diff --git "a/China/15.Sinopec_$104.55 B_Energy/2023/results.txt" "b/China/15.Sinopec_$104.55 B_Energy/2023/results.txt"
new file mode 100644--- /dev/null
+++ "b/China/15.Sinopec_$104.55 B_Energy/2023/results.txt"
@@ -0,0 +1,99693 @@
+Unit: Share
+Number of
+points
+percentage
+8.14
+1.61
+5.07
+6.68
+0.370
+2.5
+0.239
+0.245
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.406
+43.4
+0.267
+0.383
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+4.33
+4.52
+(0.19)
+%
+2014
+Change
+2015
+RMB
+RMB
+Items
+2016
+Diluted earnings per share
+As of 31 December
+29.2
+1.371
+1.772
+Net cash flow from operating activities per share
+points
+percentage
+7.42
+1.267
+0.407
+43.4
+0.267
+531
+121,071,210
+121,071,210
+677,538
+712,232
+657,703
+1,447,268
+15
+1,498,609
+666,084
+%
+RMB million
+RMB million
+Change
+2015
+As of 31 December
+2016
+214,543
+2014
+RMB million
+RMB
+3.5
+1.3
+0.383
+Basic earnings per share
+RMB
+%
+RMB
+RMB
+Items
+1,455,594
+2014
+2015
+2016
+For the year ended 31 December
+118,280,396
+596,697
+5.1
+804,473
+Change
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+5.883
+5.606
+(86)
+419
+331
+1,328
+(20,562)
+(4,680)
+(943)
+(134)
+(518)
+(5,002)
+(3,987)
+125
+112
+133
+1,622
+721
+(3,165)
+1,528
+(314)
+(4,915)
+403
+261
+Beginning of
+the year
+(208)
+(475)
+117
+(4,365)
+(22,164)
+(3,380)
+(4,573)
+(3,855)
+(16,586)
+1,420
+1,060
+5,578
+(5,993)
+(16,703)
+82,843
+RMB million
+RMB million
+Items
+(3) Extraordinary items and corresponding amounts
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+Principal Financial Data and Indicators
+4
+Principal Financial Data and Indicators
+3
+Net loss on disposal of non-current assets
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+percentage
+55.27
+(0.99)
+45.44
+44.45
+5.108
+4.9
+points
+RMB million
+Donations
+Gain on holding and disposal of various investments
+2014
+2015
+2016
+For the year ended 31 December
+(Income)/expenses
+(5) Significant changes of items in the financial statements
+Derivative financial instruments
+Cash flow hedging
+Total
+Available-for-sale financial assets
+Government grants
+Items
+Attributable to: Equity shareholders of the Company
+Minority interests
+Total
+Tax effect
+Subtotal
+Gain on business combination under the same control
+Other non-operating expenses, net
+Investment income in Sichuan-to-East China Pipeline Co. recalculated after losing control
+(4) Items measured by fair values
+55,588
+41,827
+34,285
+This annual report includes forward-looking statements. All statements,
+other than statements of historical facts, that address activities, events or
+developments that the Company expects or anticipates will or may occur
+in the future (including but not limited to projections, targets, reserve
+and other estimates and business plans) are forward-looking statements.
+The Company's actual results or developments may differ materially
+from those indicated by these forward-looking statements as a result
+of various factors and uncertainties. The Company makes the forward-
+looking statements referred to herein as at 24 March 2017 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+Documents for Inspection
+210
+Corporate Information
+209
+Financial Statements
+75
+Company Profile
+Controlled Subsidiaries
+74
+Management and Employees
+Directors, Supervisors, Senior
+60
+Report of the Board of Supervisors
+58
+Report of the Board of Directors
+Principal Wholly-owned and
+50
+COMPANY PROFILE
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 OF THE COMPANY PREPARED IN ACCORDANCE WITH THE
+PRC ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (ASBE) AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
+HAVE BEEN AUDITED BY PRICEWATERHOUSECOOPERS ZHONG TIAN LLP AND PRICEWATERHOUSECOOPERS RESPECTIVELY. BOTH
+FIRMS HAVE ISSUED STANDARD UNQUALIFIED AUDITOR'S REPORT.
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+CSRC: China Securities Regulatory Commission.
+RMC: Oil and Natural Gas Reserves Management Committee of the Company;
+Sichuan-to-East China Pipeline Co.: Sinopec Sichuan-to-East China Natural Gas Pipeline Co., Ltd;
+Sinopec group: China Petrochemical Corporation and its subsidiaries;
+China Petrochemical Corporation: our controlling shareholder, China Petrochemical Corporation;
+Company: Sinopec Corp. and its subsidiaries;
+IMPORTANT NOTICE: THE BOARD OF DIRECTORS, THE BOARD OF SUPERVISORS, DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT OF SINOPEC CORP. WARRANT THAT THERE ARE NO FALSE REPRESENTATIONS, MISLEADING STATEMENTS OR MATERIAL
+OMISSIONS IN THIS ANNUAL REPORT, AND JOINTLY AND SEVERALLY ACCEPT FULL RESPONSIBILITY FOR THE AUTHENTICITY,
+ACCURACY AND COMPLETENESS OF THE INFORMATION CONTAINED IN THIS ANNUAL REPORT. THERE IS NO OCCUPANCY OF NON-
+OPERATING FUNDS BY THE CONTROLLING SHAREHOLDERS OF SINOPEC CORP.. MR. WANG YUPU, CHAIRMAN OF THE BOARD OF
+DIRECTORS, MR. DAI HOULIANG, VICE CHAIRMAN AND PRESIDENT, MR. WANG DEHUA, CHIEF FINANCIAL OFFICER AND HEAD OF THE
+FINACIAL DEPARTMENT OF SINOPEC CORP. WARRANT THE AUTHENTICITY AND COMPLETENESS OF THE FINANCIAL STATEMENTS
+CONTAINED IN THIS ANNUAL REPORT. THE AUDIT COMMITTEE OF SINOPEC CORP. HAS REVIEWED THE ANNUAL RESULTS OF SINOPEC
+CORP. FOR THE YEAR ENDED 31 DECEMBER 2016.
+In this report, unless the context otherwise requires, the following terms shall have the meaning set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation;
+Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production,
+pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical
+products, coal chemical products, synthetic fibre, and other chemical products; the import and export, including an import and export agency
+business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research,
+development and application of technologies and information.
+COMPANY PROFILE
+Chemicals
+Marketing and Distribution
+Refining
+Exploration and Production
+AS APPROVED BY THE 12TH MEETING OF THE SIXTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD
+PROPOSED A FINAL CASH DIVIDEND OF RMB 0.17 (TAX INCLUSIVE) PER SHARE FOR 2016, COMBINING WITH THE INTERIM CASH
+DIVIDEND OF RMB 0.079 (TAX INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2016 WILL BE RMB 0.249 (TAX INCLUSIVE)
+PER SHARE. THE DIVIDEND PROPOSAL IS SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE
+YEAR 2016.
+DEFINITIONS:
+Hong Kong Listing Rules: Listing Rules of the Hong Kong Stock Exchange
+Corporate Governance
+Connected Transactions
+OPEC
+中国石化
+中国石化
+中国石化
+OPEC
+中国石化
+中国石化
+SINOPEC CORP. 2016 ANNUAL REPORT AND ACCOUNTS
+中国石化
+中国石化
+中国石化
+L L L L L
+中国石化
+中国石化
+中国石化
+中国石化
+中国石化
+43
+(Stock Code A Share: 600028; H Share: 00386; ADR : SNP)
+中国石化
+39
+Significant Events
+29
+19
+11
+8
+Management's Discussion and Analysis
+OPEC
+Business Review and Prospects
+of Principal Shareholders
+Changes in Share Capital and Shareholdings
+Principal Financial Data and Indicators
+Company Profile
+236
+CONTENTS
+Πορεά
+Chairman's Statement
+End of
+the year
+262
+314
+Conversion:
+For overseas production of crude oil: 2016, 1 tonne = 7.20 barrels; 2015, 1 tonne = 7.21 barrels; 2014, 1 tonne = 7.22 barrels;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+Quarter
+Fourth
+Third
+Second
+Quarter
+RMB million
+First
+Quarter
+RMB million
+For the year of 2016
+148,019
+Quarter
+29.4
+214,543
+43,238
+2.8
+28,901
+29,713
+47,603
+43.8
+165,740
+32,281
+Total
+RMB million
+29,713
+1,376
+10,047
+11,887
+6,403
+46,416
+17,250
+RMB million
+9,916
+6,190
+1,930,911
+566,966
+484,725
+465,159
+414,061
+RMB million
+13,060
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+46,416
+42.4
+Items
+Net cash flow from operating activities
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+Operating income
+Items
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+Net cash flow from operating activities
+Profit before taxation
+Total assets
+Operating profit
+Items
+(1) Principal financial data
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH ASBE
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+2
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+Operating income
+66,795
+Total liabilities
+(2) Principal financial indicators
+56,093
+79,877
+65,798
+51.0
+52,246
+78,876
+2,827,566
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+(4.4)
+1,930,911
+RMB million
+%
+2014
+Change
+RMB million
+For the year ended 31 December
+2016
+2015
+RMB million
+2,020,375
+Changes
+1
+(89)
+券投基金
+交通銀行股份有限公司-滙豐晉信雙核策略混合型
+(3,402,700)
+131,135,206
+0.11
+A Share
+國泰君安證券股份有限公司
+A Share
+139,961,578
+0.12
+A Share
+工銀瑞信基金・工商銀行・特定客戶資産管理
+0
+322,037,900
+0.27
+A Share
+139,961,578
+0
+0.08
+68,870,234
+6
+CO
+We are 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:
+Note 2: Sinopec Century Bright Capital Investment Limited, an overseas wholly-owned subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares,
+accounting for 0.46% of the total issued share capital of Sinopec Crop.. Those shareholdings are included in the total number of the shares held by HKSCC
+Nominees Limited.
+Note 1: As compared with the number of shares held as of 31 December 2015.
+0000 000
+91,545,992
+23,928,471
+77,858,630
+71,197,295
+0.06
+A Share
+長江證券股份有限公司
+0.06
+A Share
+中國工商銀行-上證50交易型開放式指數證券投資基金
+1,220,850
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+284,218,172
+0.30
+HKSCC Nominees Limited²
+China Petrochemical Corporation
+Name of shareholders
+Nature of
+The shareholdings of top ten shareholders as of 31 December 2016 are listed as below:
+(1) Shareholdings of top ten shareholders
+As of 31 December 2016, the total number of shareholders of Sinopec Corp. was 609,380 including 603,151 holders of domestic A shares and 6,229
+holders of overseas H shares. As of 28 February 2017, the total number of shareholders of Sinopec Corp. was 579,998. Sinopec Corp. has complied
+with requirement for minimum public float under the Hong Kong Listing Rules.
+中國證券金融股份有限公司
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+CHANGES IN THE SHARE CAPITAL
+1
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+of Principal Shareholders
+Shareholdings Share Capital and
+Principal Financial Data and Indicators
+5
+There is no change on the number and nature of shares of Sinopec Corp. during the reporting period
+361,151,404
+HKSCC Nominees Limited
+Shareholders
+A Share
+0
+Unknown
+5,311,433
+96,593,005
+1,861,425,318
+1.54
+A Share
+中央匯金資產管理有限責任公司
+25,379,653,053
+H Share
+Changes shares subject to
+of shareholding¹ pledges or lock-up
+0
+0
+Total number of
+shares held
+85,792,671,101
+70.86
+State-owned Share
+Percentage of
+shareholdings %
+20.96
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO)
+JPMorgan Chase & Co.
+(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.
+908,006,153(L)
+1,275,857,318(L)
+5.00(L)
+3.56(L)
+0.00(L)
+20,400(L)
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+0.12(L)
+0.62(S)
+158,634,692(S)
+1.93(L)
+0.01(S)
+8.93(L)
+percentage of Sinopec
+Corp.'s issued share capital
+(H Share) (%)
+Approximate
+31,602,000(L)
+492,573,324(L)
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+*
+Over the past year, in its efforts to implement
+supply-side structural reform, the Company
+benefited from its integrated value chain, which
+allows our businesses to complement each
+other well. As we increased the effective supply
+of petroleum and petrochemical products and
+related services to the community, we reaped
+economic benefits and improved our asset
+utilisation. To cope with harsh conditions in the
+upstream sector, we strengthened measures
+to rein in costs and address our weaknesses.
+At the same time, we gave priority to high-
+efficiency exploration activities and made a
+number of important new discoveries. In line
+with our emphasis on profitability, we made
+continuous improvements in our oil production
+and trimmed production of high-cost oilfields,
+thereby effectively controlling our production
+costs. The Company also continuously improves
+its energy structure by increasing production of
+shale gas. As a result, domestic gas production
+for the year reached 21.6 billion cubic meters,
+while we further developed Fuling shale gas
+field, China's first large-scale shale gas project,
+to an annual capacity of 7 billion cubic meters.
+Our energy structure improved steadily as
+our gas supply in the Yangtze River Economic
+Belt and the Beijing-Tianjin-Hebei region
+continued to grow. In downstream operations,
+the Company achieved robust results by taking
+advantage of market opportunities to expand
+the effective supply of mid-range and high-
+end products. We optimised the structure of
+our refinery products according to market
+demand and vigorously promoted applications
+of new technologies, leading to a lower diesel-
+to-gasoline ratio. Moreover, we pressed ahead
+with upgrading of our oil product specification
+to ensure implementation of GB V standards for
+automobile gasoline and diesel fuels and the GB
+VI standards for Beijing. At the same time, we
+eliminated obsolete and low-efficiency production
+In 2016, in accordance with the IFRS, the
+Company recorded a turnover and other
+operating revenue of RMB 1,930.9 billion.
+Profit before taxation was RMB80.2 billion,
+represented a 42.1% increase year on year,
+of which profit attributable to owners of the
+Company amounted to RMB46.7 billion,
+represented a 43.6% increase year on year.
+Taking into account the Company's profitability,
+shareholders return and the need for future
+development, the Board of Directors proposed
+a final dividend of RMB 0.17 per share, which,
+combined with the interim dividend of RMB
+0.079 per share, brought the full-year dividend
+to RMB 0.249 per share. The dividend payout
+ratio reaches 64.6%.
+other hand, in view of the difficulties that low
+oil prices created for our upstream operations,
+along with slower growth in downstream
+demand and structural changes in the external
+environment, we intensified our reform initiatives
+and implemented stricter controls over our
+investment plans in tandem with a series of
+major reforms on the supply side. Over the past
+year, our focus on transformation of growth
+mode and structural adjustments allowed us
+to improve the quality and efficiency of our
+assets as well as upgrade our operations. Under
+the management's leadership, the entire staff
+united to advance these goals. We achieved
+significant improvement in our operating results
+through unrelenting joint efforts to explore new
+markets, optimise our operations, reduce costs
+and improve risk management. Together, these
+achievements represented an exceptional start
+to our 13th Five-Year Plan.
+In 2016, as a result of low oil prices, the
+Company faced a challenging and complex
+operating environment. Given those conditions,
+on one hand, in light of the government's new
+thinking about the country's development,
+the Company took a visionary approach to
+the future. Guided by our strategies of value-
+oriented growth, innovation-driven development,
+integrated resource allocation, openness
+to cooperation, and green, low-carbon
+development, we formulated our 13th Five-Year
+Plan and has been continuously creating new
+and sustainable competitive advantages. On the
+On behalf of the Board of Directors, the
+management and all the staff of Sinopec Corp.,
+I would like to express my sincere gratitude to
+our shareholders and the wider community for
+your interest and support.
+Dear Shareholders and Friends:
+Mr. Wang Yupu, Chairman
+China Petrochemical
+Corporation
+CHAIRMAN'S STATEMENT
+of Principal S
+Shareholes in Share Capital anders
+7
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+*. Inclusive of 553,150,000 H shares held by
+Sinopec Century Bright Capital Investment
+Ltd. (overseas wholly-owned subsidiary of
+China Petrochemical Corporation) through
+HKSCC Nominees Limited.
+Sinopec Corp.
+71.32%
+8
+Name of shareholders
+BlackRock, Inc.
+1,558,000(S)
+17.23%
+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
+As at the end of the reporting period,
+there were no employee shares.
+(2) Existing employee shares
+There is no issuance of shares of Sinopec
+Corp. during the reporting period
+(1) Issuance of securities in reporting
+period
+3 ISSUANCE AND LISTING OF SECURITIES
+(1) Controlling shareholder
+(L) Long position, (S): Short position
+Trustee (exclusive of passive trustee)
+Investment manager
+Beneficial owner
+substantial shareholder
+Interest of corporation controlled by the
+Status of shareholders
+Schroders Plc
+Custodian corporation/approved lending agent
+Investment manager
+(H Share)
+2,278,374,418(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. Wang Yupu.
+Through re-organisation in 2000, China
+Petrochemical Corporation injected its
+principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+retained certain petrochemical facilities.
+It provides well-drilling services, well-
+logging services, downhole operation
+services, services in connection with
+manufacturing and maintenance of
+production equipment, engineering
+construction, utility services including
+water and power and social services.
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+912,886,426
+Shipping Co., Ltd
+China Merchants Energy
+58.74%
+351,351,000
+Equipment Corporation
+Sinopec Oilfield
+Number of
+shares interests held
+or regarded as held
+65.22%
+Service Corporation
+Sinopec Oilfield
+65.67%
+2,907,856,000
+Shareholding
+Percentage
+Numberof
+Shares Held
+Name of Company
+Sinopec Engineering
+(Group) Co. Ltd
+9,224,327,662
+中国石化
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER ASBE AND IFRS PLEASE REFER TO PAGE 202 OF
+THE REPORT.
+5.912
+62.8 Mainly due to significant increase in profit from refineries as well as the
+impact of timing of the taxes submitted by enterprises
+(80.0) Mainly due to the maturity of RMB 30 billion super short term financing
+papers, and issuance of RMB 12 billion super short term papers in
+2016, with the year-end balance of RMB 6 billion
+Significant Improvement on operating cash flow and decreased
+investment as compared with 2015, resulted in surplus cash
+38.6 Mainly due to sale of equity in Sichuan-to-East China Pipeline Co.,
+resulted in RMB 22.8 billion increase in long term equity in associates.
+(59.4) Mainly due to increase in profits and decrease in demand for external
+funds, and the repayment of part of the short-term borrowings
+63.4 The Company optimised its operating funds, and based on its trust
+worthy creditability, increased its credit line in using the notes
+33.5 Mainly due to the increase in trading volume of the trading business,
+resulted in an increase of RMB 30.5 billion in the accounts payable to
+the third parties.
+Reasons for change
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+21,903
+8.876
+30,779
+246.8 Mainly due to increased income from reorganisation of pipeline assets
+Income of investment
+30,000
+6,000
+Short term bonds payable
+20,394
+32,492
+52,886
+Tax payable
+(24,000)
+43,743
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+Items
+56,411
+80,151
+Profit before taxation
+98,604
+96,763
+73,439
+56,822
+Unit: RMB million
+77,193
+2012
+2,787,684
+2013
+2,881,928
+2014
+2,827,566
+For the year ended 31 December
+2015
+2,020,375
+1,930,911
+Turnover and other operating revenues
+2016
+Operating profit
+65,818
+130,558
+Accounts payable
+Items
+As of 31 December
+2016
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period, or such changes
+which constituted 5% or more of total assets at the balance sheet date or more than 10% of profit before taxation:
+(5,770)
+(5,975)
+195
+10
+RMB million
+of the year
+Influence
+Unit: RMB million
+(8,834)
+(8,746)
+(4,024)
+(3,448)
+5,386
+4,722
+on the profit
+174,301
+2015
+RMB million
+Cash at bank and on hand
+2,262
+3,566
+5,828
+Notes payable
+(44,355)
+74,729
+30,374
+Increase/(decrease)
+Amount Percentage
+Short-term borrowings
+84.293
+116,812
+(%)
+104.5
+RMB million
+72,831
+69,666
+142,497
+Long term equity investment
+32,519
+5.846
+95,444
+Profit attributable to owners of the Company
+129,175
+73,282
+895,761
+1,012,703
+1,094,035
+1,113,611
+1,086,348
+242,892
+2012
+As of 31 December
+2014
+2015
+2016
+Adjusted net assets per share (RMB)
+Net assets per share (RMB)
+Total equity attributable to owners of the Company
+Non-controlling interests
+2013
+Non-current liabilities
+197,440
+181,831
+4.899
+4.860
+39,086
+513,315
+571,087
+595,255
+5.033
+4.969
+5.585
+5.517
+5.873
+5.808
+676,197
+146,743
+710,994
+54,348
+111,964
+120,241
+196,617
+189,485
+201,540
+196,275
+54,691
+91,012
+Net current liabilities
+Items
+0.536
+0.399
+0.269
+0.385
+Diluted earnings per share (RMB)
+0.568
+0.571
+0.546
+0.399
+0.385
+Basic earnings per share (RMB)
+64,082
+66,348
+46,639
+32,512
+46,672
+0.269
+Non-current assets
+Return on capital employed (%)
+5.23
+Unit: RMB million
+1.264
+1.305
+1.267
+1.371
+1.772
+Net cash generated from operating activities per share (RMB)
+7.30
+12.48
+7.84
+4.81
+6.56
+Return on net assets (%)
+9.10
+8.03
+6.06
+11.62
+Chairman's Statement
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+Financial asset or financial liability with change in fair value recognised through profit or loss
+A financial asset or financial liability is classified as at fair value through profit or loss if it is acquired or incurred principally for the
+purpose of selling or repurchasing in the near term or if it is a derivative, unless the derivative is a designated and effective hedging
+instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity
+instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. These financial instruments
+are initially measured at fair value with subsequently changes in fair value recognised in profit or loss. Subsequent to initial recognition,
+financial assets and financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognised
+in profit or loss.
+Loans and Receivables
+Loans and Receivables are non-derivative financial assets with fixed or determinable recoverable amount and with no quoted price in
+active market. After the initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method.
+Held-to-maturity investment
+Held-to-maturity investment includes non-derivative financial assets with fixed or determinable recoverable amount and fixed maturity that
+the Group has the positive intention and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are
+measured at amortised cost using the effective interest method.
+Available-for-sale financial assets
+Available-for-sale financial assets include non-derivative financial assets that are designated as available for sales and other financial
+assets which do not fall into any of the above categories.
+Available-for-sale financial assets whose fair value cannot be measured reliably are measured at cost subsequent to initial recognition.
+Other than the above equity instrument investments whose fair values cannot be measured reliably, other available-for-sale financial assets
+are initially stated at fair values. The gains or losses arising from changes in the fair value are directly recognised in equity, except for
+the impairment losses and exchange differences from monetary financial assets denominated in foreign currencies, which are recognised
+in profit or loss. The cumulative gains and losses previously recognised in equity are transferred to profit or loss when the available-for-
+sale financial assets are derecognised. Dividend income from these equity instruments is recognised in profit or loss when the investee
+declares the dividends. Interest on available-for-sale debt instrument investments calculated using the effective interest rate method is
+recognised in profit or loss (see Note 3(17) (c)).
+Other financial liabilities
+Financial assets and financial liabilities are initially recognised at fair value. For financial asset or financial liability of which the change in its
+fair value is recognised in profit or loss, the relevant transaction cost is recognised in profit or loss. The transaction costs for other financial
+assets or financial liabilities are included in the initially recognised amount. Subsequent to initial recognition financial assets and liabilities
+are measured as follows:
+Financial liabilities other than the financial liabilities at fair value through profit or loss are classified as other financial liabilities.
+Other financial liabilities include the liabilities arising from financial guarantee contracts. Financial guarantees are contracts that require
+the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the holder) for a loss the holder
+incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Where the Group
+issues a financial guarantee, subsequent to initial recognition, the guarantee is measured at the higher of the amount initially recognised
+less accumulated amortisation and the amount of a provision determined in accordance with the principles of contingencies (see Note
+3(16)).
+94
+94
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments (Continued)
+(b) Disclosure of financial assets and financial liabilities
+In the balance sheet, financial assets and liabilities are not offset unless all the following conditions are met:
+Except for the other financial liabilities described above, subsequent to initial recognition, other financial liabilities are measured at
+amortised cost using the effective interest method.
+the Group has a legally enforceable right to set off financial assets against financial liabilities; and
+The Group classifies financial assets and liabilities into different categories at initial recognition based on the purpose of acquiring assets
+and assuming liabilities: financial assets and financial liabilities at fair value through profit or loss, loans and receivables, held-to-maturity
+investments, available-for-sale financial assets and other financial liabilities.
+(a) Classification, recognition and measurement of financial instruments
+Intangible assets, where the estimated useful life is finite, are stated in the balance sheet at cost less accumulated amortisation and provision
+for impairment losses (see Note 3(12)). For an intangible asset with finite useful life, its cost less estimated residual value and accumulated
+impairment losses is amortised on a straight-line basis over the expected useful lives, unless the intangible assets are classified as held for sale
+(see Note 3(10)).
+An intangible asset is regarded as having an indefinite useful life and is not amortised when there is no foreseeable limit to the year over which
+the asset is expected to generate economic benefits for the Group.
+Useful lives and amortisation methods are reviewed at least each year end.
+(9) Goodwill
+The initial cost of goodwill represents the excess of cost of acquisition over the acquirer's interest in the fair value of the identifiable net assets
+of the acquiree under the business combination involving entities not under common control.
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(12)). On disposal of an asset group or a set of
+asset groups, any attributable amount of purchased goodwill is written off and included in the calculation of the profit or loss on disposal.
+(10) Held for sale and discontinued operation
+Non-current assets or disposal group that meet the following conditions will be classified as held for sale. (i) for the non-current assets or the
+disposal group, they can only be sold immediately in current condition, according to the usual terms of selling the assets or disposal group;
+(ii) the Group has made the resolution and obtain the appropriate approval on disposal of the non-current assets or the disposal group; (iii) the
+Group has signed an irrevocable transfer agreement with the transferee; (iv) the transfer will be completed within one year.
+Non-current assets, except for financial assets and deferred tax assets that satisfy the cognition criteria for assets held for sale are stated at the
+lower of carrying amount and the fair value less costs to sell. Any excess of the original carrying amount over the fair value less costs to sell is
+recognised as asset impairment loss.
+The Group recognises a financial asset or a financial liability on its balance sheet when the Group enters into and becomes a party to the
+underlining contract of the financial instrument.
+The assets and liabilities in the non-current asset or disposal groups which have been classified as assets held for sale are classified as current
+assets and current liabilities, and are presented separately in the consolidated balance sheet.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+93
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments
+Financial instruments of the Group include cash and cash equivalents, bond investments, equity securities other than long-term equity
+investments, receivables, derivative financial instruments, payables, loans, bonds payable, and share capital, etc.
+A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale, can be clearly
+distinguished operationally and for financial reporting purposes from the rest of the Group and (i) represents a separate major line of business
+or geographical area of operations, (ii) is part of a single coordinated plan to dispose of a separate major line of business or geographical area
+of operations, or (iii) is a subsidiary acquired exclusively with a view to resale.
+(8) Intangible assets
+the Group intends to settle the financial assets and liabilities on a net basis, or to realise the assets and settle the liabilities
+simultaneously.
+If there is an active market for a financial asset or financial liability, the quoted price in the active market is used to establish the fair value
+of the financial asset or financial liability.
+The gain or loss from remeasuring the hedging instrument at fair value is recognised in profit or loss. The gain or loss on the hedged
+item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in profit or loss.
+When a hedging instrument expires or is sold, terminated or exercised, or no longer meets the criteria for hedge accounting, the Group
+discontinues prospectively the hedge accounting treatments. If the hedged item is a financial instrument measured at amortised cost, any
+adjustment to the carrying amount of the hedged item is amortised to profit or loss from the adjustment date to the maturity date using
+the recalculated effective interest rate at the adjustment date.
+Hedge of net investment in foreign operation
+A hedge of a net investment in a foreign operation is a hedge of the exposure to foreign exchange risk associated with a net investment
+in a foreign operation. The portion of the gain or loss on a hedging instrument that is determined to be an effective hedge is recognised
+directly in equity as a separate component until the disposal of the foreign operation, at which time the cumulative gain or loss
+recognised directly in equity is recognised in profit or loss. The ineffective portion is recognised immediately in profit or loss.
+(e) Convertible bonds
+Convertible bonds that contain an equity component
+Convertible bonds that can be converted to equity share capital at the option of the holder, where the number of shares that would be
+issued on conversion and the value of the consideration that would be received at that time do not vary, are accounted for as compound
+financial instruments which contain both a liability component and an equity component.
+At initial recognition, the liability component of the convertible bonds is measured as the present value of the future interest and principal
+payments, discounted at the market rate of interest applicable at the time of initial recognition to similar liabilities that do not have a
+conversion option. Any excess of proceeds over the amount initially recognised as the liability component is recognised as the equity
+component. Transaction costs that relate to the issue of the convertible bonds are allocated to the liability and equity components in
+proportion to the allocation of proceeds.
+Subsequent to initial recognition, the liability component of a convertible corporate bond is measured at amortised cost using the effective
+interest method, unless it is designated at fair value through profit or loss. The equity component of a convertible corporate bond is not
+remeasured subsequent to initial recognition.
+A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm
+commitment, or an identified portion of such an asset, liability or unrecognised firm commitment.
+If the convertible corporate bond is converted, the liability component, together with the equity component, is transferred to share capital
+and capital reserve (share premium). If the convertible corporate bond is redeemed, the consideration paid for the redemption, together
+with the transaction costs that relate to the redemption, are allocated to the liability and equity components. The difference between the
+allocated and carrying amounts is charged to profit or loss if it relates to the liability component or is directly recognised in equity if it
+relates to the equity component.
+Convertible bonds issued with a cash settlement option and other embedded derivative features are split into liability and derivative
+components.
+At initial recognition, the derivative component of the convertible bonds is measured at fair value. Any excess of proceeds over the amount
+initially recognised as the derivative component is recognised as the liability component. Transaction costs that relate to the issue of the
+convertible bonds are allocated to the liability and derivative components in proportion to the allocation of proceeds. The portion of the
+transaction costs relating to the liability component is recognised initially as part of the liability. The portion relating to the derivative
+component is recognised immediately as an expense in profit or loss.
+The derivative component is subsequently remeasured at each balance sheet date and any gains or losses arising from change in the
+fair value are recognised in profit or loss. The liability component is subsequently carried at amortised cost using the effective interest
+method until extinguished on conversion or redemption. Both the liability and the related derivative components are presented together
+for financial statements reporting purposes.
+If the convertible bonds are converted, the carrying amounts of the derivative and liability components are transferred to share capital
+and share premium as consideration for the shares issued. If the convertible bonds are redeemed, any difference between the amount
+paid and the carrying amount of both components is recognised in profit or loss.
+96
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Other convertible bonds
+(c) Determination of fair value
+Fair value hedges
+(11) Financial Instruments (Continued)
+If no active market exists for a financial instrument, a valuation technique is used to establish the fair value. Valuation techniques include
+using arm's length market transactions between knowledge, and willing parties; reference to the current fair value of other instrument that is
+substantially the same; discounted cash flows and option pricing model. The Group calibrates the valuation technique and tests it for validity
+periodically.
+(d) Hedge accounting
+Hedge accounting is a method which recognises the offsetting effects on profit or loss of changes in the fair values of the hedging instrument
+and the hedged item in the same accounting period(s).
+Hedged items are the items that expose the Group to risks of changes in fair value or future cash flows and that are designated as being
+hedged. The Group's hedged items include fixed-rate borrowings that expose the Group to risk of changes in fair values, floating rate
+borrowings that expose the Group to risk of variability in cash flows, and a forecast transaction that is settled with a fixed amount of foreign
+currency and expose the Group to foreign currency risk, and a forecast transaction that is settled with an undetermined future market price
+and exposes the Group to risk of variability in cash flows, etc.
+A hedging instrument is a designated derivative whose changes in fair value or cash flows are expected to offset changes in the fair value or
+cash flows of the hedged item.
+The hedge is assessed by the Group for effectiveness on an ongoing basis and determined to have been highly effective throughout the
+accounting periods for which the hedging relationship was designated. The Group uses a ratio analysis to assess the subsequent effectiveness
+of a cash flow hedge, and uses a regression analysis to assess the subsequent effectiveness of a fair value hedge.
+Cash flow hedges
+A cash flow hedge is a hedge of the exposure to variability in cash flows. The portion of the gain or loss on the hedging instrument that
+is determined to be an effective hedge is recognised directly in shareholders' equity as a separate component. That effective portion is
+adjusted to the lesser of the following (in absolute amounts):
+the cumulative gain or loss on the hedging instrument from inception of the hedge;
+(d) Hedge accounting (Continued)
+the cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset, the associated gain or loss is removed
+from shareholders' equity, included in the initial cost of the non-financial asset, and recognised in profit or loss in the same year during
+which the non-financial asset affects profit or loss. However, if the Group expects that all or a portion of a net loss recognised directly in
+shareholders' equity will not be recovered in future accounting periods, it reclassifies the amount that is not expected to be recovered into
+profit or loss.
+For cash flow hedges, other than those covered by the preceding two policy statements, the associated gain or loss is removed from
+shareholders' equity and recognised in profit or loss in the same period or periods during which the hedged forecast transaction affects
+profit or loss.
+When a hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting,
+the Group will discontinue the hedge accounting treatments prospectively. In this case, the gain or loss on the hedging instrument that
+remains recognised directly in shareholders' equity from the period when the hedge was effective shall not be reclassified into profit or
+loss and is recognised in accordance with the above policy when the forecast transaction occurs. If the forecast transaction is no longer
+expected to occur, the gain or loss on the hedging instrument that remains recognised directly in shareholders' equity from the period
+when the hedge was effective shall be reclassified into profit or loss immediately.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+95
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gain
+or loss is removed from equity and recognised in profit or loss in the same period during which the financial asset or financial liability
+affects profit or loss. However, if the Group expects that all or a portion of a net loss recognised directly in shareholders' equity will not
+be recovered in future accounting periods, it reclassifies the amount that is not expected to be recovered into profit or loss.
+(11) Financial Instruments (Continued)
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+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.
+Minority interest is presented separately in the consolidated balance sheet within shareholders' equity. Net profit or loss attributable to
+minority shareholders is presented separately in the consolidated income statement below the net profit line item.
+(c) Method for preparation of consolidated financial statements (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+89
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Where the Company acquired a minority interest from a subsidiary's minority shareholders, the difference between the investment cost and
+the newly acquired interest into the subsidiary's identifiable net assets at the acquisition date is adjusted to the capital reserve (capital
+surplus) in the consolidated balance sheet. Where the Company partially disposed an investment of a subsidiary that do not result in a loss
+of control, the difference between the proceeds and the corresponding share of the interest into the subsidiary is adjusted to the capital
+reserve (capital surplus) in the consolidated balance sheet. If the credit balance of capital reserve (capital surplus) is insufficient, any excess
+is adjusted to retained profits.
+Where the Company acquires a subsidiary during the reporting year through a business combination involving entities not under common
+control, the identifiable assets, liabilities and results of operations of the subsidiaries are consolidated into consolidated financial statements
+from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.
+Where the Company combines a subsidiary during the reporting period through a business combination involving entities under common
+control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at
+the beginning of the earliest comparative year presented or, if later, at the date that common control was established. Therefore the opening
+balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial
+statements, the subsidiary's assets, liabilities and results of operations are included in the consolidated balance sheet and the consolidated
+income statement, respectively, based on their carrying amounts in the subsidiary's financial statements, from the date that common control
+was established.
+The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its
+subsidiaries. Control means an entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
+to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
+statements from the date that control commences until the date that control ceases.
+(c) Method for preparation of consolidated financial statements
+A business combination involving entities or businesses not under common control is a business combination in which all of the combining
+entities or businesses are not ultimately controlled by the same party or parties both before and after the business combination. Difference
+between the consideration paid by the Group as the acquirer, comprises of the aggregate of the fair value at the acquisition date of assets
+given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree, and the Group's
+interest in the fair value of the identifiable net assets of the acquiree, is recognised as goodwill (Note 3(9)) if it is an excess, otherwise in the
+profit or loss. The expense incurred for equity securities and debt securities issued as the consideration of the combination is recognised
+in the initial cost of the securities. Any other expense directly attributable to the business combination is recognised in the profit or loss
+for the year. The difference between the fair value and the book value of the assets given is recognised in profit or loss. The acquiree's
+identifiable assets, liabilities and contingent liabilities, if satisfying the recognition criteria, are recognised by the Group at their fair value at
+the acquisition date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
+(b) Business combination involving entities not under common control
+A business combination involving entities or businesses under common control is a business combination in which all of the combining
+entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that
+control is not transitory. The assets and liabilities that the acquirer receives in the acquisition are accounted for at the acquiree's carrying
+amount on the acquisition date. The difference between the carrying amount of the acquired net assets and the carrying amount of the
+consideration paid for the acquisition (or the total nominal value of shares issued) is recognised in the share premium of capital reserve, or
+the retained earnings in case of any shortfall in the share premium of capital reserve. Any costs directly attributable to the combination shall
+be recognised in profit or loss for the current period when occurred. The expense incurred for equity securities and debt securities issued as
+the consideration of the combination is recognised in the initial cost of the securities. The combination date is the date on which the acquirer
+effectively obtains control of the acquiree.
+(a) Business combination involving entities under common control
+In a business combination involving entities not under common control achieved in stages, the Group remeasures its previously held equity
+interest in the acquiree on the acquisition date. The difference between the fair value and the net book value is recognised as investment
+income for the year. If other comprehensive income was recognised regarding the equity interest previously held in the acquiree before the
+acquisition date, the relevant other comprehensive income is transferred to investment income in the period in which the acquisition occurs.
+Where control of a subsidiary is lost due to partial disposal of the equity investment held in a subsidiary, or any other reasons, the Group
+derecognises assets, liabilities, minority interests and other equity items related to the subsidiary. The remaining equity investment is
+remeasured to fair value at the date in which control is lost. The sum of consideration received from disposal of equity investment and the
+fair value of the remaining equity investment, net of the fair value of the Group's previous share of the subsidiary's identifiable net assets
+recorded from the acquisition date, is recognised in investment income in the period in which control is lost. Other comprehensive income
+related to the previous equity investment in the subsidiary, is transferred to investment income when control is lost.
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+(b) Investment in joint ventures entities and associates
+(2) Transactions in foreign currencies and translation of financial statements in foreign currencies
+The initial investment cost of a long-term equity investment obtained through a business combination involving entities under common
+control is the Company's share of the carrying amount of the subsidiary's equity at the combination date. The difference between the initial
+investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the
+share premium is insufficient, any excess is adjusted to retained earnings.
+In the Company's separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method.
+Except for cash dividends or profits distributions declared but not yet distributed that have been included in the price or consideration paid
+in obtaining the investments, the Company recognises its share of the cash dividends or profit distributions declared by the investee as
+investment income irrespective of whether these represent the net profit realised by the investee before or after the investment. Investments
+in subsidiaries are stated at cost less impairment losses (see Note 3(12)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+(a) Investment in subsidiaries
+(5) Long-term equity investments
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+90
+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.
+Inventories are recorded by perpetual method.
+Any excess of the cost over the net realisable value of each item of inventories is recognised as a provision for diminution in the value of
+inventories. Net realisable value is the estimated selling price in the normal course of business less the estimated costs of completion and the
+estimated costs necessary to make the sale and relevant taxes. The net realisable value of materials held for use in the production is measured
+based on the net realisable value of the finished goods in which they will be incorporated. The net realisable value of the quantity of inventory
+held to satisfy sales or service contracts is measured based on the contract price. If the quantities held by the Group are more than the
+quantities of inventories specified in sales contracts, the net realisable value of the excess portion of inventories is measured based on general
+selling prices.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+Inventories are initially measured at cost. Cost includes the cost of purchase and processing, and other expenditures incurred in bringing the
+inventories to their present location and condition. The cost of inventories is calculated using the weighted average method. In addition to the
+cost of purchase of raw material, work in progress and finished goods include direct labour and an appropriate allocation of manufacturing
+overhead costs.
+(4) Inventories
+Cash and cash equivalents comprise cash on hand, demand deposits, short-term and highly liquid investments which are readily convertible into
+known amounts of cash and are subject to an insignificant risk of change in value.
+(3) Cash and cash equivalents
+The assets and liabilities of foreign operation are translated into Renminbi at the spot exchange rates at the balance sheet date. The equity
+items, excluding “Retained earnings", are translated into Renminbi at the spot exchange rates at the transaction dates. The income and
+expenses of foreign operation are translated into Renminbi at the spot exchange rates or an exchange rate that approximates the spot exchange
+rates on the transaction dates. The resulting exchange differences are separately presented as other comprehensive income in the balance sheet
+within equity. Upon disposal of a foreign operation, the cumulative amount of the exchange differences recognised in which relate to that foreign
+operation is transferred to profit or loss in the year in which the disposal occurs.
+Foreign currency monetary items are translated at the PBOC rates at the balance sheet date. Exchange differences, except for those directly
+related to the acquisition, construction or production of qualified assets, are recognised as income or expenses in the income statement. Non-
+monetary items denominated in foreign currency measured at historical cost are not translated. Non-monetary items denominated in foreign
+currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. The difference
+between the translated amount and the original currency amount is recognised as other comprehensive income, if it is classified as available-for-
+sale financial assets; or charged to the income statement if it is measured at fair value through profit or loss.
+Foreign currency transactions are, on initial recognition, translated into Renminbi at the spot exchange rates quoted by the People's Bank of
+China ("PBOC rates") at the transaction dates.
+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.
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Where the individual component parts of an item of fixed asset have different useful lives or provide benefits to the Group in different patterns
+thus necessitating use of different depreciation rates or methods, each part is recognised as a separate fixed asset.
+The subsequent costs including the cost of replacing part of an item of fixed assets are recognised in the carrying amount of the item if the
+recognition criteria are satisfied, and the carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of fixed
+assets are recognised in profit or loss as incurred.
+The Group terminates the recognition of an item of fixed asset when it is in a state of disposal or it is estimated that it is unable to generate
+any economic benefits through use or disposal. Gains or losses arising from the retirement or disposal of an item of fixed asset are determined
+as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of
+retirement or disposal.
+Other than oil and gas properties, the cost of fixed assets less residual value and accumulated impairment losses is depreciated using the
+straight-line method over their estimated useful lives, unless the fixed asset is classified as held for sale (see Note 3(10)). The estimated useful
+lives and the estimated rate of residual values adopted for respective classes of fixed assets are as follows:
+Estimated
+useful life
+Estimated rate
+of residual value
+Plants and buildings
+12-50 years
+Equipment, machinery and others
+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.
+4.30 years
+3%
+3%
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+92 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(7) Oil and gas properties
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+33
+for the year ended 31 December 2016
+The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset
+to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, capitalised borrowing
+costs (see Note 3(19)), and any other costs directly attributable to bringing the asset to working condition for its intended use. According to legal
+or contractual obligations, costs of dismantling and removing the items and restoring the site on which the related assets located are included in
+the initial cost.
+Fixed assets represent the tangible assets held by the Group using in the production of goods, rendering of services and for operation and
+administrative purposes with useful life over one year.
+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 entity or an associate is accounted for using the equity method, unless the investment is classified as held
+for sale (see Note 3(10)).
+The initial cost of investment in joint ventures entities and associates is stated at the consideration paid except for cash dividends or profits
+distributions declared but unpaid at the time of acquisition and therefore included in the consideration paid should be deducted if the
+investment is made in cash. Under the circumstances that the long-term investment is obtained through non-monetary asset exchange, the
+initial cost of the investment is stated at the fair value of the assets exchanged if the transaction has commercial substance, the difference
+between the fair value of the assets exchanged and its carrying amount is charged to profit or loss; or stated at the carrying amount of the
+assets exchanged if the transaction lacks commercial substance.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+91
+Financial Statements (PRC)
+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)).
+Financial Statements (PRC)
+for the year ended 31 December 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(5) Long-term equity investments (Continued)
+(b) Investment in joint ventures entities and associates (Continued)
+The Group recognises its share of the investee's net profits or losses after making appropriate adjustments to align the accounting policies
+or accounting periods with those of the Group based on the fair values of the investee's net identifiable assets at the time of acquisition.
+Under the equity accounting method, unrealised profits and losses resulting from transactions between the Group and its associates or joint
+ventures entities are eliminated to the extent of the Group's interest in the associates or joint ventures entities. Unrealised losses resulting
+from transactions between the Group and its associates or joint ventures entities are fully recognised in the event that there is an evidence of
+impairment.
+The Group discontinues recognising its share of net losses of the investee after the carrying amount of the long-term equity investment and
+any long-term interest that is in substance forms part of the Group's net investment in the associate or the joint ventures entity is reduced
+to zero, except to the extent that the Group has an obligation to assume additional losses. However, if the Group has incurred obligations for
+additional losses and the conditions on recognition of provision are satisfied in accordance with the accounting standard on contingencies,
+the Group continues recognising the investment losses and the provision. Where net profits are subsequently made by the associate or joint
+venture entity, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not
+recognised.
+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 entities are stated in Note
+3(12).
+(6) Fixed assets and construction in progress
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For a long-term equity investment obtained through a business combination not involving enterprises under common control, the initial
+investment cost comprises the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity securities issued
+by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not
+involving enterprises under common control, if it is achieved in stages, the initial cost comprises the carrying value of previously-held equity
+investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
+(f) Derecognition of financial assets and financial liabilities
+The Group derecognises a financial asset when the contractual right to receive cash flows from the financial asset expires, or where the Group
+transfers substantially all risks and rewards of ownership of the financial asset, or where the Group neither transfers nor retains substantially
+all risks and rewards of ownership of the financial asset but the Group gives up the control of a financial asset.
+the carrying amounts; and
+for the year ended 31 December 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(12) Impairment of financial assets and non-financial long-term assets (Continued)
+(a) Impairment of financial assets (Continued)
+When available-for-sale financial assets measured at fair value are impaired, despite not being derecognised, the cumulative losses resulted
+from the decrease in fair value which had previously been recognised directly in shareholders' equity, are reversed and charged to profit or
+loss.
+When available-for-sale financial assets measured at cost are impaired, the differences between the book value and the discounted present
+value with the market return of similar financial assets are charged to profit or loss.
+Impairment loss of available-for-sale debt instrument is reversed, if the reason for the subsequent increase in fair value is objectively as
+a result of an event occurred after the recognition of the impairment loss. Impairment loss for available-for-sale equity instrument is not
+reversed through profit or loss. Impairment loss for available-for-sale financial assets measured by the cost cannot be reversed in the
+following period.
+(b) 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, oil and gas properties, construction in progress, goodwill, intangible assets and investments in subsidiaries, associates and joint
+ventures may be impaired.
+Assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
+The recoverable amounts of goodwill and intangible assets with uncertain useful lives are estimated annually no matter there are any
+indications of impairment. Goodwill is tested for impairment together with related asset units or groups of asset units.
+An asset unit is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets
+or groups of assets. An asset unit comprises related assets that generate associated cash inflows. In identifying an asset unit, the Group
+primarily considers whether the asset unit is able to generate cash inflows independently as well as the management style of production and
+operational activities, and the decision for the use or disposal of asset.
+The recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows generated by the
+asset (or asset unit, set of asset units).
+Fair value less costs to sell of an asset is based on its selling price in an arm's length transaction less any direct costs attributable to
+the disposal. Present value of expected future cash flows is the estimation of future cash flows to be generated from the use of and upon
+disposal of the asset, discounted at an appropriate pre-tax discount rate over the asset's remaining useful life.
+If the recoverable amount of an asset is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The
+amount by which the carrying amount is reduced is recognised as an impairment loss in profit or loss. A provision for impairment loss of
+the asset is recognised accordingly. Impairment losses related to an asset unit or a set of asset units first reduce the carrying amount of any
+goodwill allocated to the asset unit or set of asset units, and then reduce the carrying amount of the other assets in the asset unit or set of
+asset units on a pro rata basis. However, the carrying amount of an impaired asset will not be reduced below the highest of its individual fair
+value less costs to sell (if determinable), the present value of expected future cash flows (if determinable) and zero.
+Impairment losses for assets are not reversed.
+98
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+On derecognition of a financial asset, the difference between the following amounts is recognised in profit or loss:
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+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.
+97
+Financial Statements (PRC)
+(a) Impairment of financial assets
+The carrying amount of financial assets (except those financial assets stated at fair value with changes in the fair values charged to profit or
+loss) are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists,
+impairment loss is provided.
+Objective evidences of impairment include but not limited to:
+(i) significant financial difficulty of the debtor;
+(ii) a breach of contract, such as a default or delinquency in interest or principal payments;
+(iii) it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
+(iv) due to the significant financial difficulty of the debtor, financial assets is unable to be traded in active market;
+Where the obligations for financial liabilities are completely or partially discharged, the entire or parts of financial liabilities are derecognised.
+(12) Impairment of financial assets and non-financial long-term assets
+(vi) a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(v) significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and the cost of
+investment may not be recoverable; and
+Available-for-sale financial assets are assessed for impairment on an individual basis. Objective evidence of impairment for equity
+instruments classified as available-for-sale includes information about significant but not temporary decline in the fair value of the equity
+investment instrument below its cost. The Group assesses equity instruments classified as available-for-sale separately at the end of
+each reporting period, it will be considered as impaired if the fair value of the equity instrument at reporting date is less than its initial
+investment cost over 50% (including 50%) or the duration of the fair value below its initial investment cost is more than one (including
+one) year, if the fair value of the equity instrument at reporting date is less than its initial investment cost over 20% (including 20%) but
+below 50%, other related factors such as price volatility will be taken into consideration to assess if it is impaired.
+Available-for-sale financial assets
+the sum of the consideration received and any cumulative gain or loss that had been recognised directly in equity.
+Where impairment is assessed on an individual basis, an impairment loss in respect of a receivable or held-to-maturity investment is
+calculated as the excess of its carrying amount over the present value of the estimated future cash flows (exclusive of future credit losses
+that have not been incurred) discounted at the original effective interest rate. All impairment losses are recognised in profit or loss.
+Impairment loss on receivables and held-to-maturity investments is reversed in profit or loss if evidence suggests that the financial assets'
+carrying amounts have increased and the reason for the increase is objectively as a result of an event occurred after the recognition of the
+impairment loss. The reversed carrying amount shall not exceed the amortised cost if the financial assets had no impairment recognised.
+Receivables are assessed for impairment on the combination of an individual basis and the aging analysis.
+Held-to-maturity investments are assessed for impairment on an individual basis.
+Receivables and held-to-maturity investments
+66.2
+46,767
+2.9
+1,124
+65,883
+At 31 December
+2015
+8,095
+Within one year
+35.4%
+100.0
+1,263
+At 31 December 2016 and 2015, the total amounts of the top five other receivables of the Group are set out below:
+Total amount (RMB million)
+Ageing
+Percentage to the total balance of other receivables
+At 31 December
+2016
+11,226
+Within one year
+41.7%
+1,260
+100.0
+for the year ended 31 December 2016
+During the year ended 31 December 2016 and 2015, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+Ageing analysis of prepayments is as follows:
+Total
+Less: Allowance for doubtful accounts
+Amounts to others
+Amounts to associates and joint ventures
+Amounts to Sinopec Group Company and fellow subsidiaries
+Amounts to subsidiaries
+9 PREPAYMENTS
+1,903
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+105
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+During the year ended 31 December 2016 and 2015, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided in prior years.
+Allowance for doubtful accounts
+24.5
+5,237
+9.8
+%
+receivables
+Amount
+RMB million
+%
+to other
+receivables
+to total
+other
+balance
+to other
+receivables
+% RMB million
+RMB million
+Allowance
+to total
+other
+receivables
+Amount
+of allowance
+Percentage
+Allowance
+RMB million
+balance
+34,217
+73.1
+4,573
+2
+22.4
+14,787
+1
+11.2
+The Group
+1.122
+1
+5,341
+1
+5.9
+2,740
+66.6
+43,852
+-
+8.1
+The Company
+206
+RMB million
+15100
+100.0
+3,780
+0.8
+1.9
+5.6
+91.7
+32
+72
+3,465
+211
+Total
+Between one and two years
+Between two and three years
+Over three years
+Within one year
+%
+% RMB million
+6880
+RMB million
+RMB million
+2,826
+Allowance
+RMB million
+8200
+100.0
+29
+2,943
+31
+56.3
+18
+6
+1.4
+1
+82
+5.7
+12
+96.0
+%
+balance
+%
+At 31 December
+2016
+prepayments
+Amount prepayments
+2,810
+2,943
+3,780
+3,550
+47
+24
+50
+58
+86
+690
+3,043
+RMB million
+2015
+At 31 December
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+364
+to
+3,465
+31
+Percentage
+to total
+prepayments
+balance
+Allowance
+Amount prepayments
+to
+Percentage
+to total
+Percentage
+of allowance
+At 31 December 2015
+Percentage
+of allowance
+At 31 December 2016
+The Group
+16
+1,296
+11
+3,454
+23
+2,920
+3,749
+1,312
+572
+49
+2018
+Registered
+RMB million
+Principal activities
+Legal
+representative
+Register location
+Principal place
+of business
+Name of investees
+Capital
+(a) Principal joint ventures and associates
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+107
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Principal joint ventures and associates of the Group are as follows:
+Percentage of
+equity/voting
+right directly
+or indirectly
+held by the
+Company
+1.Joint ventures
+("BASF-YPC")
+40.00%
+12,547
+Manufacturing and
+Wang Jingyi
+PRC
+PRC
+BASF-YPC Company Limited
+oil products
+Limited ("FREP")
+50.00%
+14,758
+Manufacturing refining
+Gu Yuefeng
+PRC
+PRC
+Fujian Refining & Petrochemical Company
+For the year 2016, the Group and the Company had no individually significant long-term investment impairment.
+Details of the Company's principal subsidiaries are set out in Note 53.
+268,451
+(7,657)
+14,691
+13,840
+942
+in joint Investments in
+ventures
+RMB million
+199,060
+46,695
+Investments in
+subsidiaries
+RMB million
+Investments
+(45)
+116,812
+(722)
+66,838
+50,696
+(45)
+2,007
+(4,553)
+(71)
+484
+1,523
+(96)
+96
+(70)
+associates
+RMB million
+distribution of
+Provision for
+impairment
+13,987
+(10)
+(2,145)
+(149)
+15,496
+(176)
+(10)
+176
+245,921
+(152)
+(1,993)
+(149)
+3,749
+866
+2,883
+47,776
+139
+219,230
+Total
+RMB million
+RMB million
+(7,657)
+losses
+petrochemical
+products
+Mansarovar Energy Colombia Ltd.
+Zhou Mingchun
+PRC
+PRC
+China Aviation Oil Supply Company
+chemical products
+Limited ("Zhongtian Synergetic Energy")
+38.75%
+16,000
+Manufacturing of coal-
+Peng Yi
+PRC
+PRC
+Zhongtian Synergetic Energy Company
+services
+banking financial
+("Sinopec Finance")
+49.00%
+Marketing and
+10,000
+3,800
+Limited ("China Aviation Oil")
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+108
+(ii) In August 2015, one of the subsidiaries of Sinopec Group Company completed the acquisition from LUKOIL OVERSEAS WEST PROJECT Ltd. a 50% equity interests
+in CIR and revised CIR's Articles of Association subsequently. According to the revised CIR's Articles of Association, the Group retained significant influences over
+CIR. As a result, the Group reclassified the investment interest in CIR from joint ventures to associates.
+Management is in the process of allocating the fair value to identifiable assets and liabilities of Pipeline Ltd. The accompanying summarized financial information
+of Pipeline Ltd (Note 12(c)) is based on management's preliminary fair value allocation which may be subjected to further change.
+Consequently, the Group has deconsolidated the Pipeline Ltd and started accounting for its 50% equity interest in the Pipeline Ltd as an investment in associate
+company. In this connection, the Group recognized an amount of RMB 20.562 billion investment income, which was resulted from the loss of control and the re-
+measurement of the remaining 50% equity interest in the Pipeline Ltd (Note 45, 58).
+(i) On 12 December 2016, the Group entered into the Capital Injection Agreement in relation to Sinopec Sichuan To East China Gas Pipeline Co., Ltd. ("Pipeline Ltd"),
+a wholly-owned subsidiary of the Group, with China Life Insurance Company Limited ("China Life") and SDIC Communications Holding Co., Ltd. ("SDIC Holding") (the
+"Capital Injection Agreement"). According to the provisions of the Capital Injection Agreement, China Life and SDIC Holding made cash contribution to the Pipeline
+Ltd amounting to RMB 20 billion and RMB 2.8 billion, respectively, in exchange for 43.86% and 6.14% equity interest, respectively, in the Pipeline Ltd. Thereafter,
+the Group's equity interest in the Pipeline Ltd was diluted from 100% to 50%. Based on the composition and decision making mechanism of the Board of
+Directors of the Pipeline Ltd, the Group determines that it has only retained the power to participate in the financial and operating policy decisions of the Pipeline
+Ltd, and was no longer exclusively possessing the power to govern policy decisions of the Pipeline Ltd.
+Note:
+All the joint ventures and associates above are limited companies.
+50.00%
+10,000 USD
+Crude oil and natural
+gas extraction
+ΝΑ
+British Virgin
+Islands
+The Republic of
+Kazakhstan
+Caspian Investments Resources Ltd.
+("CIR") (ii)
+refined petroleum
+products
+distribution of
+29.00%
+(1)
+Provision of non-
+PRC
+Yanbu Aramco Sinopec Refining Company
+Ltd. ("YASREF")
+gas extraction
+49.00%
+25,000 USD
+Crude oil and natural
+ΝΑ
+Cyprus
+Russia
+Taihu Limited ("Taihu")
+gas extraction
+("Mansarovar")
+50.00%
+12,000 USD
+Crude oil and natural
+ΝΑ
+British Bermuda
+Colombia
+Saudi Arabia
+Liu Yun
+Saudi Arabia
+Petroleum refining
+PRC
+Sinopec Finance Company Limited
+auxiliary facilities
+gas pipelines and
+Pipeline Co., Ltd. ("Pipeline Ltd") (i)
+50.00%
+200
+Operation of natural
+Quan Kai
+PRC
+PRC
+Sinopec Sichuan to East China Gas
+2.Associates
+USD
+and processing
+37.50%
+1,560 million
+ΝΑ
+(1,447)
+(3,106)
+18
+2.3
+1
+3.3
+43
+-
+10.7
+141
+8440
+100.0
+3,465
+2.4
+84
+0.4
+13
+At 31 December 2016 and 2015, the total amounts of the top five prepayments of the Group are set out below:
+11
+11
+Total
+13.1
+Over three years
+56
+15
+2016
+At 31 December
+40.8%
+1,202
+1,354
+35.8%
+2015
+2016
+At 31 December
+At 31 December
+The Group
+10 INVENTORIES
+Percentage to the total balance of prepayments
+Total amount (RMB million)
+16
+100.0
+1,312
+26.8
+4.3
+RMB million
+Between two and three years
+62
+Percentage
+to
+Percentage
+to total
+Percentage
+of allowance
+of allowance
+Percentage
+At 31 December 2015
+At 31 December 2016
+The Company
+23
+75.9
+22
+16.7
+1
+1.0
+0.2
+2.8
+to
+1.8
+Amount prepayments
+prepayments
+balance
+81.7
+1,072
+95.4
+3,306
+Between one and two years
+Within one year
+RMB million
+%
+RMB million
+%
+% RMB million
+RMB million
+prepayments
+balance
+Allowance
+prepayments
+Amount
+to total
+Allowance
+Percentage
+At 31 December
+2015
+RMB million
+Work in progress
+Dividends declared
+Change of other comprehensive loss under the equity method
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2016
+The Company
+Balance at 31 December 2016
+Movement of provision for impairment
+Other movements
+Reclassification
+Disposals for the year
+Other equity movement under the equity method
+Dividends declared
+Share of profits less losses under the equity method
+Change of other comprehensive income/(loss) under
+the equity method
+Additions for the year
+Balance at 1 January 2016
+The Group
+12 LONG-TERM EQUITY INVESTMENTS
+Disposals for the year
+The impairment losses relating to investments for the year ended 31 December 2016 amounted to nil (2015: nil).
+Investments transferred to subsidiaries
+Investments
+45
+9,306
+84,293
+25,812
+16
+2
+(139)
+184
+1,884
+24,817
+RMB million
+Total
+Provision for
+impairment
+losses
+RMB million
+(677)
+41,389
+43,581
+995
+7,422
+in associates
+RMB million
+Investments
+in joint ventures
+RMB million
+Balance at 31 December 2016
+Raw materials
+Other investment, unlisted and at cost, represents the Group's interests in privately owned enterprises which are mainly engaged in oil and natural
+gas activities and chemical production.
+10,964
+Provision for diminution in value of inventories is mainly against finished goods and raw materials. For the year ended 31 December 2016, the
+provision for diminution in value of inventories of the Group was primarily due to the costs of finished goods and raw materials of the refining
+segment and chemical segment were higher than their net realizable value.
+145,608
+4,402
+150,010
+157,431
+920
+156,511
+Total
+Less: Provision for diminution in value of inventories
+1,552
+1,838
+66,320
+65,772
+22,762
+14,141
+59,376
+75,680
+Spare parts and consumables
+Finished goods
+106
+11,408
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2016
+29
+29
+10,993
+11,437
+10,732
+11,175
+261
+262
+RMB million
+2015
+At 31 December
+RMB million
+At 31 December
+2016
+Less: Impairment loss for investments
+Total
+Other investment, unlisted and at cost
+Equity securities, listed and at quoted market price
+11 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+of allowance
+37.0%
+At 31 December 2015
+18,181
+6.9370
+2,619
+14,290
+21,843
+51,363
+102,424
+69
+75
+80
+0.8378
+9,168
+609
+6.4936
+78
+10,406
+6.9370
+0.8945
+1,499
+87
+42,030
+91,855
+16
+10
+RMB
+million
+Exchange
+rates
+currency
+million
+RMB
+million
+1,412
+96
+Exchange
+rates
+6.4936
+49
+Within one year
+Ageing analysis on accounts receivable is as follows:
+Total
+Less: Allowance for doubtful accounts
+Amounts due from others
+Amounts due from associates and joint ventures
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from subsidiaries
+ACCOUNTS RECEIVABLE
+7
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+3,962
+Financial Statements (PRC)
+103
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+At 31 December 2016, the Group's outstanding endorsed or discounted bills (with recourse) amounted to RMB 7,523 million (2015: RMB 5,352
+million).
+Bills receivable represents mainly the bills of acceptance issued by banks for sales of goods and products.
+6 BILLS RECEIVABLE
+At 31 December 2016, structured deposits with financial institutions of the Group amounted to RMB 75,000 million (2015: RMB 25,380 million).
+At 31 December 2016, time deposits with financial institutions of the Group amounted to RMB 18,029 million (2015: RMB 733 million).
+Deposits at related parties represent deposits placed at Sinopec Finance Company Limited and Sinopec Century Bright Capital Investment Limited.
+Deposits interest is calculated based on market rate.
+69,666
+18,303
+40,073
+142,497
+51
+Financial Statements (PRC)
+million
+Original
+Original
+currency
+1,939.00
+1,411.20
+1,293.60
+2,109.76
+1,943.20
+Fuel oil
+Lubricant oil
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+2015
+(RMB/Ton)
+2,105.20
+(RMB/Ton)
+13 January
+Effective from
+Effective from
+13 December
+2014
+Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Major types of tax applicable to the Group are income tax, consumption tax, resources tax, value added tax, city construction tax, education
+surcharge and local education surcharge.
+4 TAXATION
+Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment
+accounting policies are consistent with those for the consolidated financial statements.
+for which financial information regarding financial position, results of operations and cash flows are available.
+whose operating results are regularly reviewed by the Group's management to make decisions about resource to be allocated to the segment
+and assess its performance; and
+engage in business activities from which it may earn revenues and incur expenses;
+Reportable segments are identified based on operating segments which are determined based on the structure of the Group's internal
+organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the
+following respective conditions:
+(26) Segment reporting
+Products
+1,794.80
+1,948.64
+1,576.40
+At 31 December 2016
+At 31 December 2015
+Total
+US Dollars
+Other
+Renminbi
+Deposits at related parities
+Others
+Hong Kong Dollars
+US Dollars
+Renminbi
+Cash at bank
+Renminbi
+Cash on hand
+The Group
+5 CASH AT BANK AND ON HAND
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+102
+Pursuant to the 'Circular on the Overall Promotion of Pilot Program of Levying VAT in place of Business Tax' (Cai Shui [2016] 36) jointly issued by
+the Ministry of Finance and the State Administration of Taxation, revenue from modern service of the subsidiaries of the Group, are subject to VAT
+from 1 May 2016, and the applicable tax rate is 6%, while the business tax was from 3% to 5% before then.
+Value added tax rate for liquefied petroleum gas, natural gas and certain agricultural products is 13% and that for other products is 17%.
+1,495.20
+1,370.60
+Jet fuel oil
+1,218.00
+1,116.50
+1,711.52
+Between one and two years
+Between two and three years
+Over three years
+Total
+7
+%
+83180
+3262
+100.0
+0.8
+473
+56,667
+683
+94.2
+404
+0.1
+59
+35
+21.3
+1.3
+97.8
+55,385
+750
+49.8
+231
+2490
+100.0
+50,972
+0.9
+429
+0.4
+225
+48
+4.7
+39.0
+460
+97.3
+24,578
+2,809
+31.9
+114
+0.9
+357
+98.7
+38,023
+Allowance
+RMB million
+receivable
+Amount
+RMB million
+%
+% RMB million
+to total
+accounts
+receivable
+balance
+Allowance
+accounts
+receivable
+Amount
+RMB million
+to accounts
+to total
+Percentage
+At 31 December 2015
+of allowance
+Percentage
+Percentage
+At 31 December 2016
+The Company
+525
+0.9
+(I) an entity which is under control, joint control of principle individual investor, key management personnel or close family members of such
+individuals.
+464
+49,854
+1,720
+34,261
+39,994
+1,980
+677
+2,036
+3,734
+4,580
+1,662
+18,672
+6,398
+24,222
+50,972
+33,142
+2015
+At 31 December
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+RMB million
+At 31 December
+2016
+The Company
+The Group
+Total
+Over three years
+Between one and two years
+Between two and three years
+Within one year
+RMB million
+56,667
+38,560
+683
+50,289
+receivable
+balance
+to accounts
+Percentage
+of allowance
+Allowance
+% RMB million
+Percentage
+At 31 December 2015
+to total
+accounts
+receivable
+Amount
+RMB million
+%
+% RMB million
+RMB million
+receivable
+balance
+Allowance
+accounts
+receivable
+Amount
+to accounts
+to total
+of allowance
+Percentage
+Percentage
+At 31 December 2016
+The Group
+138
+29,512
+2,771
+29,650
+228
+38,332
+56,142
+525
+97.8
+Percentage
+(k) close family members of key management personnel of the Company's holding company; and
+(i) key management personnel of the Group, and close family members of such individuals;
+At 31 December
+40,824
+2015
+RMB million
+61,621
+8,019
+2,694
+164
+2,229
+4,841
+308
+3,986
+At 31 December
+2016
+RMB million
+4
+19,843
+1,793
+2,029
+26,945
+22,845
+46,767
+65,883
+1,349
+25,596
+1,392
+1,124
+1,263
+21,453
+14,085
+45,643
+At 31 December
+2015
+RMB million
+At 31 December
+2016
+29.4%
+20,975
+0.1
+During the year ended 31 December 2016 and 2015, the Group and the Company had no individually significant accounts receivable been fully or
+substantially provided allowance for doubtful accounts.
+During the year ended 31 December 2016 and 2015, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided in prior years.
+104 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+8
+OTHER RECEIVABLES
+Amounts due from subsidiaries
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+RMB million
+Amounts due from others
+Total
+Ageing analysis of other receivables is as follows:
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+The Group
+The Company
+Less: Allowance for doubtful accounts
+64,620
+The Group
+At 31 December 2016
+6.9
+13
+1,247
+67.0
+659
+210
+6.2
+484
+5.1
+1,349
+211
+2,083
+22,845
+100.0
+12000
+32
+9691O
+2.1
+9
+1.9
+0.9
+14
+6.6
+9.1
+1,367
+1,392
+65.6
+The Company
+At 31 December 2016
+Percentage
+2
+87.9
+%
+balance
+Percentage
+Percentage
+of allowance
+At 31 December 2015
+Percentage
+Percentage
+of allowance
+Amount
+to total
+other
+receivables
+to other
+receivables
+RMB million
+24,316
+515
+254
+%
+90.2
+2.0
+0.9
+Allowance
+RMB million
+1,860
+26,945
+100.0
+82060
+10660
+57
+0.2
+balance
+Amount
+% RMB million
+20,067
+to total
+other
+receivables
+to other
+receivables
+Allowance
+% RMB million
+2015
+2016
+14,967
+At 31 December
+At 31 December
+Government grants received in relation to assets are recorded as deferred income, and recognised evenly in profit or loss over the assets'
+useful lives. Government grants received in relation to revenue are recorded as deferred income, and recognised as income in future periods as
+compensation when the associated future expenses or losses arise; or directly recognised as income in the current period as compensation for
+past expenses or losses.
+Government grants are recognised when there is reasonable assurance that the grants will be received and the Group is able to comply with
+the conditions attaching to them. Government grants in the form of monetary assets are recorded based on the amount received or receivable,
+whereas non-monetary assets are measured at fair value.
+Government grants are the gratuitous monetary assets or non-monetary assets that the Group receives from the government, excluding capital
+injection by the government as an investor. Special funds such as investment grants allocated by the government, if clearly defined in official
+documents as part of "capital reserve" are dealt with as capital contributions, and not regarded as government grants.
+(18) Government grants
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+10
+Interest income is recognised on a time proportion basis with reference to the principal outstanding and the applicable effective interest rate.
+(c) Interest income
+When the outcome of rendering the services cannot be estimated reliably, revenues are recognised only to the extent that the costs incurred
+are expected to be recoverable. If the costs of rendering of services are not expected to be recoverable, the costs are recognised in profit or
+loss when incurred, and revenues are not recognised.
+At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from
+rendering of services is recognised in the income statement by reference to the stage of completion of the transaction based on the
+proportion of services performed to date to the total services to be performed.
+(19) Borrowing costs
+The Group determines the revenue from the rendering of services according to the fair value of the received or to-be received price of the
+party that receives the services as stipulated in the contract or agreement.
+the Group does not retain the management rights, which is normally associated with owner, on goods sold and has no control over the
+goods sold.
+Revenue from the sales of goods is recognised when all of the general conditions stated above and following conditions are satisfied:
+the significant risks and rewards of ownership and title have been transferred to buyers; and
+(a) Revenues from sales of goods
+Revenue is the gross inflow of economic benefits arising in the course of the Group's normal activities when the inflows result in increase in
+shareholder's equity, other than increase relating to contributions from shareholders. Revenue is recognised in profit or loss when it is probable
+that the economic benefits will flow to the Group, the revenue and costs can be measured reliably and the following respective conditions are
+met.
+(17) Revenue recognition
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+costs, is reflected as an adjustment to the provision of oil and gas properties.
+Provisions are recognised when the Group has a present obligation as a result of a contingent event, it is probable that an outflow of economic
+benefits will be required to settle the obligations and a reliable estimate can be made. Where the effect of time value of money is material,
+provisions are determined by discounting the expected future cash flows.
+(16) Provisions
+different taxable entities which either to intend to settle the current tax liabilities and assets on a net basis, or to realise the assets and
+settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to
+be settled or recovered.
+the same taxable entity; or
+they relate to income taxes levied by the same tax authority on either:
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+Revenue from the sales of goods is measured at fair value of the considerations received or receivable under the sales contract or agreement.
+(b) Revenues from rendering services
+Borrowing costs incurred on borrowings for the acquisition, construction or production of qualified assets are capitalised into the cost of the
+related assets.
+Except for the above, other borrowing costs are recognised as financial expenses in the income statement when incurred.
+(20) Repairs and maintenance expenses
+(25) Related parties (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+101
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(h) principle individual investors of the Group and close family members of such individuals;
+(g) associates of the Group, including subsidiaries of the associates;
+(f) joint ventures of the Group, including subsidiaries of the joint ventures;
+(e) enterprises or individuals if a party has control, joint control over both the enterprises or individuals and the Group;
+(d) investors that have joint control or exercise significant influence over the Group;
+(c) the parties that are subject to common control with the Company;
+(b) the subsidiaries of the Company;
+(a) the holding company of the Company;
+If a party has the power to control, jointly control or exercise significant influence over another party, or vice versa, or where two or more parties
+are subject to common control, joint control from another party, they are considered to be related parties. Related parties may be individuals or
+enterprises. Where enterprises are subject to state control but are otherwise unrelated, they are not related parties. Related parties of the Group
+and the Company include, but not limited to:
+(25) Related parties
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+(24) Dividends
+Operating lease payments are charged as expenses on a straight-line basis over the period of the respective leases.
+(23) Operating leases
+Research costs and development costs that cannot meet the capitalisation crateria are recognised in profit or loss when incurred.
+(22) Research and development costs
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations is expensed as incurred.
+Liabilities related to future remediation costs are recorded when environmental assessments and/or cleanups are probable and the costs can
+be reliably estimated. As facts concerning environmental contingencies become known to the Group, the Group reassesses its position both with
+respect to accrued liabilities and other potential exposures.
+(21) Environmental expenditures
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+(j) key management personnel of the Company's holding company;
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+0.3
+104
+79.4
+38,560
+100.0
+228
+138
+29,650
+29960
+82.8
+9.5
+7.2
+0.5
+131
+100.0
+124
+138
+22180
+At 31 December 2016 and 2015, the total amounts of the top five accounts receivable of the Group are set out below:
+Percentage
+of allowance
+to accounts
+receivable
+balance
+%
+0.4
+0.1
+89.9
+419
+Total amount (RMB million)
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+85250
+2,125
+20.4
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+99
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+At the balance sheet date, the amounts of deferred tax recognised is measured based on the expected manner of recovery or settlement of the
+carrying amount of the assets and liabilities, using tax rates that are expected to be applied in the period when the asset is recovered or the
+liability is settled in accordance with tax laws.
+Temporary differences arise in a transaction, which is not a business combination, and at the time of transaction, does not affect accounting
+profit or taxable profit (or unused tax losses), will not result in deferred tax. Temporary differences arising from the initial recognition of goodwill
+will not result in deferred tax.
+Deferred tax assets and liabilities are recognised based on deductible temporary differences and taxable temporary differences respectively.
+Temporary difference is the difference between the carrying amounts of assets and liabilities and their tax bases. Unused tax losses and unused
+tax credits able to be utilised in subsequent years are treated as temporary differences. Deferred tax assets are recognised to the extent that it
+is probable that future taxable income will be available to offset the deductible temporary differences.
+At the balance sheet date, current tax assets and liabilities are offset if the Group has a legally enforceable right to set them off and also intends
+either to settle on a net basis or to realize the asset and settle the liability simultaneously.
+Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year, plus any adjustment to tax payable
+in respect of previous years.
+Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to business combinations and items recognised
+directly in equity (including other comprehensive income).
+(15) Income tax
+When the Group terminates the employment relationship with employees before the employment contracts expire, or provides compensation
+as an offer to encourage employees to accept voluntary redundancy, a provision for the termination benefits provided is recognised in profit
+or loss under the conditions of both the Group has a formal plan for the termination of employment or has made an offer to employees for
+voluntary redundancy, which will be implemented shortly; and the Group is not allowed to withdraw from termination plan or redundancy
+offer unilaterally.
+(c) Termination benefits
+Employees of the Group participate in the social insurance system established and managed by local labor and social security department.
+The Group makes basic pension insurance to the local social insurance agencies every month, at the applicable benchmarks and rates
+stipulated by the government for the benefits of its employees. After the employees retire, the local labor and social security department has
+obligations to pay them the basic pension. When an employee has rendered service to the Group during an accounting period, the Group
+shall recognise the accrued amount according to the above social security provisions as a liability and charged to the cost of an asset or to
+profit or loss in the same period.
+Basic pension insurance
+The Group classifies post-employment benefits into either Defined Contribution Plan (DC plan) or Defined Benefit Plan (DB plan). DC plan
+means the Group only contributes a fixed amount to an independent fund and no longer bears other payment obligation; DB plan is post-
+employment benefits other than DC plan. In this reporting period, the post-employment benefits of the Group primarily comprise basic
+pension insurance and unemployment insurance and both of them are DC plans.
+(b) Post-employment benefits
+Short term compensation includes salaries, bonuses, allowances and subsidies, employee benefits, medical insurance premiums, work-
+related injury insurance premium, maternity insurance premium, contributions to housing fund, unions and education fund and short-term
+absence with payment etc. When an employee has rendered service to the Group during an accounting period, the Group shall recognise the
+short term compensation actually incurred as a liability and charged to the cost of an asset or to profit or loss in the same period, and non-
+monetary benefits are valued with the fair value.
+(a) Short term compensation
+Employee benefits are all forms of considerations and compensation given in exchange for services rendered by employees, including short term
+compensation, post-employment benefits, termination benefits and other long term employee benefits.
+(14) Employee benefits
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods.
+(13) Long-term deferred expenses
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+(15) Income tax (Continued)
+100 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+%
+1,958
+74,622
+78,623
+2,205
+687
+51
+1,526
+3,484
+3,630
+2,248
+(3,518)
+(90)
+Other comprehensive (loss)/income
+Total comprehensive income/(loss)
+Dividends declared by associates
+Share of profit/(loss) from associates
+Share of other comprehensive
+(175)
+28
+662
+(4,017)
+51
+2,533
+2,442
+191
+Profit/(loss) for the year
+Zhongtian Synergetic
+Year ended 31 December
+Pipeline Ltd (i, vii)
+2016
+Sinopec Finance
+2016
+RMB million
+RMB million
+2015
+RMB million
+Energy (viii)
+2016
+RMB million
+1,351
+2015
+RMB million
+CIR (ix)
+2015
+2016
+2015
+RMB million
+RMB million
+RMB million
+Turnover
+China Aviation Oil
+2016
+RMB million
+Summarised income statement
+3,512
+2,248
+13 FIXED ASSETS
+The Group
+Plants and
+buildings
+RMB million
+Cost:
+Balance at 1 January 2016
+Additions for the year
+Transferred from construction in progress
+Reclassifications
+Decreases for the year
+Exchange adjustments
+Balance at 31 December 2016
+Accumulated depreciation:
+Balance at 1 January 2016
+107,873
+277
+613,134
+3,420
+Oil
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(ix) The summarized income statement of CIR for the year 2015 represents the operating result for the period from the date when the Group reclassified the
+investment interest in CIR from joint ventures to associates to 31 December 2015 (Note 12(ii)).
+(2,856)
+(4,107)
+23
+336
+26
+748
+1,707
+892
+3,630
+495
+(45)
+(loss)/income from associates
+(86)
+14
+(2,009)
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 1,977 million (2015: RMB 1,418 million) and RMB 384 million (2015: RMB 632 million) respectively.
+As at 31 December 2016, the carrying amount of all individually immaterial associates for using equity method in aggregate was RMB 18,395
+million (2015: RMB 16,596 million).
+Note:
+(vii) The summarized income statement of Pipeline Ltd presents the operating results from the date when the Group lost control to 31 December 2016 (Note 12(i)).
+(viii) The main asset of Zhongtian Synergetic Energy was under construction during the year ended 31 December 2016.
+(1,759)
+and gas
+properties
+RMB million
+5,004
+2,157
+(8,078)
+(16,536)
+(6,297)
+(4,717)
+(928)
+(1,305)
+Non-current liabilities
+(4)
+(88)
+(114)
+(32,137)
+(15,407)
+(417)
+(321)
+(883)
+(1,282)
+Net assets
+(147,952)
+(142,386)
+(5,009)
+Current liabilities
+11,835
+149,457
+154,437
+7,292
+10,168
+13,115
+8,240
+5,120
+32,217
+4,826
+16,478
+15,739
+50,301
+37,571
+5,671
+5,220
+3,842
+7,768
+25,395
+3,576
+23,461
+17,378
+11,496
+10,834
+6,734
+6,121
+3.115
+2,157
+3,576
+5,004
+Others (v)
+6,691
+Carrying Amounts
+22,800
+11,496
+10,834
+6,734
+6,121
+3,115
+16,109
+Share of net assets from associates
+984
+1,329
+15,796
+12,072
+8,422
+7,151
+10,007
+Net assets attributable to owners
+of the Company
+32,217
+22,110
+23,461
+17,378
+15,796
+10,743
+7,438
+7.151
+10,007
+Net assets attributable to minority
+interests
+22,110
+Current assets
+Non-current assets
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+(65,243)
+(107)
+(26)
+(5,298)
+47,586
+540.499
+443,485
+(5,431)
+1,031,570
+21,077
+302,711
+254,097
+Additions for the year
+Reclassifications
+1,670
+41,476
+23,349
+577,885
+66,495
+(40,610)
+57
+(115)
+(23,012)
+1,048,294
+3,480
+50,470
+Equipment
+machinery
+and others
+RMB million
+Total
+RMB million
+Cost:
+Balance at 1 January 2016
+Additions for the year
+5
+Transferred from construction in progress
+Transferred to subsidiaries
+Decreases for the year
+Balance at 31 December 2016
+Accumulated depreciation:
+Balance at 1 January 2016
+47,882
+6
+1,368
+58
+(1,621)
+530,446
+2,939
+30,267
+469,966
+535
+18,835
+Reclassifications
+and gas
+properties
+RMB million
+Transferred to subsidiaries
+Decreases for the year
+Transferred to subsidiaries
+Decreases for the year
+Balance at 31 December 2016
+Net book value:
+Balance at 31 December 2016
+Balance at 31 December 2015
+(15)
+1,623
+26,727
+(57)
+15,954
+(72)
+44,304
+24,562
+176,378
+25,517
+210,764
+172,080
+203,196
+373,020
+Reclassifications
+13,444
+3,338
+30,932
+(282)
+(58)
+(6,713)
+(22)
+53
+(17,791)
+(25,573)
+(4,257)
+(4,561)
+Balance at 31 December 2016
+(1,069)
+21,401
+255,451
+614,246
+Provision for impairment losses:
+Balance at 1 January 2016
+Additions for the year
+1,288
+350
+16,971
+9,756
+12,673
+337,394
+880,711
+626
+RMB million
+Oil
+49,005
+47,914
+827,901
+100,734
+Reclassifications
+357
+(58)
+(299)
+Decreases for the year
+(525)
+(22)
+(16,822)
+Exchange adjustments
+27
+1,813
+79
+(17,369)
+1,919
+Balance at 31 December 2016
+3,815
+Additions for the year
+432,151
+354,181
+5,901
+31,473
+50,025
+1,426
+(115)
+(1,311)
+(639)
+82
+45,243
+(27)
+2,800
+1,601,718
+4,323
+87,399
+(37,968)
+114,920
+650,685
+187
+892,936
+3,069
+1,658,541
+41,569
+(37,302)
+Plants and
+buildings
+404,919
+913,185
+Balance at 31 December 2016
+3,329
+30,642
+20,791
+54,762
+Net book value:
+Balance at 31 December 2016
+66,348
+215,124
+409,122
+690,594
+Balance at 31 December 2015
+63,404
+238,943
+431,102
+733,449
+The Company
+57
+5
+52
+Exchange adjustments
+Provision for impairment losses:
+Balance at 1 January 2016
+2,900
+20,010
+17,458
+40,368
+Additions for the year
+440
+463,023
+10,580
+14,921
+Reclassifications
+12
+(12)
+Decreases for the year
+(23)
+(561)
+(584)
+3,901
+RMB million
+RMB million
+RMB million
+(20,237)
+(22,177)
+(1,502)
+(3,113)
+(895)
+(3,320)
+(2,179)
+(1,363)
+(44,032)
+(40,192)
+Net assets
+13,683
+8,781
+15,384
+13,814
+3,624
+4,367
+Total non-current liabilities
+(978)
+(1,004)
+(1,337)
+(11,248)
+Non-current liabilities
+Non-current financial liabilities(iv)
+(19,985)
+(21,906)
+(1,492)
+(3,113)
+(49)
+6,931
+(26)
+(39,214)
+Other non-current liabilities
+(252)
+(271)
+(10)
+(895)
+(3,320)
+(2,130)
+(43,028)
+(7,653)
+3,217
+12,723
+3,278
+1,522
+5,045
+4,771
+Others (v)
+743
+729
+Carrying Amounts
+6,842
+4,391
+6,154
+5,526
+1,812
+2,184
+4,021
+2,251
+5,045
+2,184
+1,812
+5,526
+6,154
+Net assets attributable to owners
+of the company
+13,683
+8,781
+15,384
+13,814
+3,624
+4,367
+13,454
+6,690
+13,454
+12,723
+Net assets attributable to minority interests
+241
+111
+Share of net assets from joint ventures
+6,842
+4,391
+3.106
+4,771
+(3,403)
+(767)
+488
+499
+262
+1,165
+78
+1,259
+4,171
+Other current assets
+10,269
+7,396
+4,852
+4,765
+569
+759
+1,616
+2,243
+6,826
+1,394
+2,517
+8,172
+Cash and cash equivalents
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(b) Major financial information of principal joint ventures
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+FREP
+At 31
+December
+BASF-YPC
+2016
+At 31
+December
+2015
+At 31
+December
+2016
+5,965
+RMB million RMB million RMB million
+Taihu
+At 31
+At 31
+December December
+2015
+2016
+RMB million RMB million
+YASREF
+At 31
+December
+2015
+RMB million RMB million
+At 31
+December
+2016
+At 31
+December
+2015
+RMB million
+Current assets
+Mansarovar
+At 31
+At 31
+December December
+2015
+2016
+RMB million RMB million
+(1,950)
+Total current assets
+9,913
+(1,424)
+(783)
+(2,005)
+Other current liabilities
+(4,643) (3,116)
+(2,107)
+(1,864)
+(599)
+(767)
+(1,616)
+(334) (2,315) (1,187) (3,362)
+(1,088) (6,466) (7,886)
+Total current liabilities
+(6,424)
+(4,540)
+(2,890)
+(3,869)
+(599)
+(1,781)
+Current financial liabilities (iii)
+Current liabilities
+54,027
+6,246
+5,253
+1,068
+1,021
+2,781
+2,321
+8,085
+10.136
+18,441
+Non-current assets
+25,585
+13,530
+15.543
+4,050
+7,433
+8,279
+5.662
+57,054
+21,903
+Summarised income statement
+Year ended 31 December
+FREP
+155
+470
+Share of net profit/(loss) from joint ventures
+2,451
+1,470
+783
+63
+(506)
+(1,090)
+895
+1,287
+31
+(92)
+252
+Share of other comprehensive income/(loss)
+from joint ventures
+134
+Dividends from joint ventures
+(2,661)
+492
+731
+(246)
+503
+Other comprehensive income/(loss)
+270
+290
+1,851
+(2,633)
+647
+145
+738
+Total comprehensive income/(loss)
+4,902
+2,939
+158
+(743)
+(1,890)
+3,744
+89
+(3,164)
+84
+875
+243
+RMB million
+RMB million
+At 31
+December
+2015
+RMB million
+Zhongtian Synergetic
+Energy
+At 31
+December
+2016
+At 31
+December
+2015
+RMB million
+RMB million
+China Aviation Oil
+At 31
+December
+2016
+RMB million
+HP
+CIR
+At 31
+December
+At 31
+December
+At 31
+December
+2015
+2016
+2015
+December
+2016
+2016
+December
+Sinopec Finance
+At 31
+277 (1,582)
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 3,768 million (2015: RMB 2,897 million) and RMB 1,068 million (2015: RMB 324 million)
+respectively. As at 31 December 2016, the carrying amount of all individually immaterial joint ventures accounted for using equity method in
+aggregate was RMB 26,822 million (2015: RMB 24,458 million).
+Note:
+(iii) Excluding accounts payable, other payables.
+(iv) Excluding provisions.
+(v) Other reflects the excess of fair value of the consideration transferred over the Group's share of net fair value of the investee's identifiable assets acquired and
+liabilities as of the acquisition date.
+(vi) The summarized income statement represents the operating result for the period from 1 January 2015 to the date when the Group reclassified the investment in
+joint venture to interest in associates (Note 12 (ii)).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(1,245)
+109
+110
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(c) Major financial information of principal associates
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+Pipeline Ltd (i)
+At 31
+Financial Statements (PRC)
+2,722
+1,893
+(2,180)
+130
+48,758
+33
+17,323
+15,430
+1,363
+1,876
+9,658
+10,725
+41,286
+31,823
+1,821
+19
+29
+174
+9
+40
+33
+41,764
+Interest income
+Turnover
+RMB million
+2016
+2015
+BASF-YPC
+2016
+Mansarovar
+Taihu
+2015
+RMB million RMB million RMB million RMB million
+2016
+RMB million
+13
+2015
+2015
+RMB million
+RMB million
+RMB million
+YASREF
+2016
+RMB million RMB million
+CIR (vi)
+2015
+2015
+2016
+64
+Interest expense
+Profit/(loss) before taxation
+(259)
+870
+(1,574)
+(918)
+(648)
+(56)
+303
+(333)
+28
+(518)
+56
+13
+(367)
+4,902
+2,939
+1,958
+158
+(1,013)
+(733)
+439,477
+3,455
+(1,847)
+Tax expense
+Profit/(loss) for the year
+(929)
+(1,130)
+(173)
+(239)
+(192)
+(15)
+2,411
+(113)
+(1,216)
+(721)
+(20)
+6,476
+3,857
+2,606
+214
+(1,316)
+(119)
+for the year ended 31 December 2016
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2016 included RMB 3,420 million (2015:
+RMB 2,899 million) (Note 31) and RMB 2,939 million (2015: RMB 2,954 million), respectively of the estimated dismantlement costs for site
+restoration.
+Financial Statements (PRC)
+32,878
+- HK Dollar loans
+2,202
+0.8945
+1,969
+6
+0.8373
+5
+- Euro loans
+1
+7.3068
+5
+1
+7.0952
+4
+Singapore Dollar loans
+4
+6.4936
+5,063
+13,577
+6.9370
+1,013
+1,821
+6.4936
+11,824
+- Euro loans
+7.3068
+1,107
+7.0952
+4.7995
+7,855
+and fellow subsidiaries
+18,430
+43,693
+- Renminbi loans
+2,858
+10,806
+- US Dollar loans
+1,957
+Short-term loans from Sinopec Group Company
+6.9370
+Total
+4.5875
+RMB million
+8,668
+4,433
+29,682
+20,491
+6,051
+1,048
+196
+213
+8,289
+52,886
+6,307
+32,492
+Value-added tax payable
+Consumption tax
+Income tax
+Mineral resources compensation fee
+Other taxes
+Total
+2015
+At 31 December
+At 31 December
+2016
+RMB million
+The Group
+74,729
+At 31 December 2016, the Group's interest rates on short-term loans were from interest 0.68% to 6.19% (2015: from interest 0.23% to 6.16%).
+The majority of the above loans are by credit.
+At 31 December 2016 and 2015, the Group had no significant overdue short-term loan.
+22 BILLS PAYABLE
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+At 31 December 2016 and 2015, the Group had no overdue unpaid bills.
+23 ACCOUNTS PAYABLE
+At 31 December 2016 and 2015, the Group had no individually significant accounts payable aged over one year.
+24 ADVANCES FROM CUSTOMERS
+21
+30,374
+At 31 December 2016 and 2015, the Group had no individually significant advances from customers aged over one year.
+At 31 December 2016 and 2015, the Group's employee benefits payable primarily represented wages payable and social insurance payables.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+115
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+26 TAXES PAYABLE
+25 EMPLOYEE BENEFITS PAYABLE
+27 OTHER PAYABLES
+146
+11,357
+Intangible assets
+Goodwill
+023456
+4,402
+430
+(10)
+(4,021)
+677
+1
+(1)
+40,368
+14,921
+(584)
+145
+119
+45
+57
+Construction in progress
+Fixed assets
+Long-term equity investments
+Inventories
+132
+(144)
+(33)
+2
+1,349
+Prepayments
+9
+23
+220
+14
+(5)
+31
+1,940
+384
+(153)
+(110)
+2
+2,063
+(1)
+- US Dollar loans
+1,486
+11
+At 31 December 2015
+Original
+currency
+million
+Exchange
+rates
+RMB
+million
+Original
+currency
+million
+Exchange
+RMB
+rates
+million
+Short-term bank loans
+11,944
+31,036
+- Renminbi loans
+10,931
+At 31 December 2016
+The Group's short-term loans represent:
+21 SHORT-TERM LOANS
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+125562
+920
+722
+54,762
+(8)
+1,693
+854
+7,657
+6
+831
+7,663
+Total
+43
+56,138
+43
+17,239
+(163)
+(4,721)
+227
+68,720
+Others
+At 31 December 2016 and 2015, the Group's other payables primarily represented payables for constructions.
+At 31 December 2016 and 2015, the Group had no individually significant other payables aged over three years.
+28 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+The Group's non-current liabilities due within one year represent:
+2015
+RMB million
+3,957
+8,988
+56,725
+10,467
+1,779
+37,038
+62,461
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+56,493
+117
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+30 DEBENTURES PAYABLE
+At 31 December
+At 31 December
+2016
+RMB million
+Long-term loans are primarily unsecured, and carried at amortised costs.
+Total
+No loans at 31 December 2016
+6.9370
+29
+6.4936
+186
+Less: Current portion
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+The Group
+Total
+(150)
+(236)
+44,772
+62,461
+44,300
+56,493
+Between one and two years
+Between two and five years
+After five years
+The maturity analysis of the Group's long-term loans is as follows:
+- US Dollar loans
+Short-term corporate bonds (i)
+- Corporate Bonds (ii)
+Balance at 1 January 2016
+Provision for the year
+Accretion expenses
+Utilised for the year
+Exchange adjustments
+Balance at 31 December 2016
+32 OTHER NON-CURRENT LIABILITIES
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+118
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Group
+RMB million
+33,115
+3,420
+1,057
+(843)
+169
+36,918
+Provisions primarily represent provision for future dismantlement costs of oil and gas properties. The Group has established certain standardised
+measures for the dismantlement of its retired oil and gas properties by making reference to the industry practices and is thereafter constructively
+obligated to take dismantlement measures of its retired oil and gas properties. Movement of provision of the Group's obligations for the
+dismantlement of its retired oil and gas properties is as follows:
+31 PROVISIONS
+(ii) These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB 18,985 million, and RMB denominated corporate bonds
+of RMB 65,500 million (2015: USD denominated corporate bonds of RMB 22,621 million, and RMB denominated corporate bonds of RMB 65,500 million). At 31
+December 2016, RMB 18,985 million (2015: RMB 22,621 million) are guaranteed by Sinopec Group Company.
+The company issued 182-day corporate bonds of face value RMB 6 billion to corporate investors in the PRC debenture market on 12 September 2016 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.54% per annum.
+Less: Current portion
+Total
+Note:
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+6,000
+Debentures payable:
+30,000
+88,121
+(29,500)
+(4,868)
+54,985
+83,253
+(i) The company issued 180-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 23 September 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.99% per annum. The short-term bonds were due on 23 March 2016 and have been fully paid by the
+Group at maturity.
+The company issued 182-day corporate bonds of face value RMB 16 billion to corporate investors in the PRC debenture market on 14 December 2015 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.90% per annum. The short-term bonds were due on 14 June 2016 and have been fully paid by the
+Group at maturity.
+The company issued 180-day corporate bonds of face value RMB 4 billion to corporate investors in the PRC debenture market on 31 December 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.75% per annum. The short-term bonds were due on 30 June 2016 and have been fully paid by the
+Group at maturity.
+84,485
+44,350
+(5,613)
+12,193
+44,922
+8
+6.4936
+54
+5,613
+150
+50
+6.9370
+29
+6.4936
+186
+150
+236
+8,945
+5,849
+29,500
+4,868
+527
+42
+8,795
+6.9370
+6
+5,559
+Long-term bank loans
+- Renminbi loans
+- US Dollar loans
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+Renminbi loans
+- US Dollar loans
+Long-term loans due within one year
+560
+At 31 December 2016
+At 31 December 2015
+Original
+Exchange
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+RMB
+million
+8,753
+Original
+currency
+million
+38,972
+11,277
+Debentures payable due within one year
+million
+26,058
+17,345
+- US Dollar loans
+Interest rates ranging from interest
+1.30% to 4.29% per annum at 31
+December 2016 with maturities
+through 2031
+61
+6.9370
+426
+rates
+71
+461
+Less: Current portion
+Long-term bank loans
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+- Renminbi loans
+Interest rates ranging from interest
+free to 5.75% per annum at 31
+December 2016 with maturities
+through 2021
+(8,795)
+17,689
+6.4936
+1,392
+RMB
+currency
+million
+Others
+Non-current liabilities due within one year
+At 31 December 2016 and 2015, the Group had no significant overdue long-term loans.
+116
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+29 LONG-TERM LOANS
+The Group's long-term loans represent:
+Exchange
+Interest rate and final maturity
+Interest rates ranging from interest
+1.08% to 4.41% per annum at 31
+December 2016 with maturities
+through 2030
+At 31 December 2016
+At 31 December 2015
+Original
+Original
+currency
+million
+Exchange
+rates
+RMB
+million
+Long-term bank loans
+- Renminbi loans
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 111
+8
+683
+for the year ended 31 December 2016
+15 INTANGIBLE ASSETS
+The Group
+Land use
+rights
+RMB million
+Non-patent
+Operation
+Patents
+RMB million
+technology
+RMB million
+rights
+RMB million
+Others
+RMB million
+Total
+RMB million
+Cost:
+Balance at 1 January 2016
+63,324
+4,210
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+102
+74%
+self-financing
+91
+Zhenhai Old Areas Structure
+Transformation Project
+3,709
+2
+262
+264
+Additions for the year
+7%
+Yizheng-Changling Crude Oil Pipeline
+Corporation Multiple Tracks Yizheng
+Bank loans &
+self-financing
+to Jiujiang Corporation
+3,316
+1,687
+769
+2,456
+self-financing
+47%
+5,794
+3,931
+203
+1,975
+8,196
+2,155
+27,530
+Additions for the year
+2,029
+138
+284
+1,771
+463
+4,685
+Decreases for the year
+(95)
+(75)
+(22)
+(192)
+Balance at 31 December 2016
+3,123
+12,081
+Balance at 1 January 2016
+Accumulated amortisation:
+34,407
+3,575
+109,447
+2,670
+463
+9,298
+Decreases for the year
+(651)
+168
+(169)
+(845)
+Balance at 31 December 2016
+68,467
+4,378
+4,134
+36,908
+4,013
+117,900
+(25)
+8,213
+4,826
+3,387
+Net book value:
+Balance at 31 December 2016
+Balance at 31 December 2015
+At 31 December 2016, major construction projects of the Group are as follows:
+The Group
+RMB million
+The Company
+RMB million
+152,545
+72,763
+81,837
+43,561
+(1,458)
+(8,806)
+(7,467)
+(6,979)
+(87,399)
+(50,470)
+(6,900)
+Balance at 31 December 2016
+Decreases for the year
+Additions for the year
+Balance at 1 January 2016
+112
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+13 FIXED ASSETS (Continued)
+Impairment losses on fixed assets for the year ended 31 December 2016 primarily represent impairment losses recognised in the exploration and
+production ("E&P") segment of RMB 10,594 million (2015: RMB 4,213 million) on fixed assets, for the chemicals segment of RMB 2,840 million
+(2015: RMB 142 million) of fixed assets and for the refining segment of RMB 1,245 million (2015: RMB 8 million) of fixed assets. The primary
+factors resulting in the E&P segment impairment loss were downward revision of oil and gas reserve due to price change and high operating
+and development cost for certain oil fields. The carrying values of these E&P properties were written down to recoverable amounts which were
+determined based on the present values of the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2015: 10.80%).
+Further future downward revisions to the Group's oil price outlook by 10% or more would lead to further impairments which, in aggregate, are
+likely to be material. It is estimated that a general decrease of 10% in oil price, with all other variables held constant, would result in additional
+impairment loss in E&P segment by approximately RMB 3,010 million. It is estimated that a general increase of 5% in operating cost, with all
+other variables held constant, would result in additional impairment loss in E&P segment by approximately RMB 1,193 million. It is estimated that
+a general increase of 5% in discount rate, with all other variables held constant, would result in additional impairment loss in E&P segment by
+approximately RMB 439 million. The assets in the chemicals segment and refining segment were written down due to the suspension of operations
+of certain production facilities.
+At 31 December 2016 and 2015, the Group and the Company had no individually significant fixed assets which were pledged.
+At 31 December 2016 and 2015, the Group and the Company had no individually significant fixed assets which were temporarily idle or pending for
+disposal.
+(380)
+At 31 December 2016 and 2015, the Group and the Company had no individually significant fully depreciated fixed assets which were still in use.
+Cost:
+Balance at 1 January 2016
+Additions for the year
+Disposals for the year
+Transferred to subsidiaries
+Dry hole costs written off
+Transferred to fixed assets
+Reclassification to other assets
+Exchange adjustments
+Balance at 31 December 2016
+Provision for impairment losses:
+14 CONSTRUCTION IN PROGRESS
+116
+131,274
+49,689
+220
+35,240
+2,872
+402
+3,274
+9%
+self-financing
+Bank loans &
+Guangxi LNG Project
+Zhongke Refine Integration Project
+17,775
+(3,059)
+4,903
+61%
+self-financing
+576
+Bank loans &
+Tianjin LNG Project
+17,404
+7,962
+14,015
+RMB million
+Accumulated
+interest
+capitalised at
+31 December
+2016
+1,486
+412
+(13)
+1,693
+412
+129,581
+152,325
+49,277
+72,763
+Project name
+%
+Budgeted
+amount
+Balance at
+1 January
+2016
+RMB million
+Balance at
+Net change
+for the year
+RMB million
+31 December
+Percentage of
+2016
+RMB million
+Completion
+Source of funding
+RMB million
+Other receivables
+3,261
+9,892
+(3,351)
+Tax value of losses carried forward
+2,477
+5,883
+2,477
+(9,131)
+5,883
+Others
+Deferred tax assets/(liabilities)
+133
+14,639
+98
+(229)
+16,706
+(15,086)
+(58)
+(17,496)
+(96)
+(447)
+40
+(790)
+(17,340)
+(14,615)
+8,209
+11,264
+Accruals
+347
+1,755
+347
+1,755
+391
+413
+391
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+413
+Cash flow hedges
+Fixed assets
+27
+348
+(242)
+(98)
+(215)
+250
+Non-current
+Receivables and inventories
+Deferred tax assets
+Deferred tax liabilities
+At 31 December
+2016
+RMB million
+7,425
+7,425
+Written back
+for the year
+Written off
+for the year
+Other
+increase/
+(decrease)
+RMB million
+Balance at
+31 December
+2016
+RMB million
+Allowance for doubtful accounts
+Included: Accounts receivable
+7
+525
+238
+(8)
+(72)
+RMB million
+RMB million
+Provision
+for the year
+RMB million
+Balance at
+1 January
+2016
+RMB million
+At 31 December
+2015
+RMB million
+9,237
+9,237
+Deferred tax assets
+Deferred tax liabilities
+At 31 December
+2016
+RMB million
+7,214
+7,661
+At 31 December
+2015
+RMB million
+7,469
+8,259
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+At 31 December 2016, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 19,194 million
+(2015: RMB 19,338 million), of which RMB 3,833 million (2015: RMB 4,080 million) was incurred for the year ended 31 December 2016, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB 3,777 million, RMB 2,634 million,
+RMB 4,870 million, RMB 4,080 million and RMB 3,833 million will expire in 2017, 2018, 2019, 2020, 2021 and after, respectively.
+19 OTHER NON-CURRENT ASSETS
+Other non-current assets mainly represent prepayments for construction projects and purchases of equipment.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+20 DETAILS OF IMPAIRMENT LOSSES
+At 31 December 2016, impairment losses of the Group are analysed as follows:
+Note
+Periodically, management performed assessment on the probability that future taxable profit will be available over the period which the deferred tax
+assets can be realised or utilised. In assessing the probability, both positive and negative evidence was considered, including whether it is probable
+that the operations will have sufficient future taxable profits over the periods which the deferred tax assets are deductible or utilised and whether the
+tax losses result from identifiable causes which are unlikely to recur. During the year ended 31 December 2016, write-down of deferred tax assets
+amounted to RMB 811 million (2015: RMB 75 million) (Note 48).
+2,259
+Current
+2016
+RMB million
+Net book value:
+Balance at 31 December 2016
+Balance at 31 December 2015
+54,241
+51,049
+634
+604
+1,851
+1,932
+26,896
+26,097
+1,401
+1,404
+85,023
+81,086
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2016 is RMB 4,299 million (2015: RMB 3,923 million).
+16 GOODWILL
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+Principal activities
+Sinopec Beijing Yanshan Petrochemical Branch ("Sinopec Yanshan")
+Sinopec Zhenhai Refining and Chemical Branch ("Sinopec Zhenhai")
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+854
+16
+120
+24
+2,596
+32,023
+Provision for impairment losses:
+Balance at 1 January 2016
+194
+483
+24
+114
+Sinopec (Hong Kong) Limited.
+16
+Additions for the year
+17
+6
+23
+Decreases for the year
+Balance at 31 December 2016
+211
+483
+831
+Other units without individual significant goodwill
+Total
+At 31 December
+2016
+At 31 December
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+18 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+Deferred tax assets
+At
+At
+Net balance
+At
+At
+31 December 31 December 31 December 31 December 31 December 31 December
+2016
+2015
+2016
+2015
+Deferred tax liabilities
+At
+At
+RMB million
+RMB million
+RMB million
+RMB million
+Financial Statements (PRC)
+2015
+RMB million
+114
+113
+RMB million
+2015
+RMB million
+1,157
+1,157
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Trading of petrochemical
+products
+4,043
+4,043
+941
+853
+212
+218
+6,353
+6,271
+Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The recoverable amounts of the
+above cash generating units are determined based on value in use calculations. These calculations use cash flow projections based on financial
+budgets approved by management covering a one-year period and pre-tax discount rates primarily ranging from 10.4% to 11.0% (2015: 10.7% to
+11.3%). Cash flows beyond the one-year period are maintained constant.
+Key assumptions used for cash flow forecasts for these entities are the gross margin and sales volume. Management determined the budgeted gross
+margin based on the gross margin achieved in the period immediately before the budget period and management's expectation on the future trend
+of the prices of crude oil and petrochemical products. The sales volume was based on the production capacity and/or the sales volume in the period
+immediately before the budget period.
+17 LONG-TERM DEFERRED EXPENSES
+Long-term deferred expenses primarily represent prepaid rental expenses over one year and catalysts expenditures.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+other comprehensive income during the year
+Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+392
+42,498
+696,211
+1,977,877
+The Company
+2016
+RMB million
+RMB million
+2015
+RMB million
+2015
+1,930,911
+1,492,165
+50,721
+RMB million
+1,880,190
+The Group
+2016
+Operating costs
+Total
+Income from other operations
+Income from principal operations
+38 OPERATING INCOME AND OPERATING COSTS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Financial Statements (PRC)
+29,967
+Financial Statements (PRC)
+2,020,375
+726,178
+18,155
+198,754
+193,836
+Total
+Other taxes
+Education surcharge
+Resources tax
+City construction tax
+Consumption tax
+2015
+RMB million
+RMB million
+2016
+The Group
+39 TAXES AND SURCHARGES
+The income from principal operations mainly represents revenue from sales of crude oil, natural gas, refined petroleum products and chemical
+products. The income from other operations mainly represents revenue from sale of materials, service, rental income and others. Operating costs
+primarily represent the products cost related to the principal operations. The Group's segmental information is set out in Note 56.
+609,596
+845,285
+25,692
+819,593
+513,514
+1,594,070
+121
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Pursuant to the Articles of Association of the Company and a resolution passed at the Directors' meeting on 24 March 2017, the directors proposed
+to transfer RMB 2,359 million to the statutory surplus reserve.
+36 SPECIFIC RESERVE
+(2,820)
+(1,888)
+(932)
+2,000
+1,132
+97
+(4,161)
+31 December 2016
+6,333
+(719)
+7,052
+2,703
+1,970
+(17)
+2,396
+(9,153)
+(1,169)
+(7,984)
+According to relevant PRC regulations, the Group is required to transfer an amount to specific reserve for the safety production fund based on the
+turnover of certain refining and chemicals products or based on the production volume of crude oil and natural gas. The movements of specific
+reserve are as follows:
+Balance at 1 January 2016
+Provision for the year
+Utilisation for the year
+(b) After the transfer to the statutory surplus reserve, a transfer to discretionary surplus reserve can be made upon the passing of a resolution at the
+shareholders' meeting.
+(a) 10% of the net profit is transferred to the statutory surplus reserve. In the event that the reserve balance reaches 50% of the registered capital,
+no transfer is needed;
+The PRC Company Law and Articles of Association of the company have set out the following profit appropriation plans:
+79,640
+79,640
+Balance at 31 December 2016
+Appropriation
+Balance at 1 January 2016
+196,640
+18,195
+196,640
+Total
+RMB million
+surplus reserves
+RMB million
+117,000
+The Group
+Discretionary
+Statutory
+surplus reserve
+RMB million
+612
+3,345
+(3,192)
+765
+The Group
+RMB million
+Movements in surplus reserves are as follows:
+37 SURPLUS RESERVES
+Balance at 31 December 2016
+117,000
+13,695
+13,686
+3,871
+44 GAIN FROM CHANGES IN FAIR VALUE
+Total
+Others
+Intangible assets (Note 15)
+Construction in Progress (Note 14)
+Fixed assets (Note 13)
+Long-term equity investment (Note 12)
+Receivables (Note 7,8,9)
+Inventories (Note 10)
+The Group
+43 IMPAIRMENT LOSSES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+1,723,644
+1,626,905
+66,060
+63,867
+10,459
+11,035
+96,460
+108,425
+The Group
+Changes in fair value of financial assets and financial liabilities at fair value through (loss)/profit, net
+Unrealised gains from ineffective portion cash flow hedges, net
+Fair value loss on the embedded derivative component of the convertible bonds
+Others
+8,767
+17,076
+6
+7
+11
+111
+1,486
+4,375
+14,921
+56,619
+653
+3,653
+420
+(32)
+RMB million
+RMB million
+231
+2015
+2016
+45 INVESTMENT INCOME
+Total
+1
+(703)
+63,887
+2016
+RMB million
+1,379,691
+1,221
+8,273
+9,021
+859
+Interest income
+Accretion expenses (Note 31)
+Net interest expenses
+Less: Capitalised interest expenses
+Interest expenses incurred
+2015
+RMB million
+RMB million
+2016
+The Group
+40 FINANCIAL EXPENSES
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+236,349
+232,006
+861
+2,449
+4,853
+8,162
+7,052
+1,057
+1,081
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+122
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+42 EXPLORATION EXPENSES
+Total
+Other expenses
+Exploration expenses (including dry holes)
+Depreciation, depletion and amortization
+Personnel expenses
+2015
+RMB million
+1,494,046
+Purchased crude oil, products and operating supplies and expenses
+41 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2016 by the Group ranged from 2.65%
+to 4.82% (2015: 2.6% to 5.9%).
+8,980
+3,857
+610
+6,611
+Total
+Net foreign exchange loss
+(3,010)
+(3,218)
+The operation costs, selling and distribution expenses, general and administrative expenses and exploration expenses (including dry holes) in
+consolidated income statement classified by nature are as follows:
+2016
+(838)
+(6,557)
+Other comprehensive income
+Subtotal
+Translation difference in foreign currency statements
+Share of other comprehensive loss in associates and joint ventures
+Subtotal
+other comprehensive income during the year
+Subtotal
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+Subtotal
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+33 SHARE CAPITAL
+The Group
+Registered, issued and fully paid:
+95,557,771,046 domestic listed A shares (2015: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 overseas listed H shares (2015: 25,513,438,600) of RMB 1.00 each
+Total
+At 31 December
+2016
+At 31 December
+2015
+RMB million
+RMB million
+95,558
+2016
+95,558
+Before-tax
+amount
+Tax effect
+RMB million
+45
+(24)
+(7)
+(17)
+(24)
+(7)
+(17)
+2,014
+(465)
+2,479
+(5,164)
+1,115
+(6,279)
+(3,161)
+(11)
+2
+(13)
+652
+(3,813)
+Net-of-tax
+amount
+RMB million
+RMB million
+25,513
+25,513
+121,071
+for the year ended 31 December 2016
+34 CAPITAL RESERVE
+The movements in capital reserve of the Group are as follows:
+Balance at 1 January 2016
+Adjustment for the combination of entities under common control
+Transaction with minority interests
+RMB million
+121,576
+(2,137)
+(30)
+116
+Others
+Balance at 31 December 2016
+119,525
+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.
+35 OTHER COMPREHENSIVE INCOME
+THE GROUP
+(a) Each item of other comprehensive income and the influence of the income tax and the process of change to profit or loss
+Cash flow hedges:
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+120
+Financial Statements (PRC)
+Financial Statements (PRC)
+121,071
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB 1.00
+each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB 1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB 1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD 1.59 per H share and USD 20.645 per ADS,
+respectively, by way of a global initial public offering to Hong Kong and overseas investors. As part of the global initial public offering, 1,678,049,000
+state-owned ordinary shares of RMB 1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong Kong and
+overseas investors.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB 1.00 each at RMB 4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB 1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB 1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB 1.00 each at the Placing Price
+of HKD 8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD 24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.00.
+45
+In June 2013, the Company issued 21,011,962,225 listed A shares and 5,887,716,600 listed H shares as a result of bonus issues of 2 shares
+converted from the retained earnings, and 1 share transferred from capital reserves for every 10 existing shares.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB 1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+Management optimises the structure of the Group's capital, which comprises of equity and debts and bonds. In order to maintain or adjust the
+capital structure of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce
+debt, or adjust the proportion of short-term and long-term loans and bonds. Management monitors capital on the basis of the debt-to-capital ratio,
+which is calculated by dividing long-term loans (excluding current portion) and debentures payable, by the total of equity attributable to owners of
+the Company and long-term loans (excluding current portion) and debentures payable, and liability-to-asset ratio, which is calculated by dividing
+total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and investment needs
+and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a range considered
+reasonable. As at 31 December 2016, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 14.2% (2015: 17.1%) and 44.5%
+(2015: 45.4%), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 29 and 54, respectively.
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+119
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB 1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+45
+45
+4,298
+31 December 2014
+Changes in 2015
+income
+Total other
+comprehensive
+Minority interests
+Equity Attributable to shareholders of the company
+(b) Reconciliation of other comprehensive income
+THE GROUP (Continued)
+35 OTHER COMPREHENSIVE INCOME (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+137
+(641)
+778
+2,268
+2,268
+2,268
+2,268
+(5,356)
+(5,356)
+31 December 2015
+Changes in 2016
+The share of other
+comprehensive
+income which
+being reclassified
+to profit and
+loss in the future
+under equity
+method
+RMB Million
+Changes in fair
+value of
+available-for-sale
+financial assets
+137
+860
+RMB Million
+(9,290)
+(2,029)
+(7,261)
+(723)
+1,630
+3,219
+17
+(5,589)
+(5,356)
+(2,333)
+97
+(968)
+RMB Million
+Subtotal
+RMB Million
+statements
+RMB Million
+Translation
+difference in
+foreign currency
+RMB Million
+RMB Million
+Cash flow hedges
+(4,057)
+114
+(5,356)
+(4)
+2,476
+(405)
+2,881
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+RMB million
+Net-of-tax
+amount
+Tax effect
+RMB million
+RMB million
+amount
+Before-tax
+2015
+6,333
+(472)
+6,805
+4,298
+4,298
+4,298
+Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+1,354
+(223)
+1,131
+66
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Other comprehensive income
+Subtotal
+Translation difference in foreign currency statements
+Share of other comprehensive loss in associates and joint ventures
+Subtotal
+Subtotal
+other comprehensive income during the year
+62
+62
+(4)
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+3,163
+(637)
+3,800
+Subtotal
+(1,818)
+455
+(2,273)
+other comprehensive income during the year
+66
+2015
+RMB million
+RMB million
+Related parties under common control of a parent company with the Company:
+(2) Related parties not having the ability to exercise control over the Group
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 71.32%
+shareholding of the Company.
+RMB 274,867 million
+Wang Yupu
+State-owned
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+Exploration, production, storage and transportation (including pipeline transportation), sales
+and utilisation of crude oil and natural gas; refining; wholesale and retail of gasoline, kerosene
+and diesel; production, sales, storage and transportation of petrochemical and other chemical
+products; industrial investment and investment management; exploration, construction, installation
+and maintenance of petroleum and petrochemical constructions and equipments; manufacturing
+electrical equipment; research, development, application and consulting services of information
+technology and alternative energy products; import & export of goods and technology.
+Ultimate holding company
+China Petrochemical Corporation
+10169286-X
+Registered capital
+Authorised representative
+Types of legal entity
+Relationship with the Group
+Principal activities
+Registered address
+The name of the company
+Organisation code
+(1) Related parties having the ability to exercise control over the Group
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Financial Statements (PRC)
+Sinopec Finance (Note)
+Financial Statements (PRC)
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Engineering Incorporation
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows:
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+126
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+YASREF
+Taihu
+Mansarovar
+BASF-YPC
+FREP
+Joint ventures of the Group:
+CIR
+China Aviation Oil
+Zhongtian Synergetic Energy
+Sinopec Finance
+Pipeline Ltd
+Associates of the Group:
+Sinopec Century Bright Capital Investment Limited
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Assets Management Corporation
+125
+16
+68,917
+68,933
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(2,553)
+(1,982)
+1,719
+(8,876)
+(30,779)
+10,728
+4,336
+(735)
+216
+748
+1,528
+6,099
+7,467
+9.386
+8,833
+87,074
+99,592
+8,767
+17,076
+639
+(11,364)
+39,136
+160
+2015
+RMB million
+58,407
+10
+124,458
+124,468
+RMB million
+2016
+55,535
+10,526
+68,933
+RMB million
+Sales of goods
+124,468
+68,933
+2015
+2016
+165,740
+214,543
+(69,825)
+81,691
+40,910
+(22,549)
+191
+RMB million
+Purchases
+Transportation and storage
+Exploration and development services
+(viii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, property maintenance and management services.
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management and
+environmental protection.
+(iii) Transportation and storage represents the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(ii) Purchases represent the purchase of material and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary materials
+and related services, supply of water, electricity and gas.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Note:
+As at 31 December 2016 and 2015, there was no guarantee given to banks by the Group in respect of banking facilities to Sinopec Group
+Company and fellow subsidiaries, associates and joint ventures, except for the disclosure set out in Note 55(b). Guarantees given to banks by the
+Group in respect of banking facilities to associates and joint ventures are disclosed in Note 55(b).
+Included in the transactions disclosed above, for the year ended 31 December 2016 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 114,526 million (2015: RMB 112,089 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 96,023
+million (2015: RMB 93,061 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,584
+million (2015: RMB 6,754 million), operating lease charges for land and buildings paid by the Group of RMB 10,474 million and 449 million
+(2015: RMB 10,618 million and RMB 462 million), respectively and interest expenses of RMB 996 million (2015: RMB 1,194 million); and
+b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 56,251 million (2015: RMB 77,747 million),
+comprising RMB 56,010 million (2015: RMB 77,513 million) for sales of goods, RMB 209 million (2015: RMB 207 million) for interest income
+and RMB 32 million (2015: RMB 27 million) for agency commission income.
+The amounts set out in the table above in respect of the year ended 31 December 2016 and 2015 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+(57,881)
+(14,082)
+(24,877)
+Net loans repaid to related parties
+Net deposits placed with related parties
+(xi)
+(21,770)
+(ix)
+(ix) Interest income represents interest received from deposits placed with Sinopec Finance and Sinopec Century Bright Capital Investment Limited, finance companies
+controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate.
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(d) The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+(c) The Company has entered into a number of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+(b) The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as agreed to in the above
+Mutual Provision Agreement.
+where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+•
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+⋅
+where there is no government-prescribed price, the government-guidance price;
+•
+1,194
+the government-prescribed price;
+(a) The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months' notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2016.
+The terms of these agreements are summarised as follows:
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows: (Continued)
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Financial Statements (PRC)
+128
+Financial Statements (PRC)
+127
+•
+43,480
+996
+207
+1,333
+(iii)
+92,627
+118,242
+(ii)
+2015
+RMB million
+211,197
+194,179
+(i)
+RMB million
+The Group
+2016
+Note
+Interest expense
+Interest income
+Agency commission income
+Other operating lease charges
+Operating lease charges for buildings
+Operating lease charges for land
+Ancillary and social services
+Production related services
+1,299
+(iv)
+27,201
+37,444
+209
+(ix)
+116
+129
+(viii)
+302
+456
+(vii)
+462
+(x)
+449
+10,618
+10,474
+(vii)
+6,754
+6,584
+(vi)
+10,880
+10,816
+(v)
+(vii)
+59,170
+RMB million
+RMB million
+721
+4,964
+5,004
+264
+RMB million
+RMB million
+256
+3,987
+2015
+2016
+Total
+Others
+Government grants
+Gain on disposal of non-current assets
+The Group
+46 NON-OPERATING INCOME
+Total
+1,175
+30,582
+20,562
+1,576
+43,519
+8,876
+30,779
+60
+1,679
+6,947
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+123
+1,894
+112
+133
+90
+152
+1,012
+RMB million
+RMB million
+1,784
+2015
+79
+2016
+48 INCOME TAX EXPENSE
+Total
+Others
+Loss on disposal of non-current assets
+Fines, penalties and compensation
+Donations
+The Group
+47 NON-OPERATING EXPENSES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Financial Statements (PRC)
+Financial Statements (PRC)
+The Group
+1,886
+Others
+Investment income on loss of control and remeasuring interests in
+the Pipeline Ltd (Note 12(i))
+Income from investment accounted for under equity method
+under cost method
+Income from investment of subsidiaries accounted for
+RMB million
+RMB million
+2015
+2016
+2015
+RMB million
+RMB million
+The Company
+The Group
+2016
+735
+7
+(67)
+(216)
+(259)
+509
+11
+478
+(160)
+Investment income/(loss) from disposal of
+long-term equity investments
+Investment income from holding/disposal of
+available-for-sale financial assets
+(760)
+(135)
+(344)
+293
+Gains/(losses) from ineffective portion of cash flow hedge
+7
+355
+and liabilities at fair value through profit or loss
+Investment income from holding/disposal of financial assets
+20,562
+4
+173
+1,010
+(6)
+324
+11
+25,779
+3,371
+17,769
+3,749
+8,362
+9,306
+82
+Effective portion of changes in fair value of hedging instruments
+recognised during the year
+3,963
+Provision for income tax for the year
+The Group
+50 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+124
+Pursuant to the shareholders' approval at the Annual General Meeting on 27 May 2015, a final dividend of RMB 0.11 per share totaling RMB
+13,318 million of the year ended 31 December 2014 was declared.
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 26 August 2015, the directors authorised
+to declare the interim dividends for the year ended 31 December 2015 of RMB 0.09 per share totaling RMB 10,896 million.
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2016, a final dividend of RMB 0.06 per share totaling RMB 7,264
+million of the year ended 31 December 2015 was declared.
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 26 August 2016, the directors authorised
+to declare the interim dividends for the year ended 31 December 2016 of RMB 0.079 per share totaling RMB 9,565 million.
+(b) Dividends of ordinary shares declared during the year
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 24 March 2017, the directors authorised
+to declare the final dividends during the year ended 31 December 2016 of RMB 0.17 per share totaling RMB 20,582 million.
+(a) Dividends of ordinary shares declared after the balance sheet date
+49 DIVIDENDS
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate of
+15% through the year 2020.
+12,613
+20,707
+279
+228
+(a) Reconciliation of net profit to cash flows from operating activities:
+Net profit
+Add:
+Impairment losses on assets
+Depreciation of fixed assets
+2015
+2016
+Cash at the end of the year
+- Demand deposits
+- Cash on hand
+Cash at bank and on hand
+(c) The analysis of cash held by the Group is as follows:
+Net increase of cash
+Less: Cash at the beginning of the year
+Note:
+Cash balance at the end of the year
+(Increase)/decrease in operating receivables
+Increase/(decrease) in operating payables
+Net cash flow from operating activities
+Safety fund reserve
+Decrease/(increase) in deferred tax assets
+(Decrease)/increase in deferred tax liabilities
+(Increase)/decrease in inventories
+Investment income
+Financial expenses
+Fair value loss/(gain)
+Net loss on disposal of non-current assets
+Dry hole costs written off
+Amortisation of intangible assets and long-term deferred expenses
+(b) Net change in cash:
+3,100
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+811
+RMB million
+RMB million
+2015
+2016
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+12,613
+20,707
+279
+228
+(1,343)
+13,677
+21,313
+(834)
+RMB million
+RMB million
+2015
+2016
+Total
+Under-provision for income tax in respect of preceding year
+Deferred taxation
+Profit before taxation
+Tax effect of non-deductible expenses
+Tax effect of non-taxable income
+Tax effect of preferential tax rate (i)
+Write-down of deferred tax assets
+828
+958
+Tax effect of tax losses not recognised
+(235)
+(453)
+391
+299
+Effect of difference between income taxes at foreign operations tax rate and the PRC statutory tax rate
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+75
+(1,033)
+(2,551)
+(2,757)
+836
+14,023
+1,569
+19,969
+Expected income tax expense at a tax rate of 25%
+56,093
+79,877
+83
+(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.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Manufacturing of intermediate petrochemical products
+and petroleum products
+Consolidated income from principal operations
+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
+Income from other operations
+External sales
+Inter-segment sales
+External sales
+Exploration and production
+Income from principal operations
+Reportable information on the Group's operating segments is as follows:
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for cash at bank and on hand, long-term equity investments, deferred tax assets and other
+unallocated assets. Segment liabilities exclude short-term loans, short-term debentures payable, non-current liabilities due within one year, long-
+term loans, debentures payable, deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating income
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+56 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refining
+Exploration and production
+Refining
+Marketing and distribution
+322,903
+38,614
+276,640
+284,289
+1,089,154
+3,056
+3,480
+1,030,853
+1,086,098
+1,027,373
+921,612
+850,300
+800,962
+747,317
+120,650
+102,983
+128,759
+106,397
+71,019
+58,954
+57,740
+47,443
+RMB million
+2015
+2016
+RMB million
+Consolidated income from other operations
+Consolidated operating income
+Corporate and others
+Chemicals
+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.
+43,814
+320,454
+(v) Corporate and others which largely comprise the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+(iv) Chemicals. ― which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external
+customers.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+134
+Financial Statements (PRC)
+133
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+1,317
+834
+867
+1,327
+21
+25
+for the year ended 31 December 2016
+22
+Total
+Between four and five years
+After five years
+Between three and four years
+32
+25
+Between two and three years
+125
+123
+283
+263
+Between one and two years
+Within one year
+24
+55 CONTINGENT LIABILITIES
+(a) The Company has been advised by its PRC lawyers that, except for liabilities constituting or arising out of or relating to the business assumed
+by the Company in the Reorganisation, no other liabilities were assumed by the Company, and the Company is not jointly and severally liable for
+other debts and obligations incurred by Sinopec Group Company prior to the Reorganisation.
+(b) At 31 December 2016 and 2015, guarantees by the Group in respect of facilities granted to the parties below are as follows:
+(iii) Marketing and distribution which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(ii) Refining which processes and purifies crude oil, which is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(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 operating segments. The format is based on the Group's management and internal
+reporting structure.
+56 SEGMENT REPORTING
+The Group is a defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business.
+Management has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any
+resulting liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+Legal contingencies
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect the Group's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature and
+extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development areas,
+whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv) changes
+in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is indeterminable
+due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective actions that may be
+required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot reasonably be estimated at
+present, and could be material. The Group paid normal routine pollutant discharge fees of approximately RMB 6,358 million for the year ended 31
+December 2016 (2015: RMB 5,813 million).
+Environmental contingencies
+The Group monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss has occurred, and recognises
+any such losses under guarantees when those losses are reliably estimable. At 31 December 2016 and 2015, it was not probable that the Group
+will be required to make payments under the guarantees. Thus no liabilities have been accrued for a loss related to the Group's obligation under
+these guarantee arrangements.
+(i) The group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB
+17,050 million. As at 31 December 2016, the amount withdrawn by Zhongtian Synergetic Energy from banks and guaranteed by the group
+was RMB 11,545 million.
+6,713
+22,872
+6,010
+703
+658
+11,545
+10,669
+RMB million
+RMB million
+2016
+At 31 December
+Total
+Others
+Joint ventures
+Associates (i)
+2015
+At 31 December
+_
+RMB million
+418,102
+320,367
+19,248
+51,615
+54,924
+4,566
+1,581
+(678)
+2,912
+19,516
+20,769
+27,299
+32,385
+19,423
+708
+55,808
+(58,531)
+2015
+RMB million
+RMB million
+2016
+Chemicals
+Marketing and distribution
+Exploration and production
+Refining
+Segment liabilities
+Liabilities
+Total assets
+Other unallocated assets
+Deferred tax assets
+(18,511)
+1,071
+754
+2,928
+447,307
+402,476
+RMB million
+2015
+At 31 December
+RMB million
+At 31 December
+2016
+56,093
+79,877
+3,100
+3,963
+6,947
+4,964
+52,246
+78,876
+735
+(216)
+(8,980)
+(6,611)
+8,876
+30,779
+(822)
+2,942
+1,717
+3,384
+5,815
+1,910
+Long-term equity investments
+436,749
+Cash at bank and on hand
+Corporate and others
+Financial Statements (PRC)
+136
+Financial Statements (PRC)
+135
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+2,020,375
+1,930,911
+42,498
+50,721
+1,671
+1,478
+8,417
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+12,211
+22,004
+5,004
+5,486
+9,894
+9,542
+1,977,877
+1,880,190
+(1,264,305)
+(1,168,732)
+782,203
+738,469
+345,454
+17,512
+for the year ended 31 December 2016
+56 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Chemicals
+Marketing and distribution
+Exploration and production
+Refining
+Segment assets
+Assets
+Less: Non-operating expenses
+Profit before taxation
+Add: Non-operating income
+Operating profit
+(Loss)/gain from changes in fair value
+Financial expenses
+Total segment investment income
+Elimination
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Investment income/(loss)
+Total segment operating profit
+Elimination
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+By segment
+Operating (loss)/profit
+Total segment assets
+260,903
+RMB million
+At 31 December
+14.686
+9,641
+4,656
+7,124
+19.718
+19,098
+5.755
+745
+238.684
+245,054
+Net non-current assets
+(3,384)
+15,815
+(831)
+(160)
+(150)
+(34,320)
+(39,322)
+(1,628)
+(1,460)
+Non-current liabilities
+15,815
+14,686
+13,025
+5,487
+7,845
+(721)
+Summarised consolidated statement of comprehensive income and cash flow
+Year ended 31 December
+Marketing Company
+2016
+6,557
+4,016
+1,103,934
+1,050,294
+Turnover
+RMB Million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2015
+Zhonghan Wuhan
+2016
+Sinopec Kantons (ii)
+2015
+2015
+Fujian Petrochemical
+2016
+2015
+Shanghai Petrochemical
+2016
+2015
+2016
+2015
+SIPL
+19,878
+77,894
+19,248
+40,067
+926
+8,144
+14,876
+20,231
+18,116
+102,948
+121,260
+Current assets
+RMB million
+RMB million
+RMB million
+RMB million
+140
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2015
+2016
+2015
+2015
+2016
+2015
+2016
+RMB million
+1,732
+1,489
+1,386
+240,312
+246,514
+Non-current assets
+(8,499)
+(6,032)
+(1,756)
+67
+114
+418
+5,934
+14.763
+17.292
+(53,080)
+(47,106)
+Net current (liabilities)/assets
+(9,885)
+(7,521)
+(3,488)
+(73)
+(812)
+(7,726)
+(8,942)
+(5,468)
+(824)
+(156,028)
+(168,366)
+Current liabilities
+40,075
+2015
+80,803
+5,532
+13,199
+13,966
+13,265
+14,228
+13,737
+14,917
+RMB million
+RMB million
+At 31 December
+2015
+2016
+At 31 December
+Total
+13,217
+After five years
+Between three and four years
+Between two and three years
+Between one and two years
+Within one year
+At 31 December 2016 and 2015, the future minimum lease payments of the Group under operating leases are as follows:
+The Group lease land and buildings, service stations and other equipment through non-cancellable operating leases. These operating leases do not
+contain provisions for contingent lease rentals. None of the rental agreements contains escalation provisions that may require higher future rental
+payments.
+Operating lease commitments
+54 COMMITMENTS
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(ii) This listed company will announce its financial information for the year ended 31 December later than the Company, therefore its 2016 financial information is not
+currently disclosed.
+Between four and five years
+13,091
+12,980
+12,430
+At 31 December
+2016
+Estimated future annual payments of the Group are as follows:
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Land and Resources annually
+and recognised in profit and loss. Payments incurred were approximately RMB 333 million for the year ended 31 December 2016 (2015: RMB 372
+million).
+Exploration licenses for exploration activities are registered with the Ministry of Land and Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual minimum exploration investment relating to the exploration blocks in respect of which the license
+is issued. The Ministry of Land and Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of the production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+Exploration and production licenses
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB 4,173 million (2015: RMB 4,089 million).
+Note:
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+47,043
+160,060
+113,017
+RMB million
+2015
+At 31 December
+148,099
+Authorised but not contracted for
+Total
+116,379
+31,720
+Authorised and contracted for (i)
+2016
+RMB million
+At 31 December
+At 31 December 2016 and 2015, the capital commitments of the Group are as follows:
+Capital commitments
+350,022
+344,878
+284,300
+275,570
+Note:
+4,968
+4,223
+1.185
+1,558
+302
+1,456
+2,513
+3,282
+5,988
+(4,257)
+(2,481)
+24,391
+27,385
+Total comprehensive income/(loss)
+1,738
+1,738
+1,558
+1,456
+2,513
+3,282
+5,969
+(222)
+(4,604)
+23,684
+26,461
+Profit/(loss) for the year
+14,077
+11,703
+1,642
+825
+Comprehensive income/(loss)
+attributable to minority interests
+9,028
+(179)
+617
+5,143
+7,211
+4,059
+2,576
+33,196
+50,840
+(used in) operating activities
+Net cash generated from/
+40
+10
+563
+608
+545
+120
+728
+1,256
+1,641
+2,966
+(1,218)
+(3,279)
+335
+7,356
+4,932
+Dividends paid to minority interests
+7,755
+3.636
+RMB 3,986
+264,573
+283,416
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The significant
+accounting policies are set forth in Note 3. The Group believes the following critical accounting policies involve the most significant judgements and
+estimates used in the preparation of the financial statements.
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the financial statements. The Group bases the assumptions and estimates on historical experience and on various other assumptions
+that it believes to be reasonable and which form the basis for making judgements about matters that are not readily apparent from other sources.
+On an on-going basis, management evaluates its estimates. Actual results may differ from those estimates as facts, circumstances and conditions
+change.
+52 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+130
+Financial Statements (PRC)
+129
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+5,735
+510
+(a) Oil and gas properties and reserves
+2015
+RMB thousand
+5,225
+2016
+Total
+Retirement scheme contributions
+Short-term employee benefits
+Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
+Group, directly or indirectly, including directors and supervisors of the Group. The key management personnel compensations are as follows:
+(5) Key management personnel emoluments
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 21 and Note 29.
+As at and for the year ended 31 December 2016 and 2015, no individually significant impairment losses for bad and doubtful debts were
+recorded in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates and joint ventures.
+Note: The long-term borrowings mainly include an interest-free loan with a maturity period of 20 years amounting to RMB 35,560 million from the Sinopec Group
+Company through the Sinopec Finance. This borrowing is a special arrangement to reduce financing costs and improve liquidity of the Company during its initial
+global offering in 2000.
+44,536
+44,922
+43,693
+18,430
+RMB thousand
+5,648
+499
+6,147
+The accounting for the exploration and production segment's oil and gas activities is subject to accounting rules that are unique to the oil and
+gas industry. The Group has used the successful efforts method to account for oil and gas business activities. The successful efforts method
+reflects the volatility that is inherent in exploring for mineral resources in that costs of unsuccessful exploratory efforts are charged to expense.
+These costs primarily include dry hole costs, seismic costs and other exploratory costs.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have
+to be met before estimated oil and gas reserves can be designated as “proved". Proved and proved developed reserves estimates are updated
+at least annually and take into account recent production and technical information about each field. In addition, as prices and cost levels
+change from year to year, the estimate of proved and proved developed reserves also changes. This change is considered a change in estimate
+for accounting purposes and is reflected on a prospective basis in related depreciation rates. Oil and gas reserves have a direct impact on
+the assessment of the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves
+estimates are revised downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's
+carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with industry practices in the similar geographic area, including estimation
+of economic life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are
+capitalised as oil and gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+Percentage
+of equity
+interest/
+voting right
+held by
+the Group
+2016
+million
+million
+up capital
+Principal activities
+Trading of petrochemical products
+Sinopec Catalyst Company Limited
+and Chemical Company Limited
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum
+Full name of enterprise
+31 December
+Actual
+investment at
+Registered
+capital/paid-
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2016. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+53 PRINCIPAL SUBSIDIARIES
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised.
+Net realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the
+estimated costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of
+the finished goods and raw materials, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were
+to be higher than estimated, the actual allowance for diminution in value of inventories would be higher than estimated.
+(e) Allowance for diminution in value of inventories
+Management estimates impairment losses for bad and doubtful debts resulting from the inability of the Group's customers to make the required
+payments. Management bases the estimates on the ageing of the accounts receivable balance, customer credit-worthiness, and historical write-
+off experience. If the financial condition of the customers were to deteriorate, actual write-offs would be higher than estimated.
+(d) Allowances for doubtful accounts
+Fixed assets are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual
+value. Management reviews the estimated useful lives of the assets at least annually in order to determine the amount of depreciation expense
+to be recorded during any reporting year. The useful lives are based on the Group's historical experience with similar assets and taking into
+account anticipated technological changes. The depreciation expense for future years is adjusted if there are significant changes from previous
+estimates.
+(c) Depreciation
+If circumstances indicate that the net book value of a long-lived asset may not be recoverable, the asset may be considered "impaired", and
+an impairment loss may be recognised in accordance with "ASBE 8 - Impairment of Assets". The carrying amounts of long-lived assets are
+reviewed periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for
+impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a
+decline has occurred, the carrying amount is reduced to recoverable amount. For goodwill, the recoverable amount is estimated annually. The
+recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows. It is difficult to precisely
+estimate the fair value because quoted market prices for the Group's assets or cash-generating units are not readily available. In determining the
+value of expected future cash flows, expected cash flows generated by the asset or the cash-generating unit are discounted to their present value,
+which requires significant judgement relating to sales volume, selling price and amount of operating costs. The Group uses all readily available
+information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based on reasonable and
+supportable assumptions and projections of sales volume, selling price and amount of operating costs.
+(b) Impairment for assets
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment
+expense and future dismantlement costs. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based
+on volumes produced and reserves.
+8,226
+Minority
+Interests at
+9,998
+19,430
+Accounts payable
+Other non-current assets
+Prepayments and other current assets
+Accounts receivable
+Cash and cash equivalents
+At 31 December
+At 31 December
+Other related companies
+The balances with the Group's related parties at 31 December 2016 and 2015 are as follows:
+The ultimate holding company
+At 31 December At 31 December
+2016
+2015
+RMB million
+RMB million
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Advances from customers
+75.00
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 1,595
+RMB 7,233
+100.00
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 10,000
+RMB 4,804
+55.00
+4,211
+Company Limited
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 4,397
+1,941
+Other payables
+Other non-current liabilities
+Short-term loans
+29
+1,792
+1,969
+20
+13,190
+19,416
+5
+17,760
+20,385
+9,050
+13,397
+34
+22,392
+10,953
+1
+18,303
+40,073
+RMB million
+RMB million
+2015
+2016
+178
+13
+338
+33
+25
+Long-term loans (including current portion) (Note)
+18,616
+RMB 3,225
+31 December
+%
+100.00
+RMB 1,165
+RMB 1,000
+Marketing and distribution of petrochemical products
+Coal chemical industry investment management,
+52
+100.00
+USD 1,638
+USD 1,638
+15,253
+100.00
+RMB 8,000
+RMB 8,000
+64
+Investment in exploration, production and sale of
+petroleum and natural gas
+50.00
+RMB 2,873
+RMB 5,745
+Manufacturing of plastics, intermediate petrochemical
+products and petroleum products
+petroleum products
+12,518
+50.56
+RMB 5,820
+RMB 10,800
+Manufacturing of synthetic fibres, resin and plastics,
+intermediate petrochemical products and
+3,398
+60.34
+3,619
+RMB 20,739
+RMB 20,773
+100.00
+(d) Subsidiaries acquired through business combination not under common control:
+Sinopec Zhanjiang Dongxing Petrochemical
+Gaoqiao Petrochemical
+Company Limited
+Sinopec Qingdao Petrochemical
+Chemical Company Limited
+Sinopec Hainan Refining and
+(c) Subsidiaries acquired through business combination under common control:
+Company Limited (Note 1)
+ethylene and downstream byproducts
+3,029
+65.00
+RMB 4,076
+RMB 6,270
+Production, sale, research and development of
+Sinopec-SK(Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+products and petroleum products
+1,066
+85.00
+RMB 4,250
+RMB 5,000
+Manufacturing of intermediate petrochemical
+81
+98.98
+RMB 5,240
+RMB 5,294
+production and sale of coal chemical products
+Import and processing of crude oil, production,
+storage and sale of petroleum products
+and petrochemical products
+201
+HKD 3,952
+2016
+HKD 248
+70.42
+and Production Limited ("SIPL")
+Sinopec International Petroleum Exploration
+(b) Subsidiaries established by the Group:
+("Fujian Petrochemical") (i)
+Fujian Petrochemical Company Limited
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+("Marketing Company")
+Sinopec Marketing Company Limited
+Limited Liability Company
+Sinopec Yizheng Chemical Fibre
+Sinopec Lubricant Company Limited
+Marketing and distribution of
+Sinopec Pipeline Storage & Transportation
+Company Limited
+Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+3,790
+100.00
+RMB 4,585
+RMB 2,990
+Trading of crude oil and petrochemical products
+26
+100.00
+RMB 1,856
+RMB 1,400
+RMB million
+Limited Liability Company
+refined petroleum products
+Trading of crude oil and petroleum products
+Sinopec Overseas Investment Holding Limited ("SOIH") Investment holding
+RMB 20,000
+RMB 28,403
+and polyester fibres
+100.00
+RMB 6,713
+RMB 4,000
+49
+100.00
+RMB 3,374
+RMB 3,374
+Production and sale of refined petroleum products,
+lubricant base oil, and petrochemical materials
+Production and sale of polyester chips
+100.00
+RMB 12,000
+RMB 12,000
+100.00
+RMB 15,651
+RMB 13,203
+194
+100.00
+RMB 1,562
+RMB 1,500
+Production and sale of catalyst products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Pipeline storage and transportation of crude oil
+Chemical Company Limited
+Sinopec Qingdao Refining and
+Sinopec Beihai Refining and Chemical
+Sinopec Great Wall Energy & Chemical
+Sinopec Chemical Sales Company Limited
+63,555
+292,328
+75.00
+*
+17, 634
+8,849
+22,115
+18,493
+15,132
+14,347
+54,710
+32,187
+RMB million
+RMB million
+2015
+2016
+2,580
+(2) Geographical information
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Impairment losses on long-lived assets
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Depreciation, depletion and amortisation
+Corporate and others
+Corporate and others
+2,821
+76,456
+112,412
+Others
+Mainland China
+External sales
+The following tables set out information about the geographical information of the Group's external sales and the Group's non-current assets,
+excluding financial instruments and deferred tax assets. In presenting information on the basis of geographical segments, segment revenue is
+based on the geographical location of customers, and segment assets are based on the geographical location of the assets.
+5,146
+16,425
+112
+142
+2,898
+19
+267
+9
+1,655
+4,864
+11,605
+96,460
+108,425
+1,585
+2,093
+12,088
+12,654
+14,075
+14,540
+16,557
+17,209
+52,155
+61,929
+Chemicals
+Non-current assets
+Marketing and distribution
+Capital expenditure
+Total segment liabilities
+104,193
+97,078
+Corporate and others
+27,160
+31,989
+118,476
+132,922
+58,578
+82,170
+96,725
+95,883
+440,042
+1,447,268
+7,469
+7,214
+36,745
+1,498,609
+84,293
+116,812
+69,666
+142,497
+1,255,863
+1,195,341
+108,921
+95,263
+151,646
+144,371
+29,977
+405,132
+Short-term loans
+30,374
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one
+year.
+56 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+657,703
+666,084
+Total liabilities
+4,887
+15,453
+Other unallocated liabilities
+13,673
+16,136
+Other non-current liabilities
+8,259
+7,661
+Deferred tax liabilities
+83,253
+54,985
+Debentures payable
+56,493
+62,461
+Long-term loans
+11,277
+38,972
+Non-current liabilities due within one year
+74,729
+Exploration and production
+Refining
+825
+Mainland China
+2016
+RMB million
+December
+December
+December
+2016
+2015
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+24,537
+73,331
+29,369
+81,254
+340,887
+81,254
+468,124
+454,175
+December
+81,254
+174,301
+174,301
+174,301
+Accounts payable
+5,828
+5,828
+5,828
+Bills payable
+1,752
+22,785
+57,262
+16,069
+4,652
+24,717
+1,932
+Other payables and employee benefits payable
+Total
+At 31
+Zhonghan Wuhan
+At 31
+Sinopec Kantons (ii)
+At 31
+The minority interests of subsidiaries which the Group holds 100% of equity interests at the end of the year are the minority interests of their subsidiaries.
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong, respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC.
+Note:
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those return through its power over the entity.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 131
+Financial Statements (PRC)
+132
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+53 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material minority interests
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary that has minority
+interests that are material to the Group.
+Summarised consolidated balance sheet
+Marketing Company
+At 31
+At 31
+SIPL
+At 31
+At 31
+December
+December
+December
+December
+Shanghai Petrochemical
+At 31
+December
+At 31
+December
+Fujian Petrochemical
+At 31
+December
+At 31
+65,503
+Others
+54,985
+900
+The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework, and developing
+and monitoring the Group's risk management policies.
+⚫market risk;
+liquidity risk;
+⚫ credit risk;
+Financial assets of the Group include cash at bank, equity investments other than long-term equity investment, accounts receivable, bills receivable,
+available-for-sale financial assets, derivative financial instruments and other receivables. Financial liabilities of the Group include short-term and long-
+term loans, accounts payable, bills payable, debentures payable, employee benefits payable, derivative financial instruments and other payables.
+The Group has exposure to the following risks from its uses of financial instruments:
+Overview
+57 FINANCIAL INSTRUMENTS
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+138
+Financial Statements (PRC)
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+137
+1,029,318
+56,081
+1,085,399
+RMB million
+2015
+At 31 December
+1,580,856
+439,519
+2,020,375
+45,887
+1,046,096
+1,000,209
+2016
+RMB million
+At 31 December
+1,488,117
+442,794
+1,930,911
+RMB million
+2015
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Credit risk
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
+and arises principally from the Group's deposits placed with financial institutions and receivables from customers. To limit exposure to credit risk
+relating to deposits, the Group primarily places cash deposits only with large financial institution in the PRC with acceptable credit ratings. The
+majority of the Group's accounts receivable relates to sales of petroleum and chemical products to related parties and third parties operating in
+the petroleum and chemical industries. No single customer accounted for greater than 10% of total accounts receivable at 31 December 2016,
+except for the amounts due from Sinopec Group Company and fellow subsidiaries. The Group performs ongoing credit evaluations of its customers'
+financial condition and generally does not require collateral on accounts receivable. The Group maintains an impairment loss for doubtful accounts
+and actual losses have been within management's expectations.
+The carrying amounts of cash at bank, trade accounts and bills receivables, derivative financial instruments and other receivables, represent the
+Group's maximum exposure to credit risk in relation to financial assets.
+64,566
+62,461
+Long-term loans
+6.030
+6,030
+6,000
+Short-term debentures payable
+39,934
+39,934
+38,972
+30,708
+30,708
+30,374
+Non-current liabilities due within one year
+Short-term loans
+RMB million
+five years
+More than
+More than
+two years
+but less than
+five years
+RMB million
+At 31 December 2016
+More than
+one year
+but less than
+two years
+RMB million
+Within one
+year or on
+demand
+RMB million
+RMB million RMB million
+Carrying undiscounted
+amount
+cash flow
+Total
+contractual
+At 31 December 2016, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB
+256,375 million (2015: RMB 297,997 million) on an unsecured basis, at a weighted average interest rate of 3.57% (2015: 2.50%). At 31 December
+2016, the Group's outstanding borrowings under these facilities were RMB 36,933 million (2015: RMB 32,991 million) and were included in loans.
+The following table sets out the remaining contractual maturities at the balance sheet date of the Group's financial liabilities, which are based on
+contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on prevailing rates current
+at the balance sheet date) and the earliest date the Group would be required to repay:
+Liquidity risk is the risk that the Group encounters short fall of capital when meeting its obligation of financial liabilities. The Group's approach to
+managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal
+and stressed capital conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group prepares monthly
+cash flow budget to ensure that they will always have sufficient liquidity to meet its financial obligation as they fall due. The Group arranges and
+negotiates financing with financial institutions and maintains a certain level of standby credit facilities to reduce the liquidity risk.
+Liquidity risk
+Debentures payable
+RMB 3,000
+2016
+2015
+The Group
+Diluted earnings per share is calculated by the net profit attributable to equity shareholders of the Company (diluted) and the weighted average
+number of ordinary shares of the Company (diluted):
+Net profit attributable to equity shareholders of the Company (diluted) (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (diluted) (million)
+Diluted earnings per share (RMB/share)
+The calculation of the weighted average number of ordinary shares (diluted) is as follows:
+The weighted average number of the ordinary shares issued at 31 December (million)
+Weighted average number of the ordinary shares issued at 31 December (diluted) (million)
+2016
+46,413
+2015
+121,071
+0.383
+32,279
+120,853
+0.267
+2016
+2015
+121,071
+121,071
+120,853
+120,853
+60 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+In accordance with "Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares No.9 - Calculation and Disclosure
+of the Return on Net Assets and Earnings Per Share" (2010 revised) issued by the CSRC and relevant accounting standards, the Group's return on
+net assets and earnings per share are calculated as follows:
+2016
+2015
+Weighted
+average return
+on net assets
+Basic
+earnings
+Diluted
+Weighted
+earnings average return
+Basic
+earnings
+120,853
+121,071
+118,280
+2,573
+2015
+(16,703)
+117
+(3,380)
+(475)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+141
+Financial Statements (PRC)
+142
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+59 BASIC AND DILUTED EARNINGS PER SHARE
+(i) Basic earnings per share
+Basic earnings per share is calculated by the net profit attributable to equity shareholders of the Company and the weighted average number of
+outstanding ordinary shares of the Company:
+Net profit attributable to equity shareholders of the Company (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+2016
+46,416
+121,071
+0.383
+2015
+32,281
+120,853
+0.267
+The calculation of the weighted average number of ordinary shares is as follows:
+Weighted average number of outstanding ordinary shares of the Company at 1 January (million)
+Conversion of the 2011 Convertible Bonds (million)
+Weighted average number of outstanding ordinary shares of the Company at 31 December (million)
+(ii) Diluted earnings per share
+2016
+121,071
+Diluted
+(3,855)
+earnings
+per share
+(RMB/Share)
+To the shareholders of China Petroleum & Chemical Corporation
+(incorporated in People's Republic of China with limited liability)
+OPINION
+What we have audited
+羅兵咸永道
+The consolidated financial statements of China Petroleum & Chemical Corporation (the "Company") and its subsidiaries (the "Group") set out on pages
+147 to 201, which comprise:
+•
+the consolidated balance sheet as at 31 December 2016;
+the consolidated income statement for the year then ended;
+the consolidated statement of comprehensive income for the year then ended;
+the consolidated statement of changes in equity for the year then ended;
+•
+the consolidated statement of cash flows for the year then ended; and
+the notes to the consolidated financial statements, which include a summary of significant accounting policies.
+Our opinion
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December
+2016, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSs") as issued by the International Accounting Standard Board and have been properly prepared in compliance with the
+disclosure requirements of the Hong Kong Companies Ordinance.
+BASIS FOR OPINION
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the Hong Kong Instituted of Certified Public
+Accountants ("HKICPA"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the
+Consolidated Financial Statements section of our report.
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+Independence
+We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants ("the Code"), and we have fulfilled our
+other ethical responsibilities in accordance with the Code.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements
+of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
+opinion thereon, and we do not provide a separate opinion on these matters.
+PricewaterhouseCoopers, 22/F, Prince's Building, Central, Hong Kong
+T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
+Independent Auditor's Report
+(%)
+pwc
+.•
+per share on net assets
+(RMB/Share)
+(%)
+per share
+(RMB/Share)
+per share
+(RMB/Share)
+Net profit attributable to the Company's ordinary
+equity shareholders
+6.68
+0.383
+0.383
+5.07
+0.267
+0.267
+Net profit deducted extraordinary gains and losses
+attributable to the Company's ordinary
+equity shareholders
+4.33
+0.245
+0.245
+4.52
+0.239
+0.239
+61 EVENTS AFTER THE BALANCE SHEET DATE
+According to the purchase and sale agreement signed between SOIHL Hong Kong Holding Limited ("SOIHL HK"), a wholly owned subsidiary of
+the Group, and Chevron Global Energy Inc. ("CGEI”) on 21 March 2017, SOIHL HK is going to acquire the equity shares of and related interest in
+Chevron South Africa (Proprietary) Limited and the equity shares of Chevron Botswana (Proprietary) Limited ("the Targets") held by CGEI, in a total
+consideration approximate to USD 900 million ("the Transaction"). The consideration is subject to adjustment according to the circumstances of the
+Targets, such as the changes in working capital, at the completion. The Transaction has been approved by the Board of Directors of the Company,
+and is still subject to the satisfaction of the certain conditions to completion. The Targets' principle activities are to manufacture and market refined
+oil products in South Africa and market refined oil products in Botswana. According to the purchase and sale agreement signed between SOIHL Hong
+Kong Holding Limited ("SOIHL HK"), a wholly owned subsidiary of the Group, and Chevron Global Energy Inc. ("CGEI") on 21 March 2017, SOIHL
+HK is going to acquire the equity shares of and related interest in Chevron South Africa (Pty) Limited and the equity shares of Chevron Botswana
+(Pty) Limited ("the Targets") held by CGEI, in a total consideration approximate to USD 900 million, which is subject to adjustment according to
+the circumstances of the Targets at the completion day ("the Transaction"). The Transaction has been approved by the Board of Directors of the
+Company, and is still subject to the governments' approval where the Targets operates. The Targets' principle activities are to manufacture and
+market refined oil products in South Africa and market refined oil products in Botswana.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+•
+•
+REPORT OF THE INTERNATIONAL AUDITOR
+1,060
+5,578
+(16,586)
+(4,915)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+57 FINANCIAL INSTRUMENTS (Continued)
+Fair values (Continued)
+(i) Financial instruments carried at fair value (Continued)
+At 31 December 2015
+The Group
+Assets
+Available-for-sale financial assets:
+- Listed
+Derivative financial instruments:
+- Derivative financial assets
+Liabilities
+Derivative financial instruments:
+- Derivative financial liabilities
+Level 1
+Level 2
+RMB million
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+261
+140 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+4,235
+4,472
+2,586
+Available-for-sale financial assets:
+- Listed
+Derivative financial instruments:
+- Derivative financial assets
+Level 1
+RMB million
+Level 2
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+262
+29
+733
+291
+733
+262
+762
+1,024
+Liabilities
+Derivative financial instruments:
+- Derivative financial liabilities
+2,586
+1,886
+4,472
+1,886
+3,640
+4,496
+3,640
+Gain on holding and disposal of various investments
+Investment income on loss of control remeasuring interests in the Pipeline Ltd (Note 12(i))
+Other non-operating loss
+Net gains of combination under common control from 1 January 2016 to the consolidation date
+Tax effect
+Total
+Attributable to:
+Equity shareholders of the Company
+Minority interests
+2016
+2015
+RMB million
+RMB million
+1,528
+133
+(3,987)
+721
+112
+(5,002)
+(518)
+(943)
+(20,562)
+1,328
+(86)
+331
+(134)
+(22,164)
+Government grants
+Donations
+Net loss on disposal of non-current assets
+Extraordinary (gains)/losses for the year:
+305
+305
+2,445
+2,445
+261
+7,875
+8,136
+2,750
+2,750
+During the years ended 31 December 2016 and 2015, there was no transfer between instruments in Level 1 and Level 2.
+(ii) Fair values of financial instruments carried at other than fair value
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term debts and unquoted security
+investments) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term debts
+are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially the same
+characteristics and maturities ranging 1.06% to 4.90% (2015: 1.08% to 4.90%). The following table presents the carrying amount and fair value
+of the Group's long-term debts other than loans from Sinopec Group Company and fellow subsidiaries at 31 December 2016 and 2015:
+At 31 December
+Fair value
+2016
+RMB million
+110,969
+109,308
+At 31 December
+2015
+RMB million
+105,927
+103,482
+The Group has not developed an internal valuation model necessary to make the estimate of the fair value of loans from Sinopec Group Company
+and fellow subsidiaries as it is not considered practicable to estimate their fair value because the cost of obtaining discount and borrowing rates
+for comparable borrowings would be excessive based on the Reorganisation of the Group, its existing capital structure and the terms of the
+borrowings.
+Other unquoted equity investments are individually and in the aggregate not material to the Group's financial position or results of operations.
+There are no listed market prices for such interests in the PRC and, accordingly, a reasonable estimate of fair value could not be made without
+incurring excessive costs. The Group intends to hold these unquoted equity investments for long term purpose.
+Except for the above items, the financial assets and liabilities of the Group are carried at amounts not materially different from their fair values
+at 31 December 2016 and 2015.
+58 EXTRAORDINARY GAINS AND LOSSES
+Pursuant to "Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public- Extraordinary
+Gainand Loss" (2008), the extraordinary gains and losses of the Group are as follows:
+Carrying amount
+143
+Financial Statements (International)
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+19, 20
+9,306
+80,151
+8,362
+56,411
+Tax expense
+Profit for the year
+Attributable to:
+Owners of the Company
+Non-controlling interests
+Profit for the year
+Earnings per share:
+Basic
+Diluted
+10
+(20,707)
+(12,613)
+59,444
+43,798
+46,672
+32,512
+12,772
+11,286
+59,444
+43,798
+466
+15
+263
+(6,611)
+5,686
+(129)
+(1,853,718)
+(1,963,553)
+Operating profit
+Finance costs
+77,193
+56,822
+Interest expense
+Interest income
+Loss on embedded derivative component of the convertible bonds
+Foreign currency exchange losses, net
+Net finance costs
+Investment income
+Share of profits less losses from associates and joint ventures
+Profit before taxation
+9
+(9,219)
+(8,133)
+3,218
+3,010
+(259)
+(610)
+(3,857)
+(9,239)
+0.385
+0.269
+0.385
+2015
+RMB
+RMB
+59,444
+43,798
+14
+2,014
+(24)
+3,163
+62
+45
+(5,356)
+4,298
+2,268
+6,333
+137
+6,333
+137
+65,777
+43,935
+53,724
+31,789
+12,053
+12,146
+2016
+Year ended 31 December
+Note
+148 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+0.269
+The notes on pages 154 to 201 form part of these consolidated financial statements. Details of dividends payable to owners of the Company
+attributable to the profit for the year are set out in Note 13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+147
+Financial Statements (International)
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2016
+(Amounts in million)
+Profit for the year
+Other comprehensive income:
+Items that may be reclassified subsequently to profit or loss
+8
+(net of tax and after reclassification adjustments):
+Available-for-sale securities
+Share of other comprehensive income/(loss) of associates and joint ventures
+Foreign currency translation differences
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Total comprehensive income for the year
+Attributable to:
+Owners of the Company
+Non-controlling interests
+Total comprehensive income for the year
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+Cash flow hedges
+Assets
+Total operating expenses
+(236,349)
+Assessed the methodology adopted in, and tested mathematical
+accuracy of, the discounted cash flow projections.
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we gathered and consistent with our
+expectations.
+In auditing the gain of capital injection by external investors into Pipeline
+Ltd, we have performed the following procedures:
+Evaluated the effective date on which the Group lost control over the
+Pipeline Ltd, taking into consideration of factors including when the
+composition of the board of directors was changed.
+Tested the consideration to the Group as compensation for the loss
+of control over the Pipeline Ltd by checking against the relevant bank
+receipt notices. Corroborated the detail of the transaction by inspecting
+the relevant documents, agreements and contracts.
+• Recomputed the gain arising from the capital injection by external
+investors into Pipeline Ltd of RMB 20.562 billion, and agreed to
+management's computation.
+Based on our work, we found that the gain of capital injection by external
+investors into Pipeline Ltd of RMB 20.562 billion was supported by the
+evidence we gathered.
+Financial Statements (International)
+144
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+OTHER INFORMATION
+The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual
+report other than the consolidated financial statements and our auditor's report thereon.
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
+whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise
+appears to be materially misstated.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
+fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance
+with IFRSS and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is
+necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern,
+disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
+liquidate the Group or to cease operations, or have no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+Tested selected other key data inputs, such as nature gas prices and
+production profiles in the projections by reference to historical data
+and/or relevant budgets of the Group.
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement,
+whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, and for no
+other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is
+a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAS will always detect a material misstatement when it
+exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
+to influence the economic decisions of users taken on the basis of these consolidated financial statements.
+Independently estimated a range of discount rates, and found that the
+discount rates adopted by management were within the range.
+•
+Key audit matters identified in our audit are summarised as follows:
+•
+•
+Recoverability of the carrying amount of oil and gas properties; and
+Accounting for gain of capital injection by external investors into Sinopec Sichuan to East China Gas Pipeline Co., Ltd ("Pipeline Ltd").
+Key Audit Matter
+Recoverability of the carrying amount of oil and gas properties
+Refer to note 16 “PROPERTY, PLANT AND EQUIPMENT" to the
+consolidated financial statements.
+As at 31 December 2016, the carrying amount of oil and gas properties
+amounted to RMB 215,124 million.
+Low crude oil prices gave rise to possible indication that the carrying
+amount of oil and gas properties as at 31 December 2016 might
+be impaired. The Group has adopted values in use as the respective
+recoverable amounts of the oil and gas properties, which involved
+estimations or assumptions including:
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Discount rates.
+Because of the significance of the carrying amount of oil and gas
+properties as at 31 December 2016, together with the use of
+estimations or assumptions in determining their respective values in
+use, we had placed our audit emphasis on this matter.
+Accounting for gain of capital injection by external investors into
+Pipeline Ltd
+Refer to note 8 "OTHER OPERATING INCOME/(EXPENSE), NET" to the
+consolidated financial statements.
+A gain of RMB 20.562 billion arose as a result of the derecognition
+of the assets and liabilities of a former subsidiary (Pipeline Ltd) from
+the consolidated financial position of the Group when the control over
+Pipeline Ltd was lost. The Group continues to retain a 50% equity
+interest in the Pipeline Ltd, and hence its significant influence over
+the Pipeline Ltd. As a result, the Group deconsolidated the assets and
+liabilities of Pipeline Ltd when the control was lost, and accounts for its
+50% equity interest in the Pipeline Ltd as an associate company.
+Because of the significance of such gain in the year ended 31 December
+2016, we had placed our audit emphasis on this matter.
+How our audit addressed the Key Audit Matter
+In auditing the respective values in use calculations of the relevant oil and
+gas properties, we have performed the following key procedures on the
+relevant discounted cash flow projections prepared by management:
+•
+•
+Evaluated and tested the key controls, relating to the preparation of the
+discounted cash flow projections of oil and gas properties.
+Compared estimates of future crude oil prices adopted by the Group
+against a range of reputable published crude oil price forecasts.
+Compared the future production profiles against the oil and gas reserve
+estimation report approved by the Group's reserve management
+committee. Evaluated the competence, capability and objectivity of the
+management's experts engaged in estimating the oil and gas reserves.
+Assessed key estimations or assumptions used in the reserve estimation,
+by reference to historical data, management plans and/or reputable
+external data.
+• Compared the future cost profiles against historical costs or relevant
+budgets of the Group.
+•
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform
+audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
+intentional omissions, misrepresentations, or the override of internal control.
+•
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but
+not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
+1,977,877
+42,498
+2,020,375
+Operating expenses
+Purchased crude oil, products and operating supplies and expenses
+(1,379,691)
+(1,494,046)
+Selling, general and administrative expenses
+5
+(64,360)
+(69,491)
+Depreciation, depletion and amortisation
+(108,425)
+(96,460)
+Exploration expenses, including dry holes.
+(11,035)
+(10,459)
+Personnel expenses
+Taxes other than income tax
+6
+(63,887)
+(56,619)
+7
+(232,006)
+1,880,190
+50,721
+1,930,911
+4
+Other operating revenues
+3
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
+directors.
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained,
+whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
+consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
+obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
+Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the
+consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
+opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+145
+Financial Statements (International)
+Financial Statements (International)
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
+findings, including any significant deficiencies in internal control that we identify during our audit.
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
+and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
+related safeguards.
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the
+consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report
+unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
+be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+Other operating income/(expense), net
+The engagement partner on the audit resulting in this independent auditor's report is HON CHONG HENG.
+146
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2016
+(Amounts in million, except per share data)
+Note
+Year ended 31 December
+2016
+RMB
+2015
+RMB
+Turnover and other operating revenues
+Turnover
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, 24 March 2017
+Financial Statements (PRC)
+43,935
+At 31 December 2016
+75,314
+75,314
+11,277
+11,405
+11,405
+30,000
+30,486
+30,486
+56,493
+58,156
+703
+9,366
+10,930
+37,157
+83,253
+97,611
+3,314
+32,274
+39,502
+22,521
+3,566
+3,566
+3,566
+130,558
+130,558
+130,558
+87,522
+477,398
+74,729
+RMB million
+five years
+More than
+65,777
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+57 FINANCIAL INSTRUMENTS (Continued)
+Liquidity risk (Continued)
+Short-term loans
+Non-current liabilities due within one year
+Short-term debentures payable
+Long-term loans
+Debentures payable
+Bills payable
+Accounts payable
+Other payables and employee benefits payable
+Total
+87,522
+Total
+More than
+Carrying
+amount
+contractual
+undiscounted
+RMB million
+cash flow
+RMB million
+Within one
+year or on
+demand
+RMB million
+one year
+but less than
+two years
+RMB million
+two years but
+less than
+five years
+RMB million
+At 31 December 2015
+87,522
+More than
+342,868
+million
+288
+295
+Other than the amounts as disclosed above, the amounts of other financial assets and liabilities of the Group are substantially denominated in
+the functional currency of respective entity of the Group.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+139
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+57 FINANCIAL INSTRUMENTS (Continued)
+Market risk (Continued)
+(b) Interest rate risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term loans. Loans carrying interest at variable interest rates
+and at fixed interest rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates and
+terms of repayment of short-term and long-term loans of the Group are disclosed in Note 21 and Note 29, respectively.
+At 31 December 2016, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables
+held constant, would increase/decrease the Group's net profit for the year by approximately RMB 44 million (2015: decrease/increase RMB 91
+million). This sensitivity analysis has been determined assuming that the change in interest rates had occurred at the balance sheet date and the
+change was applied to the Group's loans outstanding at that date with exposure to cash flow interest rate risk, which in part be eliminated by
+cash holdings on a variable interest rate basis. The analysis is performed on the same basis for 2015.
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products
+and chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the
+Group. The Group uses derivative financial instruments, including commodity futures and swaps, to manage a portion of such risk.
+At 31 December 2016, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. At 31 December 2016, the net fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 312 million (2015: RMB 7,875 million) recognised in other receivables and derivative financial liabilities of
+RMB 4,336 million (2015: RMB 2,750 million) recognised in other payables.
+At 31 December 2016, it is estimated that a general increase/decrease of USD 10 per barrel in basic price of derivative financial instruments,
+with all other variables held constant, would impact the fair value of derivative financial instruments which would decrease/increase the Group's
+profit for the year by approximately RMB 634 million (2015: decrease/increase RMB 1,951 million), and decrease/increase the Group's other
+comprehensive income by approximately RMB 4,007 million (2015: decrease/increase RMB 3,052 million). This sensitivity analysis has been
+determined assuming that the change in prices had occurred at the balance sheet date and the change was applied to the Group's derivative
+financial instruments at that date with exposure to commodity price risk. The analysis is performed on the same basis for 2015.
+Fair values
+(i) Financial instruments carried at fair value
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy. With the fair value of each financial instrument categorised in its entirely based on the lowest level of input that is
+significant to that fair value measurement. The levels are defined as follows:
+•
+•
+•
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which
+all significant inputs are directly or indirectly based on observable market data.
+494,618
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+2015
+At 31 December
+(c) Commodity price risk
+33
+41,640
+50,432
+1
+59,678
+Management believes that the Group's current cash on hand, expected cash flows from operations and available standby credit facilities from
+financial institutions will be sufficient to meet the Group's short-term and long-term capital requirements.
+Market risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+(a) Currency risk
+Included in short-term and long-term debts denominated are the following amounts denominated in a currency other than the functional currency
+of the entity to which they relate:
+The Group
+Gross exposure arising from loans and borrowings
+US Dollars
+Euro
+Hong Kong Dollars
+Singapore Dollars
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured.
+The Group's currency risk exposure primarily relates to short-term and long-term debts denominated in US Dollars, Euro, Hong Kong Dollars and
+Singapore Dollars, and the Group enters into foreign exchange contracts to manage currency risk exposure.
+2016
+million
+Singapore Dollars
+At 31 December
+Euro
+The Group
+A 5 percent strengthening/weakening of Renminbi against the following currencies at 31 December 2016 and 2015 would have increased/
+decreased net profit for the year of the Group by the amounts shown below. This analysis has been determined assuming that the change in
+foreign exchange rates had occurred at the balance sheet date and had been applied to the foreign currency balances to which the Group has
+significant exposure as stated above, and that all other variables, in particular interest rates, remain constant. The analysis is performed on the
+same basis for 2015.
+US Dollars
+USD 1,181
+EUR 1,108
+At 31 December
+2015
+million
+EUR 1
+HKD 6
+SGD 4
+USD 126
+2016
+million
+HKD 6
+At 31 December
+2,214
+593,041
+2,214
+of Gaoqiao Branch of SAMC (Note 1)
+Contribution from SAMC in the Acquisition
+645,577
+52,536
+76,552
+(6,179)
+117,000
+41,824
+(30,497)
+Balance at 31 December 2014
+1,811
+118,280
+276,061
+4,025
+32,512
+118,280
+(1,169)
+RMB
+Other comprehensive income (Note 14)
+43,798
+11,286
+32,512
+Profit for the year
+649,602
+54,347
+595,255
+276,061
+(6,179)
+117,000
+76,552
+(28,283) 41,824
+Balance at 1 January 2015
+RMB
+Total equity
+attributable
+RMB
+Other
+Non-
+to owners
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+Share
+for the year ended 31 December 2016
+(Amounts in million)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+150
+Financial Statements (International)
+Financial Statements (International)
+149
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(1,169) 1,306
+Retained
+of the
+controlling
+Total
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+equity
+RMB
+interests
+earnings
+reserves
+reserve
+reserve
+premium
+reserve
+capital
+Company
+137
+14.026
+32,512
+326
+326
+result in a loss of control
+Total changes in ownership interests in subsidiaries that do not
+(326)
+326
+326
+Transaction with non-controlling interests
+subsidiaries that do not result in a loss of control:
+Changes in ownership interests in
+Total contributions by and distributions to owners
+Profit distribution to SAMC (Note 1)
+94,557
+45,358
+49.199
+(326)
+Total transactions with owners
+2,791
+56,550
+(121)
+281,076
+(6,781)
+79,640 117,000
+55,850
+28,341
+121,071
+Balance at 31 December 2015
+(27,376)
+94,557
+49.525
+(27,376)
+446
+121
+74
+Others
+3.088
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+45.032
+(1,169)
+446
+14,026
+16,817
+16,817
+14,026
+2,791
+Distributions to non-controlling interests
+Contributions to subsidiaries from non-controlling interests
+Appropriation (Note (a))
+Interim dividend for 2015 (Note 13)
+Final dividend for 2014 (Note 13)
+Conversion of the 2011 Convertible Bonds
+Contributions by and distributions to owners:
+Total comprehensive income for the year
+Transactions with owners, recorded directly in equity:
+43,935
+12,592
+31,343
+(13,318) (13,318)
+(13,318)
+(10,896)
+(10,896)
+56,224
+2,791
+(134)
+(60)
+(74)
+(74)
+(3,389)
+3,088
+(3,389)
+48,807
+56,670
+446
+56,224
+(3,088)
+3,088
+(10,896)
+105,477
+(Legal representative)
+212,214
+Vice Chairman, President
+22
+7,469
+7,214
+27
+10,964
+11,408
+21
+Short-term debts
+Current liabilities
+Total current assets
+Prepaid expenses and other current assets
+Inventories
+Bills receivable
+Trade accounts receivable
+Time deposits with financial institutions
+54,241
+51,049
+23
+70,145
+156,511
+10,964
+13,197
+56,142
+50,289
+24
+2222
+Cash and cash equivalents
+26
+733
+18,029
+68,933
+124,468
+1,113,611
+1,086,348
+67,791
+24
+145,608
+Current assets
+Long-term prepayments and other assets
+Goodwill
+Construction in progress
+Property, plant and equipment, net
+Non-current assets
+RMB
+2015
+RMB
+2016
+31 December
+31 December
+Note
+(Amounts in million)
+As at 31 December 2016
+CONSOLIDATED BALANCE SHEET
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+16
+690,594
+733,449
+17
+Lease prepayments
+Deferred tax assets
+Available-for-sale financial assets
+43,581
+50,696
+20
+40,712
+Total non-current assets
+66,116
+Interest in joint ventures
+Interest in associates
+6,271
+6,353
+18
+152,325
+129,581
+19
+Chief Financial Officer
+49,767
+412,261
+Share capital
+788,161
+831,235
+196,275
+181,831
+Equity
+Total non-current liabilities
+15,084
+17,426
+Other long-term liabilities
+33,186
+39,298
+31
+Provisions
+8,259
+Reserves
+Total equity attributable to owners of the Company
+Non-controlling interests
+Total equity
+Chairman
+Wang Dehua
+Dai Houliang
+Wang Yupu
+Approved and authorised for issue by the board of directors on 24 March 2017.
+788,161
+831,235
+7,661
+111,964
+676,197
+710,994
+555,126
+589,923
+121,071
+121,071
+32
+120,241
+51,277
+27
+44,300
+5,828
+224,544
+130,558
+174,301
+43,929
+18,580
+71,517
+56,239
+22222
+Accrued expenses and other payables
+Bills payable
+Trade accounts payable
+28
+Loans from Sinopec Group Company and fellow subsidiaries
+28
+333,657
+3,566
+Income tax payable
+6,051
+1,048
+44,772
+28
+Loans from Sinopec Group Company and fellow subsidiaries
+95,446
+72,674
+28
+Long-term debts
+Deferred tax liabilities
+Non-current liabilities
+129.175
+73,282
+1,013,066
+Total assets less current liabilities
+Net current liabilities
+462,832
+485,543
+Total current liabilities
+984,436
+152
+74
+676,197
+293
+SAMC (Note 1)
+Distribution to SAMC in the Acquisition of Gaoqiao Branch of
+65,777
+12,053
+53,724
+46,672
+7,052
+6,333
+(719)
+7,052
+7.052
+59,444
+12,772
+46,672
+46,672
+788,161
+111,964
+676,197
+281,076
+(6,781)
+117,000
+79,640
+55,850
+Total contributions by and distributions to owners
+(2,137)
+(2,137)
+Changes in ownership interests in
+subsidiaries that do not result in a loss of control:
+(19,013)
+(16,876)
+2.137
+(2,137)
+(86)
+(39)
+(47)
+(47)
+(6,146)
+(6,146)
+(9,565)
+28,341
+(9,565) (9,565)
+(7,264)
+Note:
+Balance at 31 December 2016
+Others
+36
+(30)
+(2,167)
+Total transactions with owners
+result in a loss of control
+Total changes in ownership interests in subsidiaries that do not
+(30)
+Transaction with non-controlling interests
+(7,264)
+RMB
+RMB
+RMB
+Distributions to non-controlling interests
+Interim dividend for 2016 (Note 13)
+Appropriation (Note (a))
+Final dividend for 2015 (Note 13)
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+Total comprehensive income for the year
+Other comprehensive income (Note 14)
+Profit for the year
+Balance at 1 January 2016
+(Amounts in million)
+for the year ended 31 December 2016
+Profit distribution to SAMC (Note 1)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+788,161
+67
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+Inventories are stated at the lower of cost and net realisable value. Cost includes the cost of purchase computed using the weighted average
+method and, in the case of work in progress and finished goods, direct labour and an appropriate proportion of production overheads. Net
+realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs
+necessary to make the sale.
+(e) Inventories
+Trade, bills and other receivables are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method,
+less impairment losses for bad and doubtful debts (Note 2(o)). Trade, bills and other receivables are derecognised if the Group's contractual
+rights to the cash flows from these financial assets expire or if the Group transfers these financial assets to another party without retaining
+control or substantially all risks and rewards of the assets.
+(d) Trade, bills and other receivables
+Cash equivalents consist of time deposits with financial institutions with an initial term of less than three months when purchased. Cash
+equivalents are stated at cost, which approximates fair value.
+(c) Cash and cash equivalents
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(4,048)
+Total equity
+attributable
+Capital
+RMB
+RMB
+RMB
+equity
+interests
+Company
+earnings
+reserves
+reserve
+reserve
+RMB
+premium
+RMB
+Share
+RMB
+reserve
+capital
+Total
+controlling
+of the
+Retained
+Other
+Non-
+to owners
+Statutory Discretionary
+surplus
+surplus
+Share
+RMB
+121.071
+(23,061)
+(30)
+263
+(17,296)
+427
+440
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+Cash and cash equivalents at 1 January
+Net increase in cash and cash equivalents
+Net cash (used in)/generated from financing activities
+Interest paid
+Distributions by subsidiaries to non-controlling interests
+Dividends paid by the Company
+Contributions to subsidiaries from non-controlling interests
+12
+Repayments of bank and other loans
+Financing activities
+Net cash used in investing activities
+Investment and dividend income received
+Interest received
+(Increase)/decrease in time deposits with maturities over three months
+non-current assets
+Proceeds from disposal of property, plant, equipment and other
+(23,440)
+3,353
+33,516
+(16,389)
+19, 20
+Proceeds from bank and other loans
+Purchase of investments, investments in associates and investments in joint ventures
+Proceeds from disposal of investments and investments in associates
+2,331
+4,028
+68,933
+124,468
+256
+10,526
+68,933
+58,114
+55,279
+9,093
+(93,047)
+(8,145)
+(6,967)
+2,228
+(1,481)
+(24,214)
+(16,876)
+105,529
+343
+(1,152,837)
+(569,091)
+1,090,241
+506,097
+(116,719)
+(66,217)
+3,399
+(6,553)
+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.
+(7,203)
+Exploratory wells expenditure
+(a) According to the PRC Company Law and the Articles of Association of the Company, the Company is required to transfer 10% of its net profit determined in accordance
+with the accounting policies complying with Accounting Standards for Business Enterprises ("ASBE"), adopted by the Group to statutory surplus reserve. In the event
+that the reserve balance reaches 50% of the registered capital, no transfer is required. The transfer to this reserve must be made before distribution of a dividend to
+shareholders. Statutory surplus reserve can be used to make good previous years' losses, if any, and may be converted into share capital by issuing of new shares to
+shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by them, provided that the balance after such issue is
+not less than 25% of the registered capital.
+831,235
+120,241
+710,994
+310,719
+424
+117,000
+79,640
+55,850
+125
+9
+Pursuant to the Articles of Association of the Company and the resolution passed at the Directors' meeting on 24 March 2017, the directors proposed to transfer RMB 2,359
+million to the statutory surplus reserve, being 10% of the current year's net profit determined in accordance with the accounting policies complying with ASBE to this
+116
+153
+116
+26,290
+121,071
+(22,828)
+(3,785)
+(19,043)
+(16,876)
+233
+263
+(30)
+233
+(153)
+(7,380)
+reserve.
+(c) As at 31 December 2016, the amount of retained earnings available for distribution was RMB 182,440 million (2015: RMB 175,679 million), being the amount determined
+in accordance with ASBE. According to the Articles of Association of the Company, the amount of retained earnings available for distribution to owners of the Company is
+lower of the amount determined in accordance with the accounting policies complying with ASBE and the amount determined in accordance with the accounting policies
+complying with International Financial Reporting Standards ("IFRS").
+(95,495)
+(65,467)
+Capital expenditure
+Investing activities
+165,740
+214,543
+(a)
+Net cash generated from operating activities
+RMB
+RMB
+2015
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+2016
+Note
+(Amounts in million)
+for the year ended 31 December 2016
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Financial Statements (International)
+Financial Statements (International)
+151
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+(d) The capital reserve represents (i) the difference between the total amount of the par value of shares issued and the amount of the net assets transferred from Sinopec
+Group Company in connection with the Reorganisation; 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.
+Year ended 31 December
+The results of foreign operations are translated into Renminbi at the applicable rates quoted by the PBOC prevailing on the transaction dates.
+Balance sheet items, including goodwill arising on consolidation of foreign operations are translated into Renminbi at the closing foreign
+exchange rates at the balance sheet date. The income and expenses of foreign operation are translated into Renminbi at the spot exchange rates
+or an exchange rate that approximents the spot exchange rates on the transaction dates. The resulting exchange differences are recognised in
+other comprehensive income and accumulated in equity in the other reserves.
+(7,264)
+The presentation currency of the Group is Renminbi. Foreign currency transactions during the year are translated into Renminbi at the applicable
+rates of exchange quoted by the People's Bank of China ("PBOC") prevailing on the transaction dates. Foreign currency monetary assets and
+liabilities are translated into Renminbi at the PBOC's rates at the balance sheet date.
+The Group,
+and
+Adjustment*
+RMB million
+Elimination
+Gaoqiao
+Branch
+of SAMC
+RMB million
+The Group,
+as previously
+reported
+RMB million
+The financial condition as at 31 December 2015 and the results of operation for the year ended 31 December 2015 previously reported by the
+Group have been restated to include the results of operations and the assets and liabilities of Gaoqiao Branch of SAMC on a combined basis as set
+out below:
+Basis of preparation (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+154
+As Sinopec Group Company controls both the Group and SAMC, the non-cash transaction described above between Sinopec and SAMC has been
+accounted as business combination under the common control and it has been reflected in the accompanying consolidated financial statements
+as combination of entities under common control in a manner of predecessor value accounting. Accordingly, the assets and liabilities of Gaoqiao
+Branch of SAMC have been accounted for at historical cost, and the consolidated financial statements of the Group prior to these acquisitions have
+been restated to include the results of operation and the assets and liabilities of Gaoqiao Branch of SAMC on a combined basis.
+Pursuant to the resolution passed at the Directors' meeting on 29 October 2015, the Company entered into the JV Agreement with Sinopec Assets
+Management Corporation ("SAMC") in relation to the formation of the Gaoqiao Petrochemical Co., Ltd. According to the JV Agreement, the Company
+and SAMC jointly set up Gaoqiao Petrochemical Co., Ltd. for RMB 100 million in cash in 2016. Subsequently, the Company subscribed capital
+contribution with the net assets of Gaoqiao Branch of the Company and SAMC subscribed capital contribution with the net assets of Gaoqiao Branch
+of SAMC. The capital contribution was completed on 1 June 2016, after which the Company held 55% of Gaoqiao Petrochemical Co., Ltd.'s voting
+rights and became the parent company of Gaoqiao Petrochemical Co., Ltd.
+Basis of preparation
+As part of the Reorganisation, certain of Sinopec Group Company's core oil and gas and chemical operations and businesses together with the
+related assets and liabilities were transferred to the Company. On 25 February 2000, in consideration for Sinopec Group Company transferring such
+oil and gas and chemical operations and businesses and the related assets and liabilities to the Company, the Company issued 68.8 billion domestic
+state-owned ordinary shares with a par value of RMB 1.00 each to Sinopec Group Company. The shares issued to Sinopec Group Company on 25
+February 2000 represented the entire registered and issued share capital of the Company on that date. The oil and gas and chemical operations and
+businesses transferred to the Company were related to (i) the exploration, development and production of crude oil and natural gas, (ii) the refining,
+transportation, storage and marketing of crude oil and petroleum products, and (iii) the production and sales of chemicals.
+The Company was established in the PRC on 25 February 2000 as a joint stock limited company as part of the reorganisation (the "Reorganisation")
+of China Petrochemical Corporation ("Sinopec Group Company"), the ultimate holding company of the Group and a ministry-level enterprise under
+the direct supervision of the State Council of the PRC. Prior to the incorporation of the Company, the oil and gas and chemical operations of the
+Group were carried on by oil administration bureaux, petrochemical and refining production enterprises and sales and marketing companies of
+Sinopec Group Company.
+Organisation
+China Petroleum & Chemical Corporation (the "Company") is an energy and chemical company that, through its subsidiaries (hereinafter collectively
+referred to as the "Group"), engages in oil and gas and chemical operations in the People's Republic of China (the "PRC"). Oil and gas operations
+consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil and natural gas by pipelines; refining crude oil
+into finished petroleum products; and marketing crude oil, natural gas and refined petroleum products. Chemical operations include the manufacture
+and marketing of a wide range of chemicals for industrial uses.
+Principal activities
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2016
+Financial Statements (International)
+Financial Statements (International)
+153
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+as restated
+RMB million
+165,740
+Summarised consolidated income statement
+Turnover and other operating revenues
+4,174
+1,443,129
+Total assets
+333,657
+(35)
+1,287
+332,405
+Current assets
+Summarised consolidated balance sheet as at 31 December 2015:
+0.269
+0.001
+0.268
+Diluted earnings per share (RMB)
+0.269
+0.001
+0.268
+Basic earnings per share (RMB)
+11,286
+60
+11,226
+Profit attributable to non-controlling interests
+32,512
+2,020,375
+(1,071)
+(60)
+2,563
+134
+2,018,883
+32,438
+Profit attributable to owners of the Company
+for the year ended 31 December 2015:
+214,543
+(13,999)
+(23,236)
+(263)
+(20,562)
+Gain on dilution and remeasurement of interests in the Pipeline Ltd (8(i))
+(8,362)
+(9,306)
+6,099
+7,467
+96,460
+108,425
+56,411
+80,151
+Investment income
+Share of profits from associates and joint ventures
+Dry hole costs written off
+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.
+Adjustments for:
+Profit before taxation
+Operating activities
+RMB
+RMB
+2015
+2016
+Year ended 31 December
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+(Amounts in million)
+for the year ended 31 December 2016
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(466)
+Interest income
+(3,218)
+(3,010)
+179,739
+237,779
+(68,431)
+81,089
+39,136
+(11,364)
+40,910
+(22,549)
+Net cash generated from operating activities
+Income tax paid
+Accounts payable and other current liabilities
+Inventories
+Accounts receivable and other current assets
+(35)
+Net charges from:
+190,603
+259
+Loss on embedded derivative component of the convertible bonds
+8,767
+17,076
+748
+1,528
+3,085
+86
+Loss on foreign currency exchange rate changes and derivative financial instruments
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Impairment losses on assets
+8,133
+9,219
+Interest expense
+168,124
+1,447,268
+Depreciation, depletion and amortisation
+462,642
+Changes in the Group's interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby
+adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative
+interests, but no adjustments are made to goodwill and no gain or loss is recognised.
+Non-controlling interests at the balance sheet date, being the portion of the net assets of subsidiaries attributable to equity interests that
+are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and
+consolidated statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling
+interests in the results of the Group are presented on the face of the consolidated income statement and the consolidated statement of
+comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling
+interests and the owners of the Company.
+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.
+(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 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+156
+Financial Statements (International)
+Key assumptions and estimation made by management in the application of IFRSS that have significant effect on the consolidated financial
+statements and the major sources of estimation uncertainty are disclosed in Note 39.
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
+which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
+current and future periods.
+The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and
+assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosure of contingent assets and
+liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The estimates and
+associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances,
+the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not readily apparent
+from other sources. Actual results could differ from those estimates.
+The accompanying consolidated financial statements are prepared on the historical cost basis except for the remeasurement of available-for-sale
+securities (Note 2(k)), securities held for trading (Note 2(k)), derivative financial instruments (Note 2(1) and (n)) and derivative component of the
+convertible bonds (Note 2(r)) to their fair values.
+Amendments to IAS 12, 'Income taxes', the IASB has issued amendments to IAS 12, 'Income taxes'. These amendments on the recognition
+of deferred tax assets for unrealised losses clarify how to account for deferred tax assets related to debt instruments measured at fair value.
+Amendments to IAS 12 are effective for annual periods beginning on or after 1 January 2017.
+Amendments to IAS 7, 'Statement of cash flows', the IASB has issued an amendment to IAS 7 introducing an additional disclosure that will
+enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment is part of the IASB's
+Disclosure Initiative, which continues to explore how financial statement disclosure can be improved. Amendments to IAS 7 are effective for
+annual periods beginning on or after 1 January 2017.
+IFRS 16, 'Leases', provides updated guidance on the definition of leases, and the guidance on the combination and separation of contracts.
+Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
+in exchange for consideration. IFRS 16 requires lessees to recognise lease liability reflecting future lease payments and a ‘right-of-use-asset' for
+almost all lease contracts, with an exemption for certain short-term leases and leases of low-value assets. The lessors accounting stays almost
+the same as under IAS 17 'Leases'. An entity shall apply IFRS 16 for annual reporting periods beginning on or after 1 January 2019. Earlier
+application is permitted if IFRS 15 is also applied.
+IFRS 15, 'Revenue from contracts with customers', establishes a comprehensive framework for determining when to recognise revenue and
+how much revenue to recognise through a 5-step approach. IFRS 15 provides specific guidance on capitalisation of contract cost and licence
+arrangements. It also includes a cohesive set of disclosure requirements about the nature, amount, timing and uncertainty of revenue and cash
+flows arising from the entity's contracts with customers. The core principle is that a company should recognise revenue to depict the transfer
+of promised goods or services to the customer in an amount that reflects the consideration to which the company expects to be entitled in
+exchange for those goods or services. IFRS 15 replaces the previous revenue standards: IAS 18 'Revenue' and IAS 11 'Construction Contracts'
+and the related Interpretations on revenue recognition: IFRIC 13 'Customer Loyalty Programmes', IFRIC 15 'Agreements for the Construction of
+Real Estate', IFRIC 18 'Transfers of Assets from Customers' and SIC-31 'Revenue-Barter Transactions Involving Advertising Services'. IFRS 15
+is effective for annual reporting periods beginning on or after 1 January 2018, with earlier application permitted.
+When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain
+or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair
+value and this amount is regarded as the fair value on initial recognition of a financial asset (Note 2(k)) or, when appropriate, the cost on
+initial recognition of an investment in an associate or joint venture (Note 2(a) (ii)).
+Amendments to IFRS 10 and IAS 28 on sale or contribution of assets between an investor and its associate or joint venture. The amendments
+address an inconsistency between IFRS 10 and IAS 28 in the sale and contribution of assets between an investor and its associate or joint
+venture. A full gain or loss is recognised when a transaction involves a business. A partial gain or loss is recognised when a transaction involves
+assets that do not constitute a business, even if those assets are in a subsidiary. The amendments were originally intended to be effective for
+annual periods beginning on or after 1 January 2016. The effective date has now been deferred/removed. Early application of the amendments
+continues to be permitted.
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(o)).
+(ii) Associates and joint ventures
+Current liabilities
+(b) Translation of foreign currencies
+A uniform set of accounting policies is adopted by those entities. All intra-group transactions, balances and unrealised gains on transactions
+between combining entities or businesses are eliminated on consolidation. Transaction costs, including professional fees, registration fees,
+costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously separate businesses, etc.,
+incurred in relation to the common control combination that is to be accounted for by using merger accounting is recognised as an expense
+in the period in which it is incurred.
+The consolidated income statement includes the results of each of the combining entities or businesses from the earliest date presented or
+since the date when the combining entities or businesses first came under the common control, where there is a shorter period, regardless
+of the date of the common control combination. The comparative amounts in the consolidated financial statements are presented as if the
+entities or businesses had been combined at the previous balance sheet date or when they first came under common control, whichever is
+shorter.
+The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common
+control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the
+control of the controlling party. The net assets of the combining entities or businesses are combined using the existing book values from the
+controlling parties' perspective. No amount is recognised as consideration for goodwill or excess of acquirers' interest in the net fair value of
+acquiree's identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the
+continuation of the controlling party's interest.
+(iv) Merger accounting for common control combination
+(a) Basis of consolidation (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+158
+Financial Statements (International)
+157
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Inter-company balances and transactions and any unrealised gains arising from inter-company transactions are eliminated on consolidation.
+Unrealised gains arising from transactions with associates and joint ventures are eliminated to the extent of the Group's interest in the entity.
+Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
+(iii)Transactions eliminated on consolidation
+In the Company's balance sheet, investments in associates and joint ventures are stated at carrying amount (Note 2(o)).
+When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as a disposal of
+the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee
+at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the fair value on initial
+recognition of a financial asset (see Note 2(k)) or, when appropriate, the cost on initial recognition of an investment in an associate (see Note
+2(a) (ii)).
+The Group's share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in the
+consolidated income statement, whereas the Group's share of the post-acquisition, post-tax items of the investees' other comprehensive
+income is recognised in the consolidated statement of comprehensive income.
+Investments in associates and joint ventures are accounted for in the consolidated financial statements using the equity method from the
+date that significant influence or joint control commences until the date that significant influence or joint control ceases. Under the equity
+method, the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group's share of the
+investee's net assets and any impairment loss relating to the investment (Note 2(j) and (o)).
+An associate is an entity, not being a subsidiary, in which the Group exercises significant influence over its management. Significant influence
+is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
+The particulars of the Group's principal subsidiaries are set out in Note 37.
+IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. The
+complete version of IFRS 9 was issued in July 2014. It replaces the whole of IAS 39. IFRS 9 introduces a new model for the recognition of
+impairment losses - the expected credit losses (ECL) model, which constitutes a change from the incurred loss model in IAS 39. IFRS 9
+applies to all hedging relationships, with the exception of portfolio fair value hedges of interest rate risk. The new guidance better aligns hedge
+accounting with the risk management activities of an entity and provides relief from the more “rule-based" approach of IAS 39. IFRS 9 is
+effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.
+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.
+(b) New and amended standards and interpretations not yet adopted by the Group
+*
+for the year ended 31 December 2015:
+Net cash generated from/(used in) operating activities
+Net cash (used in)/generated from investing activities
+Net cash generated from/(used in) financing activities
+Net increase/(decrease) in cash and cash equivalents
+Summarised consolidated statement of cash flows
+Total equity attributable to owners of the Company
+Non-controlling interests
+111,964
+1,774
+110,190
+676,197
+(1,774)
+165,818
+3,942
+(7)
+111,964
+659,107
+(35)
+232
+658,910
+Total liabilities
+462,832
+(35)
+225
+The following relevant IFRSS, amendments to existing IFRSS and interpretation of IFRS have been published and are mandatory for accounting
+periods beginning on or after 1 January 2017 or later periods and have not been early adopted by the Group. Management is in the process of
+making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial
+application and has so far concluded that, except for IFRS 16, the adoption of these amendments, new standards and new interpretations is
+unlikely to have a significant impact on the Group's results of operations and financial position.
+(116,952)
+674,029
+(79)
+201
+The accompanying consolidated financial statements have been prepared in accordance with all applicable IFRSS as issued by the International
+Accounting Standards Board ("IASB"). IFRS includes International Accounting Standards ("IAS") and related interpretations ("IFRIC"). These
+consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock
+Exchange of Hong Kong Limited. A summary of the significant accounting policies adopted by the Group are set out in Note 2.
+9,310
+58,176
+(a) New and amended standards and interpretations adopted by the Group
+The following is the Amendment to IAS 27 that has been adopted by the Group. The Group has changed from cost method to equity method
+to measure investments in joint ventures and associates in the separate financial statements from 1 January 2016 and accordingly made
+retrospective adjustments.
+Amendment to IAS 27, 'Method to measure investments in subsidiaries, joint ventures and associates', allows entities to use equity method to
+measure investments in subsidiaries, joint ventures and associates in their separate financial statements. Previousely, IAS 27 allows entities
+to measure their investments in subsidiaries, joint ventures and associates either at cost or as a financial asset in their separate financial
+statements. The amendments introduce the equity method as a third option. The election can be made independently for each category of
+investment (subsidiaries, joint ventures and associates). Entities wishing to change to the equity method must do so retrospectively. The
+amendment is effective for annual period beginning on or after 1 January 2016.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 155
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+At the completion date, the non-controlling interests amount to RMB 2,137 million was recognized in relation to SAMC's 45% interest in Gaoqiao
+Branch of the Company.
+for the year ended 31 December 2016
+58,407
+1
+32
+Gaoqiao Branch of SAMC sold its chemical products and steam to the Group. The transactions between the Group and the Gaoqiao Branch of SAMC have been
+eliminated on combination. All other significant balances and transactions between the Group and Gaoqiao Branch of SAMC have been eliminated on combination.
+165,740
+(116,719)
+(32)
+Basis of preparation (Continued)
+(185)
+(63)
+9,093
+1
+236,349
+3,871
+4,853
+2,449
+13,686
+861
+232,006
+Gasoline
+Diesel
+64
+Solvent oil
+1,794.80
+13,695
+2,105.20
+1,939.00
+1,411.20
+1,293.60
+2,109.76
+Naphtha
+1,943.20
+RMB/Ton
+Effective from
+13 January 2015
+13 December 2014
+Effective from
+Jet fuel oil
+Fuel oil
+Lubricant oil
+RMB/Ton
+18,195
+56,619
+198,754
+1,948.64
+2
+230
+40
+(12)
+49
+13
+(25)
+2016
+RMB million
+55,502
+8,385
+63,887
+2015
+RMB million
+48,741
+7,878
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+7 TAXES OTHER THAN INCOME TAX
+Consumption tax (i)
+City construction tax (ii)
+Education surcharge
+Resources tax
+Other
+Note:
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+2016
+2015
+RMB million
+193,836
+RMB million
+18,155
+1,576.40
+288
+1,116.50
+62
+288
+202
+552
+62
+73
+202
+552
+62
+288
+202
+125
+125
+125
+125
+125
+125
+175
+175
+175
+175
+Donations
+300
+300
+300
+486
+489
+552
+1,711.52
+118
+37
+1,218.00
+1,495.20
+1,370.60
+(ii) City construction tax is levied on an entity based on its total paid amount of value-added tax, consumption tax and business tax. Pursuant to the 'Circular on the
+Overall Promotion of Pilot Program of Levying VAT in place of Business Tax'(Cai Shui [2016] 36) jointly issued by the Ministry of Finance and the State Administration
+of Taxation, revenue from modern service of the subsidiaries of the Group, are subject to VAT from 1 May 2016, and the applicable tax rate is 6%, while the business
+tax was from 3% to 5% before then.
+8
+OTHER OPERATING INCOME/(EXPENSE), NET
+Gain on dilution and remeasurement of interests in the Pipeline Ltd (i)
+Government grant (ii)
+Ineffective portion of change in fair value of cash flow hedges
+Net realised and unrealised gain on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (iii)
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Fines, penalties and compensations
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+168
+(iv) Mr Xu Bin, Mr. Geng Limin, Mr. Li Xinjian, Mr. Zhou Shiliang and Mr. Chen Mingzheng ceased being supervisors from 27 May 2015; Mr. Liu Zhongyun, Mr. Zhou
+Hengyou and Mr. Wang Yajun were elected as supervisors from 27 May 2015. Mr. Liu Yun ceased being director and was elected as supervisor from 27 May 2015.
+(v) Mr. Kang Mingde ceased being independent supervisor from 27 May 2015.
+(iii) Mr. Chen Xiaojin, Mr. Ma Weihua and Ms. Bao Guoming ceased being independent directors from 27 May 2015; Mr. Tang Min and Mr. Fan Gang were elected as
+independent directors from 27 May 2015.
+(ii) Mr. Fu Chengyu, Mr. Zhang Yaocang and Mr. Cao Yaofeng ceased being directors from 27 May 2015; Mr. Wang Yupu, Mr. Zhang Haichao and Mr. Jiao Fangzheng
+were elected as directors from 27 May 2015.
+(i) Mr. Zhang Jianhua ceased being director from 13 July 2016; Mr. Li Chunguang ceased being director from 26 August 2016; Mr. Ma Yongsheng was elected as
+director from 25 February 2016.
+5,735
+1,325
+508
+510
+2,399
+1,501
+19
+408
+81
+257
+102
+14,384
+(w) Environmental expenditures
+RMB million
+14,410
+(ii) Impairment of other long-lived assets is accounted as follows:
+The carrying amounts of other long-lived assets, including property, plant and equipment, construction in progress, lease prepayments and
+other assets, are reviewed at each balance sheet date to identify indicators that the assets may be impaired. These assets are tested for
+impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such
+a decline has occurred, the carrying amount is reduced to the recoverable amount. For goodwill, the recoverable amount is estimated at each
+balance sheet date.
+The recoverable amount is the greater of the fair value less costs to disposal and the value in use. In determining the value in use,
+expected future cash flows generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current
+market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely
+independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows
+independently (i.e. a cash-generating unit).
+The amount of the reduction is recognised as an expense in the consolidated income statement. Impairment losses recognised in respect
+of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to
+reduce the carrying amount of the other assets in the unit on a pro rata basis, except that the carrying value of an asset will not be reduced
+below its individual fair value less costs to disposal, or value in use, if determinable.
+Management assesses at each balance sheet date whether there is any indication that an impairment loss recognised for a long-lived asset,
+except in the case of goodwill, in prior years may no longer exist. An impairment loss is reversed if there has been a favourable change in the
+estimates used to determine the recoverable amount. A subsequent increase in the recoverable amount of an asset, when the circumstances
+and events that led to the write-down or write-off cease to exist, is recognised as an income. The reversal is reduced by the amount that
+would have been recognised as depreciation had the write-down or write-off not occurred. An impairment loss in respect of goodwill is not
+reversed.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+161
+Financial Statements (International)
+162
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(p) Trade, bills and other payables
+Trade, bills and other payables are initially recognised at fair value and thereafter stated at amortised cost unless the effect of discounting would
+be immaterial, in which case they are stated at cost.
+(q) Interest-bearing borrowings
+Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
+bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the consolidated
+income statement over the period of borrowings using the effective interest method.
+(r) Convertible bonds
+(i) Convertible bonds that contain an equity component
+Convertible bonds that can be converted to equity share capital at the option of the holder, where the number of shares that would be issued
+on conversion and the value of the consideration that would be received at that time do not vary, are accounted for as compound financial
+instruments that contain both a liability component and an equity component.
+At initial recognition, the liability component of the convertible bonds is measured as the present value of the future interest and principal
+payments, discounted at the market rate of interest applicable at the time of initial recognition to similar liabilities that do not have a
+conversion option. Any excess of proceeds over the amount initially recognised as the liability component is recognised as the equity
+component. Transaction costs that relate to the issuance of the convertible bonds are allocated to the liability and equity components in
+proportion to the allocation of proceeds.
+The liability component is subsequently carried at amortised cost. The interest expense on the liability component is calculated using the
+effective interest method. The equity component is recognised in the capital reserve until the bond is converted or redeemed.
+If the bond is converted, the capital reserve, together with the carrying amount of the liability component at the time of conversion, is
+transferred to share capital and share premium as consideration for the shares issued. If the bond is redeemed, the capital reserve is
+transferred to share premium.
+(ii) Other convertible bonds
+Convertible bonds issued with a cash settlement option and other embedded derivative features are accounted for as compound financial
+instruments that contain a liability component and a derivative component.
+At initial recognition, the derivative component of the convertible bonds is measured at fair value. Any excess of proceeds over the amount
+initially recognised as the derivative component is recognised as the liability component. Transaction costs that relate to the issuance of
+the convertible bonds are allocated to the liability and derivative components in proportion to the allocation of proceeds. The portion of
+the transaction costs relating to the liability component is recognised initially as part of the liability. The portion relating to the derivative
+component is recognised immediately as an expense in the consolidated income statement.
+The derivative component is subsequently remeasured at each balance sheet date and any gains or losses arising from change in the
+fair value are recognised in the consolidated income statement. The liability component is subsequently carried at amortised cost until
+extinguished on conversion or redemption. The interest expense recognised in the consolidated income statement on the liability component
+is calculated using the effective interest method. Both the liability and the related derivative components are presented together for financial
+statements reporting purposes.
+If the convertible bonds are converted, the carrying amounts of the derivative and liability components are transferred to share capital and
+share premium as consideration for the shares issued. If the convertible bonds are redeemed, any difference between the amount paid and
+the carrying amounts of both components is recognised in the consolidated income statement.
+For investments in associates and joint ventures accounted under the equity method (Note 2(a) (ii)), the impairment loss is measured by
+comparing the recoverable amount of the investment as a whole with its carrying amount in accordance with the accounting policy set out
+in Note 2(o) (ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable
+amount in accordance with the accounting policy set out in Note 2(o) (ii).
+Financial Statements (International)
+The impairment loss is measured as the difference between the asset's carrying amount and the estimated future cash flows, discounted at
+the current market rate of return for a similar financial asset where the effect of discounting is material, and is recognised as an expense
+in the consolidated income statement. Impairment losses for trade and other receivables are reversed through the consolidated income
+statement if in a subsequent period the amount of the impairment losses decreases. Impairment losses for equity securities carried at cost
+are not reversed.
+(o) Impairment of assets
+489
+(iii)Hedge of net investments in foreign operations
+When a hedging instrument expires or is sold, terminated or exercised, or no longer meets the criteria for hedge accounting, the Group
+discontinues prospectively the hedge accounting treatments. If the hedged item is a financial instrument measured at amortised cost, any
+adjustment to the carrying amount of the hedged item is amortised to profit or loss from the adjustment date to the maturity date using the
+recalculated effective interest rate at the adjustment date.
+The gain or loss from remeasuring the hedging instrument at fair value is recognised in profit or loss. The gain or loss on the hedged item
+attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in profit or loss.
+A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment,
+or an identified portion of such an asset, liability or unrecognised firm commitment.
+(ii) Fair value hedges
+(n) Hedging (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+160
+Financial Statements (International)
+When a hedging instrument expires or is sold, terminated, exercised, or the entity revokes designation of the hedge relationship but the
+hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity until the transaction occurs
+and it is recognised in accordance with the above policy. If the hedged transaction is no longer expected to take place, the cumulative
+unrealised gain or loss is reclassified from equity to the consolidated income statement immediately.
+For cash flow hedges, other than those covered by the preceding two policy statements, the associated gain or loss is reclassified from equity
+to the consolidated income statement in the same period or periods during which the hedged forecast transaction affects the consolidated
+income statement.
+If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gain
+or loss is reclassified from equity to the consolidated income statement in the same period or periods during which the asset acquired or
+liability assumed affects the consolidated income statement (such as when interest income or expense is recognised).
+If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset, the associated gain or loss is reclassified
+from equity to be included in the initial cost or other carrying amount of the non-financial asset.
+Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability or a highly
+probable forecast transaction or the foreign currency risk of a committed future transaction, the effective portion of any gains or losses on
+remeasurement of the derivative financial instrument to fair value are recognised in other comprehensive income and accumulated separately
+in equity in other reserves. The ineffective portion of any gain or loss is recognised immediately in the consolidated income statement.
+(i) Cash flow hedges
+(n) Hedging
+Financial assets and liabilities are presented respectively in the consolidated balance sheet, without any offset. However, they are offset and
+reported in the balance sheet when satisfied the following: (1) There is a legally enforceable right to offset the recognised amounts. (2) There
+is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be
+contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of
+the Company or the counterparty.
+(m)Offsetting financial instruments
+Derivative financial instruments are recognised initially at fair value. At each balance sheet date, the fair value is remeasured. The gain or loss
+on remeasurement to fair value is recognised immediately in the consolidated income statement, except where the derivatives qualify for cash
+flow hedge accounting or hedge the net investment in a foreign operation, in which case recognition of any resulting gain or loss depends on the
+nature of the item being hedged (Note 2(n)).
+(I) Derivative financial instruments
+Investments in securities held for trading are classified as current assets. Any attributable transaction costs are recognised in the consolidated
+income statement as incurred. At each balance sheet date, the fair value is remeasured, with any resultant gain or loss being recognised in the
+consolidated income statement.
+Investments in available-for-sale securities are carried at fair value with any change in fair value recognised in other comprehensive income
+and accumulated separately in equity in other reserves. When these investments are derecognised or impaired, the cumulative gain or loss is
+reclassified from equity to the consolidated income statement. Investments in equity securities, other than investments in associates and joint
+ventures, that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are recognised in the
+balance sheet at cost less impairment losses (Note 2(o)).
+The portion of the gain or loss on remeasurement to fair value of an instrument used to hedge a net investment in a foreign operation that is
+determined to be an effective hedge is recognised in other comprehensive income and accumulated separately in equity in the other reserve
+until the disposal of the foreign operation, at which time the cumulative gain or loss is reclassified from equity to the consolidated income
+statement. The ineffective portion is recognised immediately in the consolidated income statement. In this year no hedge of net investment in
+foreign operations was hold by the Group.
+(i) Trade accounts receivable, other receivables and investment in equity securities that do not have a quoted market price in an active market
+are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists, an
+impairment loss is determined and recognised.
+2015
+RMB million
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2016
+(cc) Segment reporting
+Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial
+information provided regularly to the Group's chief operating decision maker for the purposes of allocating resources to, and assessing the
+performance of the Group's various lines of business.
+3 TURNOVER
+Turnover primarily represents revenue from the sales of crude oil, natural gas, refined petroleum products and chemical products.
+4
+OTHER OPERATING REVENUES
+Sale of materials, service and others
+Rental income
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+The following items are included in selling, general and administrative expenses:
+Operating lease charges
+Auditor's remuneration:
+audit services
+- others
+Impairment losses:
+- trade accounts receivable
+- other receivables
+- accounts prepayments
+6 PERSONNEL EXPENSES
+Salaries, wages and other benefits
+Contributions to retirement schemes (Note 35)
+164 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+2016
+RMB million
+49,812
+909
+50,721
+2015
+RMB million
+41,524
+974
+42,498
+2016
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorized and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(bb)Dividends
+Income tax comprises current and deferred tax. Current tax is calculated on taxable income by applying the applicable tax rates. Deferred tax is
+provided using the balance sheet liability method on all temporary differences between the carrying amounts of assets and liabilities for financial
+reporting purposes and the amounts used for taxation purposes only to the extent that it is probable that future taxable income will be available
+against which the assets can be utilised. Deferred tax is calculated on the basis of the enacted tax rates or substantially enacted tax rates that
+are expected to apply in the period when the asset is realised or the liability is settled. The effect on deferred tax of any changes in tax rates is
+charged or credited to the consolidated income statement, except for the effect of a change in tax rate on the carrying amount of deferred tax
+assets and liabilities which were previously charged or credited to other comprehensive income or directly in equity.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(s) Provisions and contingent liability
+A provision is recognised for liability of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a
+past event, when it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made.
+When it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is
+disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only
+be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability
+of outflow of economic benefits is remote.
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+cost, is reflected as an adjustment to the provision and oil and gas properties.
+(t) Revenue recognition
+Revenues associated with the sale of crude oil, natural gas, petroleum and chemical products and ancillary materials are recorded when the
+customer accepts the goods and the significant risks and rewards of ownership and title have been transferred to the buyer. Revenue from the
+rendering of services is recognised in the consolidated income statement upon performance of the services. No revenue is recognised if there are
+significant uncertainties regarding recovery of the consideration due, the possible return of goods, or when the amount of revenue and the costs
+incurred or to be incurred in respect of the transaction cannot be measured reliably.
+Interest income is recognised on a time apportioned basis that takes into account the effective yield on the asset.
+A government grant that becomes receivable as compensation for expenses or losses already incurred with no future related costs is recognised
+as income in the period in which it becomes receivable.
+(u) Borrowing costs
+Borrowing costs are expensed in the consolidated income statement in the period in which they are incurred, except to the extent that they are
+capitalised as being attributable to the construction of an asset which necessarily takes a period of time to get ready for its intended use.
+(v) Repairs and maintenance expenditure
+Repairs and maintenance expenditure is expensed as incurred.
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+Liabilities related to future remediation costs are recorded when environmental assessments and/or cleanups are probable and the costs can
+be reliably estimated. As facts concerning environmental contingencies become known to the Group, the Group reassesses its position both with
+respect to accrued liabilities and other potential exposures.
+(x) Research and development expense
+Research and development expenditures that cannot be capitalised are expensed in the period in which they are incurred. Research and
+development expense amounted to RMB 5,941 million for the year ended 31 December 2016 (2015: RMB 5,654 million).
+(y) Operating leases
+Operating lease payments are charged to the consolidated income statement on a straight-line basis over the period of the respective leases.
+(z) Employee benefits
+The contributions payable under the Group's retirement plans are recognised as an expense in the consolidated income statement as incurred
+and according to the contribution determined by the plans. Further information is set out in Note 35.
+Termination benefits, such as employee reduction expenses, are recognised when, and only when, the Group demonstrably commits itself to
+terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic
+possibility of withdrawal.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+163
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(aa) Income tax
+The tax value of losses expected to be available for utilisation against future taxable income is set off against the deferred tax liability within the
+same legal tax unit and jurisdiction to the extent appropriate, and is not available for set off against the taxable profit of another legal tax unit.
+The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable
+that the related tax benefit will be realised.
+525
+300
+249
+299
+Effect of difference between income taxes at foreign operations tax rate and the PRC statutory tax rate
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+(1,033)
+83
+Tax effect of preferential tax rate (i)
+(2,583)
+(2,786)
+Tax effect of non-taxable income
+788
+1,529
+Tax effect of non-deductible expenses
+56,411
+14,103
+20,038
+Expected PRC income tax expense at a statutory tax rate of 25%
+80,151
+Profit before taxation
+RMB million
+RMB million
+2015
+2016
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+(1,343)
+12,613
+20,707
+(834)
+13,677
+279
+21,313
+228
+Deferred taxation (Note 27)
+391
+- Provision for the year
+Adjustment of prior years
+(453)
+Tax effect of tax losses not recognised
+Jiang Xiaoming
+Independent directors
+Li Chunguang(i)
+Zhang Jianhua(i)
+Jiao Fangzheng
+Ma Yongsheng(i)
+Wang Yupu
+Dai Houliang
+Wang Zhigang
+Zhang Haichao
+Directors
+Name
+The emoluments of every director and supervisor is set out below:
+(a) Directors' and supervisors' emoluments
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+166
+12,613
+20,707
+279
+228
+75
+811
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate of
+15% through the year 2020.
+Note:
+Actual income tax expense
+Adjustment of prior years
+Write-down of deferred tax assets
+828
+958
+(235)
+Andrew Y. Yan
+Current tax
+RMB million
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(k) Available-for-sale financial assets
+(iii) Impairment losses on long-lived assets for the year ended 31 December 2016 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB 11,605 million (2015: RMB 4,864 million), the chemicals segment of RMB 2,898 million (2015: RMB 142 million) and for the refining
+segment of RMB 1,655 million (2015: RMB 9 million) (Note 36), most of which are impairment losses on property, plant and equipment (Note 16). The primary
+factors resulting in the E&P segment impairment loss were downward revision of oil and gas reserve due to price change and high operating and development cost
+for certain oil fields. The carrying values of these E&P properties were written down to recoverable amounts which were determined based on the present values of
+the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2015: 10.80%). Further future downward revisions to the Group's oil price outlook
+by 10% or more would lead to further impairments which, in aggregate, are likely to be material. It is estimated that a general decrease of 10% in oil price, with all
+other variables held constant, would result in additional impairment loss in E&P segment by approximately RMB 3,010 million. It is estimated that a general increase
+of 5% in operating cost, with all other variables held constant, would result in additional impairment loss in E&P segment by approximately RMB 1,193 million. It
+is estimated that a general increase of 5% in discount rate, with all other variables held constant, would result in additional impairment loss in E&P segment by
+approximately RMB 439 million. The assets in the chemicals and refining segment were written down mainly due to the suspension of operations of certain production
+facilities.
+(ii) Government grants for the years ended 31 December 2016 and 2015 primarily represent financial appropriation income and non-income tax refunds received from
+respective government agencies without conditions or other contingencies attached to the receipts of the grants.
+(i) On 12 December 2016, the Group entered into the Capital Injection Agreement in relation to Sinopec Sichuan To East China Gas Pipeline Co., Ltd. ("Pipeline Ltd"),
+a wholly-owned subsidiary of the Group, with China Life Insurance Company Limited ("China Life") and SDIC Communications Holding Co., Ltd. ("SDIC Holding") (the
+"Capital Injection Agreement"). According to the provisions of the Capital Injection Agreement, China Life and SDIC Holding made cash contribution to the Pipeline
+Ltd amounting to RMB 20 billion and RMB 2.8 billion, respectively, in exchange for 43.86% and 6.14% equity interest, respectively, in the Pipeline Ltd. Thereafter,
+the Group's equity interest in the Pipeline Ltd was diluted from 100% to 50%. Based on the composition and decision making mechanism of the Board of Directors
+of the Pipeline Ltd, the Group determines that it has only retained the power to participate in the financial and operating policy decisions of the Pipeline Ltd, and was
+no longer exclusively possessing the power to govern policy decisions of the Pipeline Ltd. Consequently, the Group has deconsolidated the Pipeline Ltd and started
+accounting for its 50% equity interest in the Pipeline Ltd as an investment in associate company. In this connection, the Group recognized a gain of RMB 20.562
+billion, which was resulted from the dilution and the remeasurement of the remaining 50% equity interest in the Pipeline Ltd.
+Note:
+(129)
+5,686
+(199)
+(1,238)
+(112)
+(133)
+(90)
+(152)
+(748)
+(1,528)
+(5,146)
+(16,425)
+870
+195
+165
+304
+5,131
+4,101
+20,562
+2015
+RMB million
+RMB million
+165
+RMB million
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2015
+2016
+Tax expense in the consolidated income statement represents:
+10 TAX EXPENSE
+2.6% to 5.9%
+2.65% to 4.82%
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+8,133
+9,219
+1,081
+1,057
+7,052
+8,162
+(1,221)
+(859)
+8,273
+9,021
+Interest expense
+Accretion expenses (Note 31)
+Less: Interest expense capitalised*
+Interest expense incurred
+RMB million
+RMB million
+2015
+2016
+9 INTEREST EXPENSE
+for the year ended 31 December 2016
+Financial Statements (International)
+67
+Tang Min
+Supervisors
+Yu Renming
+Wang Yajun (iv)
+Zou Huiping
+Jiang Zhenying
+Zhou Hengyou (iv)
+Liu Zhongyun (iv)
+Liu Yun (iv)
+Chen Xiaojin (iii)
+Ma Weihua (iii)
+Bao Guoming (iii)
+Supervisors
+Fan Gang (iii)
+Tang Min (iii)
+Andrew Y. Yan
+Jiang Xiaoming
+Independent directors
+Cao Yaofeng (ii)
+Zhang Yaocang (ii)
+Fu Chengyu (ii)
+Jiao Fangzheng (ii)
+Zhang Haichao (ii)
+Directors
+Wang Yupu (ii)
+Li Chunguang
+Zhang Jianhua
+Wang Zhigang
+Dai Houliang
+Name
+The emoluments of every director and supervisor is set out below: (Continued)
+(a) Directors' and supervisors' emoluments (Continued)
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+167
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Xu Bin (iv)
+6,147
+Geng Limin (iv)
+Li Xinjian (iv)
+Chen Mingzheng (iv)
+170
+67
+252
+170
+67
+252
+170
+67
+272
+186
+Total
+RMB'000
+RMB'000
+RMB'000
+Supervisors' fee
+Directors'/
+scheme
+contributions
+Bonuses
+RMB'000
+2015
+Retirement
+or receivable in
+respect of a
+person's services
+as a director,
+whether of the
+Company or its
+subsidiary
+undertaking
+Emoluments paid
+RMB'000
+Salaries,
+allowances and
+benefits in kind
+Emoluments paid or receivable in respect of
+director's other services in connection with the
+management of the affairs of the Company or
+its subsidiary undertaking
+Notes:
+Total
+Kang Mingde (v)
+Independent supervisors
+Zhou Shiliang (iv)
+Fan Gang
+1,200
+2,936
+365
+114
+47
+379
+130
+72
+431
+196
+72
+459
+214
+Total
+RMB'000
+RMB'000
+Supervisors' fee
+Directors'/
+2016
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+Company or
+its subsidiary
+undertaking
+or receivable in
+respect of a
+person's services
+as a director,
+whether of the
+Emoluments paid
+RMB'000
+allowances and
+benefits in kind
+Salaries,
+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
+Zhou Hengyou
+Liu Zhongyun
+Liu Yun
+41
+499
+8ייייייי 8888 יייייייי
+699
+1,512
+595
+66
+325
+204
+Wang Yajun
+Total
+594
+67
+309
+218
+Yu Renming
+619
+67
+334
+218
+Jiang Zhenying
+619
+67
+334
+218
+Zou Huiping
+300
+300
+300
+300
+520
+556
+745
+Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating
+unit, or groups of cash-generating units, that is expected to benefit the synergies of the combination and is tested annually for impairment
+(Note 2(0)). In respect of associates or joint ventures, the carrying amount of goodwill is included in the carrying amount of the interest in the
+associate or joint venture and the investment as a whole is tested for impairment whenever there is objective evidence of impairment (Note 2(o)).
+Others
+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.
+2016
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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(o)). The cost
+of an asset comprises its purchase price, any directly attributable costs of bringing the asset to working condition and location for its intended
+use. The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when
+that cost is incurred, when it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the
+item can be measured reliably. All other expenditure is recognised as an expense in the consolidated income statement in the year in which it is
+incurred.
+Gains or losses arising from the retirement or disposal of an item of property, plant and equipment, other than oil and gas properties, are
+determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised as income or expense
+in the consolidated income statement on the date of retirement or disposal.
+Depreciation is provided to write off the cost amount of items of property, plant and equipment, other than oil and gas properties, over its
+estimated useful life on a straight-line basis, after taking into account its estimated residual value, as follows:
+Estimated
+Buildings
+Equipment, machinery and others
+Estimated
+usage period
+12 to 50 years
+4 to 30 years
+residuals rate
+3%
+3%
+for the year ended 31 December 2016
+(g) Oil and gas properties
+(j) Goodwill
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+159
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+for the year ended 31 December 2016
+Construction in progress represents buildings, oil and gas properties, various plant and equipment under construction and pending installation,
+and is stated at cost less impairment losses (Note 2(o)). Cost comprises direct costs of construction as well as interest charges, and foreign
+exchange differences on related borrowed funds to the extent that they are regarded as an adjustment to interest charges, during the periods of
+construction.
+The Group uses the successful efforts method of accounting for its oil and gas producing activities. Under this method, costs of development
+wells, the related supporting equipment and proved mineral interests in properties are capitalised. The cost of exploratory wells is initially
+capitalised as construction in progress pending determination of whether the well has found proved reserves. The impairment of exploratory well
+costs occurs upon the determination that the well has not found proved reserves. The exploratory well costs are usually not carried as an asset
+for more than one year following completion of drilling, unless (i) the well has found a sufficient quantity of reserves to justify its completion as
+a producing well if the required capital expenditure is made; (ii) drilling of the additional exploratory wells is under way or firmly planned for the
+near future; or (iii) other activities are being undertaken to sufficiently progress the assessing of the reserves and the economic and operating
+viability of the project. All other exploration costs, including geological and geophysical costs, other dry hole costs and annual lease rentals,
+are expensed as incurred. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes
+produced and reserves.
+Management estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into
+consideration the anticipated method of dismantlement required in accordance with the industry practices and the future cash flows are adjusted
+to reflect such risks specific to the liability, as appropriate. These estimated future dismantlement costs are discounted at pre-tax risk-free rate
+and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs of the oil and gas properties.
+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.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(h) Lease prepayments
+Lease prepayments represent land use rights paid to the relevant government authorities. Land use rights are carried at cost less accumulated
+amount charged to expense and impairment losses (Note 2(o)). The cost of lease prepayments is charged to expense on a straight-line basis
+over the respective periods of the rights.
+(i) Construction in progress
+1,755
+Deferred tax assets
+Deferred tax liabilities
+31 December 31 December 31 December
+2016
+2015
+2016
+RMB million RMB million RMB million
+Net balance
+31 December 31 December 31 December
+2015
+2016
+2015
+RMB million RMB million RMB million
+Receivables and inventories
+Accruals
+347
+1,755
+347
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+Current
+Property, plant and equipment
+413
+391
+413
+Cash flow hedges
+Non-current
+Tax losses carried forward
+27
+348
+(242)
+(98)
+(215)
+7,875
+51,277
+391
+20,299
+Value-added input tax to be deducted
+20,183
+150,010
+(4,402)
+Less: Allowance for diminution in value of inventories
+(920)
+156,511
+145,608
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 1,461,285 million for the year ended 31
+December 2016 (2015: RMB 1,572,798 million). It includes the write-down of inventories of RMB 430 million (2015: RMB 3,687 million) and the
+reversal of write-down of inventories made in prior years of RMB 10 million (2015: RMB 34 million), which were recorded in purchased crude oil,
+products and operating supplies and expenses in the consolidated income statement. The write-down of inventories of RMB 4,021 million for the
+year ended 31 December 2016 (2015: RMB 2,931 million) was realised primarily with the sales of inventories.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+26 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Other receivables
+Advances to suppliers
+250
+Prepaid income tax
+Derivative financial instruments
+27 DEFERRED TAX ASSETS AND LIABILITIES
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+26,056
+3,749
+18,055
+1,145
+762
+49,767
+2,920
+11,264
+(447)
+Deferred tax assets/(liabilities)
+Cash flow hedges
+Non-current
+Property, plant and equipment
+Tax losses carried forward
+Embedded derivative component of
+the convertible bonds
+Available-for-sale securities
+Others
+Net deferred tax liabilities
+(8,635)
+3,474
+282
+Accruals
+Current
+Accruals
+Cash flow hedges
+Non-current
+Property, plant and equipment
+Tax losses carried forward
+Available-for-sale securities
+Others
+Net deferred tax liabilities
+178
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Recognised in
+Recognised
+Receivables and inventories
+Receivables and inventories
+Current
+Movements in the deferred tax assets and liabilities are as follows:
+2,477
+133
+8,209
+5,883
+98
+(14,615)
+(17,340)
+(3,351)
+2,477
+(9,131)
+5,883
+14,639
+16,706
+(229)
+(15,086)
+(58)
+(96)
+40
+157,431
+(17,496)
+(790)
+At 31 December 2016, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 19,194 million
+(2015: RMB 19,338 million), of which RMB 3,833 million (2015: RMB 4,080 million) was incurred for the year ended 31 December 2016, because
+it was not probable that the future taxable profits will be realised. These deductible losses carried forward of RMB 3,777 million, RMB 2,634 million,
+RMB 4,870 million, RMB 4,080 million and RMB 3,833 million will expire in 2017, 2018, 2019, 2020, 2021 and after, respectively.
+Periodically, management performed assessment on the probability that future taxable profit will be available over the period which the deferred tax
+assets can be realised or utilised. In assessing the probability, both positive and negative evidence was considered, including whether it is probable
+that the operations will have sufficient future taxable profits over the periods which the deferred tax assets are deductible or utilised and whether the
+tax losses result from identifiable causes which are unlikely to recur. During the year ended 31 December 2016, write-down of deferred tax assets
+amounted to RMB 811 million (2015: RMB 75 million) (Note 10).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+177
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+27 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+Others
+1,552
+Crude oil and other raw materials
+66,320
+(4)
+Contribution to associates and joint ventures
+(772)
+(1,008)
+1,780
+Reclassifications
+1,485,943
+3,732
+119,471
+74,594
+815,123
+565
+569,172
+2,899
+39,949
+4,928
+Transferred from construction in progress
+268
+Additions
+101,648
+Balance at 1 January 2015
+Cost:
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Oil and gas,
+properties
+RMB million
+Plants and
+buildings
+RMB million
+16 PROPERTY, PLANT AND EQUIPMENT
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+170
+(8)
+120,852,547,200
+120,852,547,200
+(12)
+(380)
+626
+3,420
+277
+Additions
+1,601,718
+880,711
+613,134
+107,873
+Balance at 1 January 2016
+1,601,718
+2,470
+157
+880,711
+613,134
+107,873
+Balance at 31 December 2015
+2,201
+112
+Exchange adjustments
+(8,336)
+(7,778)
+(79)
+(479)
+Disposals
+(1,550)
+(1,170)
+Reclassification to lease prepayments and other long-term assets
+of shares
+2015
+Number
+121,071,209,646
+121,071,209,646
+40
+(8)
+(13)
+(72)
+(38)
+6
+683
+525
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+Sinopec Group Company and fellow subsidiaries are repayable under the same terms.
+Trade accounts receivable and bills receivables (net of impairment losses for bad and doubtful debts) primarily represent receivables that are
+neither past due nor impaired. These receivables relate to a wide range of customers for whom there is no recent history of default.
+25 INVENTORIES
+consolidated
+Work in progress
+Finished goods
+Spare parts and consumables
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+75,680
+59,376
+14,141
+22,762
+65,772
+238
+530
+525
+RMB million
+2016
+Number
+of shares
+Weighted average number of shares at 31 December
+Weighted average number of shares (diluted) at 31 December
+32,512
+(2)
+32,510
+2015
+RMB million
+RMB million
+46,672
+(3)
+46,669
+2016
+(ii) Weighted average number of shares (diluted)
+After tax effect of employee share option scheme of Shanghai Petrochemical
+Profit attributable to ordinary owners of the Company (diluted)
+Profit attributable to ordinary owners of the Company
+(i) Profit attributable to ordinary owners of the Company (diluted)
+The calculation of diluted earnings per share for the year ended 31 December 2016 is based on the profit attributable to ordinary owners of the
+Company (diluted) of RMB 46,669 million (2015: RMB 32,510 million) and the weighted average number of shares of 121,071,209,646 (2015:
+120,852,547,200) calculated as follows:
+The calculation of basic earnings per share for the year ended 31 December 2016 is based on the profit attributable to ordinary owners of
+the Company of RMB 46,672 million (2015: RMB 32,512 million) and the weighted average number of shares of 121,071,209,646 (2015:
+120,852,547,200) during the year.
+1,838
+15 BASIC AND DILUTED EARNINGS PER SHARE
+(641)
+778
+6,333
+(472)
+Balance at 1 January
+Provision for the year
+Written back for the year
+Written off for the year
+Others
+Balance at 31 December
+2016
+2015
+RMB million
+137
+in other
+413
+income comprehensive
+44,469
+374,191
+449,609
+868,269
+Depreciation for the year
+3,815
+49,005
+47,914
+100,734
+Impairment losses for the year
+440
+10,580
+3,901
+14,921
+Reclassifications
+369
+(58)
+(311)
+Reclassification to lease prepayments and other long-term assets
+(14)
+(316)
+(330)
+Written back on disposals
+(534)
+(22)
+Balance at 1 January 2016
+(17,067)
+868,269
+374,191
+4,375
+Reclassifications
+679
+(766)
+87
+Contribution to associates and joint ventures
+(4)
+(4)
+Reclassification to lease prepayments and other long-term assets
+(68)
+(2)
+(86)
+(156)
+Written back on disposals
+(278)
+(65)
+(6,533)
+(6,876)
+Exchange adjustments
+40
+1,344
+66
+1,450
+Balance at 31 December 2015
+44,469
+449,609
+781,661
+87,819
+(17,623)
+27
+172
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+17 CONSTRUCTION IN PROGRESS
+Balance at 1 January
+Additions
+Dry hole costs written off
+Transferred to property, plant and equipment
+Reclassification to lease prepayments and other long-term assets
+Impairment losses for the year
+Disposals
+Exchange adjustments
+2016
+2015
+RMB million
+152,325
+RMB million
+177,716
+81,837
+106,809
+(7,467)
+(6,099)
+(87,399)
+(119,471)
+(6,900)
+(5,600)
+(1,486)
+Financial Statements (International)
+Exchange adjustments
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+1,865
+84
+1,976
+Balance at 31 December 2016
+48,572
+435,561
+483,814
+967,947
+Net book value:
+Balance at 1 January 2015
+61,125
+239,905
+403,252
+704,282
+Balance at 31 December 2015
+63,404
+238,943
+431,102
+733,449
+Balance at 31 December 2016
+66,348
+215,124
+409,122
+690,594
+The additions to oil and gas properties of the Group for the year ended 31 December 2016 included RMB 3,420 million (2015: RMB 2,899 million)
+of estimated dismantlement costs for site restoration (Note 31).
+171
+Balance at
+130
+32
+Recognised in
+consolidated
+Balance at
+(4)
+40
+(1,010)
+(282)
+(790)
+Recognised
+income
+statement
+RMB million
+in other
+comprehensive
+Balance at
+income
+RMB million
+Others
+RMB million
+31 December 2016
+RMB million
+1,755
+413
+(1,506)
+(22)
+6
+92
+347
+391
+250
+(465)
+1,343
+(215)
+(841)
+7
+Balance at
+1 January 2015
+RMB million
+statement
+RMB million
+income
+RMB million
+Others
+RMB million
+31 December 2015
+RMB million
+2,883
+258
+(1,131)
+155
+3
+1,755
+887
+(637)
+250
+(113)
+2,398
+(383)
+11
+(9,131)
+5,883
+-
+(282)
+3
+1
+33
+4,213
+(9,131)
+5,883
+(392)
+(509)
+(27)
+(35,100)
+Exchange adjustments
+82
+2,800
+187
+87,399
+(2,332)
+(35,636)
+3,069
+Balance at 31 December 2016
+114,920
+650,685
+892,936
+1,658,541
+Accumulated depreciation:
+Balance at 1 January 2015
+40,523
+329,267
+411,871
+Depreciation for the year
+3,541
+40,200
+44,078
+Impairment losses for the year
+Disposals
+6,063
+(2,202)
+Reclassification to lease prepayments and other long-term assets
+109
+(3,351)
+(3,426)
+20
+2,477
+(139)
+(7)
+146
+40
+(136)
+(96)
+(790)
+834
+(838)
+347
+(447)
+4,323
+Transferred from construction in progress
+5,901
+31,473
+50,025
+Reclassifications
+1,426
+(115)
+(1,311)
+(130)
+1 January 2016
+RMB million
+(733)
+(111)
+(2)
+13
+amount of hedged items
+2,476
+(405)
+2,881
+(3,161)
+652
+(3,813)
+instruments recognised during the year
+Amounts transferred to initial carrying
+Effective portion of changes in fair value of hedging
+11
+Cash flow hedges:
+RMB million
+Net of tax
+Tax
+effect
+Before tax
+amount
+RMB million
+Net of tax
+amount
+RMB million
+RMB million RMB million
+Tax
+effect
+Before tax
+amount
+2015
+2016
+14 OTHER COMPREHENSIVE INCOME
+amount
+RMB million
+(1,354)
+223
+(1,131)
+Net movement during the year recognised
+62
+(4)
+66
+(24)
+(7)
+(17)
+Changes in fair value recognised during the year
+Available-for-sale securities:
+3,163
+(637)
+3,800
+2,014
+(465)
+2,479
+in other comprehensive income
+Net movement during the year recognised
+1,818
+(455)
+2,273
+5,164
+(1,115)
+6,279
+to the consolidated income statement
+Reclassification adjustments for amounts transferred
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+13
+25
+36
+177
+715
+233
+66,342
+63,051
+Over three years
+Between two and three years
+Between one and two years
+Within one year
+RMB million
+31 December
+2015
+31 December
+2016
+RMB million
+The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as follows:
+67,106
+63,486
+10,964
+13,197
+56,142
+50,289
+(525)
+(683)
+56,667
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+in other comprehensive income
+for the year ended 31 December 2016
+For the year ended 31 December 2016, the five highest paid individuals in the Company included one director and four senior management. The
+emolument paid to each of one director and four senior management was below RMB 1,000 thousand. The total salaries, wages and other benefits
+was RMB 3,244 thousand, and the total amount of their retirement scheme contributions was RMB 333 thousand. For the year ended 31 December
+2015, all the five highest paid individuals in the Company were senior management.
+169
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Pursuant to the shareholders' approval at the Annual General Meeting on 27 May 2015, a final dividend of RMB 0.11 per share totaling RMB 13,318
+million according to total shares of 18 June 2015 was approved. Cash dividends have been paid on 19 June 2015.
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2016, a final dividend of RMB 0.06 per share totaling RMB 7,264
+million according to total shares of 23 June 2016 was approved. All dividends have been paid in the year ended 31 December 2016.
+13,318
+7,264
+RMB million
+RMB million
+2015
+2016
+Final cash dividends in respect of the previous financial year, approved and paid during the year of
+RMB 0.06 per share (2015: RMB 0.11 per share)
+Pursuant to a resolution passed at the director's meeting on 24 March 2017, final dividends in respect of the year ended 31 December 2016 of
+RMB 0.17 (2015: RMB 0.06) per share totaling RMB 20,582 million (2015: RMB 7,264 million) were proposed for shareholders' approval at the
+Annual General Meeting. Final cash dividend proposed after the balance sheet date has not been recognised as a liability at the balance sheet date.
+Dividends payable to owners of the Company attributable to the previous financial year, approved during the year represent:
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 26 August 2016, the directors authorised to
+declare the interim dividends for the year ending 31 December 2016 of RMB 0.079 (2015: RMB 0.09) per share totaling RMB 9,565 million (2015:
+RMB 10,896 million). Dividends were paid on 21 September 2016.
+18,160
+30,147
+7,264
+10,896
+9,565
+20,582
+RMB million
+RMB million
+2015
+2016
+Dividends declared and paid during the year of RMB 0.079 per share (2015: RMB 0.09 per share)
+Dividends declared after the balance sheet date of RMB 0.17 per share (2015: RMB 0.06 per share)
+Dividends payable to owners of the Company attributable to the year represent:
+13 DIVIDENDS
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+(17)
+(7)
+(24)
+BASF-YPC
+2016
+2015
+Mansarovar
+2016
+Taihu
+2015
+2016
+2015
+YASREF
+2016
+CIR (iv)
+2015
+2015
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Turnover
+Depreciation, depletion and amortisation
+41,764
+(52)
+48,758
+2015
+(53)
+2016
+FREP
+4,391
+6,154
+5,526
+1.812
+2,184
+3,278
+1.522
+5,045
+4,771
+Other (ii)
+743
+729
+Carrying Amounts
+6,842
+4,391
+6,154
+5,526
+1,812
+2,184
+4,021
+2.251
+5,045
+4,771
+Summarised statement of comprehensive income
+Year ended 31 December
+Impairment losses for bad and doubtful debts are analysed as follows:
+50,972
+17,323
+(2,275)
+1,363
+(192)
+(15)
+(113)
+(119)
+(1,216)
+(721)
+(20)
+Profit/(loss) before taxation
+6,476
+3,857
+2,606
+2,268
+2,268
+4,298
+4,298
+Foreign currency translation differences
+(5,356)
+(5,356)
+45
+45
+associates and joint ventures
+Share of other comprehensive profit/(loss) of
+62
+(4)
+66
+(239)
+15,430
+(2,312)
+(173)
+(929)
+1,876
+9,658
+10,725
+41,286
+31,823
+1,821
+(996)
+(782)
+(1,043)
+(1,279)
+(2,754)
+(1,915)
+(1,248)
+Interest income
+Interest expense
+130
+33
+19
+29
+174
+9
+40
+33
+13
+64
+(1,130)
+6,842
+3,734
+18,672
+174
+(iv) The summarized statement of comprehensive income represents the operating result for the period from 1 January 2015 to the date when the Group reclassified the
+investment interest in CIR from joint ventures to associates (Note 19 (i)).
+(iii) Other reflects the excess of fair value of the consideration transferred over the Group's share of the fair value of the investee's identifiable assets and liabilities as of
+the transaction date.
+(ii) Excluding provisions.
+(i) Excluding trade accounts payable and other payables.
+Note:
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 3,768 million (2015: RMB 2,897 million) and RMB 1,068 million (2015: RMB 324 million) respectively.
+As at 31 December 2016, the carrying amount of all individually immaterial joint ventures accounted for using equity method in aggregate was RMB
+26,822 million (2015: RMB 24,458 million).
+(1,582)
+277
+243
+(1,245)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+875
+134
+income/(loss) from joint ventures
+Share of other comprehensive
+252
+(92)
+31
+1,287
+895
+(1,090)
+(506)
+63
+145
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+21 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+Reclassification to other assets
+Transferred from other long-term assets
+Transferred from construction in progress
+Additions
+Balance at 1 January
+Cost:
+22 LEASE PREPAYMENTS
+The impairment losses relating to investments for the year ended 31 December 2016 amounted to nil (2015: nil).
+Other investment, unlisted and at cost, represents the Group's interests in privately owned enterprises which are mainly engaged in oil and natural
+gas activities and chemical production.
+10,964
+11,408
+Less: Impairment loss for investments
+29
+29
+10,993
+11,437
+10,732
+261
+262
+11,175
+RMB million
+2015
+31 December
+RMB million
+31 December
+2016
+Equity securities, listed and at quoted market price
+Other investment, unlisted and at cost
+783
+1,470
+2,451
+joint ventures
+(2,180)
+(1,013)
+158
+1,958
+2,939
+4,902
+Profit/(loss) for the year
+(367)
+13
+214
+(1,316)
+(1,847)
+2.411
+3,455
+28
+(259)
+870
+Tax expense
+(1,574)
+(918)
+(648)
+(56)
+303
+(333)
+(518)
+1,893
+Disposals
+2,722
+(246)
+Share of net profit/(loss) from
+470
+155
+Dividends declared by joint ventures
+(2,661)
+492
+731
+89
+3,744
+(1,890)
+(743)
+158
+1,958
+2,939
+4,902
+Total comprehensive income/(loss)
+(3,164)
+738
+647
+(2,633)
+1.851
+290
+270
+Other comprehensive income/(loss)
+503
+84
+Exchange adjustments
+Balance at 31 December
+Accumulated amortisation:
+6,673
+8,310
+34,407
+36,908
+(61)
+1,720
+32,748
+34,407
+2,670
+(169)
+RMB million
+RMB million
+2015
+2016
+Net book value at 31 December
+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
+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:
+1,777
+(i) Others mainly comprise prepaid operating lease charges over one year and catalyst expenditures.
+1,643
+(6)
+6,398
+34,261
+39,994
+Bills receivable
+Trade accounts receivable, net
+Less: Impairment losses for bad and doubtful debts
+Amounts due from associates and joint ventures
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from third parties
+RMB million
+2015
+31 December
+RMB million
+31 December
+2016
+24 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+176
+Financial Statements (International)
+Financial Statements (International)
+175
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+26,097
+8,310
+10,012
+26,896
+(75)
+4,580
+67,791
+20,946
+10,725
+12,275
+63,324
+68,467
+221
+(1,509)
+(422)
+(536)
+(229)
+543
+994
+3,125
+59,866
+1,835
+63,324
+300
+4,279
+2015
+RMB million
+2016
+RMB million
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+Net book value:
+Balance at 31 December
+Exchange adjustments
+Written back on disposals
+Reclassification to other assets
+Transferred from other long-term assets
+Amortisation charge for the year
+Balance at 1 January
+1,840
+70,145
+1,572
+111
+20,630
+2,989
+2,234
+17,759
+20,385
+26,097
+26,896
+2015
+RMB million
+31 December
+RMB million
+2016
+31 December
+Note:
+Balance at 31 December
+Others (i)
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Operating rights of service stations
+51,049
+12,275
+14,226
+54,241
+74
+(20)
+(83)
+(113)
+(12)
+132
+Share of net assets from joint ventures
+111
+241
+(321)
+(883)
+(1,282)
+Net assets
+32,217
+23,461
+22,110
+17,378
+15,796
+(12,072)
+8,422
+(417)
+7,151
+Net assets attributable to owners of
+the Company
+32,217
+23,461
+22,110
+17,378
+15,796
+10,743
+7,438
+7,151
+10,007
+10,007
+(15,407)
+(32,137)
+(114)
+RMB million
+RMB million
+8,240
+5,120
+4,826
+15,739
+50,301
+37,571
+5,671
+5.220
+3,842
+7,768
+Current liabilities
+(5,009)
+(142,386)
+(147,952)
+(8,078)
+(16,536)
+(6,297)
+(4,717)
+(928)
+(1,305)
+Non-current liabilities
+(4)
+(88)
+6,805
+Net assets attributable to
+non-controlling interests
+1,329
+Dividends declared by associates
+Share of profit/(loss) from associates
+Share of other comprehensive
+(loss)/income from associates
+Pipeline Ltd (ii, iv)
+2016
+Sinopec Finance
+2016
+RMB million
+RMB million
+2015
+RMB million
+Zhongtian Synergetic Energy (v)
+2016
+RMB million
+2015
+RMB million
+China Aviation Oil
+2016
+RMB million
+CIR (i)
+2015
+RMB million
+2016
+2015
+RMB million
+RMB million
+191
+2,442
+2,533
+74,622
+78,623
+2.205
+687
+51
+Total comprehensive income/(loss)
+31 December
+2015
+Other comprehensive (loss)/income
+Turnover
+984
+Share of net assets from associates
+16,109
+11,496
+10,834
+6.734
+6.121
+3,115
+2,157
+3,576
+5,004
+Others (iii)
+6,691
+Carrying Amounts
+22,800
+11,496
+10,834
+6,734
+6,121
+3,115
+2,157
+3,576
+5,004
+Summarised statement of comprehensive income
+Year ended 31 December
+Profit/(loss) for the year
+31 December
+2016
+2015
+RMB million
+31 December
+RMB million
+1,157
+1,157
+4,043
+4,043
+941
+853
+212
+218
+6,353
+6,271
+Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The recoverable amounts of the
+above cash generating units are determined based on value in use calculations. These calculations use cash flow projections based on financial
+budgets approved by management covering a one-year period and pre-tax discount rates primarily ranging from 10.4% to 11.0% (2015: 10.7% to
+11.3%). Cash flows beyond the one-year period are maintained constant.
+Key assumptions used for cash flow forecasts for these entities are the gross margin and sales volume. Management determined the budgeted gross
+margin based on the gross margin achieved in the period immediately before the budget period and management's expectation on the future trend
+of the prices of crude oil and petrochemical products. The sales volume was based on the production capacity and/or the sales volume in the period
+immediately before the budget period.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+19 INTEREST IN ASSOCIATES
+The Group's investments in associates are with companies primarily engaged in the oil and gas, petrochemical, and marketing and distribution
+operations in the PRC.
+The Group's principal associates are as follows:
+Name of company
+Sinopec Sichuan To East China Gas
+% of
+ownership
+interests
+50.00
+Principal activities
+Measurement
+method
+Country of
+incorporation
+RMB million
+Principal place
+31 December
+2015
+31 December
+(1,445)
+(1,009)
+116
+129,581
+90
+Balance at 31 December
+152,325
+As at 31 December 2016, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 12,192 million (2015: RMB 16,772 million). The geological and geophysical costs paid during the year ended 31
+December 2016 were RMB 2,899 million (2015: RMB 4,347 million).
+18 GOODWILL
+Cost
+Less: Accumulated impairment losses
+Impairment tests for cash-generating units containing goodwill
+Goodwill is allocated to the following Group's cash-generating units:
+Principal activities
+Sinopec Beijing Yanshan Petrochemical Branch
+("Sinopec Yanshan")
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+Sinopec (Hong Kong) Limited
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Trading of petrochemical products
+Other units without individually significant goodwill
+31 December
+2016
+RMB million
+14,016
+(7,663)
+6,353
+31 December
+2015
+RMB million
+13,928
+(7,657)
+6,271
+2016
+1,526
+Operation of natural gas
+PRC
+Caspian Investments Resources Ltd.
+50.00
+Crude oil and natural
+Equity method
+British
+("CIR”) (i)
+gas extraction
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+Virgin Islands
+The Republic of
+Kazakhstan
+Pipeline Ltd (ii)
+Sinopec Finance
+Zhongtian Synergetic Energy
+RMB million
+31 December 31 December
+2016
+2016
+RMB million
+31 December
+2015
+RMB million
+Current assets
+11,835
+Non-current assets
+25,395
+149,457
+16,478
+154,437
+10,168
+China Aviation Oil
+31 December 31 December 31 December
+2016
+2015
+2016
+RMB million RMB million RMB million
+7,292
+13,115
+CIR (i)
+products
+Equity method
+("China Aviation Oil")
+Company Limited
+of business
+PRC
+Pipeline Co., Ltd. ("Pipeline Ltd")
+pipelines and auxiliary
+facilities
+Sinopec Finance Company Limited
+49.00
+Provision of non-banking
+Equity method
+PRC
+PRC
+("Sinopec Finance")
+financial services
+Zhongtian Synergetic Energy
+38.75
+Manufacturing of
+Equity method
+PRC
+PRC
+Company Limited
+coal-chemical products
+("Zhongtian Synergetic Energy")
+China Aviation Oil Supply
+29.00
+Marketing and distribution Equity method
+PRC
+PRC
+of refined petroleum
+3,484
+3,630
+2,248
+Current financial liabilities (i)
+(1,781)
+(1,424)
+(783)
+(2,005)
+(334)
+(2,315)
+(1,187)
+(3,362)
+Other current liabilities
+(4,643)
+(3,116)
+(2,107)
+(1,864)
+(599)
+Other comprehensive income
+(1,616)
+(1,088)
+(6,466) (7,886)
+Total current liabilities
+(6,424)
+(4,540)
+(2,890)
+(3,869)
+(599)
+Current liabilities
+(767)
+54,027
+5,662
+569
+759
+1,616
+2,243
+6,826
+5,965
+Total current assets
+18,441
+9,913
+6.246
+5.253
+1.068
+1,021
+2,781
+2,321
+8,085
+10,136
+Non-current assets
+21,903
+25,585
+13.530
+15.543
+4.050
+7,433
+8,279
+57,054
+4,765
+(1,950)
+(7,653) (11,248)
+(44,032)
+(40,192)
+Net assets
+13,683
+8,781
+15,384
+13,814
+3,624
+4,367
+6.931
+3,217
+13,454
+12,723
+Net assets attributable to owners of the company
+13,683
+8,781
+15,384
+13,814
+3,624
+4,367
+6,690
+3,106
+13,454
+12,723
+Net assets attributable to non-controlling interests
+(1,363)
+(3,403)
+(2,179)
+(895)
+Non-current liabilities
+Non-current financial liabilities (ii)
+(19,985)
+(21,906)
+(1,492)
+(3,113)
+(49)
+(26)
+(43,028)
+(39,214)
+Other non-current liabilities
+(252)
+(271)
+(10)
+(895)
+(3,320)
+(2,130)
+(1,337)
+(1,004)
+(978)
+Total non-current liabilities
+(20,237)
+(22,177)
+(1,502)
+(3,113)
+(3,320)
+56
+4,852
+10,269
+(ii) Management is in the process of allocating the fair value to identifiable assets and liabilities of Pipeline Ltd, therefore the summarised financial information of Pipeline
+Ltd is based on management's preliminary fair value allocation which may be subject to further change.
+(iii) Other reflects the excess of fair value of the consideration transferred over the Group's share of the fair value of the investee's identifiable assets and liabilities as of
+the transaction date.
+(iv) The summarised statement of comprehensive income of Pipeline Ltd represents the operating results of the Pipeline Ltd for the period from the date when the Group
+lost control to 31 December 2016 (Note 8(i)).
+(v) The main asset of Zhongtian Synergetic Energy was under construction during the year ended 31 December 2016.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+173
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+20 INTEREST IN JOINT VENTURES
+The Group's principal interests in joint ventures are as follows:
+Name of entity
+Fujian Refining & Petrochemical
+Company Limited ("FREP")
+% of ownership
+interests
+Principal activities
+Measurement
+method
+Country of
+incorporation
+of business
+Principal place
+63,486
+50.00
+Manufacturing refining
+oil products
+(i) In August 2015, one of the subsidiaries of Sinopec Group Company completed the acquisition from LUKOIL OVERSEAS WEST PROJECT Ltd. a 50% equity interests in
+CIR and revised CIR's Articles of Association subsequently. According to the revised CIR's Articles of Association, the Group retained significant influences over CIR. As
+a result, the Group reclassified the investment interest in CIR from joint ventures to associates. The summarized statement of comprehensive income for the year 2015
+of CIR represents the operating result for the period from the date when the Group reclassified the investment interest in CIR from joint ventures to associates to 31
+December 2015.
+Equity method
+Note:
+(2,009)
+(3,518)
+(90)
+(175)
+28
+662
+(4,017)
+51
+1,351
+3,512
+3,630
+2.248
+(2,856)
+(4,107)
+23
+336
+26
+748
+1,707
+892
+495
+(1,759)
+(45)
+(86)
+14
+331
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial associates accounted for using
+equity method in aggregate was RMB 1,977 million (2015: RMB 1,418 million) and RMB 384 million (2015: RMB 632 million) respectively. As at
+31 December 2016, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate was RMB 18,395
+million (2015: RMB 16,596 million).
+7,396
+PRC
+40.00
+Saudi Arabia
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+Taihu
+BASF-YPC
+2016
+2015
+FREP
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2016
+2015
+2016
+2016
+2015
+2016
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+Mansarovar
+YASREF
+2015
+2015
+RMB million
+Current assets
+Cash and cash equivalents
+8,172
+2,517
+1,394
+488
+499
+262
+1,165
+78
+1,259
+4,171
+Other current assets
+Saudi Arabia
+BASF-YPC Company Limited
+Equity method
+Company Ltd. ("YASREF")
+Manufacturing and
+Equity method
+PRC
+PRC
+PRC
+("BASF-YPC")
+distribution of
+petrochemical products
+Mansarovar Energy Colombia Ltd.
+50.00
+Crude oil and natural
+Equity method
+British Bermuda
+Colombia
+("Mansarovar")
+gas extraction
+Taihu Limited ("Taihu")
+49.00
+Crude oil and natural
+Equity method
+Cyprus
+Russia
+gas extraction
+Yanbu Aramco Sinopec Refining
+37.50
+Petroleum refining and
+processing business
+(767)
+67,106
+50
+Within one year
+At 31 December 2016 and 2015, the future minimum lease payments under operating leases are as follows:
+The Group leases land and buildings, service stations and other equipment through non-cancellable operating leases. These operating leases do not
+contain provisions for contingent lease rentals. None of the rental agreements contains escalation provisions that may require higher future rental
+payments.
+Operating lease commitments
+33 COMMITMENTS AND CONTINGENT LIABILITIES
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 28 and 33, respectively.
+Management optimises the structure of the Group's capital, which comprises of equity and debts. In order to maintain or adjust the capital
+structure of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce debt, or
+adjust the proportion of short-term and long-term loans. Management monitors capital on the basis of the debt-to-capital ratio, which is calculated
+by dividing long-term loans (excluding current portion), including long-term debts and loans from Sinopec Group Company and fellow subsidiaries,
+by the total of equity attributable to owners of the Company and long-term loans (excluding current portion), and liability-to-asset ratio, which is
+calculated by dividing total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating
+and investment needs and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at
+a range considered reasonable. As at 31 December 2016, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 14.2 % (2015:
+17.1 %) and 44.5% (2015: 45.5%), respectively.
+Capital management
+All A shares and H shares rank pari passu in all material aspects.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+In June 2013, the Company issued 21,011,962,225 listed A shares and 5,887,716,600 listed H shares as a result of bonus issues of 2 shares
+converted from the retained earnings, and 1 share transferred from the share premium for every 10 existing shares.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB 1.00 each at the Placing Price
+of HKD 8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD 24,042,227,300 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.
+32 SHARE CAPITAL (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+350,022
+344,878
+284,300
+275,570
+12,430
+12,980
+13,091
+13,217
+182
+13,199
+13,265
+14,228
+13,737
+14,917
+2015
+RMB million
+RMB million
+31 December
+2016
+31 December
+13,966
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB 1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB 1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+2015
+2016
+32 SHARE CAPITAL
+Balance at 31 December
+Exchange adjustments
+Utilised for the year
+Accretion expenses
+Balance at 1 January
+Provision for the year
+Provisions primarily represent provision for future dismantlement costs of oil and gas properties. The Group has mainly committed to the PRC
+government to establish certain standardised measures for the dismantlement of its oil and gas properties by making reference to the industry
+practices and is thereafter constructively obligated to take dismantlement measures of its oil and gas properties.
+Movement of provision of the Group's obligations for the dismantlement of its oil and gas properties is as follow:
+RMB million
+33,115
+31 PROVISIONS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+181
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+212,214
+224,544
+2,750
+4,472
+for the year ended 31 December 2016
+183
+RMB million
+29,613
+2,899
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB 1.00 each at RMB 4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD 1.59 per H share and USD 20.645 per ADS,
+respectively, by way of a global initial public offering to Hong Kong and overseas investors. As part of the global initial public offering, 1,678,049,000
+state-owned ordinary shares of RMB 1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong Kong and
+overseas investors.
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB
+1.00 each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB 1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB 1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+121,071
+95,558
+25,513
+121,071
+95,558
+25,513
+RMB million
+RMB million
+3,420
+95,557,771,046 listed A shares (2015: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2015: 25,513,438,600) of RMB 1.00 each
+31 December
+2015
+31 December
+2016
+33,115
+121
+169
+36,918
+(599)
+(843)
+1,081
+1,057
+Registered, issued and fully paid
+Financial Statements (International)
+Financial Statements (International)
+184
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect management's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature
+and extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development
+areas, whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv)
+changes in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is
+indeterminable due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective
+actions that may be required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot
+reasonably be estimated at present, and could be material. The Group paid normal routine pollutant discharge fees of approximately RMB 6,358
+million in the consolidated financial statements for the year ended 31 December 2016 (2015: RMB 5,813 million).
+Environmental contingencies
+(ii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB 17,050 million. As at 31
+December 2016, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 11,545 million.
+Note:
+Management monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss has occurred, and recognises
+any such losses under guarantees when those losses are estimable. At 31 December 2016 and 2015, it was not probable that the Group will be
+required to make payments under the guarantees. Thus no liabilities have been accrued for a loss related to the Group's obligation under these
+guarantee arrangements.
+Contingent liabilities (Continued)
+33 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Legal contingencies
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+22,872
+6,010
+10,669
+11,545
+703
+658
+Joint ventures
+Associates(ii)
+Others
+31 December
+2015
+RMB million
+RMB million
+6,713
+31 December
+2016
+The Group is defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business. Management
+has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any resulting
+liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+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.
+194,179
+(i)
+RMB million
+2015
+2016
+Note
+Interest income
+Agency commission income
+Other operating lease charges
+34 RELATED PARTY TRANSACTIONS
+Operating lease charges for buildings
+Ancillary and social services
+Production related services
+Exploration and development services
+Transportation and storage
+Purchases
+Sales of goods
+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:
+The Group is part of a larger group of companies under Sinopec Group Company, which is controlled by the PRC government, and has significant
+transactions and relationships with Sinopec Group Company and fellow subsidiaries. Because of these relationships, it is possible that the terms
+of these transactions are not the same as those that would result from transactions among wholly unrelated parties.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+Operating lease charges for land
+92,688
+At 31 December 2016 and 2015, guarantees by the group in respect of facilities granted to the parties below are as follows:
+1,327
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB 4,173 million (2015: RMB 4,089 million).
+Note:
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+160,060
+148,099
+RMB million
+113,017
+47,043
+2015
+Exploration and production licenses
+31 December
+RMB million
+31 December
+2016
+Authorised but not contracted for
+Authorised and contracted for (i)
+At 31 December 2016 and 2015, capital commitments are as follows:
+Capital commitments
+33 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+116,379
+31,720
+1,317
+Exploration licenses for exploration activities are registered with the Ministry of Land and Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual exploration investment relating to the exploration blocks in respect of which the license is
+issued. The Ministry of Land and Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+Estimated future annual payments are as follows:
+834
+867
+21
+25
+24
+32
+25
+125
+123
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Land and Resources annually
+which are expensed. Payments incurred were approximately RMB 333 million for the year ended 31 December 2016 (2015: RMB 372 million).
+283
+RMB million
+RMB million
+2015
+31 December
+31 December
+2016
+Contingent liabilities
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Between one and two years
+Within one year
+263
+RMB million
+211,197
+95,928
+46,835
+236
+150
+USD denominated
+RMB denominated
+Current portion of long-term loans
+21
+4
+5
+5
+1,969
+Singapore Dollar ("SGD") denominated
+EUR denominated
+HKD denominated
+32,878
+13,577
+USD denominated
+10,806
+2,858
+RMB denominated
+150
+186
+18,580
+43,929
+26,484
+426
+17,345
+26,058
+31 December
+2015
+RMB million
+31 December
+2016
+RMB million
+Interest rates ranging from 1.08% to
+4.41% per annum at 31 December 2016
+with maturities through 2030
+Interest rates ranging from 1.30% to
+4.29% per annum at 31 December 2016
+with maturities through 2031
+USD denominated
+Third parties' debts
+Long-term bank loans
+RMB denominated
+43,693
+Interest rate and final maturity
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+180
+Financial Statements (International)
+Financial Statements (International)
+179
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The Group's weighted average interest rates on short-term loans were 2.42% (2015: 1.7%) at 31 December 2016. The above borrowings are
+unsecured.
+115,446
+74,819
+28 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Long-term debts represent:
+18,430
+Short-term loans
+Loans from Sinopec Group Company and fellow subsidiaries
+USD denominated
+RMB denominated
+Current portion of long-term corporate bonds
+USD denominated
+RMB denominated
+Current portion of long-term bank loans
+Euro ("EUR") denominated
+US Dollar ("USD") denominated
+RMB denominated
+11,944
+Short-term bank loans
+RMB million
+RMB million
+2015
+31 December
+31 December
+2016
+Short-term debts represent:
+28 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Third parties' debts
+461
+17,806
+31,036
+11,357
+71,517
+56,239
+30,000
+6,000
+Corporate bonds (i).
+10,481
+38,295
+4,868
+29,500
+10,931
+4,868
+54
+42
+5,559
+8,753
+5,613
+8,795
+7,855
+11,824
+1,013
+29,500
+Corporate bonds (ii)
+RMB denominated
+Fixed interest rates ranging from 3.30% to
+5.68% per annum at 31 December 2016
+with maturity through 2022
+Interest payable
+Salaries and welfare payable
+30 ACCRUED EXPENSES AND OTHER PAYABLES
+Over 6 months
+Between 1 month and 6 months
+Within 1 month or on demand
+31 December
+2015
+3,566
+134,124
+RMB million
+Payables for constructions
+31 December
+2016
+174,301
+5,828
+180,129
+2,868
+6,251
+10,348
+117,342
+RMB million
+2015
+31 December
+13,168
+130,558
+154,882
+Other payables
+Taxes other than income tax
+85,332
+77,309
+23,912
+21,468
+58,778
+52,827
+1,457
+1,396
+1,185
+Financial liabilities carried at amortised costs
+1,618
+31 December
+2015
+31 December
+2016
+RMB million
+5,030
+134,124
+13,682
+115,412
+159,953
+12,693
+7,483
+180,129
+RMB million
+Derivative financial instruments
+Receipts in advance
+RMB million
+31,444
+RMB million
+The ageing analysis of trade accounts and bills payables are as follows:
+Less: Current portion
+USD denominated
+Interest rates ranging from interest free to
+5.75% per annum at 31 December 2016
+with maturities through 2021
+95,446
+72,674
+(10,481)
+(38,295)
+105,927
+110,969
+No loans at 31 December 2016
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+88,121
+84,485
+22,621
+18,985
+4.25% per annum at 31 December 2016
+with maturities through 2043
+Fixed interest rates ranging from 1.25% to
+USD denominated
+65,500
+65,500
+Total third parties' long-term debts
+Less: Current portion
+31 December
+2016
+44,922
+186
+Trade accounts and bills payables measured at amortised cost
+Bills payable
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to associates and joint ventures
+Amounts due to third parties
+29 TRADE ACCOUNTS AND BILLS PAYABLES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(ii) These corporate bonds are carried at amotised cost. At 31 December 2016, RMB 18,985 million (USD denominated corporate bonds) are guaranteed by Sinopec
+Group Company.
+The Company issued 182-day corporate bonds of face value RMB 6 billion to corporate investors in the PRC debenture market on 12 September 2016 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.54% per annum
+44,350
+The Company issued 180-day corporate bonds of face value RMB 4 billion to corporate investors in the PRC debenture market on 31 December 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.75% per annum. The short-term bonds were due on 30 June 2016 and have been fully paid by the
+Group at maturity.
+(i) The Company issued 180-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 23 September 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.99% per annum. The short-term bonds were due on 23 March 2016 and have been fully paid by the
+Group at maturity.
+Note:
+Short-term and long-term bank loans, loans from Sinopec Group Company and fellow subsidiaries are primarily unsecured and carried at amortised
+cost.
+139,746
+117,446
+44,300
+44,772
+(236)
+(150)
+The Company issued 182-day corporate bonds of face value RMB 16 billion to corporate investors in the PRC debenture market on 14 December 2015 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.90% per annum. The short-term bonds were due on 14 June 2016 and have been fully paid by the
+Group at maturity.
+(ii)
+22
+92,627
+20,457
+9,998
+8,226
+18,580
+43,929
+44,772
+44,300
+21,590
+114,359
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 28.
+The long-term borrowings mainly include an interest-free loan with a maturity period of 20 years amounting to RMB 35,560 million from the
+Sinopec Group Company (a state-owned enterprise) through the Sinopec Finance. This borrowing is a special arrangement to reduce financing
+costs and improve liquidity of the Company during its initial global offering in 2000.
+As at and for the year ended 31 December 2016, and as at and for the year ended 31 December 2015, no individually significant impairment
+losses for bad and doubtful debts were recognised in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates
+and joint ventures.
+(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
+130,107
+13,195
+19,419
+49,237
+Prepaid expenses and other current assets
+Long-term prepayments and other assets
+Total
+Trade accounts payable
+Accrued expenses and other payables
+Other long-term liabilities
+Short-term loans and current portion of long-term loans
+from Sinopec Group Company and fellow subsidiaries
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Total
+31 December
+2016
+RMB million
+10,978
+22,393
+13,430
+9,084
+20,385
+17,760
+44,793
+2016
+RMB'000
+5,648
+499
+2015
+RMB'000
+5,225
+510
+6,147
+•
+uses of public utilities.
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+state-controlled.
+35 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 17.0% to 24.0% of
+the salaries, bonuses and certain allowances of its staff. In addition, the Group provides a supplementary retirement plan for its staff at rates not
+exceeding 5% of the salaries. The Group has no other material obligation for the payment of pension benefits associated with these plans beyond
+the annual contributions described above. The Group's contributions for the year ended 31 December 2016 were RMB 8,385 million (2015: RMB
+7,878 million).
+36 SEGMENT REPORTING
+Segment information is presented in respect of the Group's business segments. The format is based on the Group's management and internal
+reporting structure.
+In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker for the purposes of
+resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been
+aggregated to form the following reportable segments.
+(i) Exploration and production, which explores and develops oil fields, produces crude oil and natural gas and sells such products to the refining
+segment of the Group and external customers.
+(ii) Refining, which processes and purifies crude oil, that is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(iii) Marketing and distribution, which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(iv) Chemicals, which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products mainly to
+external customers.
+(v) Corporate and others, which largely comprises the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and corporate and others businesses separately. The reportable segments are each managed separately because they manufacture and/
+or distribute distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+118,242
+depositing and borrowing money; and
+Trade accounts receivable
+•
+•
+5,735
+(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 35. As at 31 December 2016 and 2015, the accrual for the contribution to
+post-employment benefit plans was not material.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+187
+Financial Statements (International)
+188
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+34 RELATED PARTY TRANSACTIONS (Continued)
+(d) Transactions with other state-controlled entities in the PRC
+The Group is a state-controlled energy and chemical enterprise and operates in an economic regime currently dominated by entities directly
+or indirectly controlled by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively
+referred as "state-controlled entities").
+Apart from transactions with Sinopec Group Company and fellow subsidiaries, the Group has transactions with other state-controlled entities,
+include but not limited to the followings:
+•
+sales and purchases of goods and ancillary materials;
+•
+rendering and receiving services;
+lease of assets;
+31 December
+2015
+RMB million
+Financial Statements (International)
+The Company has entered into a service stations franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+129
+116
+(ix)
+209
+207
+(x)
+996
+1,194
+(ix)
+(21,770)
+(xi)
+(24,877)
+Interest expense
+Net deposits placed with related parties
+Net loans repaid to related parties
+(14,082)
+302
+(57,881)
+456
+462
+1,333
+(iii)
+1,299
+(iv)
+27,201
+37,444
+(v)
+10,816
+10,880
+(vi)
+6,584
+6,754
+(vii)
+10,474
+10,618
+(vii)
+449
+(vii)
+The amounts set out in the table above in respect of the year ended 31 December 2016 and 2015 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+(viii)
+185
+•
+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%.
+186
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+34 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+•
+•
+•
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2016.
+The terms of these agreements are summarised as follows:
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+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.
+(ix) Interest income represents interest received from deposits placed with Sinopec Finance Company Limited and Sinopec Century Bright Capital Investment Limited,
+finance companies controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate. The
+balance of deposits at 31 December 2016 was RMB 40,073 million (2015: RMB 18,303 million).
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+34 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 2016 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 114,526 million (2015: RMB 112,089 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 96,023
+million (2015: RMB 93,061 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,584
+million (2015: RMB 6,754 million), operating lease charges for land and buildings paid by the Group of RMB 10,474 million and RMB 449
+million (2015: RMB 10,618 million and RMB 462 million), respectively and interest expenses of RMB 996 million (2015: RMB 1,194 million);
+and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 56,251 million (2015: RMB 77,747 million),
+comprising RMB 56,010 million (2015: RMB 77,513 million) for sales of goods, RMB 209 million (2015: RMB 207 million) for interest income
+and RMB 32 million (2015: RMB 27 million) for agency commission income.
+At 31 December 2016 and 2015, there was no guarantee given to banks by the Group in respect of banking facilities to related parties, except
+for the guarantees disclosed in Note 33.
+The directors of the Company are of the opinion that the above transactions with related parties were conducted in the ordinary course of
+business and on normal commercial terms or in accordance with the agreements governing such transactions, and this has been confirmed by
+the independent directors.
+Financial Statements (International)
+(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.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, property maintenance and management services.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+Note:
+(viii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+Proved reserves
+Items
+Summary of Reserves of Crude Oil and Natural Gas
+Natural gas production (bcf)
+25,748
+4,869
+4,982
+Refinery throughput
+Unit: million tonnes
+Change from
+2015 to 2016 (%)
+Gasoline, diesel and kerosene production
+Gasoline
+Diesel
+Kerosene
+Proved developed reserves
+Light chemical feedstock production
+marketing advantages fully into play
+to further improve margins for LPG,
+asphalt and other products. In 2016, the
+company processed 236 million tonnes of
+crude and produced 149 million tonnes
+of refined oil products, up by 0.53% from
+the previous year, with gasoline up by
+4.4% and kerosene up by 4.6%.
+China
+Consolidated subsidiaries
+Shengli
+Shengli
+Fuling
+Consolidated subsidiaries
+Puguang
+China
+Proved developed reserves
+Proved reserves
+Items
+Equity accounted entities
+Consolidated subsidiaries
+Consolidated subsidiaries
+Others
+China
+Proved undeveloped reserves
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Others
+Overseas
+Light product yield (%)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note: Includes 100% of the production of domestic joint ventures.
+25.47
+24.35
+20.75
+4.6
+38.54
+38.81
+39.17
+(3.9)
+(0.7)
+76.50
+94.70
+94.75
+76.52 (0.17) percentage points
+94.66 (0.05) percentage points
+strategies, promoted effective supply
+and further expanded the retail volume
+of premium gasoline. We also improved
+our marketing network by accelerating
+the planning and construction of service
+stations and refined oil product pipelines.
+We expanded natural gas retail business
+for automobiles by expediting the
+construction and operation of CNG/LNG
+stations, achieving 25% growth in sales
+volume of natural gas for automobiles.
+In 2016, the total sales volume of oil
+products was 195 million tonnes, of
+which domestic sales accounted for 173
+million tonnes. Our emerging business
+maintained its rapid growth with
+increased scale and profits. Emerging
+business transaction volume reached
+RMB 35.1 billion, up by 41.4% from the
+previous year.
+Summary of Operations for the Marketing and Distribution Segment
+76.33
+74.26
+70.05
+67.34
+(3) Marketing and Distribution
+In 2016, the company actively responded
+to changes in the market environment
+to bring our advantages in integrated
+business and distribution network into full
+play, achieving solid operating results. We
+optimised internal and external resources
+and achieved growth in both total sales
+volume and retail scale. We made
+timely adjustments to our marketing
+2016
+2015
+2014
+235.53
+236.49
+235.38
+(0.4)
+149.17
+148.38
+146.23
+0.5
+56.36
+53.98
+51.22
+4.4
+Refinery yield (%)
+Others
+2,243
+Consolidated subsidiaries
+Equity accounted entities
+201
+136
+230
+159
+260
+273
+52
+136
+40
+313
+375
+279
+1,326
+801
+1,701
+1,080
+312
+201
+37
+116
+6,436
+Change from
+6,457
+6,454
+7,570
+7,178
+31 December 2015
+31 December 2016
+Natural gas reserves (bcf)
+26
+23
+3
+0
+29
+23
+85
+99
+1,701
+Overseas
+1,080
+1,393
+480.22
+471.91
+431.29
+2015 to 2016 (%)
+2014
+2015
+2016
+(8.6)
+Change from
+Consolidated subsidiaries
+Equity accounted entities
+Overseas
+Others
+Fuling
+Consolidated subsidiaries
+China
+Proved developed reserves
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+303.51
+349.47
+360.73
+1,552
+31 December 2015
+31 December 2016
+Crude oil reserves (mmbbls)
+4.3
+716.35
+734.79
+766.12
+(5.2)
+49.86
+53.13
+50.36
+(14.6)
+310.87
+296.34
+253.15
+(13.2)
+2,013
+2016
+Over the past year, the Company actively
+fulfilled its social responsibilities and firmly
+established itself as a good corporate
+citizen. We advanced our green, low-carbon
+development initiatives as we delivered more
+environmentally friendly products. We also
+successfully concluded our Clear Water, Blue
+Sky environmental campaign, achieving further
+declines in the emissions of major pollutants.
+We stressed the importance of biodiversity and
+strove to minimise the environmental impact
+of our operations. Meanwhile, we continued
+to open up the Company to public scrutiny.
+As a people-oriented enterprise, we reinforced
+workplace safety for our employees and secured
+their legitimate rights and interests. In 2016,
+we earmarked a total of RMB 6.584 billion
+to promote social, educational, medical and
+healthcare development in the areas where we
+have operations. In addition, we stepped up
+targeted measures to combat poverty, reduce
+privation in impoverished areas in Qinghai and
+Tibet, with total donations amounted to RMB
+133 million to help local residents achieve
+sustainable development.
+2014
+25
+USD/barrel
+95
+85
+55
+75
+65
+55
+55
+Mr. Dai Houliang, Vice Chairman & President
+2015.1
+2015.2
+2015.3
+2015.4
+2015.5
+2015.6
+55
+35
+45
+In 2016, domestic demand for chemicals
+grew steadily. According to our statistics,
+domestic apparent consumption of
+ethylene equivalent was up by 3.0%
+from the previous year, and consumption
+of synthetic resin, synthetic fiber and
+synthetic rubber rose by 5.1%, 2.6% and
+7.5%, respectively. Domestic chemical
+product prices decreased compared with
+the previous year, but experienced an
+upward trend, in line with movements of
+international chemical product prices.
+The Board of Directors and I believe that through
+the joint efforts of the Board, the management
+and all the staff, coupled with the support of our
+shareholders and the wider community, Sinopec
+Corp. will continue to make progress in its
+various businesses, growing stronger and bigger
+and delivering greater value to our shareholders
+and our society.
+Wang Yupu
+Chairman
+Beijing, China
+24 March 2017
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+9
+Chairman's Statement
+BUSINESS REVIEW AND PROSPECTS
+BUSINESS REVIEW
+In 2016, global economic recovery continued
+to be weak, while China's economy maintained
+its stable growth, with gross domestic product
+(GDP) up by 6.7%. International oil prices
+fluctuated above their lowest levels. With
+abundant supply, domestic oil products
+market witnessed strong competition. Demand
+for chemicals grew steadily, and China's
+environmental regulations became more
+stringent. The Company actively addressed
+market changes through a focus on growth
+quality, profitability and restructuring. We
+pressed ahead with measures to address market
+development, optimisation, cost reduction and
+risk control, coordinating all aspects of our
+work, which helped deliver operating results that
+were better than expected.
+1
+MARKET REVIEW
+(1) Crude Oil Market
+In 2016, international crude oil prices
+bottomed out and fluctuated upwards,
+yet still remained at a low level. The
+average spot price of Platt's Brent for the
+year was USD 43.69 per barrel, down by
+16.7% from the previous year.
+(2) Refined Oil Products Market
+In 2016, domestic demand for refined
+oil products maintained its growth while
+the structure of consumption continued
+to change, and market supply was in
+surplus. According to our statistics,
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) was 288 million tonnes, up
+by 4.3% from the previous year, with
+gasoline up by 11.9%, kerosene up by
+11.0% and diesel down by 2.2%. The
+government further improved the pricing
+mechanism for refined oil products by
+setting the floor price. In 2016, the
+government made 15 price adjustments
+with 10 increases and 5 decreases.
+(3) Chemical Products Market
+2015.7
+In 2017, under the Company's 13th Five-Year
+Plan, our planned capital expenditures will be
+RMB 110.2 billion. We will strive to increase our
+upstream reserves and resource base. We will
+also expand natural gas, especially shale gas,
+businesses to promote gas consumption in the
+Yangtze River Economic Belt. In the refining and
+chemical businesses, we will build four world-
+class refining bases, in Mao Zhan, Zhenhai,
+Shanghai and Nanjing. We will promote further
+upgrades in oil products and improve our
+capability to deliver high-end, high-value-added
+products. At the same time, we will give full
+play of our advantages in the marketing network
+and brand name to supply the market with
+cleaner oil products and reinforce our efforts
+to tap potentials in our emerging businesses
+and transform into an comprehensive services
+provider. Through the implementation of Energy
+Efficiency Doubling Plan and Green Enterprises
+Action Plan, we will endeavor to become the
+leading green, low-carbon operators in the
+industry.
+2015.8
+2015.10
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 11
+Business Review and Prospects
+12
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+2 PRODUCTION & OPERATIONS REVIEW
+(1) Exploration and Production
+2017.2
+In 2016, faced with low oil prices and
+coped with harsh conditions in the
+upstream sector, we strengthened
+measures to rein in costs and address
+our weaknesses. At the same time,
+we gave priority to high-efficiency
+exploration activities and made a
+in the Xinjiang Tahe Basin, the Beibu
+Gulf in Guangxi and the Yin-E Basin
+in Neimongol, along with new shale
+gas findings in the Yongchuan block in
+Sichuan. In development, we adopted a
+profit-oriented approach, adjusting the
+development structure, enhancing cost
+discipline, and cutting low-efficiency oil
+production and high-cost EOR operations.
+We implemented Phase Two of Fuling
+Shale Gas development project and
+Summary of Operations for the Exploration and Production Segment
+increased our production of natural gas.
+We also completed the mixed ownership
+reform of Sichuan-to-East China Pipeline
+Co. and improved our asset profitability.
+The Company's production of oil and
+gas declined to 431.29 million barrels
+of oil equivalent, with domestic crude
+production down by 14.6% from the
+previous year and natural gas production
+up by 4.3%.
+Oil and gas production (mmboe)
+Crude oil production (mmbbls)
+China
+6,439
+number of important new discoveries
+2017.1
+2016.12
+2016.11
+2015.11
+2015.12
+2016.1
+2016.2
+2016.3
+2016.4
+2016.5
+2016.6
+2016.7
+2016.8
+2016.9
+Trend of International Crude Oil Prices
+WTI-NYMEX
+ICE BRENT
+-- DTD BRENT
+DUBAI
+2016.10
+2015.9
+2015
+assets. We will take advantage of opportunities
+that arise from the government's support
+policies, including reforms in the oil and gas
+sector and in state-owned enterprises as well
+as the Belt and Road initiative, to enhance the
+quality and profitability of our business.
+a result, we achieved effective control over our
+expenses and kept inventories at reasonable
+levels. Moreover, we enjoyed abundant free cash
+flow and maintained the ratio of liabilities to
+assets at a low level.
+0.4
+Annual average throughput per station (tonne/station)
+3,926
+3,896
+3,858
+0.8
+Change from
+53.13
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+In 2016, we accelerated development of
+basic and high-end chemicals to promote
+effective supply, and we optimised the
+operations of our facilities based on
+their profit margins. The Company fine-
+tuned its chemical feedstock mix to
+lower costs, optimised product mix by
+Summary of Operations for the Chemicals Segment
+2014
+the end of the
+previous year
+to the end of
+the reporting
+period (%)
+0.1
+31 December
+31 December
+(4) Chemicals
+52.34
+52.56
+Direct sales and distribution (million tonnes)
+2015 to 2016 (%)
+Total sales volume of oil products (million tonnes)
+194.84
+189.33
+189.17
+2.9
+Total domestic sales volume of oil products (million tonnes)
+172.70
+171.37
+170.97
+0.8
+Overseas
+Retail sales (million tonnes)
+120.14
+119.03
+117.84
+0.9
+28,436
+Looking ahead to 2017, we expect the global
+political and economic landscape to become
+more complex, with international oil prices
+hovering at low levels. Meanwhile, we believe
+that more positive trends will emerge in China's
+economy, driving faster growth in domestic
+demand for petroleum and petrochemical
+products. The Company will adhere to its
+development strategies of value-oriented growth,
+innovation-driven development, integrated
+resource allocation, openness to cooperation,
+and green, low-carbon development. In
+accordance with our objective of progressing at a
+steady pace, we will strive to achieve safety and
+environmental friendly goals, stable production
+and operations, and steady improvements in
+operating results. On top of that, we will actively
+pursue market opportunities and further deepen
+supply-side structural reform. While redoubling
+efforts to implement structural adjustments,
+we will promote technological innovations and
+prudently implement mixed-ownership reforms.
+In addition, we will explore ways to create a
+new business model that will capitalise on our
+finance business to support development of core
+physical operations. These measures will help us
+rejuvenate our operations, enhance our operating
+efficiency and augment the profitability of our
+30,730
+857,420
+4,497
+4,727
+4,758
+4,932
+4,528
+4,622
+4,656
+4,966
+Total
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Others
+175
+253
+253
+Fuling
+facilities. In the chemical business, we adhered
+to development of basic and high-end chemicals.
+We further increased the proportion of high end
+products from three major synthetic materials.
+As we enhanced our efforts in new product
+development, we pressed ahead with integration
+of production, sales, research and consumption,
+striving to offer comprehensive solutions to
+customers. Meanwhile, we continuously adapted
+our marketing initiatives to reflect the latest
+market trends. With our superior network,
+we delivered more environmentally friendly
+premium gasoline products to the market. In
+addition, we complemented our marketing
+activities by growing our emerging businesses.
+We continuously expanded our business types
+and product varieties in an aim to provide one-
+stop service to our customers. Transaction value
+of our emerging business surged by 41%. These
+results mark an important milestone for us in
+our development as an comprehensive service
+provider.
+In 2016, the Company further enhanced
+cooperation with our business partners. In our
+overseas operations, we were actively involved
+in expanding projects across the Belt and Road
+region and we continued to make progress in
+developing a number of major projects, such
+as the Yanbu refinery in Saudi Arabia, which
+commenced operations during the year. In our
+domestic businesses, the Company further
+strengthened its mixed-ownership operations
+and partnered with 14 provinces and cities in
+China to drive the development of our natural
+gas business. We brought in new investors to
+Sichuan-to-East China Pipeline Co., raising RMB
+22.8 billion. Meanwhile, Sinopec Marketing Co.
+Ltd.'s shareholding reform progressed smoothly.
+While we have continued developing our refining
+and chemical production bases and shifting our
+focus towards mid-range and high-end products,
+we increased our efforts to find additional
+opportunities for cooperation in various sectors
+with the aim of enabling all participants to enjoy
+the benefits of shared development.
+In 2016, the Company continued to improve
+its management and operating efficiency. We
+diligently promoted a corporate culture of
+rigorousness, meticulousness and pragmatism,
+thus ensuring that we conducted our operations
+in compliance with applicable laws and
+regulations. At the same time, we integrated our
+internal control and risk management systems
+and further improved our controls on investment
+and financial management. We also increased
+our efforts to promote information-based,
+intelligent operations throughout the Company
+and to develop our data sharing platform. As
+175
+13
+Business Review and Prospects
+14
+742,588
+857,420
+742,588
+2015
+2016
+Area under license
+(as of 31 December)
+to-gasoline ratio further declining to
+1.19. We actively responded to the
+challenges of abundant market supply,
+and succeeded in maintaining the
+utilisation rate at a high level. Meanwhile,
+through superior feedstock optimisation
+by our international trading business, we
+further cut crude procurement costs and
+achieved moderate increases in product
+exports. We brought our centralised
+Summary of Operations for the Refining Segment
+In 2016, the Company completed GB V
+automobile gasoline and diesel quality.
+upgrading program ahead of schedule
+and actively promoting VI automobile
+gasoline and diesel quality upgrading
+in Beijing. We advanced the adjustment
+of our product structure and increased
+output of gasoline (especially premium
+gasoline) and kerosene, with the diesel-
+(2) Refining
+China
+Overseas
+Regions with development licenses
+China
+Regions with exploration licenses
+Unit: Square kilometers
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+33,305
+6,436
+1
+2,330
+78
+88222020
+140
+78
+Total
+0
+Equity accounted entities
+138
+0
+0
+Overseas
+117
+50
+Others
+21
+28
+Consolidated subsidiaries
+110
+78
+138
+140
+0
+2
+0
+0
+0
+2
+75
+117
+35
+21
+8000008
+78
+50
+28
+152
+110
+Shengli
+110
+138
+Consolidated subsidiaries
+1
+0
+0
+99
+55
+150
+268
+900
+Total
+Equity accounted entities
+5
+0
+0
+0
+0
+0
+2
+6
+373
+196
+138
+78
+China
+Exploratory Development
+Exploratory Development
+Exploratory Development Exploratory Development
+Region
+Net
+Gross
+Net
+Gross
+2015
+2016
+Wells being drilled (as of 31 December)
+22171018
+26
+144
+1,950
+78
+0
+155
+110
+31,547
+31,547
+Others
+17,902
+17,902
+18,115
+18,115
+32,019
+Overseas
+3,614
+6,913
+3,122
+Consolidated subsidiaries
+28
+14
+28
+7,432
+32,019
+49,662
+49,662
+153
+Oil production wells (as of 31 December)
+2016
+2015
+Region
+China
+Gross
+49,921
+Net
+49,921
+Gross
+Net
+49,662
+49,662
+Consolidated subsidiaries
+Shengli
+49,921
+49,921
+15
+22223035
+Equity accounted entities
+Total
+Puguang
+57
+57
+55
+6,439
+0
+223010.
+4,727
+0
+129
+75
+23
+35
+152
+110
+152
+0
+4,758
+4,932
+4,966
+57,353
+3,600
+53,535
+6,885
+56,575
+3,107
+52,784
+Natural gas production wells (as of 31 December)
+2016
+2015
+Region
+Gross
+Net
+Gross
+China
+4,966
+4,932
+4,758
+Net
+4,727
+Consolidated subsidiaries
+7,404
+Consolidated subsidiaries
+55
+1
+Synthetic fiber
+Synthetic fiber monomer and polymer
+Synthetic rubber
+Synthetic resin
+Ethylene
+Unit: thousand tonnes
+Change from
+2014 2015 to 2016 (%)
+of synthetic fiber reaching 86.5% and
+the specialty and new products as a
+percentage of synthetic resins reaching
+61.4%. By implementing low-inventory
+and differentiated marketing strategies,
+our full-year chemical sales volume
+increased by 11.3% from the previous
+year to 69.96 million tonnes, with all
+produced chemicals sold.
+Note: Includes 100% of the production of domestic joint ventures.
+0.2
+30,538
+30,551
+30,560
+30,547
+30,597
+30,603
+2015
+2016
+maximising production of high-value-
+added products tailored to market
+demands, and intensified its efforts to
+enhance research and development,
+production, marketing and sales of high
+value added new products, achieving
+good results. Ethylene output was 11.059
+million tonnes, with the differential ratio
+(5) Research and Development
+In 2016, the Company pushed ahead
+with its innovation-driven strategy,
+continuing to advance its R&D activities
+with notable results. In our upstream
+business, our development in shale
+gas exploration technologies enabled.
+us to make breakthroughs in shale gas
+exploration in Yongchuan, Chongqing,
+the breakthrough in Ordovician oil
+and gas reservoir formation theory
+and exploration technologies led us
+to the discovery of the Shunbei field.
+In refining, we applied technologies
+such as for production of high-octane
+gasoline from FCC diesel. In chemicals,
+we commercialised the production of
+ethylene glycol from syngas, adopted
+butadiene tail-gas selective hydrogenation
+technologies, employed technologies to
+produce light olefins from coal as well
+as olefin catalytic cracking technologies,
+and developed new products including
+2016
+(0.5)
+(6) Health, Safety and the Environment
+In 2016, the Company fully followed
+its safe production and accountability
+scheme, strengthened the identification
+and control of risks, completed the
+rectification of potential hazards from oil
+and gas pipelines, further push forward.
+management on potential hazards
+from oil storage tanks, reinforced on.
+site supervision and management, and
+environmentally friendly polypropylene
+resin with high stiffness and tenacity,
+and a specialty resin used in high-
+performance medical spun-bond non-
+woven fabrics. In 2016, the Company
+filed 5,612 patent applications at
+home and abroad, of which 3,942 were
+granted. The Company also won four
+second prizes in the National Technology
+and Innovation Awards and one golden
+award and nine excellent patent awards
+in China's Patent Award competition.
+1,315
+8,383
+8,994
+1,282
+1,242
+9,275
+939
+843
+857
+14,639
+15,065
+15,201
+10,698
+2015
+11,118
+11,059
+31 December
+0.9
+Productive
+Dry Productive
+1,112
+724
+1,113
+724
+18
+18
+0
+724
+0
+18
+2,953
+2,880
+1,016
+1,226
+2,470
+149
+18
+1,112
+0
+181
+Productive
+Development
+Exploratory
+Development
+Exploratory
+2015
+2016
+Wells completed (as of 31 December)
+Exploration and Production Activities
+1
+0
+0
+0
+1
+0
+931
+724
+Dry
+1.7
+Region
+(3.1)
+166
+25
+1,801
+195
+373
+6
+801
+73
+149
+Consolidated subsidiaries
+25
+1,801
+195
+373
+6
+801
+266
+462
+5
+150
+0
+3.1
+0
+99
+1
+2
+Overseas
+781
+122
+223
+1
+339
+76
+100
+Others
+1,020
+73
+149
+266
+Shengli
+Dry
+Refining: We will continue with
+our market-oriented, profitability.
+driven strategy to optimise crude oil
+procurement and resource allocation and
+to lower our purchasing costs. We will
+comprehensively adjust our production
+plans to ensure safe and reliable
+operations. We will enhance our product
+structure by increasing the production of
+jet fuel and gasoline (especially premium
+gasoline) and further lowering the diesel-
+to-gasoline ratio. We will accelerate the
+quality and supply of GB VI gasoline
+and diesel in Beijing and GB V regular
+diesel in other area. In 2017, we plan
+to process 240 million tonnes of crude
+and produce 150 million tonnes of oil
+products.
+and profitability of both incremental and
+existing reserves. In gas development,
+we will advance key projects for capacity
+construction, refine the management of
+developed gas fields and optimise gas
+production and marketing plans. In 2017,
+we plan to produce 294 million barrels of
+crude oil, of which overseas production
+will account for 46 million barrels. We
+plan to produce 879.9 billion cubic feet
+of natural gas.
+achieved overall safe production and
+operations. We standardised measures
+to enhance worker protection and
+improved occupational health safeguards
+for our employees. By implementing
+its green, low-carbon strategy, the
+Company established a more stringent
+environmental protection management
+system, completed Clear Water, Blue Sky
+environmental protection project, and
+met emission reduction targets for major
+pollutants. Compared with last year,
+energy intensity was reduced by 1.59%,
+industrial water consumption was down
+by 1.1%, COD in discharged water was
+down by 3.86%, sulfur dioxide emissions
+were down by 4.84%, and all hazardous
+chemicals, discharged water, gas, and
+solid wastes were properly treated. For
+more detailed information, please refer
+to our Communication on Progress for
+Sustainable Development.
+In 2017, bearing in mind structural
+reforms on the supply side, the Company
+will focus on enhancing quality and
+profitability of our assets, cost reduction,
+market expansion, structural adjustments,
+reforms, and consolidating the basis for
+further growth. We will undertake the
+following work during the year:
+(2) Operations
+Looking ahead to 2017, we expect even
+more uncertainty in the global economy
+while China's economy maintains its
+steady growth. International oil prices are
+expected to fluctuate at a low level, with
+domestic demand for refined oil products
+continuing to grow as the consumption
+structure undergoes further adjustments.
+Domestic demand for petrochemical
+products will increase steadily as the
+consumption structure gradually shifts
+towards the high end.
+(1) Market Outlook
+BUSINESS PROSPECTS
+In 2016, focusing on quality and
+profitability of investment, the Company
+continuously optimised its investment
+projects. Total capital expenditures were
+RMB 76.456 billion. Capital expenditures
+for the exploration and production
+segment were RMB 32.187 billion,
+mainly for Fuling shale gas and Yuanba
+gas field development projects and LNG
+terminal projects in Guangxi and Tianjin,
+as well as overseas projects. Capital
+expenditures for the refining segment
+were RMB 14.347 billion, mainly for
+gasoline and diesel quality upgrading
+projects, adjustments in the product
+mix and refinery revamping projects.
+Capital expenditures for the marketing
+and distribution segment were RMB
+18.493 billion, mainly for constructing
+and renovating service stations and
+building refined oil product pipelines,
+depots and storage facilities, as well as
+for rectification of safety hazards. Capital
+expenditures for the chemicals segment
+were RMB 8.849 billion, mainly for
+adjustment of the feedstock and product
+structure, the Ningdong coal chemical
+project and the Zhongtianhechuang coal
+to chemical project. Capital expenditures
+for the corporate and others segment
+were RMB 2.58 billion, mainly for R&D
+facilities and information technology
+application projects.
+(7) Capital Expenditures
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+16
+Business Review and Prospects
+15
+China
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Business Review and Prospects
+Exploration and Production: We will
+maintain exploration activities, optimising
+our plans to achieve high-efficiency
+exploration. Our goal will be discovery of
+low-cost, large-scale reserves to expand
+our resources. In oil development, we
+will fine-tune development plans based
+on oil price trends and promote oilfield
+development by increasing the volume
+Chemicals: We will continue to adjust
+our feedstock mix to lower costs, fine-
+tune our product slate to deliver more
+popular, profitable and high-value-added
+products, optimise our facility utilisation
+rate, shut down facilities which have no
+marginal contributions. We will deepen
+the adjustment on sector structure,
+through advancing the development of
+fine chemicals and biochemicals, and
+improving operations of our coal-chemical
+projects. Meanwhile, we will enhance our
+strategies of product differentiation and
+precision marketing, and provide our
+customers with full process solutions and
+value-added services. In 2017, we plan to
+produce 11.66 million tonnes of ethylene.
+Marketing and Distribution: We will
+intensify our marketing strategy of
+balancing profits and volume, with the
+priority on profits. We will undertake
+measures to fully explore markets,
+expand our retail volume and increase
+our market share. We will further improve
+our marketing network to reinforce
+our advantages. We will accelerate
+construction of gas stations to strengthen
+our presence in the CNG/LNG market.
+We will step up the promotion of key
+merchandise and self-branding and
+boost the growth of our emerging
+business. We will explore building a
+new type of customer service center,
+employ techniques of Big Data analysis
+to conduct precision marketing and
+further our transformation into a modern
+comprehensive services provider. In
+2017, we plan to sell 175 million tonnes
+of oil products in the domestic market.
+Dry Productive
+17
+110
+in the refining business, and revamping
+of refineries as well as GB VI quality
+upgrading of oil products. The marketing
+and distribution segment will account
+for RMB 18 billion, mainly for revamping
+service stations, improving pipeline
+network, building oil tank farms and
+removing safety hazards. The chemicals
+segment will account for RMB 15.1
+billion, mainly for the integrated refining
+and chemical project in Zhanjiang of
+Guangdong Province, the integrated
+refining and chemical project in Gulei of
+Fujian Province and the high-efficiency
+and environmentally friendly aromatics
+project in Hainan refinery. The corporate
+and others segment will account for
+RMB 3.8 billion, mainly for R&D and
+Information technology projects.
+Research and Development: We will
+continue to implement our strategy
+of development driven by innovation,
+improving mechanisms for technological
+innovation and fast-tracking key technical
+breakthroughs. In exploration and
+production, we will focus on increasing
+reserves and production and pushing
+ahead with breakthroughs in enhanced oil
+recovery technologies and development
+of difficult-to-tap reserves. In refining,
+R&D initiatives will address processing
+of heavy crude oil, quality upgrading of
+oil products and optimisation of product
+slate. In chemicals we will focus on
+adjustments in our product mix along
+with further progress in R&D for basic
+chemicals, synthetic materials, coal-
+chemicals, fine chemicals and bio-
+chemicals. We also expect to make
+progress in safety, environmental and
+energy-conserving technologies as well
+as prospective and basic research to
+enhance our capabilities for innovation
+and to achieve new R&D breakthroughs.
+Capital Expenditures: In 2017, we
+will devote attention to the quality
+and profitability of investments, and
+optimise our investment projects. Capital
+expenditures for the year are budgeted
+at RMB 110.2 billion. The exploration
+and production segment will account
+for expenditures of RMB 50.5 billion,
+mainly for Phase II of Fuling shale
+gas development, Tianjin LNG project,
+and gas storage project, and overseas
+oil and gas project development. The
+refining segment will account for RMB
+22.8 billion, mainly for building of
+refining bases, structural adjustments
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+3,343
+- Corporate and others
+- Exploration and production
+2,282
+5,696
+Aggregate share of profits from associates and joint ventures
+Investment income
+9.306
+8,362
+1,376
+Profit before taxation
+(4)
+Net finance costs
+Aggregate investment income
+- Elimination
+- Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+835
+24
+(8)
+1,379
+Total segment operating profit
+725
+4,566
+1,581
+384
+3,212
+19,476
+20,623
+28,855
+32,153
+20,959
+56,265
+2,362
+(17,418)
+77,193
+56.822
+Share of profits/(losses) from associates and joint ventures
+- Exploration and production
+(1,203)
+633
+- Refining
+- Marketing and distribution
+- Chemicals
+1,075
+90
+70
+108,921
+41
+292,328
+283,416
+144,371
+151,646
+95,263
+1,195,341
+1,255,863
+Interest in associates and joint ventures
+116,812
+84,293
+(36,641)
+25,337
+69,666
+142,497
+Cash and cash equivalents and time deposits with financial institutions
+Other unallocated assets.
+7,469
+7,214
+Deferred tax assets
+10,964
+11,408
+Available-for-sale financial assets
+264,573
+260,903
+447,307
+402,476
+34
+350
+(822)
+263
+466
+(6,611)
+80,151
+(9,239)
+56,411
+At 31 December
+2016
+119
+RMB million
+2015
+RMB million
+Assets
+Segment assets
+- Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+Total segment assets
+At 31 December
+- Elimination
+Other operating revenues
+- Chemicals
+Marketing and distribution
+Chemicals
+Corporate and others
+Other operating revenues
+Turnover and other operating revenues
+2016
+2015
+RMB million
+RMB million
+47,443
+57,740
+58,954
+71,019
+106,397
+128,759
+102,983
+120,650
+747,317
+800,962
+850,300
+921,612
+Exploration and production
+Refining
+Elimination of inter-segment sales
+Turnover
+Inter-segment sales
+External sales
+Exploration and production
+Turnover
+Information of the Group's reportable segments is as follows:
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for interest in associates and joint ventures, investments, deferred tax assets, cash and cash
+equivalents, time deposits with financial institutions and other unallocated assets. Segment liabilities exclude short-term, income tax payable,
+long-term debts, loans from Sinopec Group Company and fellow subsidiaries, deferred tax liabilities and other unallocated liabilities.
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating income
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+36 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+19,013
+1,027,373
+3,480
+1,030,853
+External sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+Inter-segment sales
+- Corporate and others
+1,086,098
+284,289
+42,498
+1,930,911
+2,020,375
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+189
+Financial Statements (International)
+190
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+36 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+2016
+RMB million
+2015
+RMB million
+Result
+Operating profit/(loss)
+By segment
+- Exploration and production
+- Refining
+- Marketing and distribution
+50,721
+1,671
+1,478
+8,417
+276,640
+38,614
+43,814
+322,903
+320,454
+418,102
+436,749
+320,367
+345,454
+738,469
+3,056
+1,089,154
+782,203
+(1,264,305)
+1,880,190
+1,977,877
+9,542
+9,894
+5,486
+5,004
+22,004
+17,512
+12,211
+(1,168,732)
+Total assets
+1,447,268
+57,515
+2,672
+11,599
+891
+644
+4,355
+798
+616
+(279)
+238
+(126)
+(58)
+Cash and cash equivalents at 1 January
+(1,157)
+14,914
+2,042
+1,327
+1,077
+279
+101
+380
+630
+260
+337
+Effect of foreign currency exchange
+rate changes
+2,682
+616
+and cash equivalents
+588
+investing activities
+21,180
+2,729
+(4,052)
+(190)
+(439)
+54
+54
+76
+(504)
+(3,080)
+Net (decrease)/increase in cash
+(4,869)
+financing activities
+(20,424)
+(42,777)
+(4,414)
+637
+(2,637)
+(3,696)
+(55)
+(176)
+(443)
+(682)
+Net cash (used in)/generated from
+633
+112
+71
+• credit risk;
+liquidity risk;
+• market risk.
+The Board of Directors has overall responsibility for the establishment, oversight of the Group's risk management framework, and developing and
+monitoring the Group's risk management policies.
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management controls and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+Credit risk
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
+and arises principally from the Group's deposits placed with financial institutions and receivables from customers. To limit exposure to credit risk
+relating to deposits, the Group primarily places cash deposits only with large financial institutions in the PRC with acceptable credit ratings. The
+majority of the Group's trade accounts receivable relate to sales of petroleum and chemical products to related parties and third parties operating
+in the petroleum and chemical industries. No single customer accounted for greater than 10% of total accounts receivable at 31 December 2016,
+except the amounts due from Sinopec Group Company and fellow subsidiaries. Management performs ongoing credit evaluations of the Group's
+customers' financial condition and generally does not require collateral on trade accounts receivable. The Group maintains an impairment loss for
+doubtful accounts and actual losses have been within management's expectations.
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, trade accounts and bills receivables, derivative financial
+instruments and other receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+194
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The Group has exposure to the following risks from its uses of financial instruments:
+for the year ended 31 December 2016
+Liquidity risk
+Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach in managing
+liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
+conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Management prepares monthly cash flow budget
+to ensure that the Group will always have sufficient liquidity to meet its financial obligations as they fall due. The Group arranges and negotiates
+financing with financial institutions and maintains a certain level of standby credit facilities to reduce the Group's liquidity risk.
+At 31 December 2016, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB 256,375
+million (2015: RMB 297,997 million) on an unsecured basis, at a weighted average interest rate of 3.57% per annum (2015: 2.50%). At 31
+December 2016, the Group's outstanding borrowings under these facilities were RMB 36,933 million (2015: RMB 32,991 million) and were included
+in debts.
+The following table sets out the remaining contractual maturities at the balance sheet date of the Group's financial liabilities, which are based on
+contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on prevailing rates current
+at the balance sheet date) and the earliest date the Group would be required to repay:
+31 December 2016
+Total
+Carrying
+amount
+RMB million
+contractual
+undiscounted
+cash flow
+RMB million
+Within
+1 year or
+on demand
+RMB million
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, investments, trade accounts receivable,
+bills receivable, amounts due from Sinopec Group Company and fellow subsidiaries, amounts due from associates and joint ventures, available-for-
+sale financial assets, derivative financial instruments and other receivables. Financial liabilities of the Group include short-term and long-term debts,
+loans from Sinopec Group Company and fellow subsidiaries, trade accounts payable, bills payable, amounts due to Sinopec Group Company and
+fellow subsidiaries, derivative financial instruments and other payables.
+Overview
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+9
+I
+18
+(19)
+Cash and cash equivalents at 31
+December
+14,373
+14,914
+3,045
+2,042
+5,441
+1,077
+717
+101
+886
+134
+260
+Note:
+(ii) This listed company will announce its financial information for the year ended 31 December 2016 later than the Company, therefore its 2016 financial information is
+not currently disclosed.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+193
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Net cash (used in)/generated from
+4,223
+3,636
+1,185
+24,391
+(2,481)
+(4,257)
+6,000
+3,310
+2,513
+1,456
+302
+1.558
+1,738
+Comprehensive income/(loss)
+27,385
+attributable to non-controlling interests
+7,755
+(3,279)
+(1,218)
+2,964
+1,655
+1,256
+728
+120
+545
+608
+Dividends paid to non-controlling interests
+9,028
+Total comprehensive income/(loss)
+1,738
+1,558
+million
+million
+million
+Turnover
+1,050,294
+1,103,934
+4,016
+6,557
+77,843
+80,748
+4.968
+5,532
+1.642
+11,703
+14,077
+Profit/(loss) for the year
+26,461
+23,684
+(4,604)
+(222)
+5,981
+3,310
+2,513
+1,456
+825
+4,932
+More than 1
+year but less
+than 2 years
+RMB million
+7,356
+10
+RMB
+RMB
+million
+million
+million
+million
+million
+million
+million
+million
+million
+RMB
+million
+Net cash generated from/(used in)
+operating activities
+50,840
+33,196
+2,576
+4,059
+7,182
+4,933
+619
+617
+(179)
+million
+RMB
+RMB
+RMB
+40
+Summarised statement of cash flows
+Year ended 31 December
+Marketing Company
+SIPL
+Shanghai Petrochemical
+Fujian Petrochemical
+Sinopec Kantons (ii)
+Zhonghan Wuhan
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+2015
+2016
+2015
+RMB
+RMB
+RMB
+RMB
+RMB
+563
+million
+More than 2
+years but less
+than 5 years
+RMB million
+Short-term debts
+- Derivative financial liabilities
+At 31 December 2015
+Assets
+Available-for-sale financial assets:
+- Listed
+Derivative financial instruments:
+- Derivative financial assets
+Liabilities
+Derivative financial instruments:
+Derivative financial liabilities
+Level 1
+Derivative financial instruments:
+Level 2
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+262
+29
+291
+733
+733
+2,586
+1,886
+Level 3
+2,586
+Liabilities
+Derivative financial instruments:
+Other than the amounts as disclosed above, the amounts of other financial assets and liabilities of the Group are substantially denominated in the
+functional currency of respective entity within the Group.
+Interest rate risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts. Debts bearing interest at variable rates and at
+fixed rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates of short-term and long-
+term debts, and loans from Sinopec Group Company and fellow subsidiaries of the Group are disclosed in Note 28.
+As at 31 December 2016, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables held
+constant, would increase/decrease the Group's net profit for the year by approximately RMB 44 million (2015: decrease/increase by approximately
+RMB 91 million). This sensitivity analysis has been determined assuming that the change of interest rates was applied to the Group's debts
+outstanding at the balance sheet date with exposure to cash flow interest rate risk, which in part be eliminated by cash holdings on a variable
+interest rates basis. The analysis is performed on the same basis for 2015.
+Commodity price risk
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products and
+chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the Group.
+The Group uses derivative financial instruments, including commodity futures and swaps, to manage a portion of this risk. As at 31 December 2016,
+the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as qualified cash flow hedges and
+economic hedges. The fair values of these derivative financial instruments as at 31 December 2016 are set out in Notes 26 and 30.
+As at 31 December 2016, it is estimated that a general increase/decrease of USD 10 per barrel in basic price of derivative financial instruments,
+with all other variables held constant, would impact the fair value of derivative financial instruments, which would decrease/increase the Group's
+profit for the period by approximately RMB 634 million (2015: decrease/increase RMB 1,951 million), and decrease/increase the Group's other
+reserves by approximately RMB 4,007 million (2015: decrease/increase RMB 3,052 million). This sensitivity analysis has been determined assuming
+that the change in prices had occurred at the balance sheet date and the change was applied to the Group's derivative financial instruments at that
+date with exposure to commodity price risk. The analysis is performed on the same basis for 2015.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+- Derivative financial assets
+Fair values
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy defined in IFRS 7, ‘Financial Instruments: Disclosures', with the fair value of each financial instrument categorised in
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+•
+•
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which
+all significant inputs are directly or indirectly based on observable market data.
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+At 31 December 2016
+Assets
+Available-for-sale financial assets:
+- Listed
+(i) Financial instruments carried at fair value
+1,886
+262
+762
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values (Continued)
+(ii) Fair values of financial instruments carried at other than fair value (Continued)
+Carrying amount
+Fair value
+31 December
+2016
+RMB million
+110,969
+109,308
+31 December
+2015
+Financial Statements (International)
+RMB million
+105,927
+103,482
+39 ACCOUNTING ESTIMATES AND JUDGEMENTS
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the consolidated financial statements. Management bases the assumptions and estimates on historical experience and on
+various other assumptions that it believes to be reasonable and which form the basis for making judgements about matters that are not readily
+apparent from other sources. On an ongoing basis, management evaluates its estimates. Actual results may differ from those estimates as facts,
+circumstances and conditions change.
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of such policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the consolidated financial statements. The
+significant accounting policies are set forth in Note 2. Management believes the following critical accounting policies involve the most significant
+judgements and estimates used in the preparation of the consolidated financial statements.
+Oil and gas properties and reserves
+The accounting for the exploration and production's oil and gas activities is subject to accounting rules that are unique to the oil and gas industry.
+There are two methods to account for oil and gas business activities, the successful efforts method and the full cost method. The Group has elected
+to use the successful efforts method. The successful efforts method reflects the volatility that is inherent in exploring for mineral resources in that
+costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include dry hole costs, seismic costs
+and other exploratory costs. Under the full cost method, these costs are capitalised and written-off or depreciated over time.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated at least
+annually and take into account recent production and technical information about each field. In addition, as prices and cost levels change from
+year to year, the estimate of proved and proved developed reserves also changes. This change is considered a change in estimate for accounting
+purposes and is reflected on a prospective basis in relation to depreciation rates. Oil and gas reserves have a direct impact on the assessment of
+the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves estimates are revised
+downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration the
+anticipated method of dismantlement required in accordance with industry practices in similar geographic area, including estimation of economic
+life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are capitalised as oil and
+gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment loss
+and future dismantlement costs. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes
+produced and reserves.
+Financial Statements (International)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+198
+The Group has not developed an internal valuation model necessary to estimate the fair values of loans from Sinopec Group Company and
+fellow subsidiaries as it is not considered practicable to estimate their fair values because the cost of obtaining discount and borrowing rates for
+comparable borrowings would be excessive based on the Reorganisation, the Group's existing capital structure and the terms of the borrowings.
+Investments in unquoted equity securities are individually and in the aggregate not material to the Group's financial condition or results of
+operations. There are no listed market prices for such interests in the PRC and, accordingly, a reasonable estimate of fair value could not be
+made without incurring excessive costs. The Group intends to hold these unquoted other investments in equity securities for long term purpose.
+Except for the above items, the financial assets and liabilities of the Group are carried at amounts not materially different from their fair values
+at 31 December 2016 and 2015.
+197
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group that range from 1.06% to
+4.90% (2015: 1.08% to 4.90%). The following table presents the carrying amount and fair value of the Group's long-term indebtedness other
+than loans from Sinopec Group Company and fellow subsidiaries at 31 December 2016 and 2015:
+1,024
+4,472
+4,472
+Level 1
+Level 2
+RMB million
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+261
+4,235
+3,640
+4,496
+3,640
+305
+305
+2,445
+2,445
+261
+7,875
+8,136
+2,750
+2,750
+During the years ended 31 December 2016 and 2015, there was no transfer between instruments in Level 1 and Level 2.
+(ii) Fair values of financial instruments carried at other than fair value
+The disclosures of the fair value estimates, and their methods and assumptions of the Group's financial instruments, are made to comply
+with the requirements of IFRS 7 and IAS 39 and should be read in conjunction with the Group's consolidated financial statements and related
+notes. The estimated fair value amounts have been determined by the Group using market information and valuation methodologies considered
+appropriate. However, considerable judgement is required to interpret market data to develop the estimates of fair value. Accordingly, the
+estimates presented herein are not necessarily indicative of the amounts the Group could realise in a current market exchange. The use of
+different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
+SGD
+1
+295
+288
+29,369
+73,331
+24,537
+Short-term debts
+Long-term debts
+Loans from Sinopec Group Company
+and fellow subsidiaries
+Trade accounts payable
+Bills payable
+Accrued expenses and other payables
+31 December 2015
+81,781
+340,887
+Total
+Within
+Carrying undiscounted
+amount
+RMB million
+cash flow
+RMB million
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+More than
+5 years
+RMB million
+71,517
+contractual
+81,781
+468,124
+454,175
+81,781
+Long-term debts
+Loans from Sinopec Group Company
+and fellow subsidiaries
+Trade accounts payable
+56,239
+57,515
+72,674
+85,021
+1,498,609
+27,277
+30,535
+24,537
+63,352
+63,678
+18,790
+2,092
+42,796
+174,301
+174,301
+174,301
+Bills payable
+5,828
+5,828
+5,828
+Accrued expenses and other payables
+95,446
+More than
+5 years
+RMB million
+72,476
+110,678
+41,176
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+Currency risk
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The
+Group's currency risk exposure primarily relates to short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries
+denominated in USD, EUR, SGD and HKD. The Group enters into foreign exchange contracts to manage its currency risk exposure.
+Included in short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries of the Group are the following amounts
+denominated in a currency other than the functional currency of the entity to which they relate:
+Gross exposure arising from loans
+USD
+EUR
+31 December
+2016
+million
+31 December
+2015
+million
+USD 126
+Market risk
+USD 1,181
+EUR 1,108
+HKD 6
+SGD
+HKD
+A 5 percent strengthening/weakening of RMB against the following currencies at 31 December 2016 and 2015 would have increased/decreased net
+profit for the year of the Group by the amounts shown below. This analysis has been determined assuming that the change in foreign exchange rates
+had occurred at the balance sheet date and had been applied to the foreign currency balances to which the Group has significant exposure as stated
+above, and that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2015.
+USD
+EUR
+31 December
+31 December
+2016
+RMB million
+2015
+RMB million
+33
+EUR 1
+SGD 4
+HKD 6
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+41,637
+24,118
+88,229
+89,258
+130,558
+130,558
+3,566
+3,566
+44,439
+130,558
+3,566
+464
+8,795
+35,560
+88,082
+477,398
+88,082
+494,618
+88,082
+342,868
+41,640
+50,432
+59,678
+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 2016
+195
+Financial Statements (International)
+196
+Financial Statements (International)
+72,476
+3,747
+million
+(31,573)
+million
+Sinopec Yangzi Petrochemical Company Limited
+RMB 13,203
+100.00
+Liability Company
+RMB 12,000
+100.00
+RMB 4,000
+100.00
+RMB 3,374
+100.00
+Sinopec Pipeline Storage & Transportation
+Company Limited
+Company Limited
+Sinopec Lubricant Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+RMB 1,595
+100.00
+RMB 5,000
+85.00
+Sinopec Chemical Sales Company Limited
+RMB 1,000
+100.00
+China International United Petroleum and
+RMB 3,000
+Sinopec Yizheng Chemical Fibre Limited
+Sinopec Great Wall Energy & Chemical
+Particulars of
+issued capital
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+1,488,117
+442,794
+1,930,911
+31 December
+2016
+RMB million
+1,000,209
+45,887
+1,046,096
+439,519
+2,020,375
+31 December
+2015
+RMB million
+1,029,318
+56,081
+1,085,399
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+191
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+37 PRINCIPAL SUBSIDIARIES
+At 31 December 2016, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+Interests held
+(million)
+RMB 8,000
+Interests
+held by
+by the non-controlling
+Company % interests %
+100.00
+Principal activities
+RMB 20,739
+100.00
+Name of company
+100.00
+1,580,856
+Chemical Company Limited
+USD 1,638
+55.00
+Sinopec Shanghai Petrochemical Company Limited
+RMB 10,800
+50.56
+("Shanghai Petrochemical")
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+RMB 28,403
+70.42
+RMB 6,270
+65.00
+RMB 10,000
+RMB 5,745
+Investment in exploration, production
+and sale of petroleum and natural gas
+Coal chemical industry investment
+management, production and sale
+of coal chemical products
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Pipeline storage and transportation
+of crude oil
+Production and sale of polyester
+chips and polyester fibres
+Production and sale of refined
+petroleum products, lubricant base
+oil, and petrochemical materials
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Marketing and distribution of
+petrochemical products
+Trading of crude oil and
+petrochemical products
+50.00
+Gaoqiao Petrochemical Company Limited (Note 1)
+("Sinopec Kantons")
+60.34
+100.00
+Sinopec Catalyst Company Limited
+RMB 1,500
+100.00
+China Petrochemical International Company Limited
+RMB 1,400
+100.00
+Sinopec Beihai Refining and Chemical Limited
+RMB 5,294
+98.98
+Liability Company
+Sinopec Qingdao Refining and Chemical
+Company Limited
+Sinopec Zhanjiang Dongxing Petrochemical
+Company Limited
+RMB 4,397
+75.00
+Sinopec Hainan Refining and Chemical
+Company Limited
+RMB 3,986
+75.00
+Sinopec Marketing Company Limited
+("Marketing Company")
+Sinopec-SK(Wuhan) Petrochemical
+Company Limited ("Zhonghan Wuhan")
+Sinopec Kantons Holdings Limited
+HKD 248
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Investment holding
+RMB million
+2016
+RMB million
+Loans from Sinopec Group Company and fellow subsidiaries
+63,352
+88,229
+Deferred tax liabilities
+7,661
+8,259
+Other unallocated liabilities
+20,828
+18,923
+Total liabilities
+667,374
+95,446
+659,107
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+36 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one
+year.
+Capital expenditure
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+72,674
+Long-term debts
+1,048
+Liabilities
+Segment liabilities
+- Exploration and production
+- Refining
+95,944
+96,773
+82,170
+58,578
+- Marketing and distribution
+133,303
+118,897
+- Chemicals
+32,072
+27,243
+- Corporate and others.
+97,080
+104,194
+Total segment liabilities
+440,569
+405,685
+Short-term debts
+56,239
+41,517
+Income tax payable
+6,051
+Refining
+2015
+Marketing and distribution
+Corporate and others
+12,654
+12,088
+2,093
+1,585
+108,425
+96,460
+11,605
+4,864
+1,655
+9
+267
+14,075
+19
+142
+112
+16,425
+5,146
+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
+Others
+Non-current assets
+million
+Others
+2,898
+14,540
+16,557
+17,209
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+2016
+2015
+RMB million
+RMB million
+32,187
+54,710
+14,347
+15,132
+18,493
+22,115
+8,849
+17,634
+2,580
+2,821
+76,456
+112,412
+61,929
+52,155
+Chemicals
+Production and sale of catalyst products
+Mainland China
+petrochemical products
+245,054
+238,684
+745
+5,755
+19,070
+19,676
+7,124
+4,656
+9,641
+14,686
+15,815
+Net non-current assets
+Net assets
+185,604
+18,037
+20,518
+25,004
+20.094
+7,238
+4.723
+7,885
+8,654
+7,316
+Attributable to owners of the Company
+197,948
+(3,384)
+(831)
+(721)
+14,763
+5.934
+418
+114
+67
+(1,756)
+(6,032)
+(8,499)
+Non-current assets
+246,514
+240,312
+40,067
+40,075
+19,070
+19,676
+7,845
+5,487
+13,025
+14.686
+15,815
+Non-current liabilities
+(1,460)
+(1,628)
+(39,322)
+(34,320)
+134,393
+17,292
+126,100
+12,500
+2015
+2016
+2015
+2016
+2015
+2015
+2016
+2015
+RMB
+RMB
+RMB
+2016
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+Trading of petrochemical products
+1.02 Import and processing of crude oil,
+production, storage and sale of
+petroleum products and
+million
+million
+RMB
+2015
+2016
+Zhonghan Wuhan
+10.009
+3,619
+2,361
+4.738
+5,625
+4,755
+Attributable to non-controlling interests
+63,555
+59,504
+15,253
+16,187
+12,504
+10,085
+3.619
+2,362
+3,147
+3.029
+2,561
+Summarised consolidated statement of comprehensive income
+Year ended 31 December
+Marketing Company
+SIPL
+Shanghai Petrochemical
+Fujian Petrochemical
+Sinopec Kantons (ii)
+4,331
+(53,080)
+2,784
+Net current (liabilities)/assets
+Marketing Company
+At 31
+SIPL
+At 31
+At 31
+At 31
+Shanghai Petrochemical
+At 31
+At 31
+Fujian Petrochemical
+At 31
+At 31
+Sinopec Kantons (ii)
+At 31
+Zhonghan Wuhan
+At 31
+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
+December
+December
+December
+December
+December
+December
+December
+December
+December
+2016
+December
+Summarised financial information on subsidiaries with material non-controlling interests
+37 PRINCIPAL SUBSIDIARIES (Continued)
+for the year ended 31 December 2016
+petroleum products
+15.00 Manufacturing of intermediate
+petrochemical products and
+25.00 Manufacturing of intermediate
+petrochemical products and
+petroleum products
+(47,106)
+25.00 Manufacturing of intermediate
+petrochemical products and
+petroleum products
+29.58 Marketing and distribution of refined
+petroleum products
+35.00 Production, sale, research and
+development of ethylene and
+downstream byproducts
+39.66 Trading of crude oil and petroleum
+products
+45.00 Manufacturing of intermediate
+petrochemical products and
+petroleum products
+49.44 Manufacturing of synthetic fibres,
+resin and plastics, intermediate
+petrochemical products and
+petroleum products
+50.00 Manufacturing of plastics,
+intermediate petrochemical
+products and petroleum products
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC. All of the above principal subsidiaries are limited companies.
+Note:
+(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.
+192
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2015
+2016
+Summarised consolidated balance sheet
+2015
+million
+Current assets
+121,260
+102.948
+18.116
+20,231
+14,876
+8,144
+926
+140
+(9,885)
+million
+1,489
+Current liabilities
+(168,366)
+(156,028)
+(824)
+(5,468)
+(8,942)
+(7,726)
+(812)
+(73)
+(3,488)
+(7,521)
+1,386
+million
+1,732
+RMB
+million
+2016
+2015
+2015
+2016
+2015
+2016
+RMB
+RMB
+RMB
+2015
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+million
+million
+million
+million
+RMB
+408,995
+25,566
+Table II: Costs incurred in oil and gas exploration and development
+The Group
+(438,097)
+Development
+Total costs incurred
+Equity method investments
+Share of costs of exploration and development
+434,561
+Exploration
+20,458
+14,270
+377,199
+11,296
+11,296
+9,337
+9,337
+net capitalised costs
+Total of the Group's and its equity method investments'
+and joint ventures
+Share of net capitalised costs of associates
+Equity method investments
+408,995
+(27,296)
+356,741
+of associates and joint ventures
+362
+exploration and development costs
+(465,393)
+423,265
+2,624
+61,177
+63,801
+719
+42,860
+43,222
+719
+2,624
+49,605
+52,229
+362
+Total of the Group's and its equity method investments'
+31,918
+11,572
+11,572
+10,942
+10,942
+Other
+countries
+China
+Total
+Other
+countries
+China
+Total
+2015
+RMB million
+2016
+RMB million
+32,280
+11,121
+(1,290)
+831,235
+367,862
+Property cost, wells and related equipments
+The Group
+countries
+China
+Total
+Other
+Other
+countries
+China
+Total
+2015
+RMB million
+2016
+RMB million
+Table 1: Capitalised costs related to oil and gas producing activities
+and facilities
+In accordance with the Accounting Standards Update 2010-03, “Extractive Activities - Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and
+Disclosures" ("ASU 2010-03"), issued by the Financial Accounting Standards Board of the United States, and in accordance with “Industrial Information
+Disclosure Guidelines for Public Company - No.8 Oil and Gas Exploitation", issued by Shanghai Stock Exchange, this section provides supplemental
+information on oil and gas exploration and producing activities of the Group and its equity method investments at 31 December 2016 and 2015, and
+for the years then ended in the following six separate tables. Tables I through III provide historical cost information under IFRS pertaining to capitalised
+costs related to oil and gas producing activities; costs incurred in oil and gas exploration and development; and results of operation related to oil and
+gas producing activities. Tables IV through VI present information on the Group's and its equity method investments' estimated net proved reserve
+quantities; standardised measure of discounted future net cash flows; and changes in the standardised measure of discounted cash flows.
+Tables | to VI of supplemental information on oil and gas producing activities set out below represent information of the Company and its consolidated
+subsidiaries and equity method investments.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+202
+The figures are extracted from the consolidated financial statements prepared in accordance with the accounting policies complying with IFRS during the year ended
+31 December 2015 and 2016 which have been audited by PricewaterhouseCoopers.
+*
+788,161
+(1,404)
+Total equity under IFRS*
+(i)
+Government grants
+Adjustments:
+1,218
+31 December
+2015
+RMB million
+789,565
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+356,741
+Supporting equipments and facilities
+606,493
+Net capitalised costs
+(33,098)
+(495,538)
+(528,636)
+and impairment losses
+Accumulated depreciation, depletion, amortisation
+858
+41,566
+847,092
+888,658
+44,219
+852,279
+896,498
+650,686
+192,877
+Total capitalised costs
+70,731
+4
+52,931
+52,935
+Uncompleted wells, equipments and facilities
+20
+40,688
+572,446
+204,773
+613,134
+204,793
+22
+192,855
+44,193
+69,873
+1,218
+6,352
+42,860
+629
+678
+(3,147)
+(35,582)
+(38,729)
+Results of operation from producing activities
+(995)
+(210)
+(1,205)
+(798)
+(798)
+Income tax expense
+49
+1,044
+1,883
+(2,349)
+(35,582)
+(37,931)
+Profit before taxation
+(6,083)
+(6,083)
+(4,576)
+(4,576)
+Taxes other than income tax
+(4,077)
+(52,216)
+839
+(56,293)
+Equity method investments
+Sales
+832,525
+(2,752)
+(4)
+(1,165)
+(2,205)
+7,207
+6,352
+7,207
+(1,370)
+associates and joint ventures
+Share of profit for producing activities of
+(195)
+Revenues
+Income tax expense
+(1,175)
+Profit before taxation
+(2,570)
+Taxes other than income tax
+(2,752)
+impairment losses
+Depreciation, depletion, amortisation and
+Exploration expenses
+(2,205)
+Production costs excluding taxes
+6,352
+6,352
+| | | | | |
+43,941
+(4,940)
+(73,534)
+Transfers
+Sales
+Revenues
+The Group
+2015
+RMB million
+Other
+countries
+China
+Total
+Other
+countries
+China
+Total
+2016
+RMB million
+Table III: Results of operations related to oil and gas producing activities
+36,720
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Gas Producing Activities (Unaudited)
+Financial Statements
+204
+Gas Producing Activities (Unaudited)
+Financial Statements
+Supplemental Information on Oil and
+203
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+3,842
+61,177
+65,019
+1,081
+Supplemental Information on Oil and
+(68,594)
+36,720
+52,580
+impairment losses
+Depreciation, depletion, amortisation and
+(10,459)
+(10,459)
+(11,035)
+(11,035)
+Exploration expenses
+(1,432)
+(46,883)
+(48,315)
+(1,425)
+(42,652)
+52,580
+(44,077)
+6,553
+116,480
+123,033
+4,016
+91,275
+95,291
+6,553
+63,900
+70,453
+4,016
+54,555
+58,571
+Production costs excluding taxes
+Shareholders' equity under ASBE
+(2,157)
+Effects of major differences between the shareholders' equity under ASBE and the total equity under IFRS are analysed as follows:
+Note
+75,787
+Trade accounts payable
+18,690
+2,703
+Loans from Sinopec Group Company and fellow subsidiaries
+49,131
+50,574
+Short-term debts
+Current liabilities
+227,260
+265,835
+Total current assets
+85,182
+104,726
+Prepaid expenses and other current assets
+46,029
+46,942
+540
+471
+29,512
+38,332
+10,130
+46,453
+88,120
+754,277
+711,890
+81,840
+16,018
+Accrued expenses and other payables
+Total current liabilities
+44,772
+75,926
+49,676
+713,683
+696,903
+40,594
+14,987
+267,854
+280,822
+112,999
+148,997
+1,852
+Bills payable
+2,761
+Reserves
+Share capital
+Equity
+Total non-current liabilities
+Other long-term liabilities
+Provisions
+Deferred tax liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Long-term debts
+Non-current liabilities
+Total assets less current liabilities
+Net current liabilities
+Total equity
+44,100
+14,731
+6,114
+31 December
+31 December
+2016
+RMB
+Note
+BALANCE SHEET OF THE COMPANY (Amounts in million)
+42 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+199
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2016 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+2015
+41 PARENT AND ULTIMATE HOLDING COMPANY
+40 EVENTS AFTER THE BALANCE SHEET DATE
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised. Net
+realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated
+costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of the finished
+goods and raw materials, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were to be higher
+than estimated, the actual allowance for diminution in value of inventories could be higher than estimated.
+Allowance for diminution in value of inventories
+Management estimates impairment losses for bad and doubtful debts resulting from the inability of the Group's customers to make the required
+payments. Management bases the estimates on the ageing of the accounts receivable balance, customer credit-worthiness, and historical write-off
+experience. If the financial condition of the customers were to deteriorate, actual write-offs would be higher than estimated.
+Impairment for bad and doubtful debts
+Property, plant and equipment, other than oil and gas properties, are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. Management reviews the estimated useful lives of the assets at least annually in order
+to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Group's historical
+experience with similar assets and take into account anticipated technological changes. The depreciation expense for future periods is adjusted if
+there are significant changes from previous estimates.
+Depreciation
+If circumstances indicate that the net book value of a long-lived asset may not be recoverable, the asset may be considered “impaired", and an
+impairment loss may be recognised in accordance with IAS 36 “Impairment of Assets". The carrying amounts of long-lived assets are reviewed
+periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for impairment
+whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a decline has
+occurred, the carrying amount is reduced to recoverable amount. For goodwill, the recoverable amount is estimated annually. The recoverable
+amount is the greater of the net selling price and the value in use. It is difficult to precisely estimate selling price because quoted market prices for
+the Group's assets or cash-generating units are not readily available. In determining the value in use, expected cash flows generated by the asset
+or the cash-generating unit are discounted to their present value, which requires significant judgement relating to level of sale volume, selling price
+and amount of operating costs. Management uses all readily available information in determining an amount that is a reasonable approximation
+of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of sale volume, selling price and
+amount of operating costs.
+Impairment for long-lived assets
+39 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+According to the purchase and sale agreement signed between SOIHL Hong Kong Holding Limited ("SOIHL HK"), a wholly owned subsidiary of
+the Group, and Chevron Global Energy Inc. ("CGEI") on 21 March 2017, SOIHL HK is going to acquire the equity shares of and related interest in
+Chevron South Africa (Proprietary) Limited and the equity shares of Chevron Botswana (Proprietary) Limited ("the Targets") held by CGEI, in a total
+consideration approximate to USD 900 million ("the Transaction"). The consideration is subject to adjustment according to the circumstances of the
+Targets, such as the changes in working capital, at the completion. The Transaction has been approved by the Board of Directors of the Company,
+and is still subject to the satisfaction of the certain conditions to completion. The Targets' principle activities are to manufacture and market refined
+oil products in South Africa and market refined oil products in Botswana.
+6,492
+RMB
+Property, plant and equipment, net
+297
+297
+13,840
+15,496
+13,987
+14,691
+191,403
+238,264
+72,763
+49,277
+439,477
+373,020
+Non-current assets
+Inventories
+Trade accounts receivable
+Time deposits with financial institutions
+Cash and cash equivalents
+Current assets
+Total non-current assets
+Long-term prepayments and other assets
+Lease prepayments
+Available-for-sale financial assets
+Interest in joint ventures
+Interest in associates
+Investment in subsidiaries
+Construction in progress
+Bills receivable
+505
+177
+29,767
+(81)
+(3,088)
+(24,214)
+(16,829)
+175,153
+28,727
+176,497
+23,733
+1,950
+2,438
+49
+81
+80
+47
+183,321
+447,424
+557
+1,773
+1,950
+117,000
+117,000
+117,000
+117,000
+79,640
+79,640
+3,088
+76,552
+79,640
+55,850
+(149)
+55,850
+176,497
+Note:
+43,798
+59,444
+Profit for the year under IFRS*
+191
+160
+127
+114
+(i)
+(ii)
+Government grants
+Safety production fund
+2015
+RMB million
+43,480
+RMB million
+59,170
+Net profit under ASBE
+Adjustments:
+440,059
+2016
+Under ASBE, safety production fund should be recognised in profit or loss with a corresponding increase in reserve according to PRC regulations.
+Such reserve is reduced for expenses incurred for safety production purposes or, when safety production related fixed assets are purchased, is
+reduced by the purchased cost with a corresponding increase in the accumulated depreciation. Such fixed assets are not depreciated thereafter.
+Under IFRS, payments are expensed as incurred, or capitalised as fixed assets and depreciated according to applicable depreciation methods.
+Effects of major differences between the net profit under ASBE and the profit for the year under IFRS are analysed as follows:
+(II) SAFETY PRODUCTION FUND
+Under ASBE, grants from the government are credited to capital reserve if required by relevant governmental regulations. Under IFRS, government
+grants relating to the purchase of fixed assets are recognised as deferred income and are transferred to the income statement over the useful life of
+these assets.
+(I) GOVERNMENT GRANTS
+Other than the differences in the classifications of certain financial statements captions and the accounting for the items described below, there are no
+material differences between the Group's consolidated financial statements prepared in accordance with the accounting policies complying with ASBE
+and IFRS. The reconciliation presented below is included as supplemental information, is not required as part of the basic financial statements and
+does not include differences related to classification, presentation or disclosures. Such information has not been subject to independent audit or review.
+The major differences are:
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH ASBE AND IFRS (UNAUDITED)
+(Unaudited)
+Financial Statements
+(Differences Between the ASBE and IFRS)
+Financial Statements (International)
+201
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(i) In 2014, the International Accounting Standards Board published Amendments to International Accounting Standard 27 (IAS 27) - Separate Financial Statements.
+These amendments allowed entities to use equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial
+statements. Entities wishing to change to the equity method must do so retrospectively. The amendment is effective from 1 January 2016. In order to eliminate
+the difference regarding subsequent measurements on investments in joint ventures and associates between separate financial statements prepared in accordance
+with ASBE and IFRS, the Company changed its subsequent measurements on investments in associates and joint ventures from cost method to equity method in
+its separate financial statements prepared in accordance with IFRS from 1 January 2016. By adopting the amendments to IAS 27 - Separate Financial Statements,
+the balance of investments in associates, investments in joint ventures, retained earnings and other reserves as at 31 December 2015 would be increased by
+RMB 8,056 million, RMB 644 million, RMB 8,672 million and RMB 28 million in the separated financial statements prepared in accordance with IFRS due to the
+retrospective adjustment.
+Note
+14,026
+41,824
+55,850
+Share premium
+Balance at 31 December
+Others
+Balance at 1 January
+Capital reserve
+The reconciliation between the opening and closing balances of each component of the Group's consolidated reserves is set out in the
+consolidated statement of changes in equity. Details of the change in the Company's individual component of reserves between the beginning
+and the end of the year are as follows:
+(a) RESERVES MOVEMENT OF THE COMPANY
+42 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+200
+Balance at 1 January
+561,130
+440,059
+447,424
+(a)
+121,071
+121,071
+561,130
+568,495
+152,553
+128,408
+3,382
+3,688
+28,968
+568,495
+Conversion of the 2011 Convertible Bonds
+Balance at 31 December
+Statutory surplus reserve
+9,122
+9,175
+9,122
+9,122
+53
+2015
+RMB million
+RMB million
+The Company
+2016
+Balance at 31 December
+Special reserve
+Appropriation
+Distribution to owners (Note 13)
+Profit for the year
+Balance at 1 January (i)
+Retained earnings
+Balance at 31 December
+Others
+Special reserve
+Cash flow hedges, net of deferred tax
+Share of other comprehensive loss of associates and joint ventures, net of deferred tax
+Balance at 1 January (i)
+Other reserves
+Balance at 31 December
+Balance at 1 January
+Discretionary surplus reserve
+Balance at 31 December
+Appropriation
+Balance at 1 January
+31 December
+2016
+RMB million
+(2,570)
+(80)
+(1,175)
+11,396
+592,389
+(266,549)
+603,785
+(271,650)
+(20,241)
+of cash flows
+10% annual discount for estimated timing
+Undiscounted future net cash flows
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+The Group
+Other
+countries
+China
+Total
+2015
+RMB million
+2016
+RMB million
+Other
+countries
+China
+Total
+The information provided does not represent management's estimate of the Group's and its equity method investments' expected future cash flows or
+value of proved oil and gas reserves. Estimates of proved reserve quantities are imprecise and change over time as new information becomes available.
+Moreover, probable and possible reserves, which may become proved in the future, are excluded from the calculations. The arbitrary valuation requires
+assumptions as to the timing and amount of future development and production costs. The calculations are made for the years ended 31 December
+2016 and 2015 and should not be relied upon as an indication of the Group's and its equity method investments' future cash flows or value of its oil
+and gas reserves.
+The standardised measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with the
+requirements of ASU 2010-03 and “Industrial Information Disclosure Guidelines for Public Company - No.8 Oil and Gas Exploitation". Estimated future
+cash inflows from production are computed by applying the average, first-day-of-the-month price for oil and gas during the twelve-month period before
+the ending date of the period covered by the report to year-end quantities of estimated net proved reserves. Future price changes are limited to those
+provided by contractual arrangements in existence at the end of each reporting year. Future development and production costs are those estimated
+future expenditures necessary to develop and produce year-end estimated proved reserves based on year-end cost indices, assuming continuation of
+year-end economic conditions. Estimated future income taxes are calculated by applying appropriate year-end statutory tax rates to estimated future
+pre-tax net cash flows, less the tax basis of related assets. Discounted future net cash flows are calculated using 10% discount factors. This discounting
+requires a year-by-year estimate of when the future expenditure will be incurred and when the reserves will be produced.
+Table V: Standardised measure of discounted future net cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+19
+7,551
+7,570
+18
+931,637
+912,898
+18,739
+(5,101)
+208,147
+net cash flows
+Standardised measure of discounted future
+(1,176)
+(150,855)
+(152,031)
+(10)
+(102,332)
+(102,342)
+3,418
+438,332
+441,750
+264
+7,160
+310,225
+(1,360)
+(9,779)
+(11,139)
+(1,405)
+(1,405)
+(4,577)
+(34,092)
+(38,669)
+(4,626)
+(15,615)
+(9,384)
+(430,695)
+(440,079)
+310,489
+207,893
+7,178
+26
+24
+24
+18
+19
+19
+18
+(4)
+(4)
+(4)
+(3)
+(3)
+3
+26
+26
+19
+26
+26
+23
+23
+23
+26
+260
+260
+273
+252
+252
+260
+18
+18
+18
+1
+6,715
+6,741
+19
+7,551
+7,570
+Beginning of year
+(billion cubic feet)
+Proved developed and undeveloped reserves (gas)
+341
+1,902
+2,243
+336
+1,216
+End of year
+1,552
+347
+2,700
+3,047
+341
+1,902
+2,243
+Beginning of year
+(million barrels)
+Proved developed and undeveloped reserves (oil)
+1
+2
+1
+2
+End of year
+286
+254
+287,477
+(6,873)
+6,073
+(68,635)
+(281,975)
+(53,715)
+(46,637)
+2015
+RMB million
+RMB million
+2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Total of the Group's and its equity method investments' results of net changes for the year
+Net changes for the year
+Net changes in income taxes
+Accretion of discount
+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
+Revisions of previous quantity estimates
+Net changes due to extensions, discoveries and improved recoveries
+Net changes in estimated future development cost
+Net changes in prices and production costs
+Sales and transfers of oil and gas produced, net of production costs
+The Group
+15,113
+(48,479)
+44,838
+(68,875)
+9,370
+(3,036)
+(231,025)
+(83,746)
+(7,285)
+(2,174)
+1,736
+464
+2,681
+1,308
+1,163
+322
+1,520
+(92)
+Table VI: Changes in the standardised measure of discounted cash flows
+611
+997
+(534)
+(12,987)
+(3,952)
+(3,006)
+(1,577)
+(223,740)
+(81,572)
+79,281
+6,363
+60,005
+30,340
+18,494
+1,887
+289,719
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Financial Statements
+(4,159)
+(3,303)
+(3,303)
+Future income tax expenses
+(2,996)
+(2,996)
+(3,444)
+(3,444)
+Future development costs
+(11,665)
+(11,665)
+(10,783)
+(10,783)
+Future production costs
+41,013
+41,013
+35,690
+35,690
+Future cash flows
+Equity method investments
+1,356
+1,356
+114
+114
+non-controlling interests
+Discounted future net cash flows attributable to
+2,242
+(4,159)
+Undiscounted future net cash flows
+18,160
+18,160
+208
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+207
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+14,607
+287,477
+302,084
+10,445
+207,893
+218.338
+investments' results of standardised measure
+of discounted future net cash flows
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Total of the Group's and its equity method
+12,365
+10,191
+10,191
+net cash flows
+Standardised measure of discounted future
+(9,828)
+(9,828)
+(7,969)
+(7,969)
+of cash flows
+10% annual discount for estimated timing
+22,193
+22,193
+12,365
+(33)
+52
+1
+52
+1,701
+1,753
+Beginning of year
+Proved developed reserves
+25
+25
+18
+18
+undeveloped reserves at the end of year
+Non-controlling interest in proved developed and
+55
+1,902
+1,957
+40
+1,216
+1,256
+End of year
+(20)
+(297)
+(317)
+(19)
+(253)
+(272)
+Production
+41
+41
+2,465
+End of year
+1,120
+1,080
+(170)
+Revisions of previous estimates
+6,715
+6,715
+7,551
+7,551
+Beginning of year
+(billion cubic feet)
+Proved developed and undeveloped reserves (gas)
+3
+201
+204
+136
+41
+136
+8
+235
+243
+3
+201
+204
+Beginning of year
+Proved undeveloped reserves
+64
+65
+1,701
+1,753
+40
+End of year
+(170)
+41
+99
+"Net" reserves exclude royalties and interests owned by others and reflect contractual arrangements and obligation of rental fee in effect at the time of
+the estimate.
+Proved developed oil and gas reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and
+operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well.
+Proved oil and gas reserves are those quantities of oil and gas, which by analysis of geoscience and engineering data, can be estimated with reasonable
+certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods,
+and government regulation before contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain,
+regardless of whether the estimate is a deterministic estimate or probabilistic estimate. Due to the inherent uncertainties and the limited nature of
+reservoir data, estimates of underground reserves are subject to change as additional information becomes available.
+The Group's and its equity method investments' estimated net proved underground oil and gas reserves and changes thereto for the years ended 31
+December 2016 and 2015 are shown in the following table.
+Table IV: Reserve quantities information
+The results of operations for producing activities for the years ended 31 December 2016 and 2015 are shown above. Revenues include sales to
+unaffiliated parties and transfers (essentially at third-party sales prices) to other segments of the Group. Income taxes are based on statutory tax
+rates, reflecting allowable deductions and tax credits. General corporate overhead and interest income and expense are excluded from the results of
+operations.
+476
+629
+1,105
+(4,517)
+(35,582)
+(40,099)
+for producing activities
+method investments' results of operations
+Total of the Group's and its equity
+427
+(2,157)
+(3,036)
+845
+(418)
+| | | | | | |
+(4)
+(1,165)
+7,207
+7,207
+427
+(1,370)
+(418)
+(195)
+9
+845
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table IV: Reserve quantities information (Continued)
+2016
+99
+35
+35
+Improved recovery
+3
+(641)
+(638)
+4
+(509)
+(505)
+Revisions of previous estimates
+72
+2,700
+Extensions and discoveries
+2,772
+1,902
+1,957
+Beginning of year
+(oil) (million barrels)
+Proved developed and undeveloped reserves
+The Group
+Other
+countries
+China
+Total
+Other
+countries
+China
+Total
+2015
+55
+(252)
+2,529
+Improved recovery
+Production
+Extensions and discoveries
+Improved recovery
+Revisions of previous estimates
+Beginning of year
+(billion cubic feet)
+associates and joint ventures (gas)
+Proved developed and undeveloped reserves of
+End of year
+23
+26
+Beginning of year
+273
+Proved undeveloped reserves
+End of year
+260
+Beginning of year
+(32)
+296
+3
+41
+Proved developed reserves
+End of year
+Production
+Extensions and discoveries
+Improved recovery
+(2)
+Revisions of previous estimates
+286
+End of year
+Proved developed reserves
+Beginning of year
+End of year
+34
+275
+| | || | ||
+286
+296
+(33)
+(32)
+9
+41
+1
+3
+34
+(2)
+Beginning of year
+275
+1
+18
+18
+93 400
+18
+(4)
+|| | || | || | ||
+19
+|| | || | || | ||
+Total of the Group and its equity method investments
+End of year
+Beginning of year
+(252)
+286
+associates and joint ventures (oil) (million barrels)
+Proved undeveloped reserves
+Equity method investments
+6,436
+6,436
+End of year
+5,987
+5,987
+6,439
+6,439
+Beginning of year
+Proved developed reserves
+7,551
+7,551
+7,160
+7,160
+6,439
+(731)
+(762)
+(762)
+Production
+1,749
+1,749
+475
+475
+Extensions and discoveries
+70
+70
+66
+66
+Proved developed and undeveloped reserves of
+(731)
+6,439
+End of year
+Beginning of year
+Other
+countries
+Proved undeveloped reserves
+China
+Total
+Other
+countries
+China
+Total
+2015
+2016
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+206
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Financial Statements
+Gas Producing Activities (Unaudited)
+Table IV: Reserve quantities information (Continued)
+End of year
+Financial Statements
+205
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+1,112
+1,112
+724
+724
+728
+728
+1,112
+Supplemental Information on Oil and
+1,112
+Hong Kong
+Wanchai
+No. 5, Dong San Huan Central Road
+INFORMATION DISCLOSURE AND PLACES FOR
+Convention Plaza
+1 Harbour Road
+COPIES OF RELATIVE REPORTS
+20th Floor, Fortune Financial Centre
+LEGAL ADVISORS
+People's Republic of China:
+Chaoyang District
+Haiwen & Partners
+20th Floor, Office Tower
+No change during the reporting period
+PLACE OF BUSINESS IN HONG KONG
+Domestic Auditors : PricewaterhouseCoopers
+Zhong Tian LLP
+http://www.sinopec.com
+: SINOPEC CORP
+: SNP
+Beijing PRC
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+Address
+Overseas Auditors
+Address
+11th Floor
+:ir@sinopec.com
+PricewaterhouseCoopers,
+Huangpu District,
+Shanghai, PRC 200021
+: PricewaterhouseCoopers
+: 22nd Floor,
+Prince's Building,
+Central, Hong Kong
+2 Corporate Avenue,
+202 Hu Bin Road,
+Postcode: 100020
+No. 22 Chaoyangmen North Street
+No.22 Chaoyangmen North Street,
+The following documents will be available
+for inspection during normal business hours
+after 24 March 2017 (Friday) at the registered
+address of Sinopec Corp. upon requests by the
+relevant regulatory authorities and shareholders
+in accordance with the Articles of Association
+and the laws and regulations of PRC:
+a) The original copies of the 2016 annual
+reports signed by Mr. Wang Yupu, the
+Chairman;
+b) The original copies of financial statements
+and consolidated financial statements as of
+31 December 2016 prepared under IFRS
+and ABSE, signed by Mr.Wang Yupu, the
+Chairman, Mr. Dai Houliang, Vice Chairman
+and President, Mr. Wang Dehua, the Chief
+Financial Officer and head of the financial
+department of Sinopec Corp.;
+c) The original auditors' report signed by the
+auditors; and
+d) Copies of the documents and announcements
+that Sinopec Corp. has published in the
+newspapers stipulated by the CSRC during
+the reporting period.
+By Order of the Board
+Wang Yupu
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Chairman
+中国石化
+China Petroleum & Chemical Corporation (Sinopec Corp.)
+Chaoyang District
+OPEC Beijing 100728 PRC
+Printed on environmentally friendly paper
+Stock code
+Beijing, PRC, 24 March 2017
+Board Secretariat
+210
+Documents for Inspection
+Chaoyang District
+Beijing, PRC
+The US:
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+DOCUMENTS FOR INSPECTION
+United States of America
+Citibank, N.A.
+Citigroup Centre
+Canada Square, Canary Wharf
+London E14 5LB, U.K.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+209
+Corporate Information
+The UK:
+Stock name
+Stock name
+SINOPEC CORP
+: SNP
+: 100728
+Beijing, PRC
+Postcode
+Tel.
+: 86-10-59960028
+Fax
+No.22 Chaoyangmen North Street,
+Chaoyang District
+: 86-10-59960386
+E-mail addresses
+Hong Kong:
+Herbert Smith Freehills
+23rd Floor, Gloucester Tower
+15 Queen's Road
+Central, Hong Kong
+Website
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zheng Baomin
+Mr. Huang Wensheng
+STATUTORY NAME
+CORPORATE INFORMATION
+London Stock Exchange
+中国石油化工股份有限公司
+ENGLISH NAME
+China Petroleum & Chemical Corporation
+CHINESE ABBREVIATION
+中国石化
+ENGLISH ABBREVIATION
+LEGAL REPRESENTATIVE
+Mr. Wang Yupu
+AUTHORISED REPRESENTATIVES
+Mr. Dai Houliang
+Mr. Huang Wensheng
+SECRETARY TO THE BOARD
+U.S.A.
+Skadden, Arps, Slate, Meagher & Flom LLP
+42/F, Edinburgh Tower, The Landmark
+Sinopec Corp.
+REGISTRARS
+Shanghai Stock Exchange
+Stock name
+: SINOPEC CORP
+Stock code
+: 600028
+H Shares:
+A Shares:
+Stock code
+: Sinopec Corp
+: 00386
+ADRs:
+Stock name
+15 Queen's Road, Central, Hong Kong
+New York Stock Exchange
+Hong Kong Stock Exchange
+NAMES AND STOCK CODES
+Stock code
+China Petroleum & Chemical Corporation
+PLACES OF LISTING OF SHARES, STOCK
+H Shares:
+A Shares:
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+DEPOSITARY FOR ADRS
+The US:
+Hong Kong Registrars Limited
+388 Greenwich St., 14th Floor
+The PRC:
+Citibank, N.A.
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+New York NY 10013
+United States of America
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+Shanghai, PRC
+(3.7)
+5,797
+(8.1)
+Synthetic resin
+Synthetic fibre
+12,250
+5,328
+11,993
+2.1
+7,482
+7,771
+(8.1)
+1,380
+(0.8)
+7,113
+7,739
+1,099
+1,107
+(0.7)
+9,609
+8,769
+17.9
+9.6
+1,369
+6,083
+2016
+(3.8)
+714
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment and
+third parties, producing, marketing and
+distributing petrochemical and inorganic
+chemical products.
+In 2016, the operating revenues of the
+chemicals segment were RMB 335.1
+billion, representing an increase of 1.9%
+as compared with that of 2015, This was
+mainly due to increase in sales volume
+of chemical products as compared with
+2015.
+The sales revenues generated by the
+segment's six major categories of
+chemical products (namely basic organic
+chemicals, synthetic resin, synthetic fibre
+monomer and polymer, synthetic fibre,
+synthetic rubber, and chemical fertiliser)
+totaled RMB 316.2 billion, representing
+an increase of 2.1% as compared with
+2015, and accounting for 94.3% of the
+operating revenues of the segment.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+23
+Management's Discussion
+and Analysis
+Management's
+Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+The following table sets forth the sales volume, average realised prices and respective percentage changes of each of the segment's six major
+categories of chemical products in 2016 and 2015.
+7,169
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2015
+Change (%)
+2016
+2015
+Change (%)
+Basic organic chemicals
+Synthetic fibre monomer and polymer
+41,605
+38,903
+6.9
+3,963
+4,121
+Average realised price (RMB/tonne)
+Year ended 31 December
+243
+Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+1,612
+(4) Chemicals Segment
+1.3
+(6.5)
+(4.4)
+10.7
+1,492,165
+1,930,911
+N/A
+N/A
+N/A
+N/A
+(1,170,313)
+(1,168,732)
+Total
+Elimination of inter-segment sales
+0.7
+(6.2)
+(5.6)
+1.8
+726,449
+739,947
+Corporate and Others
+1.7
+(0.2)
+1.9
+5 THE CAUSE AND IMPACT OF THE CHANGE
+IN THE COMPANY'S ACCOUNTING POLICY
+In 2014, the International Accounting
+Standards Board published Amendments
+to International Accounting Standard 27
+(IAS 27) Separate Financial Statements.
+These amendments allowed entities to use
+equity method to account for investments in
+subsidiaries, joint ventures and associates in
+their separate financial statements. Entities
+wishing to change to the equity method must
+do so retrospectively. The amendment is
+effective from 1 January 2016.
+Current assets
+In order to eliminate the difference
+regarding subsequent measurements on
+investments in joint ventures and associates
+between separate financial statements
+prepared in accordance with ASBE and
+IFRS, the Company changed its subsequent
+measurements on investments in associates
+and joint ventures from cost method to
+equity method in its separate financial
+statements prepared in accordance with
+IFRS from 1 January 2016.
+1,823
+(11.6)
+Synthetic rubber
+Chemical fertiliser
+In 2016, the operating expenses of the
+chemicals segment were RMB 314.5
+billion, representing an increase of 1.6%
+over 2015.
+In 2016, the segment seized the
+favorable opportunities of the low feed
+stock price, further adjust feed stock
+and product mix, coordinated production
+with sales, strictly controlled costs and
+expenses, thus, resulting in remarkable
+profits.
+In 2016, the operating profit of
+this segment was RMB 20.6 billion,
+representing an increase of RMB 1.1
+billion as compared with 2015.
+(5) Corporate and Others
+The business activities of corporate
+and others mainly consist of import
+and export business activities of the
+Company's subsidiaries, research and
+development activities of the Company,
+and managerial activities of headquarters.
+In 2016, the operating revenues
+generated from corporate and others
+were RMB 739.9 billion among which
+the sales revenues realised by trading
+companies were RMB 736.2 billion,
+representing a decrease of 5.6% over
+2015 mainly attributed to the drop of
+international crude oil prices as well
+as less revenue from crude oil trading
+business as compared with 2015.
+In 2016, the operating expenses of
+corporate and others were RMB 736.7
+billion, among which operating expenses
+realised by trading companies were RMB
+728.0 billion, representing a decrease of
+6.0% over 2015.
+In 2016, the operating profit from
+corporate and others was RMB 3.2
+billion, among which the operating profit
+realised by trading companies was RMB
+8.2 billion.
+(1) Assets, liabilities and equity
+193.8
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+Unit: RMB million
+Total assets
+BD0068
+BD0028
+and Analysis
+Management's Discussion
+27
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+6 SIGNIFICANT CHANGES IN MAJOR ASSETS
+DURING THE REPORTING PERIOD
+During the reporting period, there are no
+significant changes in the Company's major
+assets.
+The change in accounting policy carries no
+impact on financial statements prepared
+in accordance with the ASBE as well as
+consolidated financial statements prepared
+in accordance with the IFRS.
+financial statements prepared in accordance
+with IFRS due to the retrospective
+adjustment.
+By adopting the amendments to IAS
+27-Separate Financial Statements, the
+balance of investments in associates,
+investments in joint ventures, retained
+earnings and other reserves as of 31
+December 2015 would be increased by RMB
+8,056 million, RMB 644 million, RMB 8,672
+million and RMB 28 million in the separated
+The major funding sources of the Company are its operating activities and short-term and long-term loans. The major use of funds includes
+operating expenses, capital expenditures, and repayment of the short-term and long-term debts.
+In 2016, the operating profit of
+this segment was RMB 32.2 billion,
+representing an increase of 11.4%
+compared with 2015.
+4,478
+In 2016, facing abundant domestic
+supply of refined oil products and strong
+market competition, the segment made
+full use of the advantages of end user
+marketing network, actively expanded
+(6.0)
+3,212
+1,581
+384
+736.5
+4,566
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+21
+cost of crude oil processed was RMB
+484.8 billion, representing a decrease of
+19.4% over 2015.
+In 2016, refining gross margin was
+RMB 471.9 per tonne, representing
+an increase of RMB 153.8 per tonne
+compared with 2015. This is mainly
+due to widened price spread between
+product and feedstocks as a result of
+the Company's effort in product mix
+optimisation, upward movement of crude
+oil price during the period as well as floor
+price policy announced by the Chinese
+government.
+22
+22
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2016, the unit refining cash operating
+cost (defined as operating expenses
+less the processing cost of crude oil
+and refining feedstock, depreciation and
+amortisation, taxes other than income
+tax and other operating expenses, then
+divided by the throughput of crude oil
+and refining feedstock) was RMB 165.7
+per tonne, a decrease of RMB 1.9 per
+tonne against 2015, mainly because the
+segment enforced control over costs,
+improved efficiency of operations, and
+decreased operational costs in fuel,
+power, and other auxiliaries facilities.
+In 2016, the segment seized the
+favorable opportunities of the bottoming
+out of crude oil prices, enforced
+management in crude oil procurement,
+adjusted product mix based on market
+needs, increased export volume, made
+great efforts to improve the profitability
+of by-products, and as a result, realised
+significant increase in operating profit.
+In 2016, the operating profit of the
+segment totaled RMB 56.3 billion,
+representing an increase of RMB 35.3
+billion as compared with 2015.
+(3) Marketing and Distribution Segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from
+the refining segment and third parties,
+conducting wholesale and direct sales to
+domestic customers and distributing oil
+products through the segment's retail
+and distribution network, as well as
+providing related services.
+In 2016, the operating revenues of this
+segment were RMB 1,052.9 billion, a
+decrease of 4.9% over 2015, of which:
+the sales revenues of gasoline totaled
+RMB 495.2 billion, a increase of 5.1%
+compared with 2015; the sales revenues
+of diesel were RMB 412.0 billion, a
+decrease of 13.0% over 2015, and the
+sales revenues of kerosene were RMB
+70.6 billion, a decrease of 9.5% over
+2015.
+The following table sets forth the sales volumes, average realised prices, and the respective percentage changes of the segment's four major
+refined oil products in 2016 and 2015, including breakdown in retail, direct sales and wholesale of gasoline and diesel:
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+Average realised price (RMB/tonne)
+Year ended 31 December
+2016
+2015
+Change (%)
+783,490
+2016
+736,735
+Operating expenses
+Operating profit/(loss)
+13.0
+Operating profit
+Chemicals Segment
+Operating revenues
+Operating expenses
+Operating profit/(loss)
+Corporate and Others
+1,020,704
+32,153
+1,077,811
+(5.3)
+28,855
+11.4
+335,114
+328,871
+1.9
+314,491
+309,395
+1.6
+20,623
+19,476
+5.9
+Operating revenues
+739,947
+783,874
+(5.6)
+Elimination of inter-segment profit
+2015
+Change (%)
+Gasoline
+Retail
+5,490
+(7.3)
+Direct sales and wholesale
+45,342
+45,150
+0.4
+3,851
+4,314
+(10.7)
+Kerosene
+25,164
+23,028
+9.3
+2,807
+3,387
+(17.1)
+Fuel
+22,034
+24,980
+(11.8)
+1,703
+2,215
+(23.1)
+In 2016, the operating expenses of the
+segment were RMB 1,020.7 billion,
+representing a decrease of RMB 57.1
+billion or 5.3% as compared with that of
+2015. This was mainly due to decreased
+procurement volume and prices of diesel
+and fuel oil.
+In 2016, the segment's marketing cash
+operating cost (defined as the operating
+expenses less purchase costs, taxes
+other than income tax, depreciation
+and amortisation, and then divided by
+the sales volume) was RMB 197.3 per
+tonne, representing an increase of 4.3%
+compared with that of 2015.
+5,088
+(8.1)
+50,756
+46,656
+77,613
+69,842
+11.1
+6,380
+6,747
+(5.4)
+63,718
+58,211
+9.5
+6,722
+6,996
+(3.9)
+the gasoline market, increased the
+sales volume of high octane number
+gasoline, made efforts to improve total
+sales volume, coordinate internal and
+external resources, increased the spread
+between sales and procurement prices as
+compared with 2015, and achieved better
+performance.
+Direct sales and wholesale
+11,630
+19.5
+4,812
+5,498
+(12.5)
+Diesel
+91,998
+95,907
+(4.1)
+4,936
+(9.3)
+Retail
+13,895
+289,572
+788,161
+Chemicals
+and Analysis
+Discussion
+Management's
+26
+and Analysis
+Management's Discussion
+25
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2016, the Company paid
+environmental expenditures of RMB 6.36
+billion.
+Research & development expenses
+refer to the expenses recognised as
+expenditures when they occur. In
+2016, the expenditure for research &
+development was RMB 5.94 billion.
+(5) Research & development expenses and
+environmental expenditures
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+(4) Capital Expenditures
+"Significant Events" section of this report.
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+(3) Contingent Liabilities
+At the end of 2016, the cash and cash
+equivalents were RMB 124.5 billion.
+In 2016, the net cash used in the
+Company's financing activities was RMB
+93.0 billion, representing an increase of
+RMB 102.1 billion over 2015. This was
+mainly due to the impact of RMB 105.0
+billion from the capital introduction of
+Sinopec Marketing Co., Ltd. in 2015; the
+significant reduction in interest bearing
+debts for two consecutive years, of which,
+the Company repaid RMB 62.6 billion
+and RMB 63.0 billion in 2015 and 2016,
+respectively.
+received as proceeds from the sale of
+equity in Sinopec Sichuan-to-East China
+Pipeline Co., Ltd.
+In 2016, the net cash used in investing
+activities was RMB 66.2 billion,
+representing a decrease of RMB 50.5
+billion over 2015. This was mainly due
+to the decrease of RMB 30.0 billion in
+capital expenditure over the same period
+of 2015 as well as RMB 13.2 billion
+In 2016, the net cash generated from
+operating activities of the company
+was RMB 214.5 billion, representing
+an increase of RMB 48.8 billion as
+compared with 2015. This was mainly
+due to the increase in profit before tax by
+RMB 23.7 billion, depreciation, depletion
+and amortization increased by RMB 12.0
+billion, and asset impairment increased
+by RMB 8.3 billion over the same period
+of 2015. Meanwhile, due to strict control
+on occupation of funds, occupation of
+working capital decreased significantly
+compared with 2015.
+2015
+165,740
+(116,719)
+9,093
+(93,047)
+(66,217)
+Year ended 31 December
+2016
+214,543
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(6) Measurement of fair values of derivatives and relevant system
+The Company has established sound decision-making mechanism, business process and internal control systems relevant to financial instrument
+accounting and information disclosure.
+Items relevant to measurement of fair values
+403
+56
+262
+261
+Self-owned fund
+source
+Funding
+of the
+current year
+as equity
+56
+262
+261
+values recorded
+Unit: RMB million
+values in the
+current year
+of the year
+End of
+Beginning
+Impairment
+loss provision
+Accumulated
+variation of fair
+Profits and
+losses from
+variation of fair
+Cash flow hedging instruments
+Total
+Derivative financial instruments
+Stock
+Available-for-sale financial assets
+Items
+Unit: RMB million
+the year
+314
+Net cash generated from/(used in) financing activities
+Net cash generated from operating activities
+676,197
+710,994
+Total equity attributable to owners of the Company
+(14,444)
+196,275
+181,831
+Non-current liabilities
+22,711
+462,832
+485,543
+Current liabilities
+8,267
+659,107
+667,374
+Total liabilities
+(27,263)
+1,113,611
+1,086,348
+Non-current assets
+78,604
+333,657
+51,341
+1,447,268
+Change
+As of 31
+December 2015
+34,797
+Share capital
+121,071
+121,071
+Major items of cash flows
+The following table sets forth the major items in the consolidated cash flow statements for 2016 and 2015.
+Total equity attributable to owners of
+the Company was RMB 711.0 billion,
+representing an increase of RMB 34.8
+billion compared with that of the end
+of 2015, which was mainly due to the
+increase in reserves by RMB 34.8 billion.
+in accounts payable by RMB 43.7
+billion, short-term debts and borrowings
+from China Petrochemical Corp and its
+subsidiaries decreased by RMB 40.6
+billion, other accounts payable and taxes
+payable increased by RMB 17.3 billion.
+Non-current liabilities were RMB 181.8
+billion, representing a decrease of RMB
+14.4 billion compared with that of the
+end of 2015. This was mainly due to
+long-term debts decreased by RMB 22.8
+billion, estimated liabilities increased by
+RMB 6.1 billion.
+Current liabilities were RMB 485.5 billion,
+representing an increase of RMB 22.7
+billion as compared with that of the end
+of 2015. This was mainly due to increase
+The Company's total liabilities were RMB
+667.4 billion, representing an increase
+of RMB 8.3 billion compared with that of
+the end of 2015, of which:
+end of 2015. This was mainly due to the
+fact that property, plant and equipment
+(net) decreased by RMB 42.9 billion,
+construction in progress decreased by
+RMB 22.7 billion, equity of associates
+and joint ventures increased by RMB 32.5
+billion (the Company sold 50% equity in
+Sichuan-to-East China Pipeline Co., with
+the remaining 50% equity corresponding
+to RMB 22.8 billion switched to item of
+interests in associates);
+(2) Cash Flow
+Non-current assets were RMB 1,086.3
+billion, representing a decrease of RMB
+27.3 billion as compared with that of the
+Current assets were RMB 412.3 billion,
+representing an increase of RMB 78.6
+billion compared with that of the end of
+2015, of which, cash and cash equivalent,
+and time deposit in financial institutions
+increased by RMB 72.8 billion, mainly
+due to significant increase in cash flow
+from operating activities, decrease in
+investment, abundant surplus in cash,
+as well as increase in inventory by RMB
+10.9 billion.
+As of 31 December 2016, the Company's
+total assets were RMB 1,498.6 billion,
+representing an increase of RMB 51.3
+billion compared with that of the end of
+2015, of which:
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Net cash used in investing activities
+24
+43,074
+Operating expenses
+831,235
+Total equity
+8,277
+111,964
+120,241
+Non-controlling interests
+34,797
+555,126
+589,923
+Reserves
+24
+335,114
+(160)
+4,722
+5,386
+Operation
+cost
+Operation
+income
+RMB million
+Segments
+(3) The results of the principal operations by segments
+At the end of 2016, the shareholders' equity of the Company was RMB 832.5 billion, representing an increase of RMB 43.0 billion compared
+with that of the end of 2015. This was mainly due to the undistributed profit increased by RMB 29.5 billion, other comprehensive income
+increased by RMB 7.1 billion, capital reserve decreased by RMB 2.1 billion for this period.
+At the end of 2016, the Company's long-term liabilities were RMB 180.5 billion, representing a decrease of RMB 14.3 billion compared with that
+of the end of 2015. This was mainly due to the following factors: a) bonds payable decreased by RMB 28.3 billion; b) long-term loans increased
+by RMB 6.0 billion; c) provision increased by RMB 6.1 billion; d) other non-current liabilities increased by RMB 2.5 billion.
+At the end of 2016, the Company's total assets were RMB 1,498.6 billion, representing an increase of RMB 51.3 billion compared with that of
+the end of 2015. This was mainly due to the following factors: a) cash and cash equivalents increased by RMB 72.8 billion; b) long term equity
+investment increased by RMB 32.5 billion; c) intangible assets and other non-current assets increased by RMB 5.9 billion; d) fixed assets and
+construction in progress decreased by RMB 65.6 billion.
+42,960
+789,565
+51,341
+(14,330)
+194,871
+1,447,268
+RMB million
+Change
+As of 31
+December 2015
+832,525
+180,541
+1,498,609
+RMB million
+As of 31
+December 2016
+Shareholders' equity
+Long-term liabilities
+Total assets
+(2) Financial data prepared under ASBE
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+Gross profit
+margin* (%)
+Exploration and Production
+Refining
+115,939
+1.0
+(5.9)
+(4.9)
+8.4
+961,907
+1,052,857
+Marketing and Distribution
+4.6
+(15.5)
+(7.6)
+9.1
+556,081
+Net profit: In 2016, the net profit attributable to the equity shareholders of the Company was RMB 46.4 billion, representing an increase of RMB
+14.1 billion or 43.8% comparing with 2015.
+855,786
+(26.5)
+basis (%)
+a year-on-year
+Increase/
+(decrease) of
+gross profit
+margin on
+a year-on-year
+basis (%)
+Increase/
+(decrease) of
+operation
+cost on
+basis (%)
+a year-on-year
+Increase/
+(decrease) of
+operation
+income on
+(16.4)
+(15.3)
+128,469
+9.8
+Self-owned fund
+Operating profit: In 2016, the operating profit of the Company was RMB 78.9 billion, representing an increase of RMB 26.6 billion as compared
+with 2015.
+46,416
+Net profit attributable to equity shareholders of the Company
+Financial expenses, investment income and loss from changes in fair value
+Consolidated operating profit
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+Marketing and Distribution Segment
+Refining Segment
+Exploration and Production Segment
+Operating profit/(loss)
+Consolidated operating income
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+Marketing and Distribution Segment
+Refining Segment
+Exploration and Production Segment
+Operating income
+(1) Under ASBE, the operating income and operating profit or loss by reportable segments were as follows:
+The major differences between the Company's financial statements prepared under ASBE and IFRS are set out in Section C of the financial
+statements of the Company from page 202 of this report.
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER ASBE
+Self-owned fund
+(3,813)
+(3,757)
+(149)
+11
+(4,024)
+(3,448)
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+115,939
+855,786
+138,653
+52,246
+78,876
+631
+23,952
+4,566
+1,581
+(678)
+2,912
+19,516
+20,769
+27,299
+32,385
+32,281
+19,423
+(18,511)
+(58,531)
+2,020,375
+1,930,911
+(1,264,305)
+(1,168,732)
+783,874
+328,871
+335,114
+739,947
+1,106,666
+1,052,857
+926,616
+55,808
+(4.9)
+1.8
+1,052,857
+1,628
+2,019
+(19.4)
+Natural gas (million cubic meters)
+Gasoline
+19,008
+18,440
+3.1
+1,258
+1,519
+(17.2)
+77,480
+69,749
+11.1
+6,386
+(29.6)
+6,749
+Diesel
+91,492
+95,472
+(4.2)
+4,482
+4,937
+(9.2)
+Kerosene
+25,164
+23,028
+9.3
+2,807
+3,387
+(17.1)
+(5.4)
+Basic chemical feedstock
+9,674
+Crude oil
+56,411
+42.1
+Tax expense
+(20,707)
+(12,613)
+64.2
+Profit for the year
+59,444
+43,798
+35.7
+Attributable to:
+Owners of the Company
+Non-controlling interests
+46,672
+12,772
+6,808
+32,512
+11,286
+13.2
+(1) Turnover and other operating revenues
+In 2016, the Company's turnover was RMB 1,880.2 billion, representing a decrease of 4.9% over 2015. This was mainly attributable to the
+decline of crude oil and petrochemical products prices.
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2016 and 2015:
+Sales volume (thousand tonnes)
+Year ended 31 December
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+2016
+2015
+Change (%)
+2016
+2015
+Change (%)
+43.6
+32,248
+29,608
+8.9
+1,612
+1,823
+(11.6)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+19
+Management's Discussion
+and Analysis
+Management's
+Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+1,106,666
+In 2016, petroleum products (mainly
+consisting of oil products and other
+refined petroleum products) sold by
+Refining Segment and Marketing and
+Distribution Segment achieved external
+sales revenues of RMB 1,130.4 billion,
+accounting for 58.5% of the Company's
+turnover and other operating revenues,
+representing a decrease of 6.3% over
+2015 mainly due to the decline of various
+refined oil products prices. The sales
+revenue of gasoline, diesel and kerosene
+was RMB 975.6 billion, representing
+a decrease of 4.4% over 2015, and
+accounting for 86.3% of the total sales
+revenue of petroleum products. Turnover
+of other refined petroleum products
+was RMB 154.8 billion, representing a
+decrease of 17.0% compared with 2015,
+accounting for 13.7% of the total sales
+revenue of petroleum products.
+The Company's external sales revenue
+of chemical products was RMB 284.3
+billion, representing an increase of 2.8%
+over 2015, accounting for 14.7% of
+the Company's total turnover and other
+operating revenues. This was mainly due
+to the increase of chemical products
+sales volume.
+193.8
+(2) Operating expenses
+Purchased crude oil, products and
+operating supplies and expenses were
+RMB 1,379.7 billion, representing a
+decrease of 7.7% over the same period of
+2015, accounting for 74.4% of the total
+operating expenses, of which:
+Crude oil purchasing expenses were RMB
+373.7 billion, representing a decrease
+of 20.4% over the same period of 2015.
+Throughput of crude oil purchased
+externally in 2016 was 202.40 million
+tonnes (excluding the volume processed
+for third parties), representing a decrease
+of 1.9% over the same period of 2015.
+The average cost of crude oil purchased
+externally was RMB 2,084 per tonne,
+representing a drop of 19.6% over 2015.
+The Company's other purchasing
+expenses were RMB 1,006.0 billion,
+representing a decrease of 1.8% over the
+same period of 2015. This was mainly
+due to the decline in prices of externally
+purchased raw materials.
+Selling, general and administrative
+expenses were RMB 64.4 billion,
+representing an decrease of 7.4% over
+2015. That was mainly due to that
+the Company promoted the reform of
+employment system, adjusted the cost
+and tax accounting, and continuously
+enhanced cost control.
+Depreciation, depletion and amortisation
+were RMB 108.4 billion, representing
+an increase of 12.4% as compared
+with 2015. That was mainly due to the
+significant increase in depreciation and
+depletion rate as a result of oil and gas
+reserve revision in the exploration and
+production segment corresponding to
+decreased oil price.
+Exploration expenses were RMB 11.0
+billion, representing an increase of 5.5%
+year on year. That was mainly due to that
+the Company maintained its exploration
+intensity in low oil price environment.
+Personnel expenses were RMB 63.9
+billion, representing an increase of 12.8%
+over 2015. That was mainly due to that
+that the Company promoted the reform
+of employment system since 2016.
+Taxes other than income tax were RMB
+232.0 billion, representing a decrease of
+1.8% compared with 2015. Mainly due
+to the decrease in consumption tax by
+RMB 4.9 billion as a result of decreased
+production of diesel, and decrease in
+resource tax by RMB 1.0 billion as a
+result of drop in crude prices over the
+same period of 2015.
+Other operating income/(expense),
+net were RMB 5.7 billion, decreasing
+5.8 billion over the same period of
+2015. That was mainly due to the non-
+operating income from reorganisation
+and capital injection of Sichuan-to-East
+China Pipeline Co., and the increase of
+impairment of assets.
+(3) Operating profit was RMB 77.2 billion,
+representing an increase of 35.9%
+compared with 2015. This is mainly
+due to outstanding performance of the
+Company's downstream business as we
+fully tapped potential from our integrated
+business. It effectively offset the negative
+impact of low oil prices.
+(4) Net finance costs were RMB 6.6 billion,
+representing a decrease of 28.4%
+over 2015, of which: interest expense
+increased by RMB 1.1 billion over
+2015 as a result of the replacement
+of debt denominated in US dollars by
+debt denominated in RMB (inclusive of
+replacing borrowings in US dollars and
+decrease exposure to US dollars); net
+losses from foreign exchange was RMB
+600 million, decreased by RMB 3.2
+billion as compared with 2015; interest
+income increased by RMB 200 million
+as a result of increased interest income
+compared with the same period of 2015.
+(5) Profit before taxation was RMB 80.2
+billion, representing an increase of 42.1%
+year on year.
+(6) Tax expense was RMB 20.7 billion,
+representing an increase of 64.2%
+year on year. That was mainly due to a
+substantial increase in profit over the
+same period of 2015.
+In 2016, the Company's operating
+expenses were RMB 1,853.7 billion,
+decreased by 5.6% compared with 2015.
+The operating expenses mainly consisted
+of the following:
+243
+714
+Chemical fertiliser
+4,054
+4,175
+(2.9)
+Monomer and polymer for synthetic fibre
+7,146
+6,071
+17.7
+5,325
+5,796
+(8.1)
+Synthetic resin
+12,223
+11,989
+2.0
+7,488
+7,771
+(3.6)
+9.5
+8,778
+9,608
+(0.5)
+1,104
+1,098
+80,151
+Synthetic rubber
+7,740
+7,113
+(0.8)
+1,380
+1,369
+Synthetic fibre
+(8.1)
+(7) Profit attributable to non-controlling
+interests was RMB 12.8 billion,
+representing an increase of RMB 1.5
+billion comparing with 2015.
+Profit before taxation
+8,828
+Average realised price (RMB/tonne)
+Year ended 31 December
+2016
+2015
+Change (%)
+2016
+2015
+Change (%)
+52,461
+50,921
+3.0
+5,904
+6,191
+(4.6)
+58,734
+The sales revenues of refined petroleum
+products other than gasoline, diesel,
+63,359
+4,505
+4,797
+(6.1)
+14,529
+13,518
+7.5
+2,814
+3,420
+(17.7)
+36,408
+35,945
+1.3
+2,584
+2,984
+(7.3)
+(13.4)
+The sales revenues of chemical feedstock
+were RMB 94.1 billion, representing a
+decrease of 12.3% over 2015.
+The sales revenues of diesel were RMB
+264.6 billion, representing a decrease of
+12.9% over 2015.
+Management's Discussion
+and Analysis
+Management's
+Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(1) Exploration and Production Segment
+Most crude oil and a small portion of the
+natural gas produced by the exploration
+and production segment were used for
+the Company's refining and chemical
+operations. Most of the natural gas and
+a small portion of crude oil were sold
+externally to other customers.
+In 2016, the operating revenues of
+this segment were RMB 115.9 billion,
+representing a decrease of 16.4% over
+2015. This was mainly attributable to the
+decline of realised price of crude oil and
+natural gas as well as decrease in sales
+volume of crude oil.
+In 2016, the segment sold 36.38 million
+tonnes of crude oil, representing a
+decrease of 13.8% over 2015. Natural
+gas sales volume was 20.56 billion cubic
+meters, representing an increase of 3.7%
+over 2015. Average realised prices of
+crude oil and natural gas were RMB 1,734
+per tonne and RMB 1,267 per thousand
+cubic meters, representing decreases
+of 13.9% and 17.5% respectively over
+2015.
+In 2016, the operating expenses of
+this segment were RMB 152.6 billion,
+representing a decrease of 2.2% over
+2015. That was mainly due to the
+following:
+•
+.
+•
+Depreciation, depletion and
+amortisation increased by RMB 9.8
+billion year on year.
+The sales revenues of kerosene were RMB
+40.9 billion, representing a decrease of
+11.6% over 2015.
+Impairment loss on oil and gas
+related assets increased by RMB 6.7
+billion year on year;
+In 2016, the oil and gas lifting cost was
+RMB 786 per tonne, representing a
+moderate year-on-year increase of 0.8%,
+under the backdrop of a 13.2% decrease
+in crude oil production.
+In 2016, the segment made every effort
+to optimise resource mix, attached great
+emphasis on cash flow contributions, and
+proactively controlled costs. Due to the
+drop in crude oil and natural gas prices,
+the operating loss of the exploration
+and production segment were RMB 36.6
+billion, representing an expanded losses
+as compared with 2015.
+(2) Refining Segment
+Business activities of the refining
+segment include purchasing crude oil
+from third parties and the exploration
+and production segment of the Company,
+as well as processing crude oil into
+refined petroleum products. Gasoline,
+diesel and kerosene are sold internally to
+the marketing and distribution segment
+of the Company; part of the chemical
+feedstock is sold to the chemicals
+segment of the Company; and other
+refined petroleum products are sold
+externally to both domestic and overseas
+customers.
+In 2016, the operating revenues of
+this segment were RMB 855.8 billion,
+representing a decrease of 7.6% over
+2015. This was mainly attributable to the
+decreased in refined oil products prices.
+The following table sets forth the sales volumes, average realised prices and the respective changes of the Company's major refined oil products
+of the segment in 2016 and 2015.
+Sales Volume (thousand tonnes)
+Year ended 31 December
+Gasoline
+Diesel
+Kerosene
+Chemical feedstock
+Other refined petroleum products
+In 2016, sales revenues of gasoline
+were RMB 309.7 billion, representing a
+decrease of 1.8% over 2015.
+The Company with the restructuring
+of Sichuan-to-East China Pipeline Co.,
+other expenses (net) decreased by
+RMB 20.6 billion.
+55,742
+52,418
+6.3
+(7.4)
+Depreciation, depletion and amortisation
+(108,425)
+(96,460)
+12.4
+Exploration expenses, including dry holes
+(11,035)
+(10,459)
+5.5
+Personnel expenses
+(63,887)
+(56,619)
+12.8
+Taxes other than income tax
+(69,491)
+(232,006)
+(1.8)
+Other operating income/(expense), net
+5,686
+(129)
+Operating profit
+77,193
+56,822
+35.9
+Net finance costs
+(6,611)
+(9,239)
+(28.4)
+Investment income and share of profits less losses from associates and joint ventures
+9,569
+(236,349)
+(64,360)
+(7.7)
+(1,494,046)
+2,529
+2,842
+(11.0)
+kerosene and chemical feedstock were
+RMB 141.0 billion, representing a
+decrease of 5.4% over 2015.
+In 2016, the segment's operating
+expenses were RMB 799.5 billion,
+representing a decrease of 11.7% over
+2015, mainly attributable to the decline
+in procurement cost of crude oil.
+In 2016, the average processing cost
+for crude oil was RMB 2,194 per tonne,
+representing a decrease of 18.5% over
+2015. Total crude oil processed was
+220.98 million tonnes (excluding volume
+processed for third parties), representing
+a decrease of 1.1% over 2015. The total
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
+COMPANY'S AUDITED FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES. PARTS OF THE
+FOLLOWING FINANCIAL DATA WERE ABSTRACTED FROM THE COMPANY'S AUDITED FINANCIAL
+STATEMENTS THAT HAVE BEEN PREPARED ACCORDING TO THE IFRS, UNLESS OTHERWISE STATED.
+THE PRICES IN THE FOLLOWING DISCUSSION DO NOT INCLUDE VALUE-ADDED TAX.
+1 CONSOLIDATED RESULTS OF OPERATIONS
+In 2016, the Company's turnover and other operating revenues were RMB 1,930.9 billion, decreased by 4.4% compared with that of 2015. The
+operating profit was RMB 77.2 billion, representing a year on year increase of 35.9%.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+Year ended 31 December
+2016
+Turnover and other operating revenues
+Turnover
+Other operating revenues
+Operating expenses
+Purchased crude oil, product and operating supplies and expenses
+(5.6)
+(1,963,553)
+19.3
+42,498
+(4.9)
+1,977,877
+8.4
+(4.4)
+Change (%)
+2015
+RMB million
+(1,379,691)
+1,930,911
+1,880,190
+50,721
+(1,853,718)
+RMB million
+Selling, general and administrative expenses
+2,020,375
+(8) Profit attributable to owners of the
+Company was RMB 46.7 billion,
+representing an increase of 43.6% year
+on year.
+Most crude oil and a small portion of
+natural gas produced by the Company
+were internally used for refining and
+chemical production, with the remaining
+sold to external customers. In 2016,
+the turnover from crude oil, natural
+gas and other upstream products sold
+externally amounted to RMB 47.4 billion,
+a decrease of 17.8% over 2015. The
+change was mainly due to the decrease
+of crude oil prices and sales volume in
+2016.
+20
+320,367
+345,454
+10.3
+10.5
+Operating revenues
+739,947
+783,874
+23.8
+23.8
+Operating revenue before elimination of
+inter-segment sales
+3,099,643
+Elimination of inter-segment sales
+Consolidated operating revenue
+(1,168,732)
+1,930,911
+Inter-segment sales
+21.7
+21.7
+13.3
+8.7
+15.4
+14.2
+38,614
+43,814
+1.2
+1.3
+3,284,680
+(1,264,305)
+2,020,375
+335,114
+10.8
+10.0
+Corporate and Others
+External sales*
+419,580
+438,420
+13.5
+328,871
+9.6
+100.0
+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.
+(17,418)
+Operating revenues
+855,786
+926,616
+(7.6)
+Operating expenses
+799,521
+905,657
+(11.7)
+Operating profit/(loss)
+56,265
+20,959
+168.5
+Marketing and Distribution Segment
+Operating revenues
+(36,641)
+(2.2)
+156,071
+152,580
+100.0
+100.0
+* Other operating revenues are included.
+The following table sets forth the operating revenues, operating expenses and operating profit by each segment before elimination of the inter-
+segment transactions for the periods indicated, and the percentage change of 2016 compared to 2015.
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+Change
+100.0
+(%)
+Operating revenues
+115,939
+138,653
+(16.4)
+Operating expenses
+Operating (loss)/profit
+Refining Segment
+Exploration and Production Segment
+285,057
+As of 31
+December 2016
+Operating revenues
+External sales*
+Exploration and Production Segment
+(%)
+(%)
+2015
+2016
+2015
+RMB million
+RMB million
+Operating revenues
+Year ended 31 December
+2016
+of inter-segment sales
+Year ended 31 December
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+As a percentage of
+consolidated operating
+revenue before elimination
+The following table shows the operating revenues by each segment, the contribution of external sales and inter-segment sales as a percentage
+of operating revenues before elimination of inter-segment sales, and the contribution of external sales as a percentage of consolidated operating
+revenues (i.e. after elimination of inter-segment sales) for the periods indicated.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Inter-segment sales
+56,985
+67,634
+1,498,609
+412,261
+296,500
+2.2
+3.3
+3.0
+(%)
+2015
+2016
+(%)
+20
+2.1
+3.7
+138,653
+115,939
+Operating revenues
+1.9
+71,019
+58,954
+123
+4.3
+224
+External sales*
+33.9
+33.6
+54.3
+54.6
+Inter-segment sales
+Operating revenues
+3,480
+1,052,857
+1,103,610
+3,056
+0.1
+1,106,666
+33.7
+Chemicals Segment
+External sales*
+Refining Segment
+Inter-segment sales
+0.1
+1,049,377
+34.0
+Marketing and Distribution Segment
+108,469
+External sales*
+3.5
+125,654
+5.6
+6.2
+Inter-segment sales
+747,317
+3.8
+800,962
+28.2
+27.7
+855,786
+926,616
+24.4
+24.2
+Operating revenues
+2. Poverty elimination through provision of employment
+2.1 Investment in professional skill training
+1.4 Number of people lifted out of poverty
+1.3 Investment in poverty alleviation projects through
+industrial development
+1.2 Number of poverty alleviation programs
+1. Poverty elimination through industrial development
+1.1 Categories of poverty alleviation programs through
+industrial development
+2.2 Participants of professional skill trainings (person time)
+II. Investment breakdowns
+98
+中国心
+1345
+中国石化 SINOPEC
+MODEC
+e
+15,506
+37
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+In 2017, we will continue to enhance our efforts on targeted poverty alleviation and efficiency improvements. We will implement our Targeted
+Poverty Alleviation program to eradicate poverty by production development, relocation, ecological compensation, education, as well as by
+guaranteeing basic living standards to ensure the effectiveness of the program.
+(4) 2017 Targeted Poverty Alleviation Plan
+Other investments include external fund raised by the employee
+from our subsidiaries who participated in the poverty elimination plans
+44.97
+220
+0.06
+7.09
+0.02
+424
+2.3 Number of people employed
+0.44
+Significant Events
+3. Poverty elimination through relocation
+12,269
+3.2 Investment in poverty alleviation projects through relocation
+829
+6.2 Investment in ecological protection
+6.1 Items
+6. Poverty alleviation through ecological protection
+5.1 Investment in medical and health care resources in proverty.
+striken areas
+2.48
+2,797
+3.15
+1.21
+94
+1,589
+2,733
+2.27
+3.1 Number of relocated people provided with employment
+208
+38.42
+☑ Poverty alleviation through assets income
+☑ Poverty alleviation through e-commerce
+☐ Poverty alleviation through tourism development
+☑ Poverty alleviation through agriculture and forestry development
+27,775
+4.89
+100.56
+Data
+5. Poverty alleviation through healthcare
+4.3 Investment in education resources in poverty-stricken areas
+4.2 Number of students who received funding assistance
+4.1 Investment in students funding
+4. Poverty elimination through education
+☑ Poverty alleviation through science and technology development
+☐ Others
+1.46
+2. Value of goods and materials
+6.24
+5 years
+4.75%
+Purpose guarantor
+Working
+None
+capital loan
+Project
+construction
+Whether connected
+overdue transaction
+or not or not
+No
+Whether
+involved
+roll-over
+in lawsuit
+or not
+0.6
+or not
+Gain
+or loss
+No
+No
+Joint Venture
+Gain
+None
+No
+No
+Connected
+relationship
+Maoming-BASF, Ltd.
+Development, Ltd.
+or
+9 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+10 OTHER MATERIAL CONTRACTS
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any significant
+contracts subject to disclosure obligations
+during the reporting period.
+11 CREDIBILITY FOR THE COMPANY,
+CONTROLLING SHAREHOLDERS AND DE
+FACTO CONTROLLER
+During the reporting period, the Company
+and its controlling shareholder did not have
+any court's effective judgments which should
+be performed or any large amount of debt
+which should be repaid.
+12 TRUSTEESHIP, CONTRACTING AND LEASES
+During the reporting period, the Company
+was not involved in any events relating to
+significant trusteeship, contracting or leases
+for the assets of any other company, nor has
+it placed its assets with any other company
+under a trusteeship, contracting or lease
+agreement subject to disclosure obligations.
+13 ENTRUSTED ASSET MANAGEMENT AND ENTRUSTED LOANS
+(1) Entrusted Asset Management
+During the reporting period, the Company has no entrusted asset management subject to disclosure obligation.
+(2) Entrusted loans
+Whether
+Whether
+Amount
+(RMB
+Mortgage
+Borrower
+billion)
+Ningbo Gaotou Petroleum
+0.2
+Term
+5 years
+Interest
+Rate
+6.00%
+No
+No
+Joint Venture
+Gain
+Index
+I. Overview
+1. Funds
+3. Number of people lifted out of poverty
+7. Guarantee basic living standard
+7.1 Investment in left-behind children, women and senior people
+7.2 Number of left-behind children, women and senior people
+assisted
+7.3 Investment in assisting the disabled
+7.4 Number of the disabled helped
+8. Poverty alleviation through social projects
+8.1 Investment in coordinated poverty alleviation
+in East and West China
+8.2 Investment in targeted poverty alleviation programs
+8.3 Public Welfare funds for poverty alleviation
+9. Other projects
+9.1 Number of projects
+9.2 Total investment
+9.3 Number of people lifted out of poverty
+9.4 Other projects overview
+☑Conduct ecological protection and construction
+☐ Develop ways for ecological protection and compensation
+☑Set up ecological public welfare positions
+☐ Others
+Unit: RMB million
+1.79
+(3) 2016 Targeted Poverty Alleviation Work Statistics
+Significant Events
+(3) Other asset management and derivative investment
+During the reporting period, the Company has no other asset management and derivative investment subject to disclosure obligation.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+35
+Significant Events
+36
+SIGNIFICANT EVENTST (CONTINUED)
+14 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+In order to regulate connected transactions
+between the Company and Sinopec Finance
+Co., Ltd. (Sinopec Corp.'s domestic
+settlement center, hereinafter referred to as
+the "Finance Company") and to ensure the
+safety and liquidity of the deposits of the
+Company in the Finance Company, Sinopec
+Corp. and the Finance Company formulated
+the Risk Control System on Connected
+Transactions of China Petroleum & Chemical
+Corporation and Sinopec Finance Co., Ltd.,
+which covers the risk control system and
+the risk management plan of the Company
+to prevent financial risks and to ensure
+that the deposits of the Company in the
+Finance Company can be utilised at the
+Company's discretion. At the same time, as
+the controlling shareholder of the Finance
+Company, China Petrochemical Corporation
+undertakes that in case of an emergency
+where the Finance Company has difficulty
+in making payments, China Petrochemical
+Corporation will increase the capital of
+the Finance Company in accordance with
+the actual need for the purpose of making
+payment.
+In order to regulate connected transactions
+between the Company and Sinopec Century
+Bright Capital Investment, Ltd. (Sinopec
+Corp.'s overseas settlement center,
+hereinafter referred to as the Century Bright
+Company), Century Bright Company ensures
+the safety of the deposits of the Company in
+Century Bright Company by strengthening
+internal risk controls and obtaining support
+from China Petrochemical Corporation.
+China Petrochemical Corporation has
+formulated a number of internal rules,
+including the Rules for the Internal Control
+System, the Rules for Implementation of
+Overseas Capital Management Methods, and
+the Provisional Methods for Overseas Fund
+Platform Management, to impose strict rules
+on Century Bright Company for providing
+overseas financial services. Century Bright
+Company has also established the Rules for
+the Implementation of the Internal Control
+System, which ensures the standardisation
+and safety of its corporate deposits business.
+At the same time, as the wholly controlling
+shareholder of Century Bright Company,
+China Petrochemical Corporation entered
+into a keep-well agreement with Century
+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 in the Finance
+Company and Century Bright Company
+during the reporting period did not exceed
+the cap as approved at the general meeting
+of shareholders. During daily operations,
+Sinopec Corp. can withdraw the full amount
+of its deposits in the Finance Company and
+Century Bright Company.
+15 APPROPRIATION OF NONOPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+16 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+17 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+Sinopec Corp. did not implement any share
+incentive scheme during the reporting period.
+18 ENVIROMENTAL PROTECTION BY SINOPEC
+CORP AND ITS SUBSIDIARIES
+Some branches and subsidiaries of
+Sinopec Corp. are major pollutant
+discharging companies stipulated by
+China's environmental protection agencies.
+Pursuant to relevant regulations and specific
+requirements of local related authorities,
+environmental information of these
+companies has been disclosed publicly. For
+more details, please refer to the website of
+local government.
+19 POVERTY ALLEVIATION PROGRAM
+LAUNCHED BY SINOPEC CORP
+(1) Targeted Poverty Alleviation Plan
+The Company has strictly followed the
+nation's poverty elimination program
+under the thirteenth five-year plan,
+persisted in targeted objects, targeted
+project planning, targeted utilisation
+of funds, targeted measures based on
+households, targeted personnel based on
+village and targeted poverty elimination
+effect, and uphold the principle of "blood-
+making style" and "blood-transfusion
+style" poverty alleviation. We also
+increased our investment, enhanced fund
+management, aimed at work innovation,
+emphasised supervision protocols and
+guaranteed work efficiency to ensure
+the effectiveness of the targeted poverty
+alleviation plan.
+(2) Overview on 2016 Targeted Poverty
+Alleviations
+In 2016, the Company focused on poor
+villages and households, implemented
+targeted poverty elimination plans in
+infrastructure construction, labor output
+trainings, rural industry development,
+poverty relief and education assistance.
+We invested RMB 105.45 million in
+targeted poverty alleviation, helped
+27,775 registered people out of poverty
+and funded the education of 2,797
+students.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+No
+None
+No significant litigation, arbitration relating
+to the Company occurred during the
+reporting period.
+EBITDA-to-interest coverage ratio
+21.78
+19.29
+2.49
+Mainly due to the increase of earnings
+Mainly due to the improvement of the cash flow
+from operating activities
+Mainly due to the increase of earnings
+100
+12.06
+100
+Loan repayment rate (%)
+Interest payment rate (%)
+During the reporting period, the Company
+paid in full the interest accrued for the other
+bonds and debt financing instruments. As
+at 31 December 2016, the standby credit
+line provided by several domestic financial
+institutions to the Company was RMB 256.4
+billion in total, facilitating the Company to
+get such amount of unsecured loans. During
+the reporting period, Sinopec Corp. fulfilled
+relevant undertakings in the prospectus
+of corporate bonds. During the reporting
+period, Sinopec Corp. had no significant
+matters which could influence the Company's
+operation and debt paying ability.
+On 18 April 2013, Sinopec Capital (2013)
+Limited, a wholly-owned overseas subsidiary
+of Sinopec Corp., issued senior notes
+guaranteed by Sinopec Corp. with four
+different maturities, 3 years, 5 years,
+10 years and 30 years. The 3-year notes
+principal totaled USD 750 million, with an
+annual interest rate of 1.250%; the 5-year
+notes principal totaled USD 1 billion, with
+an annual interest rate of 1.875%; the 10-
+year notes principal totaled USD 1.25 billion,
+with an annual interest rate of 3.125%; and
+the 30-year notes principal totaled USD
+500 million, with an annual interest rate
+of 4.250%. These notes were listed on the
+Hong Kong Stock Exchange on 25 April
+2013, with interest payable semi-annually.
+The first payment of interest was on 24
+October 2013. During the reporting period,
+the Company has paid in full the interest and
+principal of notes with maturity of 3 years
+and the current-period interests of all notes
+with maturity of 5 years, 10 years and 30
+years.
+3 SHARE OPTION INCENTIVE SCHEME OF
+SINOPEC CORP.'S SUBSIDIARY, SINOPEC
+SHANGHAI PETROCHEMICAL COMPANY
+LIMITED ("SHANGHAI PETRO"), DURING
+THE REPORTING PERIOD
+Pursuant to the requirements of the Hong
+Kong Listing Rules, the resolution relating to
+the Shanghai Petro A Share Option Incentive
+Scheme (Draft) was considered and passed
+at the 18th meeting of the fifth session of
+the Board and the first extraordinary general
+meeting of Sinopec Corp. for 2014. The
+Share Option Incentive Scheme (Scheme)
+came into effect on 23 December 2014 with
+a validity period of 10 years. The expiry
+date of the Scheme is 22 December 2024.
+Under the Scheme, the total number of
+underlying shares to be granted shall neither
+exceed 10% of the total share capital of
+Shanghai Petro (10,800 million shares) nor
+exceed 10% of the total A share capital
+of Shanghai Petro (7,305 million shares).
+As of 31 December 2016, the number of
+the underlying shares of the share options
+to be granted by Shanghai Petro to the
+participants represents 0.35% of the total
+share capital of Shanghai Petro (10,800
+million shares). The vesting period for each
+grant under the Scheme shall be no less
+than two years.
+(1) Summary of the Scheme
+For the details of the purpose of the
+Scheme, eligible participants and
+maximum entitlement of each participant,
+underlying shares and incentive
+instrument, validity period, please refer
+to page 31-33 of Sinopec Corp's 2015
+Annual Report published on 29 March
+2016.
+100
+100
+23.07
+35.13
+Cash flow interest coverage ratio
+Mainly due to the significant increase of
+cash at bank and on hand
+Mainly due to improvement of
+cash flow from operating activities
+2015
+159,605
+Change
+23.09%
+0.72
+0.13
+0.41
+0.12
+45.44
+(0.99)
+percentage
+points
+EBITDA to total debt ratio
+0.99
+0.62
+0.37
+Mainly due to the increase of
+earnings and decrease of debts
+Interest coverage ratio
+9.85
+7.78
+2.07
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Mainly due to the significant increase of
+cash at bank and on hand
+(2) Information on the Initial Grant of the Share Option
+Grant Date: 6 January 2015
+Director and Vice President
+430,000(L)
+0.004
+Beneficial owner
+Director and Vice President
+Vice President
+430,000(L)
+0.004
+Beneficial owner
+250,000(L)
+Chief Financial Officer
+0.002
+(L): Long position;
+*
+Mr. Ye Guohua resigned as the executive director, vice president and chief financial officer of Shanghai Petro on 26 January 2017. According to the Scheme,
+his granted share options become invalid.
+(iii) Share options granted to employees
+of Shanghai Petro in addition to
+persons mentioned in item (ii) during
+the reporting period
+As at the end of reporting period,
+Shanghai Petro granted 35,970,000
+A share options to key business
+personnel.
+(iv) Exercise Price under the Initial Grant
+According to the basis of
+determination on exercise price of
+share options disclosed by Shanghai
+Petro, the exercise price under the
+initial grant is RMB 4.20 per share
+(until the expiration of the validity
+period of the Share Options, in the
+case of, among others, payment of
+dividends, capitalisation of capital
+reserves, distribution of bonus shares,
+subdivision of shares or reduction
+of shares, and rights issue, an
+adjustment to the exercise price shall
+be made in accordance with Scheme.
+On 15 June 2016, The 2015 profit
+distribution plan of Shanghai Petro
+has been approved at its 2015 annual
+general meeting. Cash dividend was
+decided to be RMB 1 per 10 shares
+and the excerise price of the share
+option was adjusted to RMB 4.10 per
+share.
+Beneficial owner
+Beneficial owner
+0.004
+430,000(L)
+Number of Participants: 214 persons
+Number of Share Options Granted: 38,760,000
+(ii) Unexercised share options granted to Directors, senior management and substantial shareholders of Shanghai Petro as of 31 December 2016
+No. of share
+options held
+at the end of
+the reporting
+Name
+Position
+period
+Percentage of
+total share
+capital
+(%)
+Percentage of
+total H share
+capital
+(%)
+Wang Zhiqing
+Chairman and President
+500,000(L)
+0.005
+Gao Jinping
+Ye Guohua*
+Jin Qiang
+Guo Xiaojun
+Jin Wenmin
+Vice Chairman and Vice President
+Director, Vice President and
+500,000(L)
+0.005
+Status
+Beneficial owner
+Beneficial owner
+(i) Initial Grant of the Share Option:
+(v) Validity Period and Exercise
+Arrangement under the Initial Grant
+The validity period of the share
+options shall be five years
+earnings compared with last year
+Reasons for change
+2012 Corporate bond
+12石化01
+122149
+12石化02
+122150
+15石化02
+136040
+1 June 2012
+19 November 2015
+1 June 2017
+1 June 2022
+19 November
+19 November
+Sinopec Corp.
+21 May 2020
+2020
+9
+9
+4.05
+13
+13
+4.26
+7
+16
+4
+2018
+Sinopec Corp.
+2010 Corporate bond
+10石化02
+122052
+21 May 2010
+136039
+15石化01
+SIGNIFICANT EVENTS
+1 MAJOR PROJECTS
+(1) Fuling shale gas project
+In accordance with the guidance of
+"overall deployment and stage-wise
+implementation", the second phase
+of production capacity building was
+promoted comprehensively in 2016. The
+Company's self-owned fund accounts
+for 50% of the project investment and
+bank loan is the main source of the other
+50%. By the end of 2016, the cumulative
+realised investment was RMB 29.3 billion
+and total production capacity was 7
+billion cubic meters per year. According
+to the plan, by the end of 2017, the total
+production capacity will be 10 billion
+cubic meters per year.
+(2) Yuanba gas field project
+The production capacity building of
+Yuanba marine facies gas field with total
+production capacity of 3.4 billion cubic
+meters per year has been completed by
+the end of 2016. The Company's self-
+owned fund accounts for 50% of the
+project investment and bank loan is the
+main source of the other 50%. By the
+end of 2016, the cumulative realised
+investment was RMB 12.8 billion.
+(3) Guangxi LNG project
+The Guangxi LNG project with designed
+receiving capacity of 3 million tonnes per
+year consists mainly of the construction
+of wharf, terminal and transportation
+pipelines. It was put into operation in
+April 2016. The Company's self-owned
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+Basic information of corporate bonds
+Bond name
+Abbreviation
+Code
+Issuance date
+Maturity date
+Amount issued (RMB billion)
+fund accounts for 40% of the project
+investment and bank loan is the main
+source of the other 60%. By the end of
+2016, the cumulative investment was
+RMB 9.7 billion.
+(4) Tianjin LNG project
+The Tianjin LNG project with designed
+receiving capacity of 3 million tonnes per
+year consists mainly of the construction
+of wharf, terminal and transportation
+pipelines. It is expected to be completed
+and operational in December 2017. The
+Company's self-owned fund accounts
+for 40% of the project investment and
+bank loan is the main source of the other
+60%. By the end of 2016, the cumulative
+investment was RMB 8.2 billion.
+Sinopec Corp.
+2016 Corporate bond (first issue)
+7
+Mainly due to the increase of
+16
+4.90
+During the reporting period, there is no credit addition mechanism and change of the repayment arrangement for the above-mentioned
+corporate bonds Sinopec Corp. strictly followed the provisions in the corporate bond prospectus to repay principals and interests of the
+corporate bonds.
+During the reporting period, the bondholders' meeting has not been convened.
+During the durations of the above-mentioned bonds, the bond trustee, China International Capital Corporation Limited, has strictly
+followed the Bond Trustee Management Agreement and continuously tracked the company's credit status, utilisation of bond proceeds
+and repayment of principals and interests of the bond. The bond trustee has also advised the company to satisfy obligations as
+described in the corporate bond prospectus and exercised its duty to protect the bondholders' legitimate rights and interests. The
+bond trustee is expected to disclose the Trustee Management Affairs Report after disclosure of the company's annual report. The full
+disclosure will be available on the website of Shanghai Stock Exchange (http://www.sse.com.cn)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+29
+Significant Events
+30
+Significant Events
+SIGNIFICANT EVENTS
+During the reporting period, United Credit ratings Co., Ltd. provided continuing credit rating for 1002, 1201, 102, 15
+01 and 1502and reaffirmed AAA credit rating. The long term credit rating and outlook of Sinopec Corp. remained at AAA and stable
+respectively.
+Principal data
+EBITDA (RMB million)
+196,464
+Current ratio
+0.85
+Quick ratio
+0.53
+Liability-to-asset ratio (%)
+44.45
+Principal accounting data and financial indicators for the two years ended 31 December 2016
+2016
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose disclosed in the relevant
+announcements. All the proceeds have been completely used.
+12th Floor, PICC building, No.2 Jianguomenwai Avenue, Chaoyang District, Beijing
+United Credit ratings Co., Ltd.
+3.3
+3.7
+Outstanding balance (RMB billion)
+Interest rate (%)
+Principal and interest repayment
+Payment of interests
+Investor Qualification Arrangement
+Listing place
+Corporate bonds trustee
+Credit rating agency
+Use of proceeds
+Credit rating agency
+Credit addition mechanism, repayment scheme
+and other relative events for corporate bonds
+during the reporting period
+Convening of corporate bond holders' meeting
+Performance of corporate bonds trustee
+Simple interest is calculated and paid on an annual basis without compounding interests. The principal will be paid at maturity with last
+installment of interest.
+Sinopec Corp. had paid in full the interest accrued for the current period interest payment year.
+1501 and 1502 were publicly offered to qualified investors in accordance with Administration of the Issuance and Trading of
+Corporate Bonds
+Shanghai Stock Exchange
+China International Capital Corporation Limited
+27th-28th Floor, China World Office 2, 1 Jianguomenwai Avenue, Chaoyang District, Beijing
+Huang Xu, Zhai Ying
+(010) 6505 1166
+4
+commencing from the grant date, but
+6 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+Save as disclosed above, during
+the reporting period, Shanghai
+Petro granted no A share option in
+accordance with the Scheme, none
+of the share options was exercised
+by the Participant and none of the
+share option was cancelled or became
+invalid.
+Sinopec Great
+Wholly
+Zhong An United
+performance
+590
+18 April 2014
+18 April 2014 -
+Joint obligations
+No
+No
+Liquedie Arabia LLC.
+No
+Wall Energy
+owned
+Coal Chemical
+17 April 2026
+and Chemical
+subsidiary
+Co., Ltd.
+Industry
+Co., LTD
+No
+of hydrogen from Air
+YASRFE requires supply
+No
+11,545
+25 May 2016
+25 May 2016-
+Joint obligations
+No No - No Yes
+31 December 2023
+(the mature date
+is estimated)
+10 December 2017
+Sinopec Corp.
+The listed
+Yanbu Aramco
+company
+itself
+Sinopec Refining
+Company(YASREF)
+Limited
+no specific
+amount agreed,
+gurarantee
+on contract
+31 December 2014
+30 years from the date Joint obligations
+No
+No
+No
+SSI
+Zhongtian Hechuang
+Energy Co., Ltd
+Controlled
+10,669
+18,071
+None
+18,985
+37,056
+5.20%
+2,534
+None
+4,782
+None
+14,108
+The amount of guarantees provided during the reporting period and the amount of guarantees outstanding at the end of the reporting period include the
+guarantees provided by the controlled subsidiaries to external parties. The amount of the guarantees provided by these subsidiaries is derived from multiplying
+the guarantees provided by Sinopec Corp.'s subsidiaries by the percentage of shareholding of Sinopec Corp. in such subsidiaries.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+7 SPECIFIC STATEMENTS AND INDEPENDENT
+OPINIONS FROM INDEPENDENT NON-
+EXECUTIVE DIRECTORS REGARDING
+EXTERNAL GUARANTEES PROVIDED BY
+SINOPEC CORP. DURING AND BY THE END
+OF 2016:
+We, as independent directors of Sinopec
+Corp., hereby make the following statements
+after conducting a thorough check of external
+guarantees provided by the Company
+accumulated up to and during 2016 in
+accordance with the requirements of the
+domestic regulatory authorities:
+The external guarantees prior to 2016 had
+been disclosed in previous annual report.
+The aggregate balance of external guarantees
+provided by Sinopec Corp. for the year 2016
+was RMB 37.056 billion, accounting for
+approximately 5.20% of the Company's net
+assets.
+We hereby present the following opinions:
+Sinopec Corp. shall continue to strengthen
+its management and actively monitor
+guarantee risks. It shall strictly follow the
+approval and disclosure procedures in
+relation to guarantee businesses for any new
+external guarantees provided thereafter.
+8 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO SINOPEC CORP.
+is subject to exercise arrangement
+of the Scheme. Please refer to the
+section "Validity Period" on Page 32
+of Sinopec Corp.'s 2015 annual report
+published on 29 March 2016.
+34
+*2:
+As defined in the Listing Rules of the Shanghai Stock Exchange.
+*1:
+Joint obligations
+No
+No - Yes No
+subsidiary
+International
+Development Ltd./
+Sonangol E.P.
+Total amount of guarantees provided during the reporting period”²
+Total amount of guarantees outstanding at the end of reporting period¹² (A)
+Guarantees by the Company to the controlled subsidiaries
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantees(A+B)
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+The amount of guarantees in excess of 50% of the net assets (E)
+Total amount of the above three guarantee items (C+D+E)
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Statement of guarantee status
+New Bright
+company
+itself
+2,248
+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.
+China Petrochemical China Petrochemical Corporation would dispose of its
+Corporation
+minor remaining chemicals business within five years
+Yes
+Yes
+Other undertakings
+Other
+China Petrochemical
+Corporation
+in order to avoid competition with Sinopec Corp. in the
+chemicals business.
+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.
+Within 10 years after
+29 April 2014 or the date
+when China Petrochemical
+Corporation acquires the assets
+32
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Yes
+Yes
+Other
+Since 2012, China Petrochemical
+Corporation has earnestly fulfilled its
+undertaking in eliminating competitions
+in chemical business with Sinopec Corp.
+through: (1) subscribing capital contribution
+of joint ventures controlled by Sinopec
+Corp., by way of injecting net assets of
+certain chemical business and cash; (2)
+authorising Sinopec Corp. to be in charge
+of production plan, management and sales
+of the remaining chemical business. The
+competition in chemical business between
+China Petrochemical Corporation and
+Sinopec Corp. has been eliminated.
+5 SIGNIFICANT ASSETS AND EQUITY SALE
+On 2 August 2016, the 7th meeting of
+sixth session of the board of directors of
+Sinopec Corp. considered and approved
+the proposal to introduce capital to invest
+in Sichuan-to-East China natural gas
+pipeline project, and agreed to take the
+Sichuan-to-East China Pipeline Co. as the
+platform to introduce capital publicly.
+On 12 December 2016, Sinopec Natural
+Gas Co., Ltd. ("Natural Gas Company"),
+a wholly-owned subsidiary of Sinopec
+Corp., entered into the capital injection
+agreement in relation to Sichuan-to-
+East China Pipeline Co. with China Life
+Insurance Company Limited ("China Life")
+and SDIC Communications Holding Co.,
+Ltd. ("SDIC Communications"). China life
+and SDIC Communications subscribed a
+total of 50% equity interest in Sichuan-to-
+East China Pipeline Co., a wholly-owned
+subsidiary of Natural Gas Company, in cash
+with an aggregate amount of RMB 22.8
+billion, among which China Life paid RMB 20
+billion and SDIC Communications paid RMB
+2.8 billion. Upon the completion of capital
+injection, the registered capital of Sichuan-to-
+East China Pipeline Co. increased from RMB
+100 million to RMB 200 million, and each of
+Natural Gas Company, China Life and SDIC
+Communication will hold 50%, 43.86% and
+6.14% equity interest in Sichuan-to-East
+China Pipeline Co., respectively. For more
+details, please refer to the announcement
+published in the China Securities Journal,
+the Shanghai Securities News and the
+Securities Times by Sinopec Corp. on 13
+December 2016 and the announcement
+published on the website of the Hong Kong
+Stock Exchange on 12 December 2016.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+33
+Significant Events
+Significant Events
+SIGNIFICANT EVENTST (CONTINUED)
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+Unit: RMB million
+Whether
+guaranteed
+for
+Amount
+connected
+Relationship
+with the
+As of the date of this report, Sinopec Corp.
+had no undertakings in respect of profits,
+asset injections or asset restructuring that
+had not been fulfilled, nor did Sinopec Corp.
+make any profit forecast in relation to any
+asset or project.
+Guarantor
+Sinopec Corp.
+Other undertakings
+5
+The listed
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+31
+Significant Events
+Significant Events
+32
+SIGNIFICANT EVENTST (CONTINUED)
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+Whether bears
+Whether strictly
+Background
+Undertakings related to Initial
+Type of
+Undertaking
+Initial Public
+Party
+6
+Contents
+deadline or not
+Public Offerings (IPOs)
+Offerings (IPOs)
+China Petrochemical 1
+Corporation
+Compliance with the connected transaction
+agreements;
+From 22 June 2001
+No
+performed or not
+Yes
+(IPOs)
+2
+Solving the issues regarding the legality of land-
+use rights certificates and property ownership
+3
+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.);
+4
+Term for performance
+Company
+Within five years, commencing
+from 15 March 2012
+Whether
+of
+overdue
+parties
+Counter-
+(yes
+company
+itself
+Corp. Shell Coal
+Period of guarantee
+10 December 2003 -
+10 December 2017
+Туре
+overdue
+or not
+guarantee guaranteed
+or no)*1
+Joint obligations
+No No
+- No
+Name of
+guaranteed
+company
+Gasification
+Corporation
+or not
+completed
+No
+68
+Whether
+Amount
+The listed
+Yueyang Sinopec
+Transaction date
+(date of signing)
+10 December 2003
+*: affiliated companies include subsidiaries, associates and joint ventures.
+Reason for provision of funds between related parties
+Impacts on the Company
+Associates and joint ventures
+Total
+Other related parties
+Amount
+incurred of the year
+Balance at
+the end
+32,472
+6,008
+Connected Transactions
+536
+6,515
+5,472
+25,957
+26,669
+at the
+beginning
+of the year
+Balance
+at the end
+of the year
+26,464
+Amount
+incurred
+5,979
+at the
+beginning
+of the year
+20,485
+Funds to related parties
+Balance
+Parent company and affiliated
+companies*
+174
+26,843
+Loans and other accounts receivable and accounts payable
+No material negative impact
+Relations
+2,872
+(119)
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+6 COMPETITION BETWEEN SINOPEC CORP
+AND ITS CONTROLLING SHAREHOLDER
+Please refer to "Performance of Undertaking
+by China Petrochemical Corporation" under
+the section "Significant Events" in this
+annual report for details.
+The Company is independent from its
+controlling shareholder in terms of, among
+other matters, business, assets and
+finances. The Company has a well-integrated
+independent business and independent
+operational capabilities.
+COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+During the reporting period, the independent
+non-executive directors of Sinopec Corp.
+fulfilled their duties in good faith as required
+by laws and regulations and the Articles
+of Association, and actively contributed
+to the development of the Company. They
+actively attended, meetings of the Board
+and meetings of the Board committees
+(please refer to the Report of the Board of
+Directors in this annual report for details
+of their attendance), reviewed the relevant
+documents with due care and exercised their
+profession advantages to offer advice and
+suggestions to Sinopec Corp.'s development
+strategy, operations and reform. The
+independent non-executive directors gave
+their independent opinions on matters
+such as connected transactions, dividend
+distributions and appointments of senior
+management as required by relevant rules
+and regulations, and maintained timely and
+effective communications with the executive
+directors, management, external auditors
+and the internal auditing department.
+The independent non-executive directors
+independently and objectively protected the
+legitimate interests of the Company and
+the shareholders, especially the minority
+shareholders, when performing their duties.
+5
+4 PERFORMANCE OF THE INDEPENDENT
+DIRECTORS
+Save as disclosed above, during the reporting
+period, none of the directors, supervisors
+and senior management of Sinopec Corp.
+and their associates had any interests or
+short positions (including any interest or
+short position that is regarded or treated as
+being held in accordance with the Securities
+and Futures Ordinance (SFO) in the shares,
+debentures and underlying shares) of
+Sinopec Corp. or any associated corporations
+(as defined in Part XV of SFO) would fall
+to be disclosed to the Sinopec Corp. and
+the Hong Kong Stock Exchange under the
+Division 7 and 8 of Part XV of SFO or which
+was recorded in the register required to be
+kept under section 352 of SFO or otherwise
+notified to Sinopec Corp. and the Hong Kong
+Stock Exchange pursuant to the Model Code
+for Securities Transactions by Directors of
+Listed Company.
+As of 31 December 2016, apart from
+13,000 A shares of Sinopec Corp. held
+by Vice President Mr. Ling Yiqun, none of
+the directors, supervisors or other senior
+management of Sinopec Corp. held any
+shares of Sinopec Corp.
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+29,541
+During the reporting period, Sinopec Corp.
+convened the 1st extraordinary general
+meeting for 2016 and 2015 annual general
+meeting in Beijing, China on 25 February
+2016 and 18 May 2016 respectively in
+accordance with relevant laws and regulations
+and procedures of noticing, convening
+and holding pursuant to the Articles of
+Association. For meeting details, please refer
+to the poll results announcements published
+in China Securities Journal, Shanghai
+Securities News and Securities Times and on
+the websites of Hong Kong Stock Exchange
+after each meeting.
+During the reporting period, there are no
+significant differences in Sinopec Corp.'s
+corporate governance and the requirements
+from the PRC Company Law and related
+regulations on securities of the CSRC. The
+Board of Supervisors of Sinopec Corp.
+agreed with all supervised matters. None
+of Sinopec Corp., the Board, directors,
+supervisors, senior management, controlling
+shareholders or de facto controllers of
+Sinopec Corp. were under the investigation
+by the CSRC or punished administratively
+or criticized publicly by the CSRC, the Hong
+Kong Securities and Futures Commission, the
+Securities and Exchange Commission of the
+United States, or received any public censure
+from Shanghai Stock Exchange, the Hong
+Kong Stock Exchange, the New York Stock
+Exchange or the London Stock Exchange.
+During the reporting period, Sinopec Corp.
+was in full compliance with domestic
+and overseas laws and regulations as
+well as the Articles of Association of the
+Company, and operates in line with all legal
+requirements and its corporate governance
+has been further improved. The Board and
+Board committees' members and senior
+management staff were adjusted in time,
+based on personnel changes. Shareholders'
+meetings, Board meetings and meetings
+of Board of Supervisors were organised
+in a standardised and efficient manner.
+Independent directors have played their
+roles dutifully by offering suggestions
+to the Company for its planning, reform
+and development plan for the "Thirteenth
+Five-Year" Period. Oriented at investors'
+demand, bilateral communication has been
+strengthened, high-quality information
+disclosure conducted, and green low-
+carbon development actively promoted and
+practiced, winning the recognition of the
+capital market and the society as a whole.
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+Corporate Governance
+CORPORATE GOVERNANCE
+Connected Transactions
+41
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+29,596
+2,753
+55
+2 ANNUAL GENERAL MEETING
+Sinopec Group
+In accordance with the disclosure requirement of the Shanghai Stock Exchange, where there are funds or guarantees provided between the Company
+and related parties, disclosure shall be made as to the reasons, the opening balance, the amount incurred in the current period and the ending
+balance of the funds provided, and their impacts on the Company.
+Unit: RMB million
+Funds from related parties
+Balance
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+BETWEEN SINOPEC CORP. AND CHINA
+PETROCHEMICAL CORPORATION
+Prior to Sinopec Corp.'s overseas listing,
+in order to ensure the smooth continuation
+of production and business conducted by
+the Company and China Petrochemical
+Corporation, the two parties entered into
+a number of agreements on continuing
+connected transactions, details of which are
+as follows:
+(1) The Company and China Petrochemical
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement)
+(2) China Petrochemical Corporation
+will provide trademarks, patents and
+computer software to the Company for
+use free of charge
+(3) China Petrochemical Corporation will
+provide cultural and educational, hygienic
+and community services to the Company
+(Cultural and Educational Hygienic and
+Community Services Agreement)
+(4) China Petrochemical Corporation will
+provide leasing services for lands and
+certain properties to the Company
+(5) China Petrochemical Corporation will
+provide comprehensive insurance to the
+Company
+(6) China Petrochemical Corporation will
+provide shareholders' loans to the
+Company and
+(7) The Company will provide franchise
+licenses for service stations to China
+Petrochemical Corporation.
+CONNECTED TRANSACTIONS
+On 26 August 2015, Sinopec Corp. and
+China Petrochemical Corporation entered
+into a supplementary agreement of the
+continuing connected transactions, whereby
+2 COMPLIANCE OF DISCLOSURES AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH HONG KONG
+LISTING RULES AND THE SHANGHAI
+LISTING RULES
+Pursuant to the Hong Kong Listing Rules and
+the Shanghai Listing Rules, the continuing
+connected transactions between the
+Company and Sinopec Group are generally
+subject to full disclosure based on the nature
+and the value of the transactions, and are
+also subject to approvals of independent
+non-executive directors and/or independent
+shareholders. The Hong Kong Stock
+Exchange and Shanghai Stock Exchange
+exempted Sinopec Corp. from full compliance
+with the relevant listing rules regarding the
+above continuing connected transactions and
+conditionally exempted Sinopec Corp. from
+complying with the continuous disclosure
+obligations.
+44
+There was no change to the above-mentioned
+supplementary agreements on continuing
+connected transactions during the reporting
+period. The aggregated amount of the
+continuing connected transactions for 2016
+of the Company is in compliance with the
+relevant requirements of the Hong Kong
+Listing Rules and the Shanghai Listing
+Rules. For performance details of connected
+transaction agreements, please refer to Item
+3 below.
+3 ACTUAL CONTINUING CONNECTED
+TRANSACTIONS ENTERED INTO BY THE
+COMPANY DURING THE YEAR
+Sinopec Corp. and China Petrochemical
+Corporation have implemented the relevant
+framework agreements in relation to the
+continuing connected transactions, including
+Mutual Supply Agreement, Cultural,
+Educational, Hygiene and Community
+Services Agreement, Land Use Rights Leasing
+Agreement, Properties Leasing Agreement,
+Intellectual Property Licence Agreements and
+SPI Fund Document.
+Pursuant to the above-mentioned agreements
+on continuing connected transactions,
+the aggregate amount of the continuing
+connected transactions of the Company
+during the year was RMB 260.704 billion.
+Among the transaction amount, purchases
+expenses amounted to RMB 179.82 billion,
+representing 9.32% of the total amount of
+this type of transaction for the reporting
+period, including purchases of products and
+services (procurement, storage, exploration
+and development services, and production-
+related services) of RMB 161.317 billion,
+purchases of auxiliary and community
+services of RMB 6.584 billion. The housing
+rent paid by the Company amounted to
+RMB 449 million. The rent for use of land
+was RMB 10.474 billion. Interest expenses
+amounted to RMB 996 million. The sales
+income amounted to RMB 80.884 billion,
+representing 4.04% of the total amount of
+this type of transaction for the reporting.
+period, including RMB 80.634 billion for
+sales of products and services, RMB 41
+million for agency commission income, and
+RMB 209 million for interest income.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+39
+Connected Transactions
+the terms of the Mutual Supply Agreement
+and the Cultural and Educational, Hygienic
+and Community Services Agreement were
+extended from 1 January 2016 to 31
+December 2018. The resolution relating to
+continuing connected transactions for the
+three years from 2016 to 2018 was approved
+at the first extraordinary general meeting
+for 2015 held on 23 October 2015. For
+details of the above continuing connected
+transactions, please refer to relevant
+announcements published on 27 August
+2015 in the China Securities Journal, the
+Shanghai Securities News and the Securities
+Times and on the websites of the Shanghai
+Stock Exchange and the Hong Kong Stock
+Exchange (dated 26 August 2015). The
+capitalised terms used in this section shall
+have the same meaning as that used in the
+above-mentioned announcements.
+The amounts of the above continuing
+connected transactions between the
+Company and Sinopec Group did not exceed
+the caps for the continuing connected
+transactions as approved by the general
+meeting of shareholders and the Board.
+Principle of pricing for the continuing
+connected transactions:
+(a) The government-prescribed price will
+apply;
+CONNECTED TRANSACTIONS (CONTINUED)
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+There are no other significant connected transactions during the reporting period.
+4 OTHER SIGNIFICANT CONNECTED TRANSACTIONS OCCURED THIS YEAR
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+40
+(c) The transactions were conducted
+pursuant to the terms of relevant
+agreements, and the terms were fair
+and reasonable and in the interests of
+Sinopec Corp. and its shareholders as a
+whole.
+ii terms not less favorable than those
+available from or to independent third
+parties, where there is no available
+comparison to determine whether
+such terms are on normal commercial
+terms.
+i normal commercial terms; or
+(b) The transactions have been entered into
+based on either of the following terms:
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business.
+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.
+Engagement Other Than Audits or Reviews
+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
+The above-mentioned connected transactions
+between the Company and Sinopec Group
+in 2016 were approved at the 12th meeting
+of the sixth session of the Board and has
+complied with the disclosure requirements
+under Chapter 14A of the Hong Kong Listing
+Rules.
+accordance with normal commercial terms
+that are fair and reasonable to the Company
+and its shareholders. The Company,
+according to internal control procedures,
+adjusts the scope and amount of continuing
+connected transactions and the caps for
+the amount exempted from disclosure
+every three years, and will be announced
+and implemented upon the approval of the
+Board and/or independent shareholders.
+For the other connected transactions,
+Sinopec Corp., in strict compliance with
+domestic and overseas regulatory rules, will
+publish the announcement and implement
+the transactions only after submitting the
+relevant proposals of connected transactions
+to the Board and/or the general meeting of
+shareholders for consideration and approval
+according to internal control procedures.
+Related party transactions with the Sinopec
+Group that occurred during the year, as set
+out in Note 34 to the financial statements
+prepared under the IFRS in this annual
+report, also fall under the definition of
+connected transactions under Chapter 14A of
+the Hong Kong Listing Rules.
+The major continuing connected transaction
+agreements were entered into in the ordinary
+course of the Company's business and in
+Decision-making procedures:
+For details of the pricing principle, please
+refer to relevant announcements published
+on 27 August 2015 in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the websites of
+the Shanghai Stock Exchange and the Hong
+Kong Stock Exchange.
+(d) when none of the above is applicable, the
+price for the provision of the products
+or services is to be agreed upon by
+the relevant parties, and shall be the
+reasonable cost incurred in providing the
+products or services plus 6% or less of
+such cost.
+(c) when there is neither a government-
+prescribed price nor a government-
+guidance price, the market price will
+apply; or
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+(b) when there is no government-prescribed
+price but there is a government-guidance
+price, the government-guidance price will
+apply;
+Related Parties
+Corporate Governance
+A.4 Appointment, re-election and
+dismissal
+7 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+a. The Board has established
+an Audit Committee. The
+Audit Committee consists of
+Independent Non-executive
+Director Mr. Andrew Y. Yan,
+who serves as the Chairman,
+and Independent Non-executive
+Director Mr. Jiang Xiaoming
+and Independent Non-executive
+Director Mr. Tang Min, who serve
+as members. As verified, none of
+them has served as a partner or
+a former partner in our current
+auditing firm.
+C.3 Audit Committee
+d. Based upon the review and
+evaluation of internal control and
+risk management of the reporting
+period, the Board is of the view
+that the internal control and risk
+management of the Company are
+effective.
+c. In terms of risk management,
+Sinopec Corp. adopted the
+enterprise risk management
+framework provided by COSO, and
+established its risk management
+policy and risk management
+organisation system. The
+Company annually conducts risk
+evaluation to identify major and
+important risks and perform
+risk management duties. It has
+designed major and important
+risks tackling measures combined
+with its internal control system
+and periodically monitor their
+implementation to ensure
+adequate care, monitor and
+tackling of major risks.
+Sinopec Corp. has formulated
+and implemented its information
+disclosure policy and insider
+information registration policy. The
+corporation regularly evaluates the
+policy implementation and makes
+disclosure in accordance with
+relevant regulations. Please refer
+to the website of Sinopec Corp.
+for the details of the information
+disclosure policy
+subsidiaries into the scope of
+internal control evaluation, with
+an internal control evaluation
+report being produced. The Board
+annually review the internal control
+evaluation report. For detailed
+information about the internal
+control during the reporting
+period, please refer to the report
+on internal control prepared by
+Sinopec Corp.
+Sinopec Corp. adopted the internal
+control framework prescribed
+in the internationally accepted
+Committee of Sponsoring
+Organizations of the Treadway
+Commission Report (COSO).
+Based upon the Articles of
+Association and the applicable
+management policies currently in
+effect, as well as in accordance
+with relevant domestic and
+overseas applicable regulations,
+Sinopec Corp. formulated and
+continuously improves the Internal
+Control Manual to achieve internal
+control of all factors of internal
+environment, risk evaluation,
+control activities, information
+and communication, and internal
+supervision. At the same time,
+Sinopec Corp. has constantly
+supervised and evaluate its
+internal control, and conducted
+comprehensive and multi-level
+checks including regular test,
+enterprise self-examination and
+auditing check, and subsumed
+headquarters, branches and
+b. In terms of internal control,
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+b. During the reporting period,
+the Audit Committee held four
+meetings. (please refer to the
+section Meetings held by the
+special committees of the Board
+under the Report of the Board of
+Directors in this annual report)
+The review opinions were issued
+at the meetings and submitted
+to the Board after signed by the
+46
+C.2 Internal Control and Risk
+Management
+d. The external auditors of Sinopec
+Corp. made a statement about
+their reporting responsibilities in
+the auditor's report contained in
+the financial report.
+c. Sinopec Corp. has adopted an
+internal control mechanism to
+ensure that the Management
+and relevant departments have
+provided the Board and the Audit
+Committee with sufficient financial
+data and related explanations and
+materials.
+b. Sinopec Corp. provides Directors
+with information about the
+financial, production and operating
+status of the Company every
+month to ensure that the Directors
+can learn about the latest
+developments of the Company in a
+timely manner.
+a. Directors are responsible for
+supervising the preparation of
+accounts for each fiscal period to
+ensure that the accounts truly and
+fairly reflect the condition of the
+business, its performance and the
+cash flow of the Company during
+the period. The Board approved
+the Financial Report for 2016 and
+warranted that the annual report
+contained no false representations,
+no material omissions or
+misleading statements and
+jointly and severally accepted full
+responsibility for the authenticity,
+accuracy and completeness of the
+content.
+C Accountability and Auditing
+C.1 Financial reporting
+c. The members of the Remuneration
+Committee may engage independent
+professionals when performing its
+duties. Reasonable costs arising
+from such consultations are borne
+by Sinopec Corp. In the meantime,
+the Remuneration Committee has
+also appointed consultants to provide
+advices. The working expenses of the
+Remuneration Committee are included
+in the budget of Sinopec Corp.
+According to the policies of Sinopec
+Corp., the senior Management and
+relevant departments of Sinopec
+Corp. must actively cooperate with
+the Remuneration Committee.
+b. The Remuneration Committee
+always consults the Chairman of the
+Board and the President about the
+remuneration plans for other Executive
+Directors. After the Remuneration
+Committee's review, it is of the view
+that all the Executive Directors of
+Sinopec Corp. have fulfilled the duty.
+clauses in the service contracts of the
+Directors in 2016.
+Committee is responsible for reviewing
+the implementation of the annual
+remuneration plans for Directors.
+Supervisors and other senior
+Management as approved at the
+general meeting of the shareholders,
+and report to the Board.
+Committee) consists of Independent
+Non-executive Director Mr. Fan
+Gang, who serves as the Chairman,
+and the Vice Chairman of the Board
+& President Mr. Dai Houliang and
+Independent Non-executive Director
+Mr. Jiang Xiaoming, who serve as
+the members of the Remuneration
+Committee. The Remuneration
+a. Sinopec Corp. has formulated
+and implemented its internal
+control and risk management
+system. The Board as a decision-
+making body is responsible
+for evaluating and review the
+effectiveness of its internal
+control and risk management.
+The Board and Audit Committee
+periodically (at least annually)
+receive reports of the Company
+regarding internal control and risk
+management information from the
+Management. All major internal
+control and risk management
+issues are reported to the Board
+and Audit Committee. Sinopec
+Corp. has set up its internal
+control and risk management
+department and internal auditing
+departments, which are equipped
+with sufficient staff, and these
+departments periodically (at least
+twice per year) report to the Audit
+Committee. The internal control
+and risk management system
+of the Company are designed to
+manage rather than eliminate all
+the risks of the Company.
+Committee (Remuneration
+members of the Audit Committee.
+During the reporting period, the
+Board and the Audit Committee
+had no disagreement.
+of the Audit Committee are
+included in the budget of Sinopec
+Corp. In accordance with the
+policies of Sinopec Corp., the
+senior Management and relevant
+departments of Sinopec Corp.
+must actively cooperate with the
+Audit Committee.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+a. Shareholders who individually or
+collectively hold 10% of the total
+voting shares of Sinopec Corp.
+may request the Board in writing
+to convene the general meeting of
+shareholders. If the Board fails to
+grant the request to convene the
+meeting according to the Rules of
+Procedure for Meetings of Boards
+of Directors, the shareholders may
+convene and hold the meeting at their
+discretion according to applicable
+laws, and reasonable expenses
+incurred will be borne by Sinopec
+Corp. These provisions are subject
+to the following conditions: the
+proposals at the general meeting
+of shareholders must fall within
+the responsibilities of the general
+meeting of shareholders, with specific
+proposals and resolutions and in
+compliance with relevant laws,
+administrative regulations and the
+Articles of Association.
+G Shareholders' rights
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+recognised the Secretary to the Board
+as having the relevant qualifications
+as company Secretary. Nominated
+by the Chairman of the Board
+and appointed by the Board, the
+Secretary to the Board is the Senior
+Management Officer of Sinopec Corp.
+and responsible for the Company
+and the Board. The Secretary gives
+opinions on corporate governance to
+the Board and arranges orientation
+training and professional development
+for the Directors.
+F Company Secretary
+a. The Hong Kong Stock Exchange
+c. During the reporting period, the
+Chairman of the Board did not attend
+the annual general meeting for the
+year 2015 due to other business
+arrangement. As recommended by
+more than half number of Directors,
+the then Director & President Mr. Li
+Chunguang hosted the annual general
+meeting for the year 2015 and
+arranged the members of the Board
+and senior Management to attend the
+meeting and communicate with the
+investors extensively.
+b. During the reporting period, separate
+resolution was proposed for each
+substantially separate issue at the
+general meeting. All resolutions were
+voted by poll to ensure the interests
+of all shareholders. Notices of the
+general meeting of shareholders were
+dispatched to shareholders 45 days
+(excluding the date of the general
+meeting) in advance.
+a. Sinopec Corp. pays close attention
+to investor relations. The Chairman
+of the Board, President and Chief
+Financial Officer conduct road shows
+every year to answer questions on
+subjects of concern to investors, such
+as development strategies and the
+production and business performance
+of the Company. Sinopec Corp.
+established a department responsible
+for communicating with investors.
+In compliance with regulatory
+provisions, Sinopec Corp. enhanced
+communication with investors by
+holding meetings with institutional
+investors, setting up an investor
+hotline and communicating through
+internet platform.
+E Investor Relations
+c. Audit Committee members may
+engage independent professionals
+when performing its duties.
+Reasonable costs arising from
+such consultations are borne by
+Sinopec Corp. In the meantime,
+the Audit Committee has
+appointed consultants to provide
+advices. The working expenses
+The terms of reference of the Audit
+Committee and the Remuneration
+Committee are published on the
+website of Sinopec Corp. at http://
+www.sinopec.com.
+c. Each Board Committee is required
+to report its decisions and
+strategies and plans for social
+responsibility management of the
+Company. The Social Responsibility
+Management Committee consists of
+three Directors, including Chairman of
+the Board Mr. Wang Yupu, who serves
+as Chairman, Vice Chairman of the
+Board & President Mr. Dai Houliang
+and Independent Non-executive
+Director Mr. Tang Min, who serve as
+members.
+b. In addition to the Audit Committee
+and the Remuneration Committee,
+the Board had established the
+Strategy Committee and the
+Social Responsibility Management
+Committee. The Strategy Committee
+is responsible for overseeing long-
+term development strategies and
+significant investment decisions of the
+Company. The Strategy Committee
+consists of eight directors, including
+Chairman of the Board Mr. Wang
+Yupu, who serves as Chairman, as
+well as Vice Chairman of the Board &
+President Mr. Dai Houliang, Executive
+Director Mr. Wang Zhigang, Mr. Zhang
+Haichao, Mr. Jiao Fangzheng, Mr. Ma
+Yongsheng and Independent Non-
+executive Directors Mr. Andrew Y.
+Yan and Mr. Fan Gang, who serve as
+members. The Social Responsibility
+Management is responsible for
+preparing policies, governance,
+D Delegation of power by the Board
+a. The Board and the Management have
+clear terms of reference in writing.
+The Articles of Association and the
+Rules of Procedure for the General
+Meetings of Shareholders and the
+Rules of Procedure for Meetings of
+Boards of Directors clearly set forth
+the scope of duties, powers and
+delegation of power of the Board and
+Management, which are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com.
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+48
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+d. The Audit Committee held two
+meetings with auditors without
+the presence of Sinopec Corp.'s
+Management to discuss the
+auditing of financial reports and
+the auditing fee for the year. The
+Audit Committee has reviewed
+the adequacy of the resources
+for accounting and financial
+reporting and the qualifications
+and experience of the employees
+as well as the sufficiency of
+the training courses provided
+to relevant employees. Audit
+Committee is of the view that
+the Management has fulfilled the
+duties to establish an effective
+internal control system. The
+Company established a whistle-
+blowing policy in its internal
+control system, providing several
+channels as online reporting,
+letter reporting, receipt of appeals
+and a complaint mailbox, etc. to
+employees to report behavior
+that violates the internal control
+system of the Company. The Audit
+Committee has reviewed and
+approved such policy.
+recommendations to the Board.
+B Remuneration and Appraisal Committee
+a. Remuneration and Appraisal
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+b. Each Director can obtain
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+c. The Chairman encourages open
+and active discussions. Directors
+have spoken freely at the Board
+meetings and actively and deeply
+participated in the discussions of
+significant decision made by the
+Board in the Board meetings.
+b. The Chairman of the Board places
+great emphasis on communication
+with the Independent Directors.
+The Chairman independently
+held two meetings with the
+Independent Directors in respect
+of development strategy, corporate
+governance and operational
+management, etc. of Sinopec
+Corp.
+a. Mr. Wang Yupu serves as
+Chairman of the Board and Mr.
+Dai Houliang serves as Vice
+Chairman of the Board and
+President of Sinopec Corp. The
+Chairman of the Board is elected
+by a majority vote of all Directors,
+and the President is nominated
+and appointed by the Board. The
+main duties and responsibilities of
+the Chairman and the President
+are clearly distinguished from
+each other, and the scope of
+their respective duties and
+responsibilities are set out in the
+Articles of Association.
+A.2 Chairman and President
+Directors of any regulations, policies
+or other requirements of domestic
+or overseas regulatory bodies in
+relation to corporate governance and
+ensures that the Directors comply
+with domestic and overseas laws
+and regulations when performing
+their duties and responsibilities.
+Sinopec Corp. has purchased liability
+insurance for all Directors to minimise
+their risks that might incur, arising
+from the performance of their duties.
+e. The Secretary to the Board assists the
+Directors in handling the daily work of
+the Board, continuously informs the
+d. The Board has reviewed and
+evaluated its performance in 2016
+and is of the view that the Board
+made decisions in compliance with
+domestic and overseas regulatory
+authorities' requirements and the
+Company's internal rules; that the
+Board have received the suggestions
+from the Board of Supervisors and
+Management during its decision
+making process; and that the Board
+safeguarded the rights and interests
+of Sinopec Corp. and its shareholders.
+c. Each Director of the Board may
+submit proposals to be included in
+the agenda of Board meetings, and
+each Director is entitled to request
+other related information.
+b. The meeting of the Board is held at
+least once a quarter. The Board will
+usually communicate the time and
+proposals of the Board meeting 14
+days before convening of the meeting.
+The relevant documents and materials
+for Board meetings are usually sent
+to each Director 10 days in advance.
+In 2016, Sinopec Corp. held six
+Board meetings. For details about the
+attendance of each Director, please
+refer to the Report of the Board of
+Directors in this annual report.
+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
+all related information in a
+comprehensive and timely
+manner. The Secretary to the
+Board is responsible for organising
+and preparing the materials for
+the Board meetings, including
+preparation of explanations for
+each proposal to ensure fully
+understanding by the Directors.
+The Management is responsible
+for providing the Directors with
+necessary information and
+materials. The Director may
+ask the Management, or ask,
+via the Management, relevant
+departments to provide necessary
+information or explanations. The
+Directors may seek advices from
+professional consultants when
+necessary.
+a Nomination Committee of the
+Board according to section A.5 of
+the Corporate Governance Code and
+Corporate Governance Report (Corporate
+Governance Code) as set out in Appendix
+14 of the Hong Kong Listing Rules.
+Sinopec Corp. is of the view that the
+nomination of Director candidates by all
+members of the Board would be better
+suited in view of its actual situation.
+The board of directors of Sinopec Corp.
+(Board) would perform the duties of the
+Nomination Committee prescribed in the
+Corporate Governance Code.
+Based on its actual circumstances,
+Sinopec Corp. did not establish
+Governance Code
+(1) Compliance with the Corporate
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, its incentive schemes and
+requirements for directors, supervisors and
+other senior management. Sinopec Corp. has
+implemented a number of incentive schemes,
+including the Measures of Sinopec Corp.
+for the Implementation of Remuneration
+for Senior Managers, the Measures of
+Sinopec Corp. for the Management of Annual
+Performance Evaluations and the Measures
+of the Leadership of Companies Directly
+under Sinopec Corp. and the Headquarters
+Department for the Management of
+Performance Evaluation.
+SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+For details of internal control self-assessment
+and internal control auditing, please refer to
+the internal control assessment report and
+the internal control auditing report published
+by the Company on the same day of this
+annual report.
+8
+Corporate Governance
+A.3 Board composition
+Save as disclosed above, Sinopec Corp.
+complied with all code provisions set out
+in the Corporate Governance Code during
+the reporting period.
+members (please refer to the
+Directors, Supervisors, Other
+Senior Management and
+Employees in this annual report),
+of which, five are Executive
+Directors; five are Non-executive
+Directors (including 4 Independent
+Non-executive Directors, which
+represent more than one-third
+of the Board). The Board has
+a fairly good diversity. The
+a. The Board consists of ten
+a. The agenda and other reference
+documents for meetings of the
+Board and Board committees
+will be distributed prior to the
+meetings to give each Director
+sufficient time to review the
+materials so that Directors can
+make informed decisions.
+A.7 Provision of and access to
+information
+d. Sinopec Corp. organised and
+arranged training sessions for
+Directors and paid the relevant
+fees. The Directors actively
+participated in the trainings
+and continuing professional
+development program.
+CORPORATE GOVERNANCE (CONTINUED)
+45
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+c. Each of the Directors confirmed
+that he has complied with the
+Model Code for Securities and
+Transactions by Directors of
+Listed Companies during the
+reporting period. In addition,
+Sinopec Corp. formulated the
+Rules Governing Shares Held by
+Company Directors, Supervisors
+and Senior Managers and Changes
+in Shares and the Model Code
+of Securities Transactions by
+Company Employees to regulate
+the purchase and sale of Sinopec
+Corp.'s securities by relevant
+personnel.
+b. Each of the Directors was able to
+devote sufficient time and effort to
+handling the matters of Sinopec
+Corp.
+a. All Non-executive Directors have
+the same duties and powers
+as the Executive Directors. In
+addition, the Independent Non-
+executive Directors are entitled
+to certain specific powers. The
+Articles of Association and the
+Rules of Procedure for Meetings
+of Boards of Directors clearly
+prescribe the duties and powers of
+Directors, Non-executive Directors
+including Independent Non-
+executive Directors. The above
+duties and powers are published
+on the Sinopec Corp.'s website at
+http://www.sinopec.com.
+A.6 Responsibility of Directors
+Corporate Governance
+Corp. shall consider several
+factors in relation to the diversity
+of the Board, including but not
+limited to, gender, age, culture
+and background of education,
+locations, profession and
+experience, skills, knowledge and
+service term.
+b. Sinopec Corp. has received from
+each of the Independent Directors
+a letter of confirmation for 2016
+regarding their compliance
+with relevant independence
+requirements set out in Rule 3.13
+of the Hong Kong Listing Rules.
+Sinopec Corp. considers that each
+of the Independent Non-executive
+Directors is independent.
+a. The term of each session of the
+Directors of Sinopec Corp. is three
+years, and the consecutive term
+of office of an Independent Non-
+executive Director cannot exceed
+six years.
+Chairman and Executive Directors
+of Sinopec Corp. have petroleum
+and petrochemical technical
+background and/or extensive
+management experience in large.
+scale enterprises. The Independent
+Non-executive Directors have rich
+experience in economics, capital
+management and investment.
+c. Sinopec Corp. engages
+professional consultants to
+prepare detailed materials for
+b. All Directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary Directors.
+A.5 Nomination Committee
+a. Considering that the Board
+did not establish a Nomination
+Committee, the Board will perform
+the duties of the Nomination
+Committee prescribed in the
+Corporate Governance Code.
+The rules in relation to the
+nomination of Directors has been
+prescribed clearly in the Articles
+of Association and Rules of
+Procedure for the Shareholders'
+Meeting. Nomination of Directors
+may be proposed by shareholders
+who individually or collectively
+hold 3% of the total voting
+shares of Sinopec Corp. (1% for
+the nomination of Independent
+Directors), by the Board or by
+the Board of Supervisors for
+approval at the general meeting
+of shareholders. When the
+Board nominates a candidate
+for Director, Independent Non-
+executive Directors shall give
+their independent opinions on the
+nomination in advance. Nine out
+of total ten Directors of the Board
+were elected at the annual general
+meeting of shareholders for the
+year 2014; one was elected at the
+first extraordinary general meeting
+of shareholders for the year 2016.
+b. The Board establishes the Policy
+Concerning Diversity of Board
+Members which stipulates that
+the members of the Board shall
+be nominated and appointed
+based on the skills and experience
+required by the Board as well
+as the principles on diversity of
+the Board. When deciding the
+composition of the Board, Sinopec
+newly appointed Directors, to
+notify them of the regulations of
+each listing place of Sinopec Corp.
+and to remind them of their rights,
+responsibilities and obligations as
+Directors.
+Beijing, China, 24 March 2017
+Chairman
+Wang Yupu
+By order of the Board.
+Currency risks: At present, China
+implements an administered floating
+exchange rate regime based on market
+supply and demand which is regulated with
+reference to a basket of currencies in terms
+of the exchange rate of Renminbi. As the
+Company purchases a significant portion of
+crude oil in foreign currency which is based
+on US dollar-denominated prices, fluctuations
+in the exchange rate of Renminbi against US
+dollars and certain other foreign currencies
+may affect the Company's purchasing
+costs of crude oil. Meanwhile, according to
+domestic pricing mechanism of refined oil
+products, the prices of domestic refined oil
+products fluctuate with Renminbi exchange
+rate, and the prices of other domestic
+refined and chemical products would also be
+influenced by import price.
+Risks with regard to overseas business
+development and management: The
+Company engages in oil and gas exploration,
+refining and chemical, warehouse logistics
+and international trading businesses in
+some regions outside China. The Company's
+overseas businesses and assets are subject
+to the jurisdiction of the host country's laws
+and regulations. In light of the complicacy of
+geopolitics, economic and other conditions,
+including sanctions, barriers to entry,
+instability in the financial and taxation.
+policies, contract defaults, the Company's
+risks with regard to overseas business
+development and management could be
+increased.
+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
+Risks with regard to the external purchase
+of crude oil: A significant amount of crude
+oil as needed by the Company is satisfied
+through external purchases. In recent years,
+especially influenced by the mismatch
+between supply and demand of crude oil,
+geopolitics, global economic growth and
+other factors, the prices of crude oil fell
+sharply. Additionally, the supply of crude
+oil may even be interrupted due to some
+extreme major incidents in certain regions.
+Although the Company has taken flexible
+counter measures, it may not fully avoid risks
+associated with any significant fluctuation
+of international crude oil prices and sudden
+disruption of supply of crude oil from certain
+regions.
+Risks from the uncertainties of obtaining
+additional oil and gas resources: The future
+sustainable development of the Company
+is partly dependent to a certain extent on
+our abilities in continuously discovering
+or acquiring additional oil and natural
+gas resources. To obtain additional oil
+and natural gas resources, the Company
+faces some inherent risks associated with
+exploration and development and/or with
+acquisition activities, and the Company has
+to invest a large amount of money with no
+guarantee of certainty. If the Company fails
+to acquire additional resources through
+further exploration, development and
+acquisition to increase the reserves of crude
+oil and natural gas, the oil and natural gas
+reserves and production of the Company
+may decline overtime which may adversely
+affect the Company's financial situation and
+operation performance.
+environment protection accordingly.
+and formulation of energy conservation
+policies. In addition, the changes which have
+occurred or might occur in macroeconomic
+and industry policies such as the opening
+up of crude oil import licenses, and further
+improvement in pricing mechanism of refined
+oil products, reforming and improvement
+in pricing mechanism of natural gas, cost
+supervision of gas pipeline and access to
+third party, and reforming in resource tax
+and environmental tax, will cause effects
+on our business operations. Such changes
+might further intensify market competition
+and have certain effect on the operations and
+profitability of the Company.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Risks with regard to the operation
+and natural disasters: The process of
+petroleum chemical production is exposed
+to the risks of inflammation, explosion and
+environmental pollution and is vulnerable to
+natural disasters. Such contingencies may
+cause serious impacts to the community,
+major financial losses to the Company and
+grievous injuries to people. The Company has
+always been paying great emphasis on the
+safety of production, and has implemented
+a strict HSE management system as an
+effort to avoid such risks as far as possible.
+Meanwhile, the main assets and inventories
+of the Company as well as the possibility of
+damage to a third party have been insured.
+However, such measures may not shield the
+Company from financial losses or adverse
+impact resulting from such contingencies.
+Investment risks: Petroleum and chemical
+sector is a capital intensive industry.
+Although the Company adopted a prudent
+investment strategy and conducted rigorous
+feasibility study on each investment project,
+some certain investment risks may exist
+in the sense that expected returns may
+not be achieved due to major changes
+in factors such as market environment,
+prices of equipment and raw materials,
+and construction period during the
+implementation of the projects.
+57
+On 27 October 2016, the 7th meeting of the
+sixth session of the Board of Supervisors was
+held, and Third Quarterly Report of Sinopec
+Corp. for 2016 was approved at the meeting.
+58
+Risks from the macroeconomic policies
+and government regulation: Although the
+Chinese government is gradually liberalizing
+the market entry regulations on petroleum
+and petrochemicals sector, the petroleum
+and petrochemical industries in China are
+still subject to entry regulations to a certain
+degree, which include: issuing licenses in
+relation to exploration and development
+of crude oil and natural gas, issuing
+business licenses for trading crude oil and
+refined oil, setting caps for retail prices of
+gasoline, diesel and other oil products, the
+imposing of the special oil income levy,
+formulation of import and export quotas and
+procedures, formulation of safety, quality
+and environmental protection standards
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Firstly, the Board and the management of
+Sinopec Corp. performed their responsibilities
+pursuant to relevant laws and regulations,
+and implemented efficient management. The
+Board diligently fulfilled its obligations and
+exercised its rights under the PRC Company
+Law and the Articles of Association, and made
+informed decisions on major issues concerning
+change in growth mode, structure adjustment,
+as well as development and profitability. The
+senior management diligently implemented the
+Through supervision and inspection on the
+production and operation management as well
+as financial management conditions, the Board
+of Supervisors and all the supervisors conclude
+that under the severe operating environment
+of excessive supply of oil products in domestic
+market and fluctuation of international crude
+oil prices at low level, the Company focused
+on transformation of its growth mode, improve
+asset quality, increase asset efficiency and
+upgrade the asset structure, with an aim to
+optimise resource and structure adjustment.
+Make every effort to expand the market, optimise
+structure, reduce costs, and control risks, all
+contributing to a hard-won business result. The
+Board of Supervisors had no objection to the
+supervised issues during this reporting period.
+In addition, the supervisors attended the general
+meetings of shareholders and presented at
+meetings of the Board. The Board of Supervisors
+also organised supervisors to attend the
+trainings for directors and supervisors of listed
+companies organised by Beijing Securities
+Supervisory Bureau under CSRC. And these
+activities have further improved their capabilities
+in performing supervisory duties.
+On 26 August 2016, the 6th meeting of the sixth
+session of the Board of Supervisors was held,
+and the Interim Financial Statements of Sinopec
+Corp. for 2016 as well as Interim Report of
+Sinopec Corp. for 2016 were reviewed and
+approved at the meeting.
+Report of the Board of Directors
+On 28 April 2016, the 5th meeting of the sixth
+session of the Board of Supervisors was held,
+and the First Quarterly Report of Sinopec Corp.
+for 2016 was approved at the meeting.
+During this reporting period, the Board of
+Supervisors held four (4) meetings in total,
+and mainly reviewed and approved Sinopec
+Corp.'s annual report, financial statement,
+communication on progress report for
+sustainable development, internal control
+assessment report and working report of the
+board of supervisors etc.
+In 2016, the Board of Supervisors and
+each supervisor of Sinopec Corp. diligently
+performed their supervision responsibilities,
+actively participated in the supervision process
+of decision making, carefully reviewed and
+effectively supervised the major decisions of
+the Company, and endeavored to safeguard the
+interests of shareholders and the Company in
+accordance with the PRC Company Law and the
+Articles of Association of Sinopec Corp.
+Dear Shareholders:
+REPORT OF THE BOARD OF SUPERVISORS
+Report of the Board of Supervisors
+58
+On 28 March 2016, the 4th meeting of the
+sixth session of the Board of Supervisors was
+held, and Financial Statements of Sinopec Corp.
+for 2015, Annual Report of Sinopec Corp. for
+2015, 2015 Communication on Progress for
+Sustainable Development Report of Sinopec
+Corp., Internal Control Assessment Report of
+Sinopec Corp. for 2015, Report on the Work of
+Board of Supervisors of Sinopec Corp. for 2015
+were reviewed and approved at the meeting.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+The financial results of the Company for the year
+ended 31 December 2016, which is prepared in
+accordance with IFRS and the financial position
+as at that date and the accompanying analysis
+are set out from page 143 to page 201 in this
+annual report. A fair review of the Company's
+business, a discussions and analysis on business
+performance using financial key performance
+indicators and the material factors underlying
+our results and financial position during the
+reporting period, particulars of significant events
+affecting the Company and the outlook of the
+Company's business are discussed throughout
+this annual report included in the chapters
+of Chairman's Statement, Business Review
+and Prospects, Management's Discussion
+and Analysis and Significant Events. All above
+discussions constitute parts of the report of the
+Board of Directors.
+Report of the Board of Directors
+1
+4
+5
+6
+Jiang Xiaoming
+0
+0
+4
+6
+6
+0
+0
+0
+4
+6
+0
+0
+4
+6
+6
+0
+0
+4
+6
+6
+0
+6
+0
+Andrew Y. Yan
+6
+4
+1
+Actual Attended By
+Attendence communication
+2. Mr. Zhang Jianhua has resigned as director of the Board on 13 Jul 2016.
+1. Mr. Li Chunguang has resigned as director of the Board on 26 Aug 2016.
+2
+meeting held
+4
+Li Chunguang
+Zhang Jianhua
+Former Director
+Former Director
+No. of
+Board Meetings*1
+Names
+6
+0
+6
+6
+Fan Gang
+0
+0
+4
+6
+6
+Tang Min
+0
+0
+5
+4
+Attended
+by proxy
+4
+6
+of Sinopec Corp. for the year 2016. (vii)
+Interim Report of Sinopec Corp. for the
+year 2016. (viii) the thirteenth five years
+plan summary of Sinopec corp.
+(4) The 8th meeting of the sixth session of
+the Board was held by on site meeting on
+26 August 2016, whereby the proposals
+in relation to the following matters were
+approved: (i) Nomitating and Appointing
+Mr.Dai Houliang as President of Sinopec
+Corp. (ii) Elected Mr.Dai Houliang as
+the Vice Chairman of the Board, (iii)
+The adjustment of members of the
+Board committees including Strategy
+Committee, Remuneration Committee
+and Social Responsibility Management
+Committee, (iv) Business performance
+of the first half year of 2016 and work
+plan of the latter half year of 2016
+(v) Business performance, financial
+information and other related matters
+of Sinopec Corp. for the first half year
+2016, (vi) Interim Financial statements
+(3) The 7th meeting of the six session of
+the Board was held by written resolution
+on 28 April 2016, whereby the proposal
+in relation to the capital injection into
+Sichuan-to-East China Pipeline Co. was
+approved.
+(2) The 6th meeting of the six session of
+the Board was held by written resolution
+on 28 April 2016, whereby the proposal
+in relation to the first quarterly results
+of Sinopec Corp. for the three months
+ended 31 March 2016 was approved in
+the meeting.
+listed foreign shares of Sinopec Corp.,
+(xiii) Convening the annual general
+meeting of Sinopec Corp. for the year
+2015 and to dispatch the notice of the
+annual general meeting.
+of Sinopec Corp. for the year 2015, (vii)
+Internal control assessment report of
+Sinopec Corp. for the year 2015, (viii)
+Re-appointment of external auditors of
+Sinopec Corp. for the year of 2016 and
+to authorise the Board to determine
+their remunerations, (ix) Elected Mr
+Ma Yongsheng as member of Strategy
+Committee, (x) Authorising the Board to
+determine the interim profit distribution
+plan of Sinopec Corp. for the year 2016,
+(xi) Authorising the Board to determine
+the proposed plan for issuance of debt
+financing instrument(s) (xii) Granting to
+the Board a general mandate to issue
+new domestic shares and/or overseas.
+of the Board was held by on site and
+video conference on 29 March 2016,
+whereby the proposals in relation to
+the following matters were approved: (i)
+Work Report of the Board, (ii) Business
+performance of 2015 and work plan of
+2016, (iii) Financial results and business
+performance of Sinopec Corp. for the
+year 2015, (iv) 2015 Communication on
+Progress for Sustainable Development
+Report of Sinopec Corp., (v) Financial
+Statements of Sinopec Corp. for the year
+2015, (vi) Annual Report and form 20F
+(1) The 5th meeting of the six session
+During this reporting period, Sinopec Corp.
+held six(6) Board meetings. The details are
+as follows:
+1 MEETINGS OF THE BOARD
+The Board is pleased to present the directors'
+report for the year ended 31 December 2016 for
+shareholders' review.
+REPORT OF THE BOARD OF DIRECTORS
+(5) The 9th meeting of the six session of
+the Board was held by written resolution
+on 28 September 2016, whereby the
+proposal in relation to the appointment of
+Mr. Wang Dehua to be the chief financial
+officer of Sinopec Corp. was approved.
+Report of the Board of Directors
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Except for their working relationships
+with Sinopec Corp., none of the
+Directors, Supervisors or other Senior
+Management has any financial, business
+or family relationship or any relationship
+in other material aspects with one
+another. For information about changes
+in share capital and shareholdings of
+substantial shareholders, please refer to
+page 6 to page 7; for information about
+meetings of the Board, please refer to
+page 51; for information about equity
+interests of Directors, Supervisors and
+other senior Management, please refer
+to page 43; for information about the
+biographies and annual remuneration of
+Directors, Supervisors and other senior
+Management, please refer to page 60 to
+page 71.
+(3) Other information about Sinopec Corp.'s
+corporate governance
+During the reporting period, neither
+PricewaterhouseCoopers Zhong Tian LLP
+nor PricewaterhouseCoopers provided any
+non-audit service to the Company.
+approved at Sinopec Corp.'s annual
+general meeting for the year 2015 on
+18 May 2016. The audit fee for 2016
+is RMB 51.58 million (including audit
+fee of internal control), which was
+approved at the 12th meeting of the
+sixth session of the Board. The annual
+financial statements have been audited
+by PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers. The
+Chinese certified accountants signing the
+report are Zhao Jianrong and Gao Peng
+from PricewaterhouseCoopers Zhong Tian
+LLP.
+The appointment of
+PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers as
+Sinopec Corp.'s external auditors for
+2016 and the authorisation of the Board
+to determine their remuneration were
+(2) Auditors
+d. According to relevant rules of
+Sinopec Corp., the Board Secretary
+is responsible for establishing an
+effective communication channel
+between Sinopec Corp. and its
+shareholders, for setting up special
+departments to communicate with
+the shareholders and for passing
+the opinions and proposals of the
+shareholders to the Board and
+Management in a timely manner.
+Contact details of Sinopec Corp. can
+be found on the Investor Center page
+on Sinopec Corp's website.
+c. The eligibility for attending the general
+meeting, the rights of shareholders,
+the proposals at the meeting and the
+voting procedures are clearly stated.
+in the notice of the general meeting
+of Sinopec Corp. dispatched to the
+shareholders.
+general meeting of shareholders,
+shareholders who individually or
+collectively hold 3% of the total
+voting shares of Sinopec Corp. may
+propose a supplementary proposal 10
+days before the date of the general
+meeting.
+b. When Sinopec Corp. holds the
+Corporate Governance
+49
+6
+(6) The 10th meeting of the six session of
+the Board was held by written resolution
+on 27 October 2016, whereby the
+proposal in relation to the third quarterly
+results of Sinopec Corp. for the nine
+months ended 30 September 2016 was
+approved in the meeting.
+2 IMPLEMENTATION OF RESOLUTIONS
+APPROVED AT THE GENERAL MEETINGS
+OF SHAREHOLDERS BY THE BOARD
+During this reporting period, in accordance
+with relevant laws and regulations as well
+as the articles of association, all members
+of the Board diligently implemented the
+resolutions approved at the general meetings
+of Sinopec Corp., and have completed
+various tasks delegated to them at the
+general meetings.
+Dai Houliang
+Wang Zhigang
+Zhang Haichao
+Jiao Fangzheng
+Ma Yongsheng
+Director Titles
+Independent Director
+Independent Director
+Independent Director
+Independent Director
+Director
+Director
+Director
+Director
+Vice Chairman
+0
+4
+6
+Wang Yupu
+For details of each meeting, please refer
+to the announcements published in China
+Securities Journal, Shanghai Securities News
+and Securities Times on the next working
+day after each meeting and on the websites
+of Shanghai Stock Exchange, Hong Kong
+Stock Exchange and Sinopec Corp.
+Chairman
+by proxy
+Attended
+Board Meetings
+Actual Attended By
+Attendence communication
+meeting held
+No. of
+Names
+Director Titles
+The sixth session of the Board Directors' attendance to the Board Meeting and the General Meetings.
+3 ATTENDANCE TO THE BOARD MEETINGS
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+50
+50
+Absent
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Absent
+0
+Pursuant to the Articles of Association
+and the laws of the PRC, the shareholders
+of Sinopec Corp. are not entitled to any
+pre-emptive rights; therefore the existing
+shareholders cannot request Sinopec Corp.
+for the right of first refusal in proportion to
+their shareholdings.
+16 PRE-EMPTIVE RIGHTS
+During this reporting period, the amount of
+charity donations made by Sinopec Corp.
+amounted to RMB 133 million.
+15 DONATIONS
+During this reporting period, the changes
+to the reserves of Sinopec Corp. are set out
+in the consolidated statement of changes
+in shareholders' equity in the financial
+statements prepared in accordance with
+IFRS in this annual report.
+14 RESERVES
+During this reporting period, changes to the
+fixed assets of Sinopec Corp. are set out in
+Note 16 to the financial statements prepared
+in accordance with IFRS in this annual
+report.
+13 FIXED ASSETS
+12 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of Sinopec Corp. as of 31 December 2016
+are set out in Note 28 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+54
+17 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+Report of the Board of Directors
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+During the reporting period, other than
+disclosed above, all the top five crude oil
+suppliers and the other largest customers of
+the Company were independent third parties.
+There were no supplier, customer, employee
+and others that have a significant impact on
+the Company and on which the Company's
+success depends.
+The total sales to the five largest customers
+of the Company accounted for 7.4% of
+the total sales of the Company, of which
+sales to the largest customer accounted for
+3.0% of the total sales. Sinopec Group, the
+controlling shareholder of Sinopec Crop., is
+one of the five largest customers.
+11 MAJOR SUPPLIERS AND CUSTOMERS
+During this reporting period, the total
+purchases from the top five crude oil
+suppliers of the Company accounted for
+56.6% of the total purchases of crude oil by
+the Company, of which the purchases from
+the largest supplier accounted for 18.7%
+of the total purchases of crude oil by the
+Company.
+10 DURING THIS REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS AND
+REGULATIONS WHICH HAVE A SIGNIFICANT
+IMPACT ON THE COMPANY
+9 DURING THIS REPORTING PERIOD,
+THE COMPANY DID NOT VIOLATE
+ENVIRONMENTAL POLICIES
+Details with regard to the Company's
+performance in relation to environmental and
+social-related key performance indicators
+and policies, are provided in the Chapters of
+Chairman's Statement and Business Review
+and Prospects in this annual report as well
+as the 2016 Communication on Progress
+for the Sustainable Development Report of
+Sinopec Corp. All these discussions in regard
+to environmental policies constitute part of
+the Report of the Board of Directors.
+reviewed and approved on the 12th meeting
+of the sixth Session of the Board on 24
+March 2017, and all members of the Board
+undertook that the contents of the report are
+true, accurate and complete, and without any
+false representation, misleading statements
+or material omissions.
+The 2016 Annual Internal Control
+Assessment Report of Sinopec Corp. was
+The Board is fully responsible for establishing
+and maintaining the internal control system
+related to the financial statements as well
+as ensuring its effective implementation. In
+2016, the Board assessed and evaluated the
+internal control of Sinopec Corp. according
+to the Basic Standard for Enterprise
+Internal Control, Application Guidelines for
+Enterprise Internal Control and Estimation
+Guidelines for Enterprise Internal Control.
+There were no significant defects in relation
+to the internal control system related to
+the financial statements as of 31 December
+2016. Therefore the internal control system
+of Sinopec Corp. related to the financial
+statements is sound and effective.
+INTERNAL CONTROL
+8 RESPONSIBILITIES FOR THE COMPANY'S
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2014
+to 2016 is RMB 0.599 per share, and the
+total dividend payment from 2014 to 2016
+as a percentage of average net profits in the
+three years is 171.35%.
+53
+The final cash dividend for 2016 is subject to approval at the 2016 annual general meeting.
+During this reporting period, neither
+Sinopec Corp. nor any of its subsidiaries
+repurchased, sold or redeemed any listed
+shares of Sinopec Corp. or its subsidiaries.
+During the reporting period, the competing
+businesses in chemicals segment between
+Sinopec Group and the Company were
+solved. For details for the positions held by
+the directors of Sinopec Corp. (excluding
+independent non-executive directors), please
+refer to the chapter Directors, Supervisors,
+Senior Management and Employees of this
+annual report.
+56
+Report of the Board of Directors
+55
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Risks with regard to the cyclical effects from
+the industry: The majority of the Company's
+operating income comes from the sales
+of refined oil products and petrochemical
+products, and part of the those businesses
+and their related products are cyclic and
+are sensitive to macro-economy, cyclic
+changes of regional and global economy,
+the changes of the production capacity
+and output, demand of consumers, prices
+and supply of the raw materials, as well as
+prices and supply of the alternative products
+etc. Although the Company is an integrated
+company with upstream, midstream
+and downstream operations, it can only
+counteract the adverse influences of industry
+cycle to some extent.
+Risks with regard to the variations from
+macroeconomic situation: The business
+results of the Company are closely related
+to China's and global economic situation.
+The development of Chinese economy has
+entered New Normal. Although various
+countries have adopted different kinds
+of macroeconomic policies to eliminate
+negative effects caused by lower growth of
+global economy, the turnaround of economic
+recovery still remains uncertain. The
+Company's business could also be adversely
+affected by such factors as the impact on
+export due to trade protectionism from some
+countries, and impact on import which is
+likely caused by regional trade agreements
+and etc.
+In the course of its production and
+operations, the Company will actively take
+various measures to circumvent operational
+risks. However, in practice, it may not be
+possible to prevent the occurrence of all
+risks and uncertainties described below.
+25 RISK FACTORS
+The Company always attaches great
+importance to fulfilling social responsibilities,
+and carries out the green and low carbon
+development strategy to pursue a sustainable
+development. Moreover, the Company
+enjoys an outstanding brand name, plays
+an important role in the economy and is a
+renowned and reputable company in China.
+The Company has formulated a well-
+established technology system and
+mechanism, and owns competent teams
+specialised in scientific research covering a
+wide range of subjects; the four platforms
+for technology advancement is taking shape,
+which includes exploration and development
+of oil and gas, refining, chemicals and
+strategic emerging technology. With its
+overall technologies reaching state of the art
+level in the global arena, and some of them
+taking the lead globally, the Company enjoys
+strong capability for technical innovations.
+The Company enjoys a favorable positioning
+with its operations located close to the
+consumer markets. Along with the steady
+growth in the Chinese economy, sales volume
+of both oil products and chemical products
+of the Company has been increasing steadily
+over the years; through continuous and
+specialized marketing efforts, the Company's
+capability in international operations and
+market expansion has been further enhanced.
+The Company owns a team of professionals
+and expertise engaged in the production
+of oil and gas, operation of refineries and
+chemical plants, as well as marketing
+activities. The Company applies outstanding
+fine management measures with its
+remarkable capabilities in management
+of operations, and enjoys a favorable
+operational cost advantage in its downstream
+businesses.
+The integrated business structure of
+the Company carries strong advantages
+in synergy among its various business
+segments, enabling the Company to
+continuously tap onto potentials in attaining
+an efficient and comprehensive utilization
+of its resources, and endowed the Company
+with strong resistance against risks, as well
+as remarkable capabilities in sustaining
+profitability.
+18 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+The Company is a large scale integrated
+energy and petrochemical company with
+upstream, mid-stream and downstream
+operations. The Company is a large scaled
+oil and gas producer in China; in respect
+of refining capacity, it ranks first in China;
+equipped with a well-developed refined oil
+products sales network, the Company is the
+largest supplier of refined oil products in
+China; and in terms of ethylene production
+capacity, the Company takes the first
+position in China, and has a well-established
+marketing network for chemical products.
+Our reserves estimates are guided by
+procedural manuals and technical experts. A
+number of working divisions at the production
+bureau level, including the exploration,
+development, financial and legal divisions,
+are responsible for initial collection and
+compilation of information about reserves.
+Exploration and development division
+collectively prepares the initial report on the
+reserves estimate. Together with technical
+experts, reserves management committees
+at the subsidiary level then review the
+report to ensure qualitative and quantitative
+compliance with technical guidance and the
+accuracy and reasonableness of the reserves
+estimation. At corporate level, the RMC is
+primarily responsible for the management
+and coordination of the reserves estimation
+process, review and approval of annual
+changes and results in the reserves estimate,
+and disclosure of our proved reserves.
+We also engage outside consultants to
+assist in our compliance with the rules
+and regulations of the U.S. Securities
+and Exchange Commission. Our reserves
+estimation process is further facilitated by
+a specialised reserves database, which is
+improved and updated periodically.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Our RMC is led by a couple of senior vice
+presidents, as well as experts and directors
+general of Sinopec's exploration and
+production segment. Mr. Wang Zhigang, the
+chairman of RMC holds a Ph.D. in geology
+from the Geology and Geophysics Research
+Institute of the Chinese Academy of Sciences
+and has over 30 years of experience in the
+oil and gas industry. Our RMC also includes
+other members who are senior managers
+in charge of exploration and development
+activities at the production bureau level.
+A majority of our RMC members hold
+doctorates or master's degrees, and our
+members have an average of 20 years of
+technical experience in relevant professional
+fields, such as geology, engineering and
+economics.
+We manage our reserves estimation through
+a two-tier management system. Our Oil
+and Natural Gas Reserves Management
+Committee, or RMC, at the headquarters
+level oversees the overall reserves estimation
+process and reviews the reserves estimation
+of our company. Each of our branches has
+a reserves management committee that
+manages the reserves estimation process
+and reviews the reserve estimation report at
+the branch level.
+23 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+For the reporting period, the Company has
+not entered into any equity-linked agreement.
+22 EQUITY-LINKED AGREEMENTS
+During the reporting period, Sinopec Corp.
+has purchased liability insurance for all
+directors to minimise their risks arising
+from the performance of their duties. The
+permitted indemnity provisions are provided
+in such directors liability insurance in respect
+of potential liability and costs associated
+with legal proceedings that may be brought
+against such directors.
+21PERMITTED INDEMNITY PROVISIONS
+No contracts concerning management
+or administration of the whole or any
+substantial part of the business of the
+Company were entered into or existed during
+the reporting period.
+20 MANAGEMENT CONTRACTS
+19 DIRECTORS' INTERESTS IN CONTRACTS
+No Director had a material interest, either
+directly or indirectly, in any contract of
+significance to the business of the Company
+to which Sinopec Corp. or any of its holding
+companies, subsidiaries or fellow subsidiaries
+was a party during the reporting period.
+24 CORE COMPETITIVENESS ANALYSIS
+0
+*.
+56.26
+Proposals for dividend distribution
+At the 12th meeting of the sixth session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMB
+0.17 (tax inclusive) per share, combining
+with an interim distributed dividend of
+RMB0.079 (tax inclusive) per share, the total
+dividend for the whole year is RMB 0.249 (tax
+included) per share.
+The profit distribution plan of Sinopec Corp.
+for the current year will be carried out in
+accordance with the policy and procedures
+stipulated as per the Articles of Association,
+with the advice of minority shareholders
+being heard and considered, meanwhile, the
+independent directors will issue independent
+opinions.
+The profit distribution policy of Sinopec Corp.
+maintains consistency and steadiness, and
+gives further consideration to the long-term
+interests of the Company, overall interests
+of all the shareholders and the sustainable
+development of the Company. Sinopec Corp.
+gives priority to adopting cash dividends
+for profit distribution, and is able to deliver
+an interim profit distribution. When the net
+profits and retained earnings of the Company
+are positive in current year, and in the event
+that the cash flow of Sinopec Corp. can
+satisfy the normal operation and sustainable
+development, Sinopec Corp. should adopt
+cash dividends, and the distribution profits
+in cash every year are no less than 30% of
+the net profits of the Company in current
+year.
+7 DIVIDEND
+6 BUSINESS PERFORMANCE
+5 BOARD COMMITTEES ISSUED REVIEW
+OPINIONS TO THE BOARD WHEN
+PERFORMING THEIR DUTIES DURING THE
+REPORT PERIOD, WITHOUT OBJECTION.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+Report of the Board of Directors
+51
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(8) The 1st meeting of the sixth session of
+the Social Responsibility Management
+Committee was held by on site meeting
+on 25 March 2016, whereby the 2015
+Communication on Progress for the
+Sustainable Development Report of
+Sinopec Corp. was approved in the
+meeting.
+(7) The 1st meeting of the sixth session
+of the remuneration Committee was
+held by written resolution on 25 March
+2016, whereby the proposal in relation
+to implementation of the rules of the
+remuneration of directors, supervisors
+and other senior management for 2015
+was reviewed and approved.
+of the Strategy Committee was held by
+written resolution on 24 August 2016,
+whereby the thirteenth five years plan
+summary of Sinopec corp. was approved
+in the meeting.
+(6) The 2nd meeting of the sixth session
+(5) The 1st meeting of the sixth session of
+the Strategy Committee was held by
+written resolution on 25 March 2016,
+whereby the proposal in relation to
+the plan of investments of 2016 was
+approved in the meeting.
+(4) The 6th meeting of the sixth session of
+the Audit Committee was held by written
+resolution on 26 October 2016, whereby
+the third quarterly report for nine months
+ended 30 September 2016 was approved
+in the meeting.
+(3) The 5th meeting of the sixth session of
+the Audit Committee was held by on site
+meeting on 22 August 2016, whereby (i)
+Interim report for the first half of 2016,
+(ii) Financial statements for the first half
+year of 2016, (iii) Reports on internal
+auditing work for the first half of 2016
+were approved in the meeting.
+(2) The 4th meeting of the sixth session of
+the Board was held by written resolution
+on 27 April 2016, whereby the first
+quarterly report for three months ended
+31 March 2016 was approved in the
+meeting.
+During the reporting period, the Audit
+Committee held four (4) meetings. Strategy
+Committee held two (2) meetings, and each
+of the remuneration Committee and the
+Social Responsibility Management Committee
+held one (1) meeting. All members of each
+committee had attended the meetings.
+Details of those meetings are as follows:
+(1) The 3rd Audit Committee meeting of the
+sixth session of the Board was held by on
+site meeting on 25 March 2016, whereby
+the proposal in relation to the following
+matters were approved in the meeting:
+(i) 2015 Annual Report; (ii) 20F of
+2015 (iii) Financial results and business
+performance of Sinopec Corp. for the year
+2015 (iv) Internal control assessment
+report of Sinopec Corp. for the year 2015
+and the internal control manual (2016)
+(v) Work report on the internal auditing
+work for the year 2015, (vi) Performance
+report of Audit Committee for the year
+2015, (vii) Reports on the auditing of the
+financial statements for the year 2015
+delivered by the domestic and overseas
+auditors.
+4 MEETINGS HELD BY THE BOARD
+COMMITTEES
+No directors were absent from two consecutive meetings of the Board. No Independent Non-executive Directors had attended the general
+meetings of shareholders in person.
+0
+0
+oo
+1
+0
+The dividend will be denominated and
+declared in RMB, and distributed to the
+domestic shareholders and investors
+participating in the Shanghai-Hong Kong
+Stock Connect Program in RMB and to
+the overseas shareholders in Hong Kong
+Dollar. The exchange rate for the dividend
+calculation in Hong Kong Dollar is based
+on the average benchmark exchange rate of
+RMB against Hong Kong Dollar as published
+by the People's Bank of China one week
+preceding the date of the declaration of such
+dividend. The arrangement of the payment
+of the final dividend will be published in due
+50.06
+course.
+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.
+64.95
+Ratio between the dividends and the net profit attributed to the shareholders of the
+listed company in the consolidated statement (%)
+47,603
+32,281
+46,416
+the consolidated statement for the dividend year (RMB million)
+Net profits attributed to the shareholders of the listed company shown in
+0.20
+23,830
+0.15
+18,160
+30,147
+Total amount of cash dividends (RMB million, tax inclusive)
+0.249
+In accordance with the Enterprise Income
+Tax Law of the People's Republic of China
+which came into effect on 1 January 2008
+and its implementation regulations, Sinopec
+Corp. is required to withhold and pay
+enterprise income tax at the rate of 10%
+on behalf of the non-resident enterprise
+shareholders whose names appear on the
+register of members for H Shares of Sinopec
+Corp. when distributing cash dividends or
+issuing bonus shares by way of capitalisation
+from retained earnings. Any H Shares of
+the Sinopec Corp. which is not registered
+under the name of an individual shareholder,
+including those registered under HKSCC
+Nominees Limited, other nominees, agents
+or trustees, or other organizations or
+groups, shall be deemed as shares held
+by nonresident enterprise shareholders.
+Therefore, on this basis, enterprise income
+tax shall be withheld from dividends payable
+to such shareholders. If holders of H Shares
+intend to change its shareholder status,
+Cash dividends (RMB/Share, tax inclusive)
+2015
+2016*
+The dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as follows:
+For investors of the Hong Kong Stock Exchange (including enterprises and individuals) investing in the A Shares of Sinopec Corp. through Shanghai-
+Hong Kong Stock Connect Program, the Company will withhold and pay income taxes at the rate of 10% on behalf of those investors and will
+report to the tax authorities for the withholding. For investors who are tax residents of other countries, whose country of domicile is a country
+having entered into a tax treaty with the PRC stipulating a dividend tax rate of lower than 10%, the enterprises and individuals may, or may entrust
+a withholding agent to, apply to the competent tax authorities for the entitlement of the rate under such tax treaty. Upon approval by the tax
+authorities, the amount paid in excess of the tax payable based on the tax rate according to such tax treaty will be refunded.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+42
+52
+Shares of Sinopec Corp. through Shanghai-
+Hong Kong Stock Connect Program, the
+company shall withhold and pay income tax
+at the rate of 20% on behalf of individual
+investors and securities investment funds.
+The company will not withhold or pay
+the income tax of dividends for domestic
+enterprise investors and those domestic
+enterprise investors shall report and pay the
+relevant tax by themselves.
+For domestic investors investing in the H
+Shanghai Hong Kong Stock Connect (
+港股票市場交易互聯互通機制試點有關稅收政策
+)(Caishui [2014] No. 81):
+Pursuant to the Notice on the Tax Policies
+Related to the Pilot Program of the
+If the individual holders of the H shares
+who are Hong Kong or Macau residents or
+residents of the countries which had an
+agreed tax rate of 10% for the cash dividends
+or bonus shares by way of capitalisation
+from retained earnings with China under
+the relevant tax agreement, Sinopec Corp.
+should withhold and pay individual income
+tax on behalf of the relevant shareholders
+at a rate of 10%. Should the individual
+holders of the H Shares are residents of the
+countries which had an agreed tax rate of
+less than 10% with China under the relevant
+tax agreement, Sinopec Corp. shall withhold
+and pay individual income tax on behalf
+of the relevant shareholders at a rate of
+10%. In that case, if the relevant individual
+holders of the H Shares wish to reclaim
+the extra amount withheld (Extra Amount)
+due to the application of 10% tax rate,
+Sinopec Corp. would apply for the relevant
+agreed preferential tax treatment provided
+that the relevant shareholders submit the
+evidence required by the notice of the tax
+agreement to the share register of Sinopec
+Corp. in a timely manner. Sinopec Corp. will
+assist with the tax refund after the approval
+of the competent tax authority. Should
+the individual holders of the H Shares are
+residents of the countries which had an
+agreed tax rate of over 10% but less than
+20% with China under the tax agreement,
+Sinopec Corp. shall withhold and pay the
+individual income tax at the agreed actual
+rate in accordance with the relevant tax
+agreement. In the case that the individual
+holders of the H Shares are residents of the
+countries which had an agreed tax rate of
+20% with China, or which has not entered
+into any tax agreement with China, or
+otherwise, Sinopec Corp. shall withhold and
+pay the individual income tax at a rate of
+20%
+2014
+6
+resolutions approved by the Board, continued
+to deepen the reform, focus on innovations,
+regulate operations, intensified strict
+management and strived to tap potentials and
+enhance efficiency, optimise business structures,
+committed to achieving the aim of sustaining
+profit and growth set by the Board. During the
+reporting period, the Board of Supervisors did
+not discover any behaviors of any other director
+or senior management which violated laws,
+regulations, and the Articles of Association, or
+were detrimental to the interests of Sinopec
+Corp. or its shareholders.
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2016 complied
+with the relevant regulation of domestic and
+overseas securities regulators, the disclosed
+information truly, accurately, completely
+and fairly reflected Sinopec Corp.'s financial
+status and operation performance. The
+dividend distribution plan was made after
+comprehensively consideration of the long.
+term interests of Sinopec Corp and the interest
+of the shareholder. No violation of confidential
+provisions of persons who prepared and
+reviewed the report was found.
+Gender
+Tenure
+Whether paid
+2015.05-2017.03
+Position in
+Sinopec Corp.
+Former Chairman
+of the Board
+of Supervisors
+60
+60
+Male
+Liu Yun
+Age
+Gender
+Name
+in 2016
+Remuneration
+paid by
+Sinopec Corp.
+List of Members of the Board of Supervisors
+(RMB 1,000,
+before tax)
+by the holding
+Company
+Yes
+Supervisor
+53
+Male
+Zhou Hengyou
+Yes
+2015.05-2018.05
+Supervisor
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+53
+Liu Zhongyun
+0
+0
+2015
+2016
+(as of 31 December)
+Equity interests in Sinopec Corp.
+Male
+Senior
+Management and Employees
+Supervisors,
+Liu Yun, aged 60, former
+Chairman of the Board of
+Supervisors of Sinopec Corp.
+Mr. Liu is a professor level
+senior accountant with a
+master degree. In December
+1998, he was appointed as
+Deputy Director General of
+Finance Department of China
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Deputy Director
+General of Finance Department
+of Sinopec Corp.; in January
+2001, he was appointed as
+Director General of Finance
+Department of Sinopec Corp.;
+in June 2006, he was appointed
+as Deputy CFO of Sinopec
+Corp.; in February 2009, he was
+appointed as Chief Accountant
+of China Petrochemical
+Corporation; in May 2009,
+he was elected as a Board
+Director of Sinopec Corp.; in
+May 2012, he was appointed
+concurrently as the Chairman
+of Sinopec Finance Co., Ltd.;
+in September 2013, he was
+appointed concurrently as
+Chairman of Sinopec Insurance
+Co., Ltd.; and in May 2015, he
+was elected as Chairman of the
+Board of Supervisors of Sinopec
+Corp. On 16 March 2017, he
+resigned as the Chairman of
+the Board of Supervisors and
+Supervisor of Sinopec Corp.
+(2) Supervisors
+Zhou Hengyou
+Liu Zhongyun
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Liu Yun
+Directors, Supervisors,
+Senior Management and Employees
+Liu Zhongyun, aged 53,
+Supervisor of Sinopec Corp.
+Mr. Liu is a professor level
+senior engineer with a doctorate
+in engineering. In December
+2002, he was appointed as a
+standing committee member of
+CPC Committee and Director
+of Organisation Department
+of Shengli Petroleum
+Administration Bureau; in
+November 2004, he was
+appointed as Deputy Secretary
+of CPC Committee of Shengli
+Petroleum Administration
+Bureau; in December
+2005, he was appointed as
+Manager of Sinopec Shengli
+Oilfield Branch; in December
+2008, he was appointed as
+Secretary of CPC Committee
+of Sinopec International
+Petroleum Exploration and
+Production Corporation; in July
+2010, he was appointed as
+General Manager of Sinopec
+Northwest Oilfield Company,
+Director General of Northwest
+Petroleum Bureau under China
+Petrochemical Corporation.
+Since August 2014, Mr. Liu
+has acted as Assistant to
+President and Director General
+of HR Department of China
+Petrochemical Corporation, and
+in May 2015, he was elected as
+Supervisor of Sinopec Corp.
+Senior Management and Employees
+65
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+0
+0
+No
+519.7
+2006.05-2016.07
+Directors, Supervisors,
+2015.05.2018.05
+Zhou Hengyou, aged 53,
+Supervisor of Sinopec Corp. Mr.
+Zhou is a professor level senior
+administration engineer and
+Committee of Jiangsu Petroleum
+Exploration Bureau; in March
+2011, he was appointed as
+Director General and Secretary
+of CPC Committee of China
+Petrochemical News. In March
+2015, he was appointed as
+Director General of the General
+Office of China Petrochemical
+Corporation, Director General of
+Policy Research Department of
+the General Office and Director
+General of President of Sinopec
+Corp. In August 2015, he was
+appointed as Director General
+of Board of Directors Office
+under China Petrochemical
+Corporation; and in May 2015,
+he was elected as Supervisor of
+Sinopec Corp.
+Senior Management and Employees
+Directors, Supervisors,
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Wang Yajun, aged 60,
+Empolyee's Representative
+Supervisor of Sinopec Corp.
+Mr. Wang is a professor level
+senior administration engineer
+with a university diploma.
+In December 2004, he was
+appointed as Vice Secretary of
+CPC committee, Secretary of
+Discipline Inspection Committee
+and Labour Union Chairman
+of Zhongyuan Petroleum
+Exploration Bureau of China
+Petrochemical Corporation.
+In November 2010, he was
+appointed as Party Secretary of
+CPC committee, of Zhongyuan
+Petroleum Exploration Bureau.
+In March 2015, Mr. Wang was
+appointed as Secretary of CPC
+of China Sinopec International
+Petroleum Exploration and
+Development Co., Ltd; and in
+May 2015, he was elected as
+Employee's Representative
+Supervisor of Sinopec Corp.
+Yu Renming, aged 53,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr. Yu is a professor level
+senior engineer with a university
+diploma. In June 2000, he
+was appointed as the Deputy
+General Manager of Sinopec
+Zhenhai Refining & Chemical
+Co., Ltd.; in June 2003, he
+was appointed as the Board
+Director and Deputy General
+Manager of Sinopec Zhenhai
+Refining & Chemical Co.,
+Ltd.; in September 2006, he
+was appointed as the Vice
+President of Sinopec Zhenhai
+Refining & Chemical Company;
+in September 2007, he was
+appointed as the President
+and the Vice Secretary of
+CPC committee of Sinopec
+Zhenhai Refining & Chemical
+Company; in January 2008, he
+was appointed as the Director
+General of Sinopec Production
+Management Department;
+and in December 2010, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+Management Department
+(Sinopec International Co.
+Ltd); in November 2014, he
+was appointed as Director
+General of Safety Supervisory
+Department of Sinopec Corp.;
+and since December 2010, he
+was elected as the Employee's
+Representative Supervisor of
+Sinopec Corp.
+a postgraduate. In December
+1998, Mr. Zhou was appointed
+as a standing committee
+member of CPC Committee
+and Deputy Labour Union.
+Chairman of Jiangsu Petroleum
+Exploration Bureau; in February
+1999, he was appointed as a
+standing committee member
+of CPC Committee and Labour
+Union Chairman of Jiangsu
+Petroleum Exploration Bureau
+of China Petrochemical
+Corporation; in December 2002,
+he was appointed as Deputy
+Secretary of CPC Committee
+and Labour Union Chairman of
+Jiangsu Petroleum Exploration
+Bureau; in June 2004, he was
+appointed as Deputy Secretary
+of CPC Committee and
+Secretary of CPC Disciplinary
+Inspection Committee of
+Jiangsu Petroleum Exploration
+Bureau; in August 2005, he was
+appointed as Secretary of CPC
+General (General Manager),
+Executive Director and Deputy
+Secretary of the CPC Committee
+of Sinopec Procurement
+Zou Huiping, aged 56,
+Supervisor of Sinopec Corp. Mr.
+Zou is a professor level senior
+accountant with a university
+diploma. In November 1998,
+he was appointed as Chief
+Accountant in Guangzhou
+Petrochemical General Plant
+of China Petrochemical
+Corporation; in February 2000,
+he was appointed as Deputy
+Director General of Finance &
+Assets Department of China
+Petrochemical Corporation;
+in December 2001, he
+was appointed as Deputy
+Director General of Finance &
+Planning Department of China
+Petrochemical Corporation; in
+March 2006, he was appointed
+as Director General of Finance
+& Assets Department of Assets
+Management Co., Ltd. of China
+Petrochemical Corporation; in
+March 2006, he was appointed
+as Director General of Auditing
+Department of Sinopec Corp.;
+and in May 2006, he was
+elected as Supervisor of Sinopec
+Corp.
+Wang Yajun
+Yu Renming
+Jiang Zhenying
+Zou Huiping
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+66
+Jiang Zhenying, aged 52,
+Employee's Representative
+Supervisor of Sinopec Corp. Mr.
+Jiang is a professor level senior
+economist with a doctor degree.
+In December 1998, he was
+appointed as the Vice President
+of the China Petrochemical
+Supplies & Equipment Co.,
+Ltd.; in February 2000, he
+was appointed as the Deputy
+Director General of Sinopec
+Procurement Management
+Department; in December
+2001, he was appointed as the
+Director General of Sinopec
+Procurement Management
+Department and in November
+2005 he concurrently held
+the positions of Chairman
+of Board of Directors,
+President and Secretary of
+CPC Committee of China
+Petrochemical International
+Co., Ltd.; in March 2006, he
+was appointed as the Director
+General (General Manager),
+Executive Director and
+Secretary of the CPC Committee
+of Sinopec Procurement
+Management Department
+(Sinopec International Co.
+Ltd.); in April 2010, he was
+appointed as the Director
+Former Board Director,
+Senior Vice President
+Yes
+Male
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Zhigang
+Zhang Haichao
+Wang Zhigang, aged 59,
+Board Director and Senior Vice
+President of Sinopec Corp. Mr.
+Wang is a professor level senior
+engineer with a Ph.D. Degree.
+In February 2000, he was
+appointed as Vice President of
+Sinopec Shengli Oilfield Co.,
+Ltd.; in June 2000, he served
+as Board Director and President
+of Shengli Oilfield Co., Ltd.;
+in November 2001, he was
+appointed temporarily as Deputy
+Director General and Deputy
+Secretary of Leading Party
+Member Group of Economic and
+Trade Commission, Ningxia Hui
+Autonomous Region; in April
+2003, he was appointed as Vice
+President of Sinopec Corp.; in
+June 2003, he was appointed
+concurrently as Director General
+of Exploration and Production
+Department of Sinopec Corp.; in
+March 2005, he was appointed
+as Senior Vice President of
+Sinopec Corp.; in January 2007,
+he was appointed concurrently
+as Vice Chairman of Sinopec
+International Petroleum
+Exploration and Production
+Corporation; in September
+2014, he was appointed
+concurrently as Chairman of
+Board of Directors of Sinopec
+International Petroleum
+Exploration and Production
+Corporation; and in May 2006,
+he was elected as Board
+Director and appointed as
+Senior Vice President of Sinopec
+Corp.
+Zhang Haichao, aged 59,
+Board Director and Senior
+Vice President of Sinopec
+Corp. Mr. Zhang is a professor
+level senior economist with a
+master degree. In March 1998,
+he was appointed as Vice
+President of Zhejiang Petroleum
+Corporation; in September
+1999, he was appointed as
+President of Zhejiang Petroleum
+Corporation; in February 2000,
+he was appointed as President
+of Sinopec Zhejiang Petroleum
+Co., Ltd.; in April 2003, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.; in April 2004,
+he served as Chairman of Board
+of Directors of Sinopec-BP
+Zhejiang Petroleum Sales Co.,
+Ltd.; in October 2004, he served
+as Secretary of CPC Committee,
+Vice Chairman of Board of
+Directors, and Vice President
+of Sinopec Sales Co., Ltd.; in
+November 2005 he served as
+Vice President of Sinopec Corp.,
+Secretary of CPC Committee,
+Chairman of Board of Directors,
+and President of Sinopec Sales
+Co., Ltd.; in June 2006, he
+served as Chairman of Board
+of Directors, and President
+of Sinopec Sales Co., Ltd.; in
+July 2014, he was appointed
+as Vice President of China
+Petrochemical Corporation; and
+in May 2015, he was elected as
+Board Director and appointed
+as Senior Vice President of
+Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+61
+Directors, Supervisors,
+Senior Management and Employees
+Supervisors,
+Management and Employees
+Senior
+Jiao Fangzheng
+60
+September 2005, he was
+appointed as Deputy CFO of
+Sinopec Corp.; in November
+2005, he was appointed as
+Vice President of Sinopec
+Corp.; in May 2006, he served
+as Board Director, Senior Vice
+President and CFO of Sinopec
+Corp.; in August 2012, he was
+appointed concurrently as
+Chairman of Sinopec Great Wall
+Energy & Chemical Co., Ltd.; in
+March 2013, he was appointed
+concurrently as Chairman of
+Sinopec Catalyst Co., Ltd.; and
+in May 2009, he was elected as
+Board Director and appointed
+as Senior Vice President of
+Sinopec Corp. in May 2016, he
+was appointed as the President
+of China Petrochemical
+Corporation and since August
+2016, he was elected as the
+Vice Chairman of the Board
+and appointed as President of
+Sinopec Corp.
+in December 2004, he served
+concurrently as Chairman of
+Board of Directors of BASF.
+YPC Company Limited; in
+Dai Houliang, aged 53, Vice
+Chairman of the Board and
+the President of Sinopec
+Corp. Mr. Dai is a professor
+level senior engineer with a
+Ph.D. degree. In December
+1997, he was appointed as
+Vice President of Yangzi
+Petrochemical Corporation; in
+April 1998, he served as Board
+Director and Vice President
+of Yangzi Petrochemical Co.,
+Ltd.; in July 2002, he served
+as Vice Chairman of Board of
+Directors, President of Yangzi
+Petrochemical Co., Ltd. and
+Board Director of Yangzi
+Petrochemical Corporation; in
+December 2003, he served as
+Chairman of Board of Directors
+and President of Yangzi
+Petrochemical Co., Ltd. and
+concurrently as Chairman of
+Board of Directors of Yangzi
+Petrochemical Corporation;
+In 2017, the Board of Supervisors and each
+supervisor will continue to follow the principle
+of due diligence and integrity, earnestly perform
+the duties of supervision as delegated by the
+shareholders, strictly review the significant
+decisions, strengthen the process control and
+supervision, increase the strength of inspection
+and supervision on subsidiaries and protect
+Sinopec Corp.'s benefit and its shareholders'
+interests.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+59
+Report of the Board of Supervisors
+Supervisors,
+Management and Employees
+Senior
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Wang Yupu
+Dai Houliang
+1 INTRODUCTION OF
+DIRECTORS, SUPERVISORS
+AND OTHER SENIOR
+MANAGEMENT
+(1) Directors
+Wang Yupu, aged 60, Chairman
+of Board of Directors of
+Sinopec Corp. Mr. Wang is a
+professor level senior engineer
+with a Ph.D. degree and an
+academician of the Chinese
+Academy of Engineering. In
+October 2000, he was appointed
+as Director, Deputy General
+Manager of Daqing Oilfield
+Company Limited; in December
+2003, he was appointed as
+Chairman and General Manager
+of Daqing Oilfield Company
+Limited; in March 2008, he
+was appointed as Chairman
+and General Manager (Director-
+General) of Daqing Oilfield
+Company Limited (Daqing
+Petroleum Administration
+Bureau); in August 2009, he
+was appointed as Vice Governor
+of the People's Government
+of Heilongjiang Province. In
+July 2010, he was elected
+as Secretary of the Leading
+Party Member Group, Vice
+Chairman, and First Secretary
+of the Secretariat of All China
+Federation of Trade Unions; in
+March 2013, he was appointed
+as Deputy Secretary of the
+Leading Party Member Group
+(Minister Level) of the Chinese
+Academy of Engineering; in
+June 2014, he was appointed
+as Deputy Secretary of the
+Leading Party Member Group
+and Vice President (Minister
+Level) of the Chinese Academy
+of Engineering. In April 2015,
+Mr. Wang acts as Chairman
+and Secretary of the Leading
+Party Member Group of China
+Petrochemical Corporation. Mr.
+Wang is an Alternate Member
+of the 17th CPC Central
+Committee and a Member
+of the 18th CPC Central
+Committee. In May 2015,
+Mr. Wang was appointed as
+Chairman of Board of Directors
+of Sinopec Corp.
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+Ma Yongsheng
+Jiao Fangzheng, aged 54,
+Board Director and Senior Vice
+President of Sinopec Corp. Mr.
+Jiao is a professor level senior
+engineer with a Ph.D. degree.
+In January 1999, he was
+appointed as Chief Geologist
+in Zhongyuan Petroleum
+Exploration Bureau of China
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Vice President
+and Chief Geologist of Sinopec
+Zhongyuan Oilfield Company;
+in July 2000, he was appointed
+as Deputy Director General of
+Sinopec Petroleum Exploration
+& Development Research
+Institute; in March 2001, he was
+appointed as Deputy Director
+General of Sinopec Exploration
+& Production Department; in
+June 2004, he was appointed
+as President of Sinopec
+Northwest Oilfield Company;
+in October 2006, he was
+appointed as Vice President of
+Sinopec Corp. in July 2010, he
+was appointed as the Director
+General of Sinopec Exploration
+& Production Department; in
+July 2014, he was appointed
+as Vice President of China
+Petrochemical Corporation;
+in September 2014, he
+was elected concurrently
+as Chairman of Board of
+Directors of Sinopec Oilfield
+Service Corporation and Vice
+Chairman of Board of Directors
+of Sinopec International
+Petroleum Exploration and
+Production Corporation; and in
+May 2015, he was elected as
+Board Director and appointed
+as Senior Vice President of
+Sinopec Corp.
+Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Tang Min
+Fan Gang
+Tang Min, aged 63,
+Independent Director of Sinopec
+Corp. Mr. Tang has a doctorate
+in economics. He presently
+acts as a Counsellor of the
+State Council of the PRC and
+the Executive Vice Chairman
+of YouChange China Social
+Entrepreneur Foundation,
+Independent Director of
+Minmetals Development Co.,
+Ltd, Origin Agritech Limited
+and Baoshang Bank Co., Ltd.
+He has served as economist
+and senior economist at the
+Economic Research Centre of
+the Asian Development Bank
+between 1989 and 2000; chief
+economist at the Representative
+office of the Asian Development
+Bank in China between 2000
+and 2004; deputy representative
+at the Representative Office of
+the Asian Development Bank in
+China between 2004 and 2007
+and the deputy secretary-general
+of the China Development
+Research Foundation between
+2007 and 2010. From May
+2015 to the present, he has
+acted as Independent Director
+of Sinopec Corp.
+Fan Gang, aged 62, Independent
+Director of Sinopec Corp.
+Mr. Fan has a doctorate in
+economics. He presently acts as
+Vice President of China Society
+of Economic Reform, President
+of China Reform Foundation,
+Head of the National Economic
+Research Institution, President
+of China Development Institute
+(Shenzhen) and an economics
+professor at Peking University.
+He began to work for Chinese
+Academy of Social Sciences
+in 1988, and subsequently
+served as Director of Editorial
+Department for the Economic
+Research Journal between 1992
+and 1993 and as Deputy Head
+of the Institute of Economics
+Supervisors,
+of Chinese Academy of Social
+Sciences between 1994
+and 1995. In 1996, he was
+redesignated to work for China
+Society of Economic Reform,
+and subsequently founded the
+National Economic Research
+Institution. From 2006 to 2010,
+and from 2015 to the present,
+he has served as a member of
+the Monetary Policy Committee
+of People's Bank of China. Mr.
+Fan is recognised as one of the
+National Young and Middle-
+Aged Experts with Outstanding
+Contributions. From May 2015
+to the present, he has acted
+as Independent Director of
+Sinopec Corp.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Jiang Zhenying
+No
+618.2
+2006.05-2018.05
+Supervisor
+56
+64
+Zou Huiping
+Senior
+Senior Management and Employees
+Ma Yongsheng, aged 55,
+Board Director and Senior Vice
+President of Sinopec Corp.
+Mr. Ma is a professor level
+senior engineer with a Ph.D.
+degree and an academician
+of the Chinese Academy of
+Engineering. In April 2002,
+he was appointed as Chief
+Geologist of Sinopec Southern
+Exploration and Production
+Company; in April 2006, he was
+appointed as Executive Deputy
+Manager (in charge of overall
+management), Chief Geologist
+of Sinopec Southern Exploration
+and Production Company; in
+January 2007, he was appointed
+as Manager and Party Secretary
+of Sinopec Southern Exploration
+and Production Company; in
+March 2007, he served as
+General Manager and Deputy
+Party Secretary of Sinopec
+Exploration Company; in May
+2007, he was appointed as
+Deputy Commander of Sichuan-
+East China Gas Transmission
+Construction Project
+Headquarter of Sinopec Corp.,
+General Manager and Deputy
+Secretary of CPC Committee of
+Sinopec Exploration Company;
+in May 2008, he was appointed
+as Deputy Director General of
+Exploration and Production
+Department of Sinopec Corp.
+(Director General Level)
+and Deputy Commander
+of Sichuan-East China Gas
+Transmission Construction
+Project Headquarter; in July
+2010, he served as Deputy
+Chief Geologist of Sinopec
+Corp.; in August 2013, he was
+appointed as Chief Geologist
+of Sinopec Corp.; in February
+2016, he was elected as Board
+Director of Sinopec Corp., and
+in December 2015, he served
+as Vice President of China
+Petrochemical Corporation
+and appointed as Senior Vice
+President of Sinopec Corp. In
+February 2016, he was elected
+as Board Director of Sinopec
+Corp.
+62
+62
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Jiang Xiaoming
+19
+Andrew Y. Yan
+1992 and 1998, he acted as
+the Vice President of United
+Nations Staff Retirement Fund;
+between 1999 and 2003, he
+acted as the Chairman of the
+Board of Directors of Frasers
+Property (China) Co., Ltd.; and
+he has previously acted as the
+Board Director of JSW Energy
+Ltd., member of the Advisory
+Committee of American Capital
+Group and Rothschild, the
+British Investment Bank, and
+Independent Director of China
+Oilfield Services Co., Ltd. From
+May 2012 to the present, he
+has acted as Independent
+Director of Sinopec Corp.
+Andrew Y. Yan, aged 59,
+Independent Director of Sinopec
+Corp. Mr. Yan is the founding
+Managing Partner of SAIF
+Partners. He studied in Nanjing
+University of Aeronautics and
+Astronautics, Peking University
+and Princeton University and
+earned a master degree from
+Princeton University. Presently,
+he acts as the Independent
+Non-executive Director of
+China Resources Land Limited
+and Cogobuy Group, the Non-
+executive Director of China
+Huiyuan Juice Group Limited,
+Feng Deli Holdings Limited
+and Guodian Technology &
+Environment Group Corporation
+Limited; the Independent
+Director of Beijing BlueFocus
+Brand Management Consulting
+Co., Ltd, TCL Group and Sky
+Solar Holdings Ltd.; and the
+Director of ATA Co., Ltd and
+Ata Online(Beijing)Education
+Technology Co., Ltd.. From 1989
+to 1994, he acted as Economist
+of the World Bank headquarters
+in Washington, research
+Fellow of Hudson Institute, an
+American famous research think
+tank, and acted as the director
+of APAC Strategic Planning &
+Business Development of Sprint
+International Corporation;
+between 1994 and 2001,
+he acted as the Managing
+Director of Emerging Markets
+Partnership and Director of
+Hong Kong Office of AIG Asia
+Infrastructural Investment
+Fund. And from May 2012 to
+the present, he has acted as
+Independent Director of
+Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+63
+Directors, Supervisors,
+Jiang Xiaoming, aged 63,
+Independent Director of Sinopec
+Corp. Mr. Jiang has a doctorate
+in economics. Presently, he
+acts as the member of the
+national committee of CPPCC,
+director of China Foundation
+for Disabled Persons, member
+of the United Nations Board of
+Investment, Chairman of the
+Board of Directors of Hong Kong
+Saibo International Co. Ltd.,
+Independent Director of COSCO
+International, Senior Fellow of
+the University of Cambridge
+Business School, and trustee of
+University of Cambridge China
+Development Fund. Between
+52
+Male
+Zhang Jianhua
+60
+Male
+Wang Yupu
+2015
+2016
+Company
+(as at 31 December)
+by the holding
+Equity interests in Sinopec Corp.
+Whether paid
+in 2016
+(RMB 1,000,
+before tax)
+Tenure
+Sinopec Corp.
+Age
+Gender
+Chairman
+Dai Houliang
+Male
+53
+No
+698.8
+2006.05-2018.05
+Board Director,
+Senior Vice President
+59
+Male
+Wang Zhigang
+Name
+President
+No
+745.3
+0
+0
+Yes
+2015.05-2018.05
+2009.05.2018.05
+Vice Chairman,
+0
+Position in
+Sinopec Corp.
+Remuneration
+paid by
+Supervisor
+Wang Yajun
+Male
+60
+Employee's
+2015.05-2018.05
+596.6
+Representative
+No
+0
+Representative
+Supervisor
+Note:
+Mr. Liu Yun resigned as the Chairman of the Board of Supervisors and supervisor of Sinopec Corp. on 16 March 2017.
+68
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+0
+0
+0
+No
+List of Members of the Board
+52
+Employee's
+2010.12.2018.05
+618.2
+No
+0000
+0
+Joooo
+Supervisor
+Yu Renming
+Male
+53
+Employee's
+2010.12 2018.05
+594.1
+Representative
+0
+lo
+Zhang Haichao
+No
+300.0
+2015.05-2018.05
+Independent Director
+62
+Male
+Fan Gang
+0
+0
+No
+300.0
+2015.05-2018.05
+Independent Director
+63
+Male
+Tang Min
+0
+0
+0
+Name
+President
+0
+0
+2015
+2016
+Company
+No
+Equity interests in Sinopec Corp.
+(as at 31 December)
+lo
+Whether paid
+by the holding
+2009.05-2016.08
+Former Board Director,
+Tenure
+Position in
+Sinopec Corp.
+Age
+61
+Male
+Li Chunguang
+Remuneration
+paid by
+Sinopec Corp.
+in 2016
+(RMB 1,000,
+before tax)
+556.3
+Fourthly, all connected transactions between the
+Company and Sinopec Group were in compliance
+with the relevant rules and regulations of
+domestic and overseas listing places. The
+pricing of all the connected transaction was fair
+and reasonable. No insider trading or asset loss
+which is detrimental to the interests of Sinopec
+Corp. or its shareholders was found.
+No
+2012.05.2018.05
+Yes
+2015.05-2018.05
+이
+0
+Yes
+2015.05-2018.05
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+0
+59
+Male
+Ma Yongsheng
+54
+Male
+Jiao Fangzheng
+59
+Male
+55
+300.0
+0
+Yes
+Independent Director
+59
+Male
+Andrew Y. Yan
+lo
+0
+0
+2016.02-2018.05
+No
+2012.05-2018.05
+Independent Director
+63
+Male
+Jiang Xiaoming
+0
+0
+300.0
+Thirdly, Sinopec Corp.'s internal control system
+is robust and effective, no material defects of
+internal control were found. In the meantime,
+Sinopec Corp. actively fulfilled its social
+responsibilities and promoted the sustainable
+development of social economy. Information
+disclosed in the sustainable development report
+was in compliance with requirements made by
+Shanghai Stock Exchange and Hong Kong Stock
+Exchange for listed companies with regard to
+the publication of social responsibility report.
+Male
+Sinopec Zhanjiang Dongxing
+16,555
+4%
+Administration
+26,538
+6%
+Others
+18,803
+4%
+Junior college
+99,957
+22%
+Technical secondary school
+41,079
+9%
+Senior high school and
+technical school degrees or below
+188,239
+42%
+Master's degree or above
+15,210
+3%
+University
+107,126
+24%
+7 CHANGES OF CORE TECHNICAL TEAM OR
+KEY TECHNICIANS
+During the reporting period, there are no
+significant changes of core technical team
+and key technicians.
+Finance
+17%
+77,531
+Technology
+72
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Exploration and Production
+149,803
+33%
+Refining
+72,473
+16%
+Chemicals
+64,227
+14%
+Marketing and Distribution
+8 EMPLOYEE BENEFITS SCHEME
+153,924
+R&D
+5,822
+2%
+5,362
+1%
+Other Segments
+Production
+173,105
+38%
+Sales
+139,079
+31%
+34%
+Details of the Company's employee
+benefits scheme are set out in Note35 of
+the financial statements prepared under
+IFRS of this annual report. As at 31
+December 2016, the Company has a total
+of 225,418 retired employees. All of them
+participated in the basic pension schemes
+administered by provincial (autonomous
+region or municipalities) governments.
+Government-administered pension schemes
+are responsible for the payments of basic
+pensions.
+9 REMUNERATION POLICY
+Based on a relatively united basic
+remuneration system, Sinopec Corp. has
+established its remuneration distribution
+system based on the value of positions,
+performance & contribution, with an aim
+to improve employee capabilities, and
+constantly improve employee performance
+evaluation and incentive & discipline
+mechanisms.
+20,739
+100
+36,182
+19,264
+(1,912)
+Sinopec Yangzi Petrochemical
+13,203
+100
+26,248
+17,369
+3,955
+Company Limited
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Sinopec Pipeline Storage & Transportation
+100
+36,580
+20,618
+2,179
+Company Limited
+Sinopec Yizheng Chemical Fibre Limited
+4,000
+100
+8,273
+5,206
+Liability Company
+Investment in exploration, production
+and sale of petroleum and natural gas
+Coal chemical industry investment
+12,000
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+Exploration and Production Limited
+18,037
+10 TRAINNING PROGRAMMS
+Centering on enterprise development
+strategy and key work of the year, the
+Company organised training programs at
+headquarters level which were attended by
+4,505 high-level personnel. With an aim to
+enhance the comprehensive capabilities and
+capacities to fulfill their duties, the Company
+launched a series of training programs for
+new management personnel, and organised
+seminars with topics such as Innovation &
+Development for 1,514 senior management.
+The Company organised online classes titled
+"Five Major development Methodologies" for
+management personnel for 1,922 persons.
+With an aim to solve key problems related
+to scientific research and production, the
+Company organised workshops for leading
+experts in the field of oil & gas exploration
+and refining technology as well as seminars
+titled "customer value orientation" which
+focused on discussion of marketing
+capabilities for 905 high-level professional
+and technical personnel. With roles of
+positions, heritage and improvement of skills
+as the focus, the Company launched the first
+chief technician training classes and training
+programs for five types of work such as oil
+and gas gathering and transferring, catalytic
+cracking for top skilled talents covering
+164 people. The branch companies and
+subsidiaries according to their conditions,
+adopted various ways to carry out different
+kinds of personnel training, and organized
+off-job training for a total of 898,000 people,
+as well as basic training for a total of 1.086
+million persons.
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2016
+73
+33
+Directors, Supervisors,
+Senior Management and Employees
+y-owned
+Principal Widiaries
+and 
+Controlled
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+On 31 December, 2016, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+(Net Loss) Principal Activities
+RMB million
+(4,604)
+Percentage of
+shares held by
+Name of Company
+Registered Capital
+Sinopec Corp.
+Total Assets
+RMB million
+(%)
+RMB million
+Net Assets
+RMB million
+Sinopec International Petroleum
+8,000
+100
+58,183
+Net Profit/
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Age
+Position in
+Sinopec Corp.
+Remuneration paid
+by Sinopec Corp.
+in 2016
+(RMB 1,000,
+before tax)
+Wang Dehua
+Male
+50
+CFO
+133.8
+Jiang Zhenghong
+Male
+55
+Gender
+Vice President
+Ling Yiqun
+Male
+54
+Vice President
+709.6
+Huang Wensheng
+Male
+50
+Vice President,
+702.0
+Board Secretary
+Chang Zhenyong
+704.2
+Male
+Name
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+products and petroleum products
+Wang Dehua
+Jiang Zhenghong
+Ling Yiqun
+(3) Other Members of Senior
+Management
+Wang Dehua, aged 50, Chief
+Financial Officer of Sinopec
+Corp. Mr.Wang is a senior
+accountant with university
+diploma. In January 2001,
+he was appointed as Deputy
+Director General of Finance
+Department of Sinopec Corp.;
+in May 2014, he was appointed
+as Acting Director General
+of Finance Department of
+Sinopec Corp.; in October
+2015, he was promoted to
+Director General of Finance
+Department of Sinopec Corp.;
+in November 2015, he was
+appointed as Director General
+of Finance Department of China
+Petrochemical Corporation; in
+August 2016, he was appointed
+as Director General of Finance
+Department of Sinopec Corp..
+Mr. Wang now concurrently acts
+as Chairman of Sinopec Century
+Bright Capital Investment
+Limited and Sinopec Insurance
+Co., Ltd., and Board Director of
+Sinopec Qingdao Petrochemical
+Company Limited. He also
+serves as Supervisor of
+Sinopec Catalyst Co., Ltd., and
+Vice Chairman of Taiping &
+Sinopec Financial Leasing Co.,
+in September 2016, he was
+appointed as Chief Financial
+Officer of Sinopec Corp.
+Jiang Zhenghong, aged 55, Vice
+President of Sinopec Corp. Mr.
+Jiang is a professor level senior
+economist with a doctor degree.
+In September 2000, he became
+Vice President of Shanghai
+Gaoqiao Petrochemical Co., Ltd.
+and Sinopec Shanghai Gaoqiao
+Company; in September
+2001, he was appointed as
+President of Shanghai Gaoqiao
+Petrochemical Co., Ltd.; in
+April 2006, he was appointed
+as Secretary of CPC Committee
+and Vice President of Sinopec
+Zhenhai Refining & Chemical
+Company; in September 2006,
+he was appointed as Secretary
+of CPC Committee and Vice
+President of Zhenhai subsidiary
+of China Petrochemical
+Corporation; in March 2008, he
+was promoted to President and
+Secretary of CPC Committee
+of Sinopec Zhenhai Refining
+& Chemical Company; in July
+2010, he was appointed as
+President and Deputy Secretary
+of CPC Committee of Sinopec
+Zhenhai Refining & Chemical
+Company; in August 2013, he
+was appointed as the Director
+General of Sinopec Corporate
+Reform Dept.; in September
+2013, he was appointed as Vice
+President of Sinopec Corp.
+Ling Yiqun, aged 54, Vice
+President of Sinopec Corp. Mr.
+Ling is a professor level senior
+engineer with a master degree.
+From 1983, he worked in the
+refinery of Beijing Yanshan
+Petrochemical Company and
+the Refining Department of
+Beijing Yanshan Petrochemical
+Company Ltd. In February 2000,
+he was appointed as the Deputy
+Director General of Refining
+Department of Sinopec Corp.;
+in June 2003, he was appointed
+as the Director General of
+Refining Department of Sinopec
+Corp.; in May 2012, he was
+appointed as Executive Director,
+President and Secretary of CPC
+Committee of Sinopec Refinery
+Product Sales Company
+Limited; in August 2013, he was
+appointed as the President of
+Sinopec Qilu Company; in July
+2010, he was appointed as Vice
+President of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+69
+Directors, Supervisors,
+Senior Management and Employees
+List of Members of the Senior Management
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Chang Zhenyong
+Lei Dianwu
+Huang Wensheng, aged 50,
+Vice President of Sinopec
+Corp., Secretary to the Board
+of Directors. Mr. Huang is a
+professor level senior economist
+with a university diploma. In
+March 2003, he was appointed
+as Deputy Director General
+of the Board Secretariat
+of Sinopec Corp.; in May
+2006, he was appointed as
+Representative on Securities
+Matters of Sinopec Corp.; since
+August 2009, He has served as
+the Deputy Director General of
+President's office of Sinopec
+Corp. In September 2009,
+he was appointed as Director
+General of the Board Secretariat
+of Sinopec Corp.; in May 2012,
+he was appointed as Secretary
+to the Board of Directors of
+Sinopec Corp.; and in May
+2014, he was appointed as Vice
+President of Sinopec Corp.
+Chang Zhenyong, aged 58,
+Vice President of Sinopec Corp.
+Mr. Chang is a professor level
+senior engineer with a master's
+degree. In September 1997, he
+was appointed as Vice President
+of Tianjin Petrochemical
+Company; in February 2000, he
+was appointed as Vice President
+of Sinopec Tianjin Company;
+and in September 2000, he
+was promoted to President
+of Sinopec Tianjin Company;
+from February 2004, he was
+appointed temporarily as
+member of Standing Committee
+of CPC Committee of Beihai,
+Guangxi; in March 2004, he was
+appointed temporarily as deputy
+mayor of Beihai, Guangxi;
+in November 2005, he was
+appointed as Director General
+of Production and Operation
+Management Department of
+Sinopec Corp.; in December
+2007, he was appointed as
+President of Qilu Petrochemical
+Company and President of
+Sinopec Qilu Company; in
+April 2010, he was appointed
+as Employee's Representative
+Supervisor of Sinopec Corp.; in
+July 2010, he was appointed
+as Deputy Chief Engineer and
+concurrently as Director General
+of Chemicals Department of
+Sinopec Corp.; in August 2012,
+he was appointed concurrently
+as Vice Chairman of Board of
+Directors of Sinopec Great Wall
+Energy & Chemical Co., Ltd.;
+in November 2014, he was
+appointed as Executive Director
+and President of Sinopec
+Chemical Products Sales
+Co. Ltd and concurrently as
+Chairman of Board of Directors
+of Sinopec Chemical Products
+Sales (Hong Kong) Co. Ltd.; and
+in May 2014, he was appointed
+as Vice President of Sinopec
+Corp.
+Lei Dianwu, aged 54, Vice
+President of Sinopec Corp. Mr.
+Lei is a Professor level Senior
+Engineer with a university
+diploma. In October 1995, he
+was appointed as Vice President
+of Yangzi Petrochemical
+Corporation; in December
+1997, he was appointed as
+Director General of Planning
+& Development Department
+in China Eastern United
+Petrochemical (Group) Co., Ltd.;
+in May 1998, he was appointed
+as Vice President of Yangzi
+Petrochemical Corporation; in
+August 1998 he was appointed
+as Vice President of Yangzi
+Petrochemical Co., Ltd.; in
+March 1999, he was appointed
+temporarily as Deputy Director
+General of Development &
+Planning Department of China
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Deputy Director
+General of Development
+& Planning Department of
+Sinopec Corp.; in March 2001,
+he was appointed as Director
+General of Development
+& Planning Department of
+Sinopec Corp.; in March
+2009, he was appointed as
+Assistant to President of China
+Petrochemical Corporation; in
+August 2013, he was appointed
+as the Chief Economist of China
+Petrochemical Corporation; in
+October 2015, he was appointed
+as Secretary to the Board of
+Directors of China Petrochemical
+Corporation; and in May 2009,
+he was appointed as Vice
+President of Sinopec Corp.
+Supervisors,
+Danagement and Employees
+Senior
+70
+Huang Wensheng
+management, production and sale
+of coal chemical products
+58
+Lei Dianwu
+0
+2 INFORMATION ON
+APPOINTMENT OR
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+On 25 February 2016, Sinopec
+Corp. convened the first
+extraordinary shareholder
+meeting for the year 2016, and
+elected Mr. Ma Yongsheng as
+Director of the sixth session of
+Board of Directors.
+On 13 July 2016, Mr. Zhang
+Jianhua resigned as Director of
+the Board, member of Strategic
+committee as well as Senior
+Vice President of Sinopec Corp.
+due to working arrangement.
+On 29 July 2016, Ms. Wen
+Dongfen resigned as CFO of
+Sinopec Corp. due to working
+arrangement.
+On 26 August 2016 Mr.
+Li Chunguang resigned as
+President and Director of the
+Board of Sinopec Corp. due to
+his age.
+On 26 August 2016, Mr. Dai
+Houliang was elected as Vice
+Chairman and was appointed as
+President of Sinopec Corp.
+On 28 September 2016, Mr.
+Wang Dehua was appointed as
+CFO of Sinopec Corp.
+On 16 March 2017, Mr. Liu Yun
+resigned as the Chairman of
+the Board of Supervisors and
+supervisor of Sinopec Corp. due
+to his age.
+For details, please refer to the
+3
+0
+announcements, published
+in China Securities Journal,
+Shanghai Securities News
+and Securities Times after
+the meetings and on websites
+of Shanghai Stock Exchange,
+Hong Kong Stock Exchange and
+Sinopec Corp.
+4 CONTRACTRAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+As of 31 December 2016 or
+any time during the reporting
+period, there is no Director
+or Supervisor of the Company
+entered into any agreement
+with any of Sinopec Corp., its
+controlling shareholder, any
+subsidiary or related subsidiary
+which shall significantly benefit
+such Director or Supervisor.
+5 REMUNERATION OF
+DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+During this reporting period,
+there is a total of 19 directors,
+supervisors and other senior
+management received
+remuneration from Sinopec
+Corp. with a total amount of
+RMB 10.3588 million.
+6 THE COMPANY'S EMPLOYEES
+As at 31 December 2016, the
+Company has a total of 451,611
+employees. There is a total
+of 225,418 retired employees
+to be reimbursed by Sinopec
+Corp. Sinopec Marketing Co.
+Limited and China International
+United Petroleum and Chemical
+Company Limited, both
+principal subsidiaries of Sinopec
+Corp., have a total of 153,924
+employees and 276 employees
+respectively.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+71
+Directors, Supervisors,
+Senior Management and Employees
+Supervisors,
+Management and Employees
+Senior
+CHANGE OF SHAREHOLDING
+OF DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+There is no change in
+shareholdings of the Company
+by Directors, Supervisors and
+other senior managements
+during the reporting period.
+709.6
+0
+0
+Wen Dongfen
+Male
+Female
+54
+52
+Vice President
+Former CFO
+709.6
+542.9
+Whether paid
+by the holding
+Company
+No
+2222 222
+0
+Equity interests in Sinopec Corp.
+(as of 31 December)
+2016
+2015
+0
+0
+0
+0
+13,000
+13.000
+0
+0
+0
+Note: The members of senior management in office are in order of the number of strokes of their surname in Chinese.
+Manufacturing of intermediate petrochemical
+Vice President
+Pipeline storage and transportation
+of crude oil
+Financial Statements (PRC)
+75
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+11/F PricewaterhouseCoopers Center, 2 Corporate Avenue, 202 Hu Bin Road, Huangpu District, Shanghai 200021, PRC
+Tel: +86 (21) 2323 8888, Fax: +86 (21) 2323 8800, www.pwccn.com
+PricewaterhouseCoopers Zhongtian LLP
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current
+period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
+not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+We are independent of Sinopec Corp. in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public
+Accountants ("CICPA Code"), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code.
+We conducted our audit in accordance with China Standards on Auditing ("CSAS"). Our responsibilities under those standards are further described in
+the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is
+sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company's financial position of
+Sinopec Corp. as at 31 December 2016, and their financial performance and cash flows for the year then ended in accordance with the requirements of
+Accounting Standards for Business Enterprises (“CASs”).
+Our opinion
+76
+We have audited the accompanying financial statements of China Petroleum & Chemical Corporation (hereinafter “Sinopec Corp."), which comprise the
+consolidated and company balance sheets as at 31 December 2016, the consolidated and company income statements, the consolidated and company
+cash flow statements and the consolidated and company statements of changes in shareholders' equity for the year then ended, and the notes to the
+financial statements.
+OPINION
+To the Shareholders of China Petroleum & Chemical Corporation,
+PwC ZT Shen Zi (2017) No. 10001
+普华永道
+pwc
+REPORT OF THE PRC AUDITOR
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+74
+2: The above indicated total assets and net profit has been prepared in accordance with ASBE. Except for Sinopec Kantons Holdings Limited and Sinopec Overseas
+Investment Holdings Ltd, which are incorporated in Bermuda and Hong Kong SAR, respectively, all of the above wholly-owned and non-wholly-owned subsidiaries are
+incorporated in the PRC. All of the above wholly-owned and controlling subsidiaries are limited liability companies except for Sinopec Shanghai Petrochemical Company
+Limited and Sinopec Kantons Holdings Limited. The Board of Directors considered that it would be redundant to disclose the particulars of all subsidiaries and,
+therefore, only those which have material impact on the results or assets of Sinopec Corp. are set out above.
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by PricewaterhouseCoopers Zhong Tian LLP or PricewaterhouseCoopers in 2016.
+KPMG Huazhen LLP served the exception.
+petrochemical products and
+petroleum products
+Manufacturing of intermediate
+What we have audited
+238
+Financial Statements (PRC)
+Key audit matters identified in our audit are summarised as follows:
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+Tested selected other key data inputs, such as nature gas prices and
+production profiles in the projections by reference to historical data
+and/or relevant budgets of the Group.
+Independently estimated a range of discount rates, and found that the
+discount rates adopted by management were within the range.
+Compared the future cost profiles against historical costs or relevant
+budgets of the Group.
+•
+•
+•
+• Compared the future production profiles against the oil and gas reserve
+estimation report approved by the Group's reserve management
+committee. Evaluated the competence, capability and objectivity of the
+management's experts engaged in estimating the oil and gas reserves.
+Assessed key estimations or assumptions used in the reserve estimation,
+by reference to historical data, management plans and/or reputable
+external data.
+• Compared estimates of future crude oil prices adopted by the Group
+against a range of reputable published crude oil price forecasts.
+Evaluated and tested the key controls, relating to the preparation of the
+discounted cash flow projections of oil and gas properties.
+In auditing the respective discounted cash flow of the relevant oil and gas
+properties, we have performed the following key procedures on the relevant
+discounted cash flow projections prepared by management:
+REPORT OF THE PRC AUDITOR (CONTINUED)
+How our audit addressed the Key Audit Matter
+Accounting for investment income of capital injection by external
+investors into Sinopec Sichuan to East China Gas Pipeline Co., Ltd
+Refer to note 12 "LONG-TERM EQUITY INVESTMENTS" to the
+consolidated financial statements, an amount of RMB 20.562 billion
+investment income was arisen as a result of the derecognition of the
+assets and liabilities of a former subsidiary (Sinopec Sichuan to East
+China Gas Pipeline Co., Ltd, the "Pipeline Ltd") from the consolidated
+financial position of the Group when the control over Pipeline Ltd was
+lost. The Group continues to retain a 50% equity interest in the Pipeline
+Ltd, and hence its significant influence over the Pipeline Ltd. As a
+result, the Group deconsolidated the Pipeline Ltd when the control was
+lost, and accounts for its 50% equity interest in the Pipeline Ltd as an
+associate company.
+Because of the significance of the carrying amount of oil and gas
+properties as at 31 December 2016, together with the use of
+estimations or assumptions in determining their respective discounted
+cash flow, we had placed our audit emphasis on this matter.
+Future cost profiles; and
+Discount rates.
+Future production profiles;
+Future crude oil prices;
+Low crude oil prices gave rise to possible indication that the carrying
+amount of oil and gas properties as at 31 December 2016 might
+be impaired. The Group has adopted discounted cash flow as the
+respective recoverable amounts of the oil and gas properties, which
+involved estimations or assumptions including:
+As at 31 December 2016, the carrying amount of oil and gas properties
+amounted to RMB 215,124 million.
+Refer to note 13 "FIXED ASSETS" to the consolidated financial
+statements.
+Recoverability of the carrying amount of oil and gas properties
+• Accounting for investment income of capital injection by external investors into Sinopec Sichuan to East China Gas Pipeline Co., Ltd.
+Key Audit Matter
+Recoverability of the carrying amount of oil and gas properties;
+•
+Because of the significance of such investment income in the year
+ended 31 December 2016, we had placed our audit emphasis on this
+matter.
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we gathered and consistent with our
+expectations.
+9,359
+55
+65
+6,270
+Sinopec-SK(Wuhan) Petrochemical
+26,461
+197,948
+367,774
+70.42
+28,403
+Sinopec Marketing Co. Limited
+Company Limited
+Manufacturing of intermediate petrochemical
+1,764
+16,175
+7765
+75
+3,986
+Sinopec Hainan Refining and Chemical
+products and petroleum products
+Petrochemical Company Limited
+Manufacturing of intermediate petrochemical
+1,455
+3,298
+7,266
+75
+products and petroleum products
+4,397
+11,428
+17,146
+8,654
+Company Limited
+10,000
+Petroleum and Chemical Limited
+Sinopec Shanghai Gaoqiao
+petroleum products
+petrochemical products and
+Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+Manufacturing of plastics, intermediate
+Production, sale, research and development
+of ethylene and downstream by-products
+Trading of crude oil and petroleum products
+petroleum products
+products and petroleum products
+Marketing and distribution of refined
+Results have not
+been announced
+2,513
+7,238
+1,558
+8,771
+5,745
+Fujian Petrochemical Company Limited
+Company Limited
+5,969
+Results have not
+been announced
+25,032
+Results have not
+been announced
+34,124
+50.56
+10,800
+Sinopec Shanghai Petrochemical
+million
+60.34
+Sinopec Kantons Holdings Limited
+50
+In auditing the investment income of capital injection by external investors
+into Pipeline Ltd, we have performed the following procedures:
+HKD 248
+Tested the consideration to the Group as compensation for the loss
+of control over the Pipeline Ltd by checking against the relevant bank
+receipt notices. Corroborated the detail of the transaction by inspecting
+the relevant documents, agreements and contracts.
+As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
+procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
+detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal control.
+Our objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from material misstatement, whether
+due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
+guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from
+fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
+users taken on the basis of these financial statements.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+Those charged with governance are responsible for overseeing Sinopec Corp.'s financial reporting process.
+In preparing these financial statements, management is responsible for assessing Sinopec Corp.'s ability to continue as a going concern, disclosing,
+as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate Sinopec
+Corp. or to cease operations, or have no realistic alternative but to do so.
+Management is responsible for the preparation and fair presentation of these financial statements in accordance with the CASS, and for such internal
+control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether
+due to fraud or error.
+8,048
+3,541
+586
+Production and sale of refined petroleum
+products, lubricant base oil,
+Sinopec Qingdao Petrochemical
+•
+1,595
+3,987
+464
+470
+and petrochemical materials
+Manufacturing of intermediate petrochemical
+Company Limited
+products and petroleum products
+Sinopec Chemical Sales Company Limited
+1,000
+100
+17,410
+2,032
+100
+1,134
+•
+•
+chips and polyester fibres
+(585) Production and sale of polyester
+Evaluated the effective date on which the Group lost control over the
+Pipeline Ltd, taking into consideration of factors including when the
+composition of the board of directors was changed.
+Sinopec Lubricant Company Limited
+3,374
+100
+24 March 2017
+Zhao Jianrong (Engagement Partner)
+Gao Peng
+Registered in the People's Republic of China
+Certified Public Accountants
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+78
+•
+Shanghai, the People's Republic of China
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of
+the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law
+or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
+communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
+and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
+related safeguards.
+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.
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Financial Statements (PRC)
+77
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Sinopec Corp. to
+express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our audit opinion.
+Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements
+represent the underlying transactions and events in a manner that achieves fair presentation.
+Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast significant doubt on Sinopec Corp.'s ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in
+these financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
+up to the date of our auditor's report. However, future events or conditions may cause Sinopec Corp. to cease to continue as a going concern.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
+PricewaterhouseCoopers Zhong Tian LLP
+Trading of petrochemical products
+Financial Statements (PRC)
+China International United Petroleum
+Trading of petrochemical products
+Company Limited
+Sinopec Beihai Refining and Chemical
+5,294
+98.98
+13,496
+7,989
+2,157
+Import and processing of crude oil,
+Limited Liability Company
+production, storage and sale of petroleum
+products and petrochemical products
+Sinopec Qingdao Refining and Chemical
+5,000
+85
+12,266
+7105
+Manufacturing of intermediate petrochemical
+Company Limited
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
+other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+Management is responsible for the other information. The other information comprises all of the information included in 2016 annual report of Sinopec
+Corp. other than the financial statements and our auditor's report thereon.
+OTHER INFORMATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Recomputed the investment income arising from the capital injection by
+external investors into Pipeline Ltd of RMB 20.562 billion, and agreed to
+management's computation.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Based on our work, we found that the investment income of capital injection
+by external investors into Pipeline Ltd of RMB 20.562 billion was supported
+by the evidence we gathered.
+278
+3,228
+2,977
+Sinopec Overseas Investment
+3,000
+31,019
+6,170
+Trading of crude oil and
+and Chemical Company Limited
+USD 1,638
+100
+16,067
+100
+petrochemical products
+(245) Overseas investment holding
+Holding Limited
+11,129
+Sinopec Catalyst Company Limited
+100
+1,400
+China Petrochemical International
+million
+435
+141,018
+Production and sale of catalyst products
+7,668
+100
+1,500
+3,785
+9,761
+Total other comprehensive income
+Share of other comprehensive (loss)/income of associates
+Total comprehensive income
+These financial statements have been approved by the board of directors on 24 March 2017.
+Note
+2016
+Cash flow hedges
+2015
+Financial Statements (PRC)
+RMB million
+38
+726,178
+845,285
+(net of tax and after reclassification adjustments):
+38
+513,514
+609,596
+RMB million
+Items that may be reclassified subsequently to profit or loss
+General and administrative expenses
+Net profit
+81
+82
+158,373
+Financial Statements (PRC)
+INCOME STATEMENT
+for the year ended 31 December 2016
+Operating income
+Less: Operating costs
+Taxes and surcharges
+Selling and distribution expenses
+Financial expenses
+Exploration expenses, including dry holes
+Impairment losses
+Add: Gain/(loss) from changes in fair value
+Investment income
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Less: Income tax expense
+Other comprehensive income
+172,568
+23,590
+2,628
+(179)
+Chief Financial Officer
+30,880
+557
+47
+(149)
+14
+408
+61
+30,941
+23,998
+Wang Yupu
+Chairman
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Dai Houliang
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Vice Chairman, President
+Wang Dehua
+2,539
+2,365
+30,701
+1,482
+41,724
+41,327
+3,851
+6,152
+11,012
+10,430
+14,044
+5,052
+33
+(292)
+45
+5
+43,519
+30,582
+24,847
+27,822
+3,095
+4,361
+1,813
+26,129
+Chief Financial Officer
+41/42
+Wang Dehua
+236,349
+41
+49,550
+46,921
+41
+74,155
+72,194
+40
+232,006
+6,611
+11,035
+10,459
+43
+17,076
+44
+(216)
+735
+45
+8,980
+39
+1,594,070
+1,492,165
+Total other comprehensive income
+Total comprehensive income
+CONSOLIDATED CASH FLOW STATEMENT
+Attributable to:
+Equity shareholders of the Company
+Minority interests
+These financial statements have been approved by the board of directors on 24 March 2017.
+Wang Yupu
+Chairman
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Note
+2016
+2015
+RMB million
+RMB million
+38
+1,930,911
+2,020,375
+38/41
+30,779
+8,876
+78,876
+52,246
+0.267
+59,170
+43,480
+35
+2,014
+(24)
+3,163
+62
+45
+4,298
+(5,356)
+2,268
+6,333
+137
+65,503
+43,617
+53,468
+31,558
+12,035
+12,059
+Dai Houliang
+0.383
+Vice Chairman, President
+59
+0.383
+46
+4,964
+6,947
+47
+3,963
+3,100
+79,877
+56,093
+48
+20,707
+12,613
+59,170
+86
+43,480
+134
+46,416
+32,281
+12,754
+11,199
+59
+0.267
+for the year ended 31 December 2016
+Refund of taxes and levies
+2016
+RMB million
+Cash received from sale of goods and rendering of services
+Sub-total of cash inflows
+Cash paid for goods and services
+Cash paid to and for employees
+Payments of taxes and levies
+Other cash paid relating to operating activities
+Sub-total of cash outflows
+Net cash flow from operating activities
+Other cash received relating to operating activities
+Cash flows from investing activities:
+831,578
+1,323
+85,932
+2015
+RMB million
+975,387
+2,954
+69,615
+918,833
+1,047,956
+------
+(504,152)
+Cash received from disposal of investments
+Cash flows from operating activities:
+RMB million
+2016
+293
+50(b)
+55,535
+58,407
+Wang Yupu
+Chairman
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Dai Houliang
+Wang Dehua
+Vice Chairman, President
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+83
+Financial Statements (PRC)
+Financial Statements (PRC)
+CASH FLOW STATEMENT
+for the year ended 31 December 2016
+Note
+(643,612)
+(35,190)
+(35,061)
+(189,557)
+(77,403)
+(39,505)
+(29,246)
+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
+Sub-total of cash inflows
+Cash repayments of borrowings
+Cash paid for dividends or interest
+Sub-total of cash outflows
+Net cash flow from financing activities
+Net increase in cash and cash equivalents
+These financial statements have been approved by the board of directors on 24 March 2017.
+41,667
+(10,130)
+(93,400)
+(106,649)
+(36,765)
+68,215
+Share of other comprehensive income/(loss) of associates and joint ventures entities
+Foreign currency translation differences
+(43,765)
+9,093
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+56,635
+(213,949)
+(50,638)
+(165,867)
+(779,537)
+(1,058,489)
+139,296
+(10,533)
+29,002
+146,685
+Cash received from returns on investments
+22,233
+22,822
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+1,885
+4,390
+1,488
+967
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+2,027
+174,864
+Note
+(93,047)
+256
+(6,553)
+(599,487)
+(62,602)
+(55,472)
+(316,062)
+(327,421)
+(102,490)
+(115,287)
+(2,029,022)
+(2,229,621)
+Cash received from disposal of investments
+50(a)
+165,740
+31,489
+3,353
+Cash received from returns on investments
+4,028
+3,399
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+440
+214,543
+Cash flows from investing activities:
+Net cash flow from operating activities
+Sub-total of cash outflows
+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
+2,163,695
+2.434
+77,436
+2015
+RMB million
+2,306,162
+3,507
+85,692
+2,243,565
+_________
+2,395,361
+(1,547,868)
+(1,731,441)
+Cash paid to and for employees
+Payments of taxes and levies
+Other cash paid relating to operating activities
+2,914
+427
+6,158
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+2,027
+105,529
+343
+105,529
+Cash received from borrowings
+Sub-total of cash inflows
+Cash repayments of borrowings
+Including: Subsidiaries' cash payments for distribution of dividends or
+Cash paid for dividends, profits distribution or interest
+profits to minority shareholders
+Sub-total of cash outflows
+Net cash flow from financing activities
+Effects of changes in foreign exchange rate
+Net increase in cash and cash equivalents
+These financial statements have been approved by the board of directors on 24 March 2017.
+506,097
+506,440
+(569,091)
+(30,396)
+1,090,241
+1,195,770
+(1,152,837)
+(33,840)
+343
+(1,481)
+(1,186,677)
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from capital contributions
+40,898
+13,337
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(72,847)
+(102,698)
+11,12
+(16,389)
+(23,351)
+Other cash paid relating to investing activities
+(17,879)
+(3,918)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(89)
+Sub-total of cash outflows
+(107,115)
+(130,056)
+Net cash flow from investing activities
+(66,217)
+(116,719)
+Cash flows from financing activities:
+Changes in fair value of available-for-sale financial assets
+31
+(net of tax and after reclassification adjustments):
+Shareholders' equity
+Share capital
+Capital reserve
+Specific reserve
+29
+62,461
+56,493
+30
+Total liabilities
+54,985
+39,298
+33,186
+18
+7,661
+8,259
+32
+16,136
+13,680
+83,253
+Total non-current liabilities
+Other non-current liabilities
+Deferred tax liabilities
+1,185
+26
+52,886
+32,492
+79,636
+86,337
+30
+6,000
+30,000
+28
+38,972
+11,277
+Total current liabilities
+485,543
+462,832
+Non-current liabilities
+Long-term loans
+Debentures payable
+Provisions
+180,541
+1,618
+194,871
+657,703
+677,538
+120,293
+112,027
+832,525
+789,565
+Total liabilities and shareholders' equity
+These financial statements have been approved by the board of directors on 24 March 2017.
+1,498,609
+712,232
+1,447,268
+Chairman
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Dai Houliang
+Vice Chairman, President
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+79
+Wang Yupu
+Total equity attributable to shareholders of the Company
+245,623
+275,163
+Other comprehensive income
+Surplus reserves
+Retained earnings
+Minority interests
+Total shareholders' equity
+33333
+36
+37
+34569
+121,071
+121,071
+119,525
+121,576
+(932)
+(7,984)
+765
+612
+196,640
+196,640
+666,084
+92,688
+95,928
+3,566
+130,558
+25,596
+21,453
+3,749
+2,920
+Inventories
+10
+156,511
+145,608
+56,142
+Other current assets
+26,904
+Total current assets
+412,261
+333,657
+Non-current assets
+Available-for-sale financial assets
+11
+Long-term equity investments
+20,422
+50,289
+7
+10,964
+153,790
+(A)
+FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+as at 31 December 2016
+Note
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+Assets
+Current assets
+Cash at bank and on hand
+Bills receivable
+Accounts receivable
+Other receivables
+Prepayments
+569801
+142,497
+69,666
+13,197
+Fixed assets
+Construction in progress
+Intangible assets
+Goodwill
+6,271
+13,537
+13,919
+7,214
+25,826
+1,086,348
+1,498,609
+7,469
+23,835
+1,113,611
+1,447,268
+Employee benefits payable
+Taxes payable
+Other payables
+Short-term debentures payable
+Non-current liabilities due within one year
+222222202
+23
+24
+1234
+30,374
+5,828
+174,301
+74,729
+6,353
+Financial Statements (PRC)
+81,086
+152,325
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+Total non-current assets
+Total assets
+Liabilities and shareholders' equity
+Current liabilities
+Short-term loans
+Bills payable
+Accounts payable
+Advances from customers
+123456789
+11,408
+10,964
+116,812
+84,293
+690,594
+733,449
+129,581
+85,023
+Financial Statements (PRC)
+BALANCE SHEET
+as at 31 December 2016
+177
+2,607
+2,238
+127,327
+151,409
+408,149
+417,012
+121,071
+505
+121,071
+68,716
+263
+(145)
+393
+313
+Surplus reserves
+Retained earnings
+196,640
+68,769
+28,968
+29,767
+65,500
+5,352
+Total current liabilities
+280,822
+265,603
+Non-current liabilities
+Long-term loans
+Debentures payable
+Provisions
+Deferred tax liabilities
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+58,448
+54,526
+36,000
+196,640
+182,440
+175,679
+Total shareholders' equity
+Financial expenses
+Exploration expenses, including dry holes
+Impairment losses
+Add: (Loss)/gain from changes in fair value
+Investment income
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Less: Income tax expense
+Net profit
+Including: net profit of acquiree before the consolidation under common control
+Attributable to:
+Equity shareholders of the Company
+Minority interests
+Basic earnings per share
+Diluted earnings per share
+Net profit
+Other comprehensive income
+Items that may be reclassified subsequently to profit or loss
+General and administrative expenses
+38,082
+Selling and distribution expenses
+Less: Operating costs
+Total liabilities and shareholders' equity
+These financial statements have been approved by the board of directors on 24 March 2017.
+569,576
+562,274
+977,725
+979,286
+Wang Yupu
+Chairman
+(Legal representative)
+The accompanying notes form part of these financial statements.
+80
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Dai Houliang
+Wang Dehua
+Vice Chairman, President
+Chief Financial Officer
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2016
+Operating income
+Taxes and surcharges
+Cash flow hedges
+ties due within one year
+30,000
+Other non-current assets
+Total non-current assets
+Total assets
+Liabilities and shareholders' equity
+Current liabilities
+Short-term loans
+Bills payable
+Accounts payable
+Advances from customers
+98,250
+46,453
+Long-term deferred expenses
+471
+7
+38,332
+29,512
+8
+45,643
+64,620
+9
+3,454
+540
+Intangible assets
+Construction in progress
+Fixed assets
+Note
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+Assets
+Current assets
+Cash at bank and on hand
+Bills receivable
+Accounts receivable
+Other receivables
+Prepayments
+Inventories
+Other current assets
+Total current assets
+Non-current assets
+Available-for-sale financial assets
+Long-term equity investments
+1,296
+46,942
+46,029
+32,743
+979,286
+9,256
+32,517
+2,761
+1,852
+75,787
+85,182
+2,360
+3,151
+Employee benefits payable
+Taxes payable
+312
+290
+32,423
+20,832
+Other payables
+113,841
+86,427
+Short-term debentures payable
+6,000
+977,725
+Non-current liabilities due within one year
+754,277
+11,959
+36,559
+265,835
+225,009
+12
+13
+14
+234
+297
+268,451
+297
+219,230
+373,020
+439,477
+49,277
+72,763
+7,913
+8,397
+1,980
+2,154
+10,952
+711,890
+285,281
+8,767
+285,281
+175,679
+196,640
+313
+(145)
+68,716
+121,071
+81
+81
+(7,397)
+(27,302)
+3,088
+14,026
+2,791
+(24,214)
+16,817
+14,026
+2.791
+(24,214)
+(3,088)
+3,088
+61
+30.941
+30,880
+30,880
+61
+61 ¯¯ 30,880
+172,101
+562,274
+538,649
+121,071
+(145)
+These financial statements have been approved by the board of directors on 24 March 2017.
+569,576
+182,440
+196,640
+393
+263
+53
+53
+68,769
+121,071
+80
+80
+(16,829)
+(16,829)
+----- (16,829)
+=== (16,829) (1
+23,998
+23,590
+408
+408
+408
+23,590
+23,590
+562,274
+175,679
+196,640
+313
+68,716
+RMB million
+equity
+earnings
+RMB million
+Balance at 31 December 2015
+5. Net decrease in specific reserve for the year.
+in shareholders' equity
+Total transactions with owners, recorded directly
+4. Conversion of the 2011 Convertible Bonds (Note 33)
+- Distributions to shareholders (Note 49)
+- Appropriation for surplus reserves
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Balance at 1 January 2015
+for the year ended 31 December 2016
+STATEMENT OF CHANGES IN EQUITY
+Financial Statements (PRC)
+86
+Financial Statements (PRC)
+85
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Wang Dehua
+Chief Financial Officer
+Vice Chairman, President
+Dai Houliang
+Balance at 1 January 2016
+Change for the year
+1. Net profit
+2. Other comprehensive income
+reserves
+RMB million
+193.552
+232
+Total
+shareholders'
+Retained
+Surplus
+Specific
+reserve
+RMB million
+income
+RMB million
+(206)
+54.690
+118.280
+reserve
+RMB million
+capital
+RMB million
+Capital comprehensive
+Wang Yupu
+Share
+Balance at 31 December 2016
+5. Others
+Net increase in specific reserve for the year
+4.
+in shareholders' equity
+Total transactions with owners, recorded directly
+- Distributions to shareholders (Note 49)
+- Appropriation for surplus reserves
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+Other
+Chairman
+(Legal representative)
+The accompanying notes form part of these financial statements.
+2 BASIS OF PREPARATION
+Details of the Company's principal subsidiaries are set out in Note 53.
+Total shareholders' equity
+Total liabilities
+Current liabilities
+Total assets
+Current assets
+Book Value
+date
+At Consolidation
+(3) The carrying value of the assets and liabilities of the acquiree are as follows:
+1 STATUS OF THE COMPANY (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+87
+2,137
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(399)
+(85)
+34
+134
+2,563
+86
+At 31 December
+2015
+Book Value
+RMB million
+153,790
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+88
+Principal accounting estimates and judgements of the Group are set out in Note 52.
+The Group determines specific accounting policies and accounting estimates based on the characteristics of production and operational activities,
+mainly reflected in the accounting for allowance for accounts receivable (Note 3(12)), valuation of inventories (Note 3(4)), depreciation of fixed
+assets and depletion of oil and gas properties (Note 3(6), (7)), measurement of provisions (Note 3(16)), etc.
+3 SIGNIFICANT ACCOUNTING POLICIES
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Group's consolidated financial statements are
+presented in Renminbi. The Company translates the financial statements of subsidiaries from their respective functional currencies into Renminbi
+(see Note 3(2)) if the subsidiaries' functional currencies are not Renminbi.
+(4) Functional currency and presentation currency
+Derivative financial instruments (see Note 3(11))
+Convertible bonds (see Note 3(11))
+· Available-for-sale financial assets (see Note 3(11))
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial asset and financial liability with change in fair value recognised through profit or loss (see Note 3(11))
+916
+The accounting year of the Group is from 1 January to 31 December.
+(3) Measurement basis
+These financial statements are prepared on a basis of going concern.
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("ASBE")
+The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises-Basic
+Standards, specific standards and relevant regulations (hereafter referred as ASBE collectively) issued by the MOF on or after 15 February
+2006. These financial statements also comply with the disclosure requirements of "Regulation on the Preparation of Information Disclosures of
+Companies Issuing Public Shares, No.15: General Requirements for Financial Reports" issued by the China Securities Regulatory Commission
+("CSRC"). These financial statements present truly and completely the consolidated and company financial position as at 31 December 2016,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year then ended.
+3,942
+232
+203
+3,927
+225
+203
+4,174
+4,130
+1,287
+937
+RMB million
+(2) Accounting period
+The accompanying notes form part of these financial statements.
+which the Company
+effectively obtains
+control of the
+acquiree.
+The consolidation
+Proportion common control
+The acquiree
+Obtain under the
+combination
+the business
+The basis for
+(1) The financial information disclosed in the consolidated scope changes are as follows:
+As Sinopec Group Company controls both the Group and SAMC, the non-cash transaction described above between Sinopec and SAMC has been
+accounted as business combination under common control. Accordingly, the assets and liabilities of Gaoqiao Branch of SAMC have been accounted
+for at historical cost, and the consolidated financial statements of the Group prior to these acquisitions have been restated to include the results of
+operation and the assets and liabilities of Gaoqiao Branch of SAMC on a combined basis.
+Pursuant to the resolution passed at the Directors' meeting on 29 October 2015, the Company entered into the JV Agreement with Sinopec Assets
+Management Corporation ("SAMC") in relation to the formation of the Gaoqiao Petrochemical Co. Ltd. According to the JV Agreement, the Company
+and SAMC jointly set up Gaoqiao Petrochemical Co. Ltd. for RMB 100 million in cash in 2016. Subsequently, the Company subscribed capital
+contribution with the net assets of Gaoqiao Branch of the Company and SAMC subscribed capital contribution with the net assets of Gaoqiao Branch
+of SAMC. The capital contribution was completed on 1 June 2016, after which the Company held 55% of Gaoqiao Petrochemical Co. Ltd.'s voting
+rights and become the parent company of Gaoqiao Petrochemical Co.Ltd..
+(3) the production and sale of chemical.
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(1) the exploration, development and production of crude oil and natural gas;
+The company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+Pursuant to the notice Guo Jing Mao Qi Gai [2000] No. 154 “Reply on the Formation of China Petroleum and Chemical Corporation", the Company
+obtained the approval from the State Economic and Trade Commission on 21 February 2000 for the formation of a joint stock limited company.
+The Company took over the exploration, development and production of crude oil and natural gas, refining, chemicals and related sales and
+marketing business of Sinopec Group Company after the establishment of the Company.
+In addition, pursuant to the notice Cai Guan Zi [2000] No. 34 "Reply to the Issue Regarding Management of State-Owned Equity by China Petroleum
+and Chemical Corporation" issued by the MOF, 68.8 billion domestic state-owned shares with a par value of RMB 1.00 each were issued to Sinopec
+Group Company, the amount of which is equivalent to 70% of the above net asset value transferred from Sinopec Group Company to the Company
+in connection with the Reorganisation.
+According to the State Council's approval to the "Preliminary Plan for the Reorganisation of China Petrochemical Corporation" (the "Reorganisation"),
+the Company was established by China Petrochemical Corporation ("Sinopec Group Company"), which transferred its core businesses together with
+the related assets and liabilities at 30 September 1999 to the Company. Such assets and liabilities had been valued jointly by China United Assets
+Appraisal Corporation, Beijing Zhong Zheng Appraisal Company, CIECC Assets Appraisal Corporation and Zhong Fa International Properties Valuation
+Corporation. The net asset value was determined at RMB 98,249,084,000. The valuation was reviewed and approved by the Ministry of Finance (the
+"MOF") (Cai Ping Zi [2000] No. 20 "Comments on the Review of the Valuation Regarding the Formation of a Joint Stock Limited Company by China
+Petrochemical Corporation").
+China Petroleum & Chemical Corporation (the "Company") was established on 25 February 2000 as a joint stock limited company. The company is
+registered in Beijing, the People's Republic of China, and the headquarter is located in Beijing, the People's Republic of China. The approval date of
+the financial report is 24 March 2017.
+1 STATUS OF THE COMPANY
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS
+Chief Financial Officer
+Wang Dehua
+Vice Chairman, President
+Dai Houliang
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Consolidation
+date
+Determination
+basis of
+consolidation
+date
+Revenue of
+the acquiree
+from 1 January
+2016 to the
+consolidation
+Net profit
+of the
+acquiree from
+1 January
+2016 to the
+consolidation
+Consolidation cost (RMB million)
+(2) The consolidation cost is as follow:
+not transitory.
+and the control is
+after combination,
+both before and
+55% Group Company
+controlled by
+Sinopec
+the company are
+Gaoqiao Branch
+of SAMC
+The acquiree and
+date
+RMB Million
+date is the date on
+date
+RMB Million
+2015
+RMB Million
+date
+RMB Million
+date
+RMB Million
+consolidation
+flow of the
+acquiree from
+1 Janurary
+2016 to the
+flow of the
+acquiree from
+1 Janurary
+2016 to the
+consolidation
+31 December
+31 December
+Net cash
+Operating cash
+Net profit
+of the
+acquiree from
+1 Janurary
+2015 to
+Revenue
+of the
+acquiree from
+1 Janurary
+2015 to
+2015
+RMB Million
+(Legal representative)
+1 June 2016
+Wang Yupu
+137
+1,306
+(1,169)
+(1,169)
+(1,169)
+2. Other comprehensive income (Note 35)
+43,480
+11,199
+32,281
+32,281
+1. Net profit
+Change for the period
+651,120
+54,423
+596,697
+240,718
+193,552
+491
+(7,261)
+50,917
+118,280
+Balance at 1 January 2015
+4,025
+1,811
+2,214
+2,214
+32,281
+31,112
+12,505
+43,617
+48,807
+56,670
+446
+(326)
+326
+326
+56,224
+16,817
+16,817
+14,026 ----
+2,791
+(24,214)
+(24,214)
+common control (Note 1)
+(24,214)
+combination of entities under common control
+7. Distributions to the original shareholders in the
+6. Contributions to subsidiaries from minority interests
+5. Transaction with minority interests
+4. Conversion of the 2011 Convertible Bonds
+- Distributions to shareholders (Note 49)
+(Note 33)
+- Appropriation for surplus reserves
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+(6fe 49) ====3,088 (2,088)
+105,477
+Adjustment for the combination of entities under
+52,612
+Other
+equity
+attributable
+Total
+shareholders'
+for the year ended 31 December 2016
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+Vice Chairman, President
+Wang Dehua
+Dai Houliang
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+84
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Wang Yupu
+44,649
+(13,033)
+(60,864)
+(298,314)
+(214,654)
+(30,382)
+(21,826)
+(267,932)
+Chairman
+(192,828)
+to equity
+Share
+capital
+Capital comprehensive
+Specific
+594,483
+240,718
+193,552
+RMB million
+equity
+interests
+RMB million
+RMB million
+RMB million
+RMB million
+the Company
+earnings
+reserves
+647,095
+reserve
+RMB million
+491
+48,703
+118,280
+Balance at 31 December 2014
+RMB million
+RMB million
+RMB million
+income
+Total
+shareholders'
+Minority
+shareholders of
+Retained
+Surplus
+(7,261)
+(74)
+reserve
+(60)
+(6,146)
+(6,146)
+Distributions to minority interests
+6.
+(86)
+(39)
+··· (47) (4
+(
+47)
+combination of entities under common control
+233
+263
+(30)
+(16,829)
+(16,829)
+(16,829)
+| | | | | |
+(30)
+5. Distributions to the original shareholders in the
+- Distributions to shareholders (Note 49)
+Transaction with minority interests
+- Appropriation for surplus reserves (Note 37)
+4.
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+65,503
+7. Adjustment for the combination of entities under
+common control (Note 1)
+under ₤2137)(2137)
+2,137
+Total transactions with owners, recorded directly
+832,525
+(74)
+These financial statements have been approved by the board of directors on 24 March 2017.
+120,293
+712,232
+275,163
+196,640
+765
+(932)
+125
+9
+116
+12,035
+116
+119,525
+160
+7
+153
+153
+Balance at 31 December 2016
+8. Net increase in specific reserve for the year
+(Note 36)
+(22,828)
+(3,785)
+(19,043)
+(16,876)
+(2,167)
+in shareholders' equity
+121,071
+53,468
+9. Others
+7,052
+121,071
+Balance at 31 December 2015
+80
+(3)
+83
+83
+10. Others
+191
+70
+121
+121
+9. Net decrease in specific reserve for the year
+121,576
+94,557
+(27,376)
+3,088
+446
+70,576
+2,791
+directly in shareholders' equity
+Total transactions with owners, recorded
+(3,389)
+46,416
+(3,389)
+(134)
+8. Distributions to minority interests
+45,032
+(7,984)
+49,525
+196,640
+7,052
+59,170
+(719)
+6,333
+612
+12,754
+46,416
+- 7,052 = 46,416
+1. Net profit
+Change for the year
+789,565
+112,027
+677,538
+2. Other comprehensive income (Note 35)
+196,640
+612
+245,623
+(7,984)
+121,576
+677,538
+245,623
+121,071
+112,027
+Balance at 1 January 2016
+789,565
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+Number of Shareholding
+Shares Held Percentage
+Sinopec Engineering (Group)
+Co. Ltd
+Sinopec Oilfield Service
+Corporation
+Sinopec Oilfield Equipment
+Corporation
+1.88(L)
+Name of Company
+157,452,151(S)
+0.00(L)
+5.94(L)
+3.75(L)
+956,876,795(L)
+1,516,334,573(L)
+1,006,400(L)
+0.40(L)
+2,907,856,000
+0.62(S)
+103,077,862(L)
+production equipment, engineering
+construction, and utility services
+including water and power and social
+services. On 20 August 2018, China
+Petrochemical Corporation completed the
+industrial and commercial registration
+and changed from enterprise owned by
+the whole people into limited liability
+company (solely State-owned company)
+and changed its Chinese name.
+65.67%
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+56.51%
+7
+Changes in
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+478,700,855(L)
+Shareholdings of Principal S
+Inclusive of 553,150,000 H shares held by
+Sinopec Century Bright Capital Investment
+Ltd. (overseas wholly-owned subsidiary of
+China Petrochemical Corporation) through
+HKSCC Nominees Limited.
+*:
+Sinopec Corp.
+68.77%*
+China Petrochemical
+Corporation
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+(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.
+Note: China Petrochemical Corporation holds
+2,595,786,987 H shares of Sinopec Oilfield
+Service Corporation (the "SSC") through
+Sinopec Century Bright Capital Investment
+Ltd., a wholly-owned overseas subsidiary
+of China Petrochemical Corporation,
+accounting for 13.67% of the total share
+capital of SSC. Such shareholdings are
+excluded from the total shares of SSC
+directly held by China Petrochemical
+Corporation indicated above.
+15.05%
+912,886,426
+China Merchants Energy
+Shipping Co., Ltd
+58.74%
+351,351,000
+10,727,896,364
+6.80(L)
+9.25
+86,697
+8.26
+7.30
+5.23
+6.06
+Return on net assets (%)
+8.59
+7.06
+6.56
+4.81
+7.84
+Net cash generated from operating activities per share (RMB)
+1,736,184,160(L)
+0.40(S)
+ʼn Share Capital anders
+152,698,359(L)
+101,037,238(S)
+0.60(L)
+Return on capital employed (%)
+0.399
+0.269
+0.385
+80,151
+56,411
+65,818
+Profit attributable to shareholders of the Company
+61,618
+51,244
+46,672
+32,512
+99,110
+46,639
+0.509
+0.423
+0.385
+0.269
+0.399
+Diluted earnings per share (RMB)
+0.509
+0.423
+Basic earnings per share (RMB)
+8
+Directors, Supervisors, Senior
+CHAIRMAN'S ADDRESS
+219
+Financial Statements
+81
+Controlled Subsidiaries
+Principal Wholly-owned and
+80
+Management and Employees
+64
+Report of the Board of Supervisors
+62
+Report of the Board of Directors
+52
+Corporate Governance
+45
+Connected Transactions
+42
+Significant Events
+Corporate Information
+220
+Documents for Inspection
+This annual report includes forward-looking statements. All statements,
+other than statements of historical facts, that address activities, events or
+developments that the Company expects or anticipates will or may occur
+in the future (including but not limited to projections, targets, reserve
+and other estimates and business plans) are forward-looking statements.
+The Company's actual results or developments may differ materially
+from those indicated by these forward-looking statements as a result
+of various factors and uncertainties. The Company makes the forward-
+looking statements referred to herein as at 22 March 2019 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+CSRC: China Securities Regulatory Commission.
+0.00(L)
+RMC: Oil and Natural Gas Reserves Management Committee of the Company;
+NDRC: China National Development and Reform Commission
+Sinopec group: China Petrochemical Corporation and its subsidiaries;
+China Petrochemical Corporation: our controlling shareholder, China Petrochemical Corporation;
+Company: Sinopec Corp. and its subsidiaries;
+31
+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;
+Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production,
+pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical
+products, coal chemical products, synthetic fibre, and other chemical products; the import and export, including an import and export agency
+business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research,
+development and application of technologies and information.
+COMPANY PROFILE
+AS APPROVED AT THE 5TH MEETING OF THE SEVENTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED A
+FINAL CASH DIVIDEND OF RMB 0.26 (TAX INCLUSIVE) PER SHARE FOR 2018, COMBINING WITH THE INTERIM CASH DIVIDEND OF RMB 0.16 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2018 WILL BE RMB 0.42 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2018.
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 OF THE COMPANY PREPARED IN ACCORDANCE WITH THE PRC
+ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (CASS) AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) HAVE BEEN
+AUDITED BY PRICEWATERHOUSECOOPERS ZHONG TIAN LLP AND PRICEWATERHOUSECOOPERS RESPECTIVELY. BOTH FIRMS HAVE ISSUED
+STANDARD UNQUALIFIED AUDITOR'S REPORT.
+IMPORTANT NOTICE: THE BOARD OF DIRECTORS, THE BOARD OF SUPERVISORS, DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF
+SINOPEC CORP. WARRANT THAT THERE ARE NO FALSE REPRESENTATIONS, MISLEADING STATEMENTS OR MATERIAL OMISSIONS IN THIS
+ANNUAL REPORT, AND JOINTLY AND SEVERALLY ACCEPT FULL RESPONSIBILITY FOR THE AUTHENTICITY, ACCURACY AND COMPLETENESS
+OF THE INFORMATION CONTAINED IN THIS ANNUAL REPORT. THERE IS NO OCCUPANCY OF NON-OPERATING FUNDS BY THE CONTROLLING
+SHAREHOLDERS OF SINOPEC CORP. MR. LI YONG, DIRECTOR, DID NOT ATTEND THE 5TH MEETING OF THE SEVENTH SESSION OF THE BOARD
+DUE TO OFFICIAL DUITES. MR. LI YONG AUTHORISED MR. LI YUNPENG TO VOTE ON HIS BEHALF IN RESPECT OF THE RESOLUTIONS PROPOSED
+AT THE MEETING. MR. DAI HOULIANG, CHAIRMAN OF THE BOARD, MR. MA YONGSHENG, PRESIDENT, MR. WANG DEHUA, CHIEF FINANCIAL
+OFFICER AND HEAD OF THE FINACIAL DEPARTMENT OF SINOPEC CORP. WARRANT THE AUTHENTICITY AND COMPLETENESS OF THE FINANCIAL
+STATEMENTS CONTAINED IN THIS ANNUAL REPORT. THE AUDIT COMMITTEE OF SINOPEC CORP. HAS REVIEWED THE FINANCIAL ANNUAL
+RESULTS OF SINOPEC CORP. FOR THE YEAR ENDED 31 DECEMBER 2018.
+COMPANY PROFILE
+Company Profile
+2
+DEFINITIONS:
+Chairman's Address
+Management's Discussion and Analysis
+Chairman's Address
+22 March 2019
+Beijing, China
+Dai Houliang
+Chairman
+Great aspiration and strong persistence will
+create remarkable accomplishments. I believe
+that with the joint efforts of the Board of
+Directors, the management and the entire staff,
+as well as the support from our shareholders
+and the community. Sinopec Corp. will surely
+stride ahead and create greater value for
+shareholders and the community.
+and incentive mechanisms. Foundation will be
+consolidated, risk control will be strengthened,
+and operation and management standards
+will be further enhanced. In addition, we will
+strongly promote technological innovations to
+drive our future growth. We advance structural
+reform by building a solid resource foundation
+for sustainable development, strengthening
+the overall competitiveness of the value chain
+of refining and marketing businesses, and
+enhancing our capability in high-end production
+and value creation of chemical business. With
+an aim to build the Company into a green
+enterprise with high quality, we will make
+vigorous efforts in pollution prevention and
+environmental protection to raise the level
+of our green development. Moreover, we will
+explore and capture strategic emerging business
+opportunities through financial investments,
+thereby cultivating new growth drivers. The
+Company's capital expenditure for 2019 will be
+RMB 136.3 billion, increasing 15.5% year-on-
+year.
+In 2019, the Company will adhere to the overall
+strategy of pursuing progress while maintaining
+stability, fulfill our due responsibilities and make
+more efforts in implementing our plans so as to
+lay solid foundation for sustainable development.
+Meticulous planning will be made to secure
+stable operation and to boost operational
+quality and profitability. Besides, we will strive
+to implement reform and to improve motivation
+Looking ahead, we face both opportunities
+and challenges. Global politics and economy
+are facing increasing uncertainties. China will
+still be in an important period of strategic
+opportunity for development. Energy production
+and consumption revolution will be accelerated,
+domestic oil and gas industrial reform will be
+further deepened, and demand for energy and
+petrochemical products will increase. Adhering
+to the general principle of making progress
+while maintaining stability and the requirements
+for high-quality development, we will accelerate
+the strategic plan of our phased goals for year
+2020 through year 2050. Guided by "reform,
+management, innovation and development", we
+stick to the operating principles of "specialised
+development, market-based operation,
+international layout and overall coordination". By
+expediting the upgrading of traditional business,
+strengthening extensive business, fostering new
+business, and building new green advantages,
+we will fully exert the specialised and integrated
+advantages and improved product and service
+quality with an emphasis on high-quality
+development. Meanwhile, we will make sure that
+staff develop together with the Company and the
+Company achieve harmonious development with
+society, which will help us achieve sustainable
+development in an all round way.
+Over the past year, we were determined to
+fulfilling our social responsibilities. Committed
+to mitigating climate change and keeping our
+skies blue, our waters clear, and our land
+pollution-free, we launched the Green Enterprise
+Campaign so as to vigorously develop clean
+energy and improve energy efficiency. We
+stepped up efforts to control greenhouse gas
+emissions and formulated a three-year plan for
+pollution prevention and control. Meanwhile, we
+reinforced our HSSE management system and
+the accountability system for safe operation
+and production, enhanced employees' health
+and public security management. We achieved.
+fruitful results by reinforcing targeted poverty
+alleviation, actively participated in various social
+and charity activities, disaster relief, the work
+related to the United Nations Global Compact
+and we were widely acclaimed by society.
+Over the past year, we consistently enhanced our
+corporate governance. The Company reelected
+the Board of Directors and the Board of
+Supervisors, appointed the senior management,
+and established the Nomination Committee.
+Independent directors played a better role. The
+Company improved the corporate governance
+structure. The regulation for the participation
+by the Party Organisation in corporate
+governance was improved, thus facilitating
+scientific decision-making. We made long-term
+development strategy and relevant execution
+plans and drew the road-map of building the
+company into a world-class enterprise in the
+new era. The continuing connected transactions
+for the next three years have been approved by
+shareholders, which safeguarded the Company's
+stable operation.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Over the past year, we constantly improved
+the Company's development quality by
+optimising production and operation, actively
+expanding markets, accelerating structural
+adjustment, and further promoting scientific
+and technological innovations, which
+strengthened our competitiveness. In upstream,
+we made great efforts to enhance oil and
+gas exploration and production and achieved
+domestic crude oil reserves replacement ratio
+of 131.7%. Meanwhile, we pushed ahead with
+the construction of natural gas production,
+supply, storage and marketing system, rapidly
+increasing natural gas production and sales
+volume. In refining, we optimised resources
+allocation, adjusted product slate to further
+lower diesel-to-gasoline ratio and successfully
+accomplished the quality upgrading of GB VI
+standard. In marketing, we gave full play to
+the advantages of integrated value chain and
+distribution network, actively responded to
+the fierce market competition and achieved
+continuous growth in both total domestic sales
+volume and retail scale. Moreover, the non-fuel
+business maintained rapid growth. In chemicals,
+we made great efforts in adjusting structure
+and pushing ahead with the integration of
+production, marketing, research and application.
+The share of high value-added products of
+three principal synthetic materials increased
+continuously and the total sales volume of
+chemicals soared. Moreover, a number of key
+projects supporting our long-term development
+progressed smoothly, which consolidated the
+development foundation. Several significant
+breakthroughs were made in the development of
+core technologies. Both patents applications and
+patents granted hit record highs. Meanwhile,
+we made solid progress in the integration of
+informatisation and industrialisation by actively
+advancing the development of smart factories,
+smart oil and gas fields, and smart service
+stations as well as e-commerce platforms such
+as Epec, ChemEmall and EasyJoy.
+turnover and other operating revenues reached
+RMB 2.89 trillion. Profit attributable to equity
+shareholders of the Company grew by 20.2%
+year on year to RMB 61.6 billion, while the
+year-end liability-to-asset ratio was 46.21%.
+Taking into account the Company's profitability,
+shareholder returns and the future development,
+the Board of Directors proposed a final dividend
+of RMB 0.26 per share. Combined with the
+interim dividend of RMB 0.16 per share, the
+total dividend for the year is RMB 0.42 per
+share with a dividend payout ratio of 82.5%.
+requirements for high-quality development, we
+fully exerted the advantages of the integrated
+value chain, initiated and implemented the
+phased goals for year 2020 and through
+year 2050, made great efforts in optimising
+operation, expanding market, reducing costs,
+controlling risks, deepening reforms, reinforcing
+management, and launching the Talent
+Empowering Enterprise Scheme. We successfully
+dealt with various risks and challenges, made
+progress in many aspects and pushed forward
+the sustainable development in an all-round way.
+Over the past year, the Company's profitability
+increased significantly. In accordance with the
+International Financial Reporting Standards, our
+In the face of complicated international
+situation, daunting challenges brought by the
+international oil prices fluctuating in a wide
+range, increasing demand for refined oil and
+petrochemical products and fierce market
+competition, adhering to the general principle
+of making progress while maintaining stability,
+following the new development philosophy and
+On behalf of the Board of Directors, the
+management and the entire staff, I would like to
+express my sincere gratitude to our shareholders
+and the community for your interest and
+support.
+Dear Shareholders and Friends:
+Chairman Dai Houliang
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+9
+Chairman's Address
+中国石化
+of Principal Shareholders
+Changes in Share Capital and Shareholdings
+Principal Financial Data and Indicators
+Company Profile
+19
+11
+∞
+8
+Business Review and Prospects
+236
+SINOPEC CORP.
+中国石油化工股份有限公司
+A Share : 600028 ; H Share : 00386 ; ADR : SNP)
+(STOCK CODE
+Annual Report and Accounts
+2018
+SlopEC SINOPEC
+中国石化
+CONTENTS
+618,800(L)
+LO
+1,244,000(S)
+State-owned Share
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+Shareholdings of Principal Shareholders
+Changes in Share Capital and
+Principal Financial Data and Indicators
+5
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS PLEASE REFER TO PAGE 212 OF
+THE REPORT.
+4.969
+5.517
+5.033
+5.585
+5.873
+5.808
+5.868
+5.997
+5.924
+5.741
+595,255
+1
+676,197
+CHANGES IN THE SHARE CAPITAL
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+25,390,660,438
+20.97
+H Share
+中國證券金融股份有限公司
+HKSCC Nominees Limited²
+0
+Number of
+shares subject to
+pledges or lock-up
+Changes of
+shareholding
+(3,083,443,708)
+68.31
+Percentage of
+shareholdings %
+Total number of
+shares held
+82,709,227,393
+Nature of
+Shareholders
+China Petrochemical Corporation
+Name of shareholders
+The shareholdings of top ten shareholders as of 31 December 2018 are listed as below:
+(1) Shareholdings of top ten shareholders
+As of 31 December 2018, the total number of shareholders of Sinopec Corp. was 490,808 including 484,996 holders of domestic A shares and 5,812
+holders of overseas H shares. As of 28 February 2019, the total number of shareholders of Sinopec Corp. was 464,131. Sinopec Corp. has complied
+with requirement for minimum public float under the Hong Kong Listing Rules.
+There is no change in the number and nature of shares of Sinopec Corp. during the reporting period
+710,994
+726,120
+717,284
+2018
+As of 31 December
+Adjusted net assets per share (RMB)
+Net assets per share (RMB)
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+Non-current liabilities
+Net current liabilities
+Non-current assets
+Items
+Unit: RMB million
+1.267
+1.371
+1.772
+1.577
+Hong Kong Listing Rules: Listing Rules of the Hong Kong Stock Exchange
+1.453
+1,088,188
+2017
+1,066,455
+2016
+2015
+54,348
+111,964
+120,241
+126,770
+139,251
+201,540
+196,275
+181,831
+10,853,566
+163,168
+242,892
+129,175
+73,282
+50,397
+60,978
+2014
+1,094,035
+1,113,611
+1,086,348
+170,675
+Unknown
+A Share
+2.16
+Person having a security interest in shares
+by the substantial shareholder
+Interest of corporation controlled
+Status of shareholders
+Schroders Plc.
+JPMorgan Chase & Co.
+Citigroup Inc.
+BlackRock, Inc.
+Name of shareholders
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO) as of 31 December 2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+6
+We are not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+Note 3: China Petrochemical Corporation subscribed for the shares of 博時中證央企結構調整交易型開放式指數證券投資基金 and 華夏中證央企結構調整交易型開放式指數證券
+with 600 million A shares of Sinopec Corp. in October 2018.
+Note 2: Sinopec Century Bright Capital Investment Limited, an overseas wholly-owned subsidiary of China Petrochemical Corporation, held 553,150,000 H shares,
+accounting for 0.46% of the total issued share capital of Sinopec Crop. Those shareholdings are included in the total number of the shares held by HKSCC
+Nominees Limited.
+Note 1: As compared with the number of shares held as of 31 December 2017.
+Interest of corporation controlled by the
+substantial shareholder
+Approved lending agent
+Beneficial owner
+Investment manager
+9.10(L)
+2,320,644,807(L)
+% of Sinopec Corp.'s issued
+voting shares (H Share)
+Number of shares interested
+The controlling shareholder of
+Sinopec Corp. is China Petrochemical
+Corporation. Established in July 1998,
+China Petrochemical Corporation is a
+state-authorized investment organisation
+and a state-owned enterprise. The legal
+representative is Mr. Dai Houliang.
+Through re-organization in 2000, China
+Petrochemical Corporation injected its
+principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+retained certain petrochemical facilities.
+It provides well-drilling services, well-
+logging services, downhole operation
+services, services in connection with
+manufacturing and maintenance of
+(1) Controlling shareholder
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+0
+Not Applicable.
+Not Applicable.
+(1) Issuance of securities in reporting
+period
+4
+3 ISSUANCE AND LISTING OF SECURITIES
+Investment manager
+(L): Long position, (S): Short position
+Approved lending agent
+Trustee (exclusive of passive trustee)
+(2) Existing employee shares
+0.00(S)
+154,958,200
+0.13
+0.78
+A Share
+北京誠通金控投資有限公司
+620,799,215
+1,021,782,160
+0.84
+A Share
+香港中央結算有限公司
+0
+1,253,177,754
+1,253,177,754
+1.04
+A Share
+國新投資有限公司
+0
+(722,418,086)
+2,609,312,057
+947,604,254
+947,604,254
+招商銀行股份有限公司-博時中證央企結構調整交易型
+開放式指數證券投資基金3
+A Share
+中國農業銀行股份有限公司-華夏中證央企結構調整交易型
+開放式指數證券投資基金 3
+ooo oo o
+128,785,037
+181,957,660
+0.15
+A Share
+005L-FH002
+154,958,200
+中國人壽保險股份有限公司分紅.個人分紅-
+322,037,900
+0.27
+A Share
+中央匯金資產管理有限責任公司
+397,446,193
+397,446,193
+0.33
+A Share
+0
+CONVERSION:
+(34.6)
+For overseas production of crude oil: 2018, 1 tonne = 7.21 barrels; 2017, 1 tonne = 7.21 barrels; 2016, 1 tonne = 7.20 barrels;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+(16,703)
+(199)
+1
+117
+Unit: RMB million
+Items
+Other equity instruments
+Derivative financial instruments
+Cash flow hedging
+Financial assets held for trading
+Total
+(5,537)
+(5) Significant changes of items in the financial statements
+Beginning
+of the year
+1,676
+End
+of the year
+on the profit
+Changes
+of the year
+1,450
+(226)
+515
+(522)
+Influence
+1,584
+(3,459)
+(5,536)
+Gain on holding and disposal of various investments
+(7,482)
+(1,023)
+(4,783)
+(148)
+(3,987)
+(518)
+Investment income on loss of control and remeasuring interests in pipeline company
+Gain on remeasurement of interests in Shanghai SECCO
+(20,562)
+Other non-operating expenses, net
+1,613
+(86)
+(22,164)
+5,578
+(16,586)
+(3,941)
+690
+Net gain of business combination under common control from beginning of the year
+to the consolidation date
+Subtotal
+(5,970)
+Tax effect
+Total
+Attributable to: Equity shareholders of the Company
+Minority interests
+(4) Items measured by fair values
+2,312
+(6,512)
+976
+(3,658)
+1,367
+2,106
+191
+(1,617)
+Non-current liabilities due
+17,450
+26,681
+(9,231)
+Bond repayment at maturity
+within one year
+Financial expenses
+(1,001)
+1,560
+(2,561)
+Decrease of structured deposit
+(164.2)
+Impairment losses
+11,605
+21,791
+(10,186)
+(46.7) Decrease of impairment losses in current year
+Non-operating income
+2,070
+1,317
+753
+57.2
+Optimisation of capital operation and increase of interest income
+(49.7)
+(25,464)
+51,196
+(7,268)
+(5,651)
+(9,069)
+51,196
+25,732
+(25,464)
+878
+50,733
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+(29,235)
+(7,485)
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+As of 31 December
+2018
+Increase/(decrease)
+Items
+RMB million
+2017
+RMB million
+Amount
+RMB million
+Percentage
+(%)
+Reasons for change
+Financial assets held for trading
+25,732
+Government grants
+Relocation compensation entitled by susidiaries
+133
+180
+RMB
+RMB
+%
+RMB
+Basic earnings per share
+0.521
+0.422
+23.4
+0.383
+Diluted earnings per share
+Items
+0.521
+23.4
+0.383
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.493
+0.376
+31.1
+0.245
+8.67
+7.14
+1.53
+0.422
+6.68
+2016
+2017
+As of 31 December
+2018
+RMB million
+1,592,308
+734,649
+2017
+RMB million
+Change
+%
+2016
+RMB million
+1,595,504
+(0.2)
+1,498,609
+Change
+741,434
+666,084
+718,355
+727,244
+(1.2)
+712,232
+121,071,210
+121,071,210
+121,071,210
+For the year ended 31 December
+2018
+(0.9)
+percentage
+points
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+percentage
+points
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+3
+Principal Financial Data and Indicators
+4
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+(3) Extraordinary items and corresponding amounts
+For the year ended 31 December
+(Income)/expenses
+44.45
+2018
+2016
+Items
+Net loss on disposal of non-current assets
+Donations
+RMB million
+RMB million
+RMB million
+742
+1,518
+1,489
+2017
+(0.33)
+46.47
+46.14
+8.20
+6.37
+1.83
+percentage
+points
+4.33
+Net cash flow from operating activities per share
+1.453
+1.577
+(7.9)
+1.772
+As of 31 December
+2018
+Items
+RMB
+2017
+RMB
+Change
+2016
+%
+RMB
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+5.933
+6.007
+(1.2)
+5.883
+152
+Non-operating expenses
+21,498
+1,709
+16.7
+77,389
+100,502
+86,573
+16.1
+79,877
+63,089
+51,119
+23.4
+46,416
+59,630
+45,582
+30.8
+29,713
+175,868
+190,935
+(7.9)
+214,543
+For the year of 2018
+First
+Quarter
+RMB million
+Second
+Third
+Fourth
+Quarter
+Quarter
+Quarter
+Total
+3,042
+RMB million
+86,965
+RMB million
+101,474
+22.5
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+(1) Principal financial data
+Items
+Operating income
+Operating profit
+Profit before taxation
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company.
+excluding extraordinary gains and losses
+Net cash flow from operating activities
+Items
+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
+Net cash flow from operating activities
+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
+2018
+RMB million
+2,891,179
+2017
+RMB million
+Change
+2016
+%
+RMB million
+2,360,193
+1,930,911
+RMB million
+RMB million
+679,001
+Items
+2018
+Turnover and other operating revenues
+2,891,179
+For the year ended 31 December
+2017
+2016
+2,360,193 1,930,911
+2015
+2,020,375
+2014
+2,827,566
+Operating profit
+82,264
+71,470
+77,193
+56,822
+73,439
+Unit: RMB million
+Profit before taxation
+37,949
+66,299
+59,568
+59,630
+2,480
+17,359
+21,809
+17,982
+12,052
+63,089
+2,891,179
+818,209
+3,109
+18,380
+22,830
+175,868
+18,770
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+1,333
+Cash received from disposal
+56,546
+4,729
+51,817
+78.0
+1,095.7
+Retirement of underground oil tanks in service station and other assets
+Receipt of the structured deposits at maturity
+of investments
+Other cash paid relating to
+87,696
+52,304
+35,392
+67.7
+3
+Receipt of time deposits at maturity
+Cash paid for acquisition of fixed
+(103,014)
+(70,948)
+(32,066)
+45.2
+Increase of capital expenditure
+assets, intangible assets and
+other long-term assets
+Cash paid for dividends, profit
+distribution or interest
+(87,483)
+(45,763)
+(41,720)
+621,251
+Increase of dividend declared
+investing activities
+772,718
+91.2
+Net cash flow from operating activities
+5. Distributions to minority interests
+Total transactions with owners, recorded directly in
+shareholders' equity
+Other
+to equity
+Share
+Capital comprehensive
+Transaction with minority interests
+capital
+RMB million
+RMB million
+income
+RMB million
+121,071
+119,525
+(932)
+Specific
+reserve
+RMB million
+765
+reserve
+- Distributions to shareholders (Note 49)
+- Appropriations for surplus reserves
+4.
+(Legal representative)
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Dehua
+Chief Financial Officer
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2018
+Total
+shareholders'
+equity
+attributable
+Balance at 1 January 2017
+Change for the year
+1. Net profit
+2. Other comprehensive income (Note 34)
+Total comprehensive income
+Transactions with owners, recorded directly in
+shareholders' equity:
+3. Appropriations of profits:
+Surplus
+Retained
+shareholders of
+Minority
+(895)
+(4,376)
+(3,481)
+51,119
+47,638
+18,280
+65,918
+| | | | |
+3,042
+(3,042)
+(32,689)
+(32,689)
+(13)
+(13)
+724
+(32,689)
+711
+(12,501)
+(3,481)
+Dai Houliang
+Chairman
+- (3,481) --
+19,175
+Total
+shareholders'
+reserves
+earnings
+the Company
+RMB million
+RMB million
+RMB million
+interests
+RMB million
+equity
+RMB million
+196.640
+275,163
+712,232
+120,293
+832,525
+51,119
+51,119
+70,294
+Cash flows from investing activities:
+(15,811)
+(65,648)
+(653,412)
+(41,770)
+(37,054)
+(206,305)
+(200,995)
+(26,211)
+(35,502)
+1,044,684
+(1,141,545)
+108,132
+117,721
+65,930
+18,919
+Cash received from returns on investments
+43,693
+23,842
+(926,963)
+1,249,677
+(867,259)
+42,913
+1,000,467
+1,304
+Sub-total of cash outflows
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+Cash paid for goods and services
+Sub-total of cash inflows
+Refund of taxes and levies
+Cash received from sale of goods and rendering of services
+Other cash received relating to operating activities
+Cash flows from operating activities:
+RMB million
+2018
+Note
+for the year ended 31 December 2018
+Cash received from disposal of investments
+1,228,816
+1,481
+19,380
+2017
+RMB million
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+2,838
+252
+28,724
+(30,116)
+(123,720)
+(134,168)
+17,465
+(67,884)
+109,915
+106,407
+109,915
+106,407
+(176,757)
+(133,663)
+(71,944)
+(38,392)
+(248,701)
+(172,055)
+CASH FLOW STATEMENT
+(138,786)
+(28,759)
+(13,189)
+These financial statements have been approved by the board of directors on 22 March 2019.
+(12,501)
+23,270
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+1
+141,185
+66,284
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(54,792)
+(37,139)
+(40,169)
+(66,913)
+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
+Sub-total of cash inflows
+Cash repayments of borrowings
+Cash paid for dividends or interest
+Sub-total of cash outflows
+Net cash flow from financing activities
+Net decrease in cash and cash equivalents
+(13)
+121,071
+(35,731)
+(4) Functional currency and presentation currency
+Derivative financial instruments (see Note 3(10))
+Other equity instrument investments (see Note 3(10))
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial assets held for trading (see Note 3(10))
+(3) Measurement basis
+The accounting year of the Group is from 1 January to 31 December.
+(2) Accounting period
+The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises - Basic
+Standards, specific standards and relevant regulations (hereafter referred as CASS collectively) issued by the MOF on or after 15 February
+2006. These financial statements also comply with the disclosure requirements of "Regulation on the Preparation of Information Disclosures of
+Companies Issuing Public Shares, No.15: General Requirements for Financial Reports" issued by the China Securities Regulatory Commission
+("CSRC"). These financial statements present truly and completely the consolidated and company financial position as at 31 December 2018,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year ended 31 December 2018.
+These financial statements are prepared on a basis of going concern.
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("CASS")
+2 BASIS OF PREPARATION
+Details of the Company's principal subsidiaries are set out in Note 54, and there are no significant changes related to the consolidation scope
+during current period.
+(3) the production and sale of chemical.
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(1) the exploration, development and production of crude oil and natural gas;
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+Pursuant to the notice Guo Jing Mao Qi Gai [2000] No. 154 “Reply on the Formation of China Petroleum and Chemical Corporation", the Company
+obtained the approval from the State Economic and Trade Commission on 21 February 2000 for the formation of a joint stock limited company.
+The Company took over the exploration, development and production of crude oil and natural gas, refining, chemicals and related sales and
+marketing business of Sinopec Group Company after the establishment of the Company.
+In addition, pursuant to the notice Cai Guan Zi [2000] No. 34 "Reply to the Issue Regarding Management of State-Owned Equity by China Petroleum
+and Chemical Corporation" issued by the MOF, 68.8 billion domestic state-owned shares with a par value of RMB 1.00 each were issued to Sinopec
+Group Company, the amount of which is equivalent to 70% of the above net asset value transferred from Sinopec Group Company to the Company
+in connection with the Reorganisation.
+According to the State Council's approval to the "Preliminary Plan for the Reorganisation of China Petrochemical Corporation" (the "Reorganisation"),
+the Company was established by China Petrochemical Corporation ("Sinopec Group Company"), which transferred its core businesses together with
+the related assets and liabilities at 30 September 1999 to the Company. Such assets and liabilities had been valued jointly by China United Assets
+Appraisal Corporation, Beijing Zhong Zheng Appraisal Company, CIECC Assets Appraisal Corporation and Zhong Fa International Properties Valuation
+Corporation. The net asset value was determined at RMB 98,249,084,000. The valuation was reviewed and approved by the Ministry of Finance (the
+"MOF") (Cai Ping Zi [2000] No. 20 "Comments on the Review of the Valuation Regarding the Formation of a Joint Stock Limited Company by China
+Petrochemical Corporation").
+China Petroleum & Chemical Corporation (the "Company") was established on 25 February 2000 as a joint stock limited company. The company is
+registered in Beijing, the People's Republic of China, and the headquarter is located in Beijing, the People's Republic of China. The approval date of
+the financial report is 22 March 2019.
+1 STATUS OF THE COMPANY
+For the year ended 31 December 2018
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Company and its subsidiaries determine their
+functional currency according to the main economic environment in where they operate. The Group's consolidated financial statements are
+presented in Renminbi. Some of subsidiaries use other currency as the functional currency. The Company translates the financial statements of
+subsidiaries from their respective functional currencies into Renminbi (see Note 3(2)) if the subsidiaries' functional currencies are not Renminbi.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+93
+Financial Statements (PRC)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+94
+94
+In a business combination involving entities not under common control achieved in stages, the Group remeasures its previously held equity
+interest in the acquiree on the acquisition date. The difference between the fair value and the net book value is recognised as investment
+income for the year. If other comprehensive income was recognised regarding the equity interest previously held in the acquiree before the
+acquisition date, the relevant other comprehensive income is transferred to investment income in the period in which the acquisition occurs.
+Where the Company acquired a minority interest from a subsidiary's minority shareholders, the difference between the investment cost and
+the newly acquired interest into the subsidiary's identifiable net assets at the acquisition date is adjusted to the capital reserve (capital
+surplus) in the consolidated balance sheet. Where the Company partially disposed an investment of a subsidiary that do not result in a loss
+of control, the difference between the proceeds and the corresponding share of the interest into the subsidiary is adjusted to the capital
+reserve (capital surplus) in the consolidated balance sheet. If the credit balance of capital reserve (capital surplus) is insufficient, any excess
+is adjusted to retained profits.
+Where the Company acquires a subsidiary during the reporting year through a business combination involving entities not under common
+control, the identifiable assets, liabilities and results of operations of the subsidiaries are consolidated into consolidated financial statements
+from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.
+Where the Company combines a subsidiary during the reporting period through a business combination involving entities under common
+control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at
+the beginning of the earliest comparative year presented or, if later, at the date that common control was established. Therefore the opening
+balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial
+statements, the subsidiary's assets, liabilities and results of operations are included in the consolidated balance sheet and the consolidated
+income statement, respectively, based on their carrying amounts in the subsidiary's financial statements, from the date that common control
+was established.
+The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its
+subsidiaries. Control means an entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
+to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
+statements from the date that control commences until the date that control ceases.
+NOTES TO THE FINANCIAL STATEMENTS
+(c) Method for preparation of consolidated financial statements
+(b) Business combination involving entities not under common control
+A business combination involving entities or businesses under common control is a business combination in which all of the combining
+entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that
+control is not transitory. The assets and liabilities that the acquirer receives in the acquisition are accounted for at the acquiree's carrying
+amount on the acquisition date. The difference between the carrying amount of the acquired net assets and the carrying amount of the
+consideration paid for the acquisition (or the total nominal value of shares issued) is recognised in the share premium of capital reserve, or
+the retained earnings in case of any shortfall in the share premium of capital reserve. Any costs directly attributable to the combination shall
+be recognised in profit or loss for the current period when occurred. The expense incurred for equity securities and debt securities issued as
+the consideration of the combination is recognised in the initial cost of the securities. The combination date is the date on which the acquirer
+effectively obtains control of the acquiree.
+(a) Business combination involving entities under common control
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+Principal accounting estimates and judgements of the Group are set out in Note 53.
+The Group determines specific accounting policies and accounting estimates based on the characteristics of production and operational activities,
+mainly reflected in the accounting for allowance for financial assets (Note 3(10)), valuation of inventories (Note 3(4)), depreciation of fixed assets
+and depletion of oil and gas properties (Note 3(6), (7)), measurement of provisions (Note 3(15)), etc.
+3 SIGNIFICANT ACCOUNTING POLICIES
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+A business combination involving entities or businesses not under common control is a business combination in which all of the combining
+entities or businesses are not ultimately controlled by the same party or parties both before and after the business combination. Difference
+between the consideration paid by the Group as the acquirer, comprises of the aggregate of the fair value at the acquisition date of assets
+given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree, and the Group's
+interest in the fair value of the identifiable net assets of the acquiree, is recognised as goodwill (Note 3(9)) if it is an excess, otherwise in the
+profit or loss. The expense incurred for equity securities and debt securities issued as the consideration of the combination is recognised
+in the initial cost of the securities. Any other expense directly attributable to the business combination is recognised in the profit or loss
+for the year. The difference between the fair value and the book value of the assets given is recognised in profit or loss. The acquiree's
+identifiable assets, liabilities and contingent liabilities, if satisfying the recognition criteria, are recognised by the Group at their fair value at
+the acquisition date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Chief Financial Officer
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(681)
+(681)
+(681)
+39,957
+39,957
+5. Others
+4. Net increase in specific reserve for the year
+in shareholders' equity
+Total transactions with owners, recorded directly
+- Distributions to shareholders (Note 49)
+- Appropriation for surplus reserves
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+2. Other comprehensive income
+Change for the year
+1. Net profit
+567,269
+177,049
+199,682
+482
+39,957
+39,276
+Balance at 31 December 2018
+3,996
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+(Legal representative)
+Chairman
+Dai Houliang
+These financial statements have been approved by the board of directors on 22 March 2019.
+537,196
+143,148
+203,678
+989
+Wang Dehua
+(485)
+(2,063)
+6
+68,795
+507
+507
+(67,799)
+(71,795)
+--- 3,996 (7
+(67,799)
+(67,799)
+(3,996)
+(2,057)
+196
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+Where control of a subsidiary is lost due to partial disposal of the equity investment held in a subsidiary, or any other reasons, the Group
+derecognises assets, liabilities, minority interests and other equity items related to the subsidiary. The remaining equity investment is
+remeasured to fair value at the date in which control is lost. The sum of consideration received from disposal of equity investment and the
+fair value of the remaining equity investment, net of the fair value of the Group's previous share of the subsidiary's identifiable net assets
+recorded from the acquisition date, is recognised in investment income in the period in which control is lost. Other comprehensive income
+related to the previous equity investment in the subsidiary, is transferred to investment income when control is lost. Other comprehensive
+income related to the equity investment of the orginal subsidiary shall be converted into the current investment income in the event of loss of
+control.
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+The Group estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with the industry practices. These estimated future dismantlement costs are
+discounted at credit-adjusted risk-free rate and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs
+of the oil and gas properties.
+The acquisition cost of mineral interest is capitalised as oil and gas properties. Costs of development wells and related support equipment are
+capitalised. The cost of exploratory wells is initially capitalised as construction in progress pending determination of whether the well has found
+proved reserves. Exploratory well costs are charged to expenses upon the determination that the well has not found proved reserves. However,
+in the absence of a determination of the discovery of proved reserves, exploratory well costs are not carried as an asset for more than one
+year following completion of drilling. If, after one year has passed, a determination of the discovery of proved reserves cannot be made, the
+exploratory well costs are impaired and charged to expense. All other exploration costs, including geological and geophysical costs, are charged
+to profit or loss in the year as incurred.
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+Estimated Estimated rate
+useful life of residual value
+12.50 years
+3%
+4.30 years
+3%
+(7) Oil and gas properties
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+Equipment, machinery and others
+Plants and buildings
+Other than oil and gas properties, the cost of fixed assets less residual value and accumulated impairment losses is depreciated using the
+straight-line method over their estimated useful lives, unless the fixed asset is classified as held for sale. The estimated useful lives and the
+estimated rate of residual values adopted for respective classes of fixed assets are as follows:
+The Group terminates the recognition of an item of fixed asset when it is in a state of disposal or it is estimated that it is unable to generate
+any economic benefits through use or disposal. Gains or losses arising from the retirement or disposal of an item of fixed asset are determined
+as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of
+retirement or disposal.
+The subsequent costs including the cost of replacing part of an item of fixed assets are recognised in the carrying amount of the item if the
+recognition criteria are satisfied, and the carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of fixed
+assets are recognised in profit or loss as incurred.
+Where the individual component parts of an item of fixed asset have different useful lives or provide benefits to the Group in different patterns
+thus necessitating use of different depreciation rates or methods, each part is recognised as a separate fixed asset.
+Construction in progress is transferred to fixed assets when the asset is ready for its intended use. No depreciation is provided against
+construction in progress.
+The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset
+to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, capitalised borrowing
+costs (see Note 3(18)), and any other costs directly attributable to bringing the asset to working condition for its intended use. According to legal
+or contractual obligations, costs of dismantling and removing the items and restoring the site on which the related assets located are included in
+the initial cost.
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(11)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(11)).
+Fixed assets represent the tangible assets held by the Group using in the production of goods, rendering of services and for operation and
+administrative purposes with useful life over one year.
+(6) Fixed assets and construction in progress
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial Statements (PRC)
+Financial Statements (PRC)
+99
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at fair value through other
+comprehensive income, and presented in other equity instrument investments. The relevant dividends of these financial assets are
+recognised in profit or loss. When derecognised, the cumulative gain or loss previously recognised in other comprehensive income transfer
+to retained earnings.
+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. 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.
+Debt instruments held by the Group mainly include cash at bank and on hand, and receivables, etc. These financial assets are measured
+at amortised cost.
+Debt instruments
+Financial Statements (PRC)
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. Bills receivable and accounts receivable arising from sales of goods or rendering services, without significant financing
+component, are initially recognised based on the transaction price expected to be entitled by the Group.
+(i) Classification and measurement
+(a) Financial assets
+Financial instruments, refer to the contracts that form one party's financial assets and form the financial liabilities or equity instruments of the
+other party. The Group recognises a financial asset or a financial liability when the Group enters into and becomes a party to the underlining
+contract of the financial instrument.
+(10) Financial Instruments
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(11)). On disposal of an asset group or a set of
+asset groups, any attributable amount of purchased goodwill is written off and included in the calculation of the profit or loss on disposal.
+The initial cost of goodwill represents the excess of cost of acquisition over the acquirer's interest in the fair value of the identifiable net assets
+of the acquiree under the business combination involving entities not under common control.
+(9) Goodwill
+Useful lives and amortisation methods are reviewed at least each year end.
+Intangible assets, where the estimated useful life is finite, are stated in the balance sheet at cost less accumulated amortisation and provision
+for impairment losses (see Note 3(11)). For an intangible asset with finite useful life, its cost less estimated residual value and accumulated
+impairment losses is amortised on a straight-line basis over the expected useful lives, unless the intangible assets are classified as held for sale.
+An intangible asset is regarded as having an indefinite useful life and is not amortised when there is no foreseeable limit to the year over which
+the asset is expected to generate economic benefits for the Group.
+(8) Intangible assets
+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.
+(c) Method for preparation of consolidated financial statements (Continued)
+98
+97
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+Inventories are initially measured at cost. Cost includes the cost of purchase and processing, and other expenditures incurred in bringing the
+inventories to their present location and condition. The cost of inventories is calculated using the weighted average method. In addition to the
+cost of purchase of raw material, work in progress and finished goods include direct labour and an appropriate allocation of manufacturing
+overhead costs.
+3,042
+(4) Inventories
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+95
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Cash and cash equivalents comprise cash on hand, demand deposits, short-term and highly liquid investments which are readily convertible into
+known amounts of cash and are subject to an insignificant risk of change in value.
+(3) Cash and cash equivalents
+The assets and liabilities of foreign operation are translated into Renminbi at the spot exchange rates at the balance sheet date. The equity
+items, excluding “Retained earnings", are translated into Renminbi at the spot exchange rates at the transaction dates. The income and
+expenses of foreign operation are translated into Renminbi at the spot exchange rates or an exchange rate that approximates the spot exchange
+rates on the transaction dates. The resulting exchange differences are separately presented as other comprehensive income in the balance sheet
+within equity. Upon disposal of a foreign operation, the cumulative amount of the exchange differences recognised in which relate to that foreign
+operation is transferred to profit or loss in the year in which the disposal occurs.
+Foreign currency monetary items are translated at the PBOC rates at the balance sheet date. Exchange differences, except for those directly
+related to the acquisition, construction or production of qualified assets, are recognised as income or expenses in the income statement. Non-
+monetary items denominated in foreign currency measured at historical cost are not translated. Non-monetary items denominated in foreign
+currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. The difference
+between the translated amount and the original currency amount is recognised as other comprehensive income, if it is classified as other equity
+instrument investments; or charged to the income statement if it is measured at fair value through profit or loss.
+Foreign currency transactions are, on initial recognition, translated into Renminbi at the spot exchange rates quoted by the People's Bank of
+China ("PBOC rates") at the transaction dates.
+(2) Transactions in foreign currencies and translation of financial statements in foreign currencies
+The unrealised profit or loss arising from the sale of assets by the Company to its subsidiaries is eliminated in full against the net profit
+attributed to shareholders; the unrealised profit or loss from the sale of assets by subsidiaries to the Company is eliminated according to the
+distribution ratio between shareholders of the parent company and minority interests. For sale of assets that occurred between subsidiaries,
+the unrealised gains and losses is eliminated according to the distribution ratio for its subsidiaries seller between net profit attributable to
+shareholders of the parent company and minority interests.
+Where the accounting policies and accounting period adopted by the subsidiaries are different from those adopted by the Company,
+adjustments are made to the subsidiaries' financial statements according to the Company's accounting policies and accounting period. Intra-
+group balances and transactions, and any unrealised profit or loss arising from intra-group transactions, are eliminated in preparing the
+consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised
+gains but only to the extent that there is no evidence of impairment.
+The excess of the loss attributable to the minority interests during the period over the minority interests' share of the equity at the beginning
+of the reporting period is deducted from minority interests.
+Minority interest is presented separately in the consolidated balance sheet within shareholders' equity. Net profit or loss attributable to
+minority shareholders is presented separately in the consolidated income statement below the net profit line item.
+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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures are stated in Note 3(11).
+The Group discontinues recognising its share of net losses of the investee after the carrying amount of the long-term equity investment
+and any long-term interest that is in substance forms part of the Group's net investment in the associate or the joint 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 Group recognises its share of the investee's net profits or losses after making appropriate adjustments to align the accounting policies
+or accounting periods with those of the Group based on the fair values of the investee's net identifiable assets at the time of acquisition.
+Under the equity accounting method, unrealised profits and losses resulting from transactions between the Group and its associates or joint
+ventures are eliminated to the extent of the Group's interest in the associates or joint ventures. Unrealised losses resulting from transactions
+between the Group and its associates or joint ventures are fully recognised in the event that there is an evidence of impairment.
+Where the initial investment cost of a long-term equity investment exceeds the Group's interest in the fair value of the investee's identifiable
+net assets at the date of acquisition, the investment is initially recognised at the initial investment cost. Where the initial investment cost is
+less than the Group's interest in the fair value of the investee's identifiable net assets at the time of acquisition, the investment is initially
+recognised at the investor's share of the fair value of the investee's identifiable net assets, and the difference is charged to profit or loss.
+After the acquisition of the investment, the Group recognises its share of the investee's net profits or losses and other comprehensive income
+as investment income or losses and other comprehensive income, and adjusts the carrying amount of the investment accordingly. Once the
+investee declares any cash dividends or profits distributions, the carrying amount of the investment is reduced by that attributable to the
+Group.
+The Group's accounting treatments when adopting the equity method include:
+The initial cost of investment in joint ventures and associates is stated at the consideration paid except for cash dividends or profits
+distributions declared but unpaid at the time of acquisition and therefore included in the consideration paid should be deducted if the
+investment is made in cash. Under the circumstances that the long-term investment is obtained through non-monetary asset exchange, the
+initial cost of the investment is stated at the fair value of the assets exchanged if the transaction has commercial substance, the difference
+between the fair value of the assets exchanged and its carrying amount is charged to profit or loss; or stated at the carrying amount of the
+assets exchanged if the transaction lacks commercial substance.
+An investment in a joint ventures or an associate is accounted for using the equity method, unless the investment is classified as held for
+sale.
+An associate is the investee that the Group has significant influence on their financial and operating policies. Significant influence represents
+the right to participate in the financial and operating policy decisions of the investee but is not control or joint control over the establishment
+of these policies. The Group generally considers the following circumstances in determining whether it can exercise significant influence
+over the investee: whether there is representative appointed to the board of directors or equivalent governing body of the investee; whether
+to participate in the investee's policy-making process; whether there are significant transactions with the investees; whether there is
+management personnel sent to the investee; whether to provide critical technical information to the investee.
+A joint venture is an incorporated entity over which the Group, based on legal form, contractual terms and other facts and circumstances,
+has joint control with the other parties to the joint venture and rights to the net assets of the joint venture. Joint control is the contractually
+agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of
+the Group and the parties sharing control.
+Financial Statements (PRC)
+(b) Investment in joint ventures and associates
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+96
+An investment in a subsidiary acquired otherwise than through a business combination is initially recognised at actual purchase cost if the
+Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity
+securities, or at the value stipulated in the investment contract or agreement if an investment is contributed by investors.
+For a long-term equity investment obtained through a business combination not involving enterprises under common control, the initial
+investment cost comprises the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity securities issued
+by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not
+involving enterprises under common control, if it is achieved in stages, the initial cost comprises the carrying value of previously-held equity
+investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
+The initial investment cost of a long-term equity investment obtained through a business combination involving entities under common
+control is the Company's share of the carrying amount of the subsidiary's equity at the combination date. The difference between the initial
+investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the
+share premium is insufficient, any excess is adjusted to retained earnings.
+In the Company's separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method.
+Except for cash dividends or profits distributions declared but not yet distributed that have been included in the price or consideration paid
+in obtaining the investments, the Company recognises its share of the cash dividends or profit distributions declared by the investee as
+investment income irrespective of whether these represent the net profit realised by the investee before or after the investment. Investments
+in subsidiaries are stated at cost less impairment losses (see Note 3(11)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+(a) Investment in subsidiaries
+(5) Long-term equity investments (Continued)
+68,789
+90
+Balance at 1 January 2018
+126
+7. Others
+45
+(92)
+(47)
+27
+(20)
+Balance at 31 December 2017
+121,071
+119,557
+(4,413)
+888
+199,682
+290,459
+727,244
+126,826
+854,070
+Balance at 31 December 2017.
+121,071
+119,557
+(4,413)
+3
+123
+123
+Net increase in specific reserve for the year
+(7,476)
+(311)
+(299)
+(12)
+2,060
+2,060
+(67,799)
+(67,799)
+(67,799)
+(3,996)
+888
+3,996
+119,192
+(353)
+(12)
+(12)
+121,071
+Balance at 31 December 2018
+7. Net increase in specific reserve for the year
+8. Others
+(11,777)
+(44,479)
+6.
+(6,774)
+(7,476)
+199,682
+727,244
+3. Appropriations of profits:
+- Appropriations for surplus reserves
+(7,618)
+(7,618)
+5,269
+(7,618)
+994
+(6,624)
+63,089
+55,471
+18.194
+73,665
+5,269
+- Distributions to shareholders (Note 49)
+4. Transaction with minority interests
+5. Contributions to subsidiaries from non-controlling
+interests
+6. Distributions to minority interests
+Total transactions with owners, recorded directly
+in shareholders' equity
+121,071
+Transactions with owners, recorded directly in
+shareholders' equity:
+initially recognised by hedged items
+Amounts transferred to cash flow hedge reserves
+Total comprehensive income
+126,826
+854,070
+Change in accounting policy (Note 3(26))
+(12)
+12
+Balance at 1 January 2018
+121,071
+119,557
+(4,425)
+888
+290,459
+199,682
+727.244
+126.826
+854,070
+Change for the year
+1. Net profit
+63,089
+63,089
+17,200
+80,289
+2. Other comprehensive income (Note 34)
+290,471
+3,996
+5,269
+(67,811)
+(35,731)
+- - 3,042 (3.
+in shareholders' equity
+Total transactions with owners, recorded directly
+(32,689)
+(32,689)
+(3,042)
+== 3,042
+30,348
+30,415
+30,415
+(67)
+(67)
+(67)
+----30,415
+263
+569,576
+RMB million
+equity
+earnings
+RMB million
+182,440
+reserves
+RMB million
+196,640
+393
+reserve
+RMB million
+(32,689)
+4. Net increase in specific reserve for the year
+89
+89
+Change in accounting policy (Note 3(26))
+(71,795)
+567,269
+177,049
+199,682
+482
+68,789
+121,071
+Balance at 31 December 2017
+567,269
+income
+RMB million
+177,049
+(32,702)
+482
+196
+68,789
+121,071
+Balance at 31 December 2017
+(55)
+(75)
+20
+5. Others
+199,682
+reserve
+RMB million
+68,769
+196
+capital
+RMB million
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+(Legal representative)
+Chairman
+Dai Houliang
+These financial statements have been approved by the board of directors on 22 March 2019.
+857,659
+909
+(2,728)
+139,304
+718,355
+279,482
+203,678
+1,706
+(92)
+(2,636)
+(2,283)
+91
+818
+121,071
+(73,526)
+(5,715)
+Wang Dehua
+Chief Financial Officer
+818
+91
+Total
+shareholders'
+Retained
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Surplus
+Capital comprehensive
+Other
+Share
+-Distributions to shareholders (Note 49)
+- Appropriation for surplus reserves
+3. Appropriations of profits:
+in shareholders' equity:
+Specific
+Total comprehensive income
+Financial Statements (PRC)
+Transactions with owners, recorded directly
+Financial Statements (PRC)
+92
+For the year ended 31 December 2018
+STATEMENT OF CHANGES IN EQUITY
+Change for the year
+1. Net profit
+2. Other comprehensive income
+Balance at 1 January 2017
+• financial assets are not reclassified in the balance sheet for the comparative period
+• any adjustments to carrying amounts of financial assets or liabilities are recognised at the beginning of the current reporting period,
+with the difference recognised in opening retained earnings
+income
+As a consequence:
+value through other
+comprehensive
+•
+395
+395
+Other equity
+instrument
+investments
+(equity instruments)
+48,179
+Financial assets held Measured at fair
+for trading
+RMB million
+Measurement
+Item
+RMB million
+48,179
+Measured at cost
+value through profit
+or loss
+Measured at fair
+provisions for impairment have not been restated in the comparative period
+The Group has set up a project team which has reviewed all of the Group's leasing arrangements over the last year in light of the new lease
+accounting rules in the New Leases Standard. The standard will affect primarily the accounting for the Group's operating leases.
+(iii) Hedging
+Lubricant oil
+Solvent oil
+Naphtha
+Diesel
+Products
+Gasoline
+Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Major types of tax applicable to the Group are income tax, consumption tax, resources tax, value added tax, city construction tax, education
+surcharge and local education surcharge.
+4 TAXATION
+For the year ended 31 December 2018
+(ii) The Group has adopted the simplified expected credit loss model for its receivables and contract assets, and the general expected credit
+loss model for receivables and contract assets carried at amortised. The Group assessed the loss allowance for receivables under the
+expected credit loss model on 1 January 2018, no significant difference compared with the loss allowance under accounting policies
+applied until 31 December 2017.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+108
+The Group expects to recognise right-of-use assets of approximately RMB 207.5 billion on 1 January 2019, lease liabilities of RMB 198.6
+billion (after adjustments for prepayments and accrued lease payments recognised as at 31 December 2018).
+the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases
+.
+the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
+.
+MoF issued revised "No. 21 Accounting Standard for Business Enterprises - Leases" ("New Leases Standard") in December 2018 and the
+New Leases Standard will be effective on 1 January 2019. It will result in almost all leases being recognised on the balance sheet by lessees,
+as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and
+a financial liability to pay rentals are recognised. Leases to explore for or use oil and natural gas are not applied to the New Leases Standard.
+The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group intends to apply the simplified transition
+approach and will not restate comparative amounts for the year prior to first adoption. All right-of-use assets will be measured at the amount
+of the lease liabilities on adoption (adjusted for any prepaid or accrued lease expenses). In applying the New Leases Standard for the first
+time, the Group has used the following practical expedients permitted by the standard:
+(d) New and amended standards and interpretations not yet adopted by the Group
+The Group has applied the hedging accounting prospectively to the derivatives held for hedging purpose.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+or loss
+(26) Changes in significant accounting policies (Continued)
+financial assets
+178
+Measured at fair
+51,196
+RMB million
+through profit or loss
+Measured at fair value
+New Financial Instruments Standards
+Measurement
+held for trading
+Financial assets
+Item
+RMB million
+51,196
+Measured at fair value
+through profit or loss
+Available-for-sale financial assets
+Financial assets at fair value through profit or loss
+Measurement
+Item
+Fuel oil
+before revision
+Other equity
+Measured at fair
+1,676
+value through other
+comprehensive income
+Available-for-sale
+profit or loss
+fair value through
+Financial assets at
+Item
+New Financial Instruments Standards
+Financial Instruments Standards before revision
+At 1 January 2018, the comparatives of classification and measurement in the Company's financial statements between the New Financial
+Instruments Standards and the Financial Instruments Standards before revision are as below:
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Measurement
+Measured at fair
+value through profit
+For the year ended 31 December 2018
+Financial Statements (PRC)
+Financial Statements (PRC)
+107
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+1,498
+(equity instruments)
+Measured at cost
+(equity instruments)
+value through other
+comprehensive income
+investments
+instrument
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Jet fuel oil
+0.8359
+CASH AT BANK AND ON HAND
+7.8023
+15,256
+6.5342
+2,336
+16
+33
+16,374
+6.8632
+7.8473
+2,389
+4
+32,117
+24,625
+112
+117,490
+125,958
+79
+10
+7.8023
+1
+11
+7.8473
+1
+126
+82
+25
+41,057
+167,015
+Financial Instruments Standards
+Financial Statements (PRC)
+109
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The financial assets are primarily the structured deposit with financial institutions, which are presented as current assets since they are expected to
+be expired within 12 months from the end of the reporting period.
+51,196
+2017
+RMB million
+51,196
+25,550
+182
+25,732
+At 31 December
+At 31 December
+2018
+RMB million
+Total
+Equity investments, listed and at quoted market price
+Structured deposit
+6 FINANCIAL ASSETS HELD FOR TRADING
+At 31 December 2018, structured deposits included in cash at bank and on hand with financial institutions of the Group amounted to RMB 77,909
+million (2017: RMB 65,250 million).
+At 31 December 2018, time deposits with financial institutions of the Group amounted to RMB 55,093 million (2017: RMB 51,786 million).
+Deposits at related parties represent deposits placed at Sinopec Finance Company Limited and Sinopec Century Bright Capital Investment Limited.
+Deposits interest is calculated based on market rate.
+165,004
+47,514
+15
+98
+35
+0.8762
+1,411.20
+2,109.76
+(RMB/Ton)
+13 January 2015
+Effective from
+Total
+Others
+US Dollars
+EUR
+Renminbi
+Deposits at related parities
+Others
+EUR
+Hong Kong Dollars
+US Dollars
+Renminbi
+Cash at bank
+Renminbi
+Cash on hand
+The Group
+2,105.20
+1,948.64
+1,711.52
+1,218.00
+39
+24,561
+6.5342
+3,760
+23,179
+6.8632
+3,377
+92,711
+102,572
+5
+14
+RMB
+million
+Exchange
+rates
+currency
+million
+RMB
+million
+Exchange
+rates
+At 31 December 2017
+Original
+Original
+currency
+million
+At 31 December 2018
+1,495.20
+82
+(i) At 1 January 2018, the comparatives of classification and measurement in the Group's financial statements between the New Financial
+Instruments Standards and the Financial Instruments Standards before revision are as below:
+The Company combined presents bills receivable
+and accounts receivable into bills and
+accounts receivable
+(c) MOF issued revised "No.22 Accounting Standards for Business Enterprises Financial instruments: recognition and measurement", revised
+"No.23 Accounting Standards for Business Enterprises Transfer of financial assets", revised “No.24 Accounting Standards for Business
+Enterprises Hedging" and revised "No.37 Accounting Standards for Business Enterprises Presentation of financial instruments" (collectively
+referred to as "New Financial Instruments Standards"). The New Financial Instruments Standards were effective on 1 January 2018. In
+accordance with the New Financial Instruments Standards, the Group classified and measured financial instruments (including impairment),
+involving comparative financial statements which are not consistent with the requirements of this standard and need not be adjusted. The
+difference between the original book value of the financial instrument and the new book value on the date of execution of the New Financial
+Instruments Standards shall be included in the retained earnings or other comprehensive income at the beginning financial statements. The
+Group has adopted the above guidelines to prepare financial statements of the year ended 31 December 2018, while the comparative figures
+for 2017 have not been restated.
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+(16) Revenue recognition
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+costs, is reflected as an adjustment to the provision of oil and gas properties.
+Provisions are recognised when the Group has a present obligation as a result of a contingent event, it is probable that an outflow of economic
+benefits will be required to settle the obligations and a reliable estimate can be made. Where the effect of time value of money is material,
+provisions are determined by discounting the expected future cash flows.
+(15) Provisions
+different taxable entities which either to intend to settle the current tax liabilities and assets on a net basis, or to realise the assets and
+settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to
+be settled or recovered.
+the same taxable entity; or
+-
+they relate to income taxes levied by the same tax authority on either:
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+The carrying amount of deferred tax assets is reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset
+against the benefit of deferred tax asset, the carrying amount of the deferred tax assets is written down. Any such write-down should be
+subsequently reversed where it becomes probable that sufficient taxable income will be available.
+At the balance sheet date, the amounts of deferred tax recognised is measured based on the expected manner of recovery or settlement of the
+carrying amount of the assets and liabilities, using tax rates that are expected to be applied in the period when the asset is recovered or the
+liability is settled in accordance with tax laws.
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recogniesd according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+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, current tax assets and liabilities are offset if the Group has a legally enforceable right to set them off and also intends
+either to settle on a net basis or to realise the asset and settle the liability simultaneously.
+Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year, plus any adjustment to tax payable
+in respect of previous years.
+Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to business combinations and items recognised
+directly in equity (including other comprehensive income).
+(14) Income tax
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+When the Group terminates the employment relationship with employees before the employment contracts expire, or provides compensation
+as an offer to encourage employees to accept voluntary redundancy, a provision for the termination benefits provided is recognised in profit
+or loss under the conditions of both the Group has a formal plan for the termination of employment or has made an offer to employees for
+voluntary redundancy, which will be implemented shortly; and the Group is not allowed to withdraw from termination plan or redundancy
+offer unilaterally.
+(c) Termination benefits
+Employees of the Group participate in the social insurance system established and managed by local labor and social security department.
+The Group makes basic pension insurance to the local social insurance agencies every month, at the applicable benchmarks and rates
+stipulated by the government for the benefits of its employees. After the employees retire, the local labor and social security department has
+obligations to pay them the basic pension. When an employee has rendered service to the Group during an accounting period, the Group
+shall recognise the accrued amount according to the above social security provisions as a liability and charge to the cost of an asset or to
+profit or loss in the same period.
+Basic pension insurance
+The Group classifies post-employment benefits into either Defined Contribution Plan (DC plan) or Defined Benefit Plan (DB plan). DC plan
+means the Group only contributes a fixed amount to an independent fund and no longer bears other payment obligation; DB plan is post-
+employment benefits other than DC plan. In this reporting period, the post-employment benefits of the Group primarily comprise basic
+pension insurance and unemployment insurance and both of them are DC plans.
+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.
+Sales of goods
+Sales are recognised when control of the goods have transferred, being when the products are delivered to the customer. Advance from
+customers but goods not yet delivered is recorded as contract liabilities and is recognised as revenues when a customer obtains control over the
+relevant goods.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(a) the holding company of the Company;
+If a party has the power to control, jointly control or exercise significant influence over another party, or vice versa, or where two or more parties
+are subject to common control, joint control from another party, they are considered to be related parties. Related parties may be individuals or
+enterprises. Where enterprises are subject to state control but are otherwise unrelated, they are not related parties. Related parties of the Group
+and the Company include, but not limited to:
+(24) Related parties
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+104
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+(23) Dividends
+Operating lease payments are charged as expenses on a straight-line basis over the period of the respective leases.
+Research costs and development costs that cannot meet the capitalisation criteria are recognised in profit or loss when incurred.
+(22) Operating leases
+(21) Research and development costs
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations is expensed as incurred.
+Liabilities related to future remediation costs are recorded when environmental assessments and/or cleanups are probable and the costs can
+be reliably estimated. As facts concerning environmental contingencies become known to the Group, the Group reassesses its position both with
+respect to accrued liabilities and other potential exposures.
+(20) Environmental expenditures
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+(19) Repairs and maintenance expenses
+Except for the above, other borrowing costs are recognised as financial expenses in the income statement when incurred.
+Borrowing costs incurred on borrowings for the acquisition, construction or production of qualified assets are capitalised into the cost of the
+related assets in the capitalisable period.
+(18) Borrowing costs
+Government grants received in relation to assets are recorded as deferred income, and recognised evenly in profit or loss over the assets'
+useful lives. Government grants received in relation to revenue are recorded as deferred income, and recognised as income in future periods as
+compensation when the associated future expenses or losses arise; or directly recognised as income in the current period as compensation for
+past expenses or losses.
+Government grants are recognised when there is reasonable assurance that the grants will be received and the Group is able to comply with
+the conditions attaching to them. Government grants in the form of monetary assets are recorded based on the amount received or receivable,
+whereas non-monetary assets are measured at fair value.
+Government grants are the gratuitous monetary assets or non-monetary assets that the Group receives from the government, excluding capital
+injection by the government as an investor. Special funds such as investment grants allocated by the government, if clearly defined in official
+documents as part of "capital reserve" are dealt with as capital contributions, and not regarded as government grants.
+(17) Government grants
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+103
+(b) Post-employment benefits
+Short term compensation includes salaries, bonuses, allowances and subsidies, employee benefits, medical insurance premiums, work.
+related injury insurance premium, maternity insurance premium, contributions to housing fund, unions and education fund and short-term
+absence with payment etc.. When an employee has rendered service to the Group during an accounting period, the Group shall recognise the
+short term compensation actually incurred as a liability and charge to the cost of an asset or to profit or loss in the same period, and non-
+monetary benefits are valued with the fair value.
+(a) Short term compensation
+Employee benefits are all forms of considerations and compensation given in exchange for services rendered by employees, including short term
+compensation, post-employment benefits, termination benefits and other long term employee benefits.
+(d) Derivative financial instruments and hedge accounting
+Derivative financial instruments are recognised initially at fair value. At each balance sheet date, the fair value is remeasured. The gain or
+loss on remeasurement to fair value is recognised immediately in profit or loss, except where the derivatives qualify for hedge accounting.
+(10) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+100
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+(c) Determination of fair value
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities
+or discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or
+loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable and accounts payable, other
+payables, loans and debentures payable, etc. These financial liabilities are initially measured at the amount of their fair value after deducting
+transaction costs and use the effective interest rate method for subsequent measurement.
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or
+financial liabilities at fair value through profit or loss.
+(b) Financial liabilities
+On derecognition of other equity instrument investments, the difference between the carrying amounts and the sum of the consideration
+received and any cumulative gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While
+on derecognition of other financial assets, this difference is recognised in profit or loss.
+The Group derecognises a financial asset when a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial assets have
+been transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but
+the Group has not retained control.
+(iii) Derecognition
+For receivables related to revenue, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in
+credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss
+allowance at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial
+recognition of a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance
+at an amount equal to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial
+instrument, on third stage, the Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for expected credit losses on a financial asset that is measured at amortised cost.
+(ii) Impairment
+(a) Financial assets (Continued)
+(10) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+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.
+(b) the subsidiaries of the Company;
+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.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods.
+(13) Employee benefits
+(12) Long-term deferred expenses
+Impairment losses for assets are not reversed.
+If the recoverable amount of an asset is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The amount
+by which the carrying amount is reduced is recognised as an impairment loss in profit or loss. A provision for impairment loss of the asset
+is recognised accordingly. Impairment losses related to an asset unit or a set of asset units first reduce the carrying amount of any goodwill
+allocated to the asset unit or set of asset units, and then reduce the carrying amount of the other assets in the asset unit or set of asset units on
+a pro rata basis. However, the carrying amount of an impaired asset will not be reduced below the highest of its individual fair value less costs
+to sell (if determinable), the present value of expected future cash flows (if determinable) and zero.
+Fair value less costs to sell of an asset is based on its selling price in an arm's length transaction less any direct costs attributable to the
+disposal. Present value of expected future cash flows is the estimation of future cash flows to be generated from the use of and upon disposal of
+the asset, discounted at an appropriate pre-tax discount rate over the asset's remaining useful life.
+The recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows generated by the
+asset (or asset unit, set of asset units).
+An asset unit is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or
+groups of assets. An asset unit comprises related assets that generate associated cash inflows. In identifying an asset unit, the Group primarily
+considers whether the asset unit is able to generate cash inflows independently as well as the management style of production and operational
+activities, and the decision for the use or disposal of asset.
+Assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The
+recoverable amounts of goodwill and intangible assets with uncertain useful lives are estimated annually no matter there are any indications of
+impairment. Goodwill is tested for impairment together with related asset units or groups of asset units.
+Internal and external sources of information are reviewed at each balance sheet date for indications that the following assets, including fixed
+assets, construction in progress, goodwill, intangible assets and investments in subsidiaries, associates and joint ventures may be impaired.
+(11) Impairment of other non-financial long-term assets
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+102
+Financial Statements (PRC)
+101
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (ie
+the entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised,
+or there is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to
+dominate the value changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the Group.
+discontinues prospectively the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that amount shall
+remain in the cash flow hedge reserve and shall be accounted for as cash flow hedges. If the hedged future cash flows are no longer
+expected to occur, that amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a reclassification
+adjustment. A hedged future cash flow that is no longer highly probable to occur may still be expected to occur, if the hedged future cash
+flows are still expected to occur, that amount shall remain in the cash flow hedge reserve and shall be accounted for as cash flow hedges.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss
+will not be recovered in one or more future periods, the Group immediately reclassify the amount that is not expected to be recovered
+into profit or loss.
+For cash flow hedges, other than those covered by the preceding two policy statements, that amount shall be reclassified from the cash
+flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected
+future cash flows affect profit or loss.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged
+forecast transaction for a non-financial asset or a nonfinancial liability becomes a firm commitment for which fair value hedge accounting
+is applied, the entity shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying
+amount of the asset or the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+The cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The cumulative gain or loss on the hedging instrument from inception of the hedge;
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a
+component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable
+forecast transaction, and could affect profit or loss. As long as a cash flow hedge meets the qualifying criteria for hedge accounting, the
+hedging relationship shall be accounted for as follows:
+Cash flow hedges
+(3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually
+hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that
+designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+(2) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(1) There is an economic relationship between the hedged item and the hedging instrument, which shares a risk and that gives rise to
+opposite changes in fair value that tend to offset each other.
+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.
+The New Financial Instruments Standards have no significant impact on the shareholder's equity. The impact to the Group's financial
+statements is presented as below:
+(c) the parties that are subject to common control with the Company;
+(e) enterprises or individuals if a party has control, joint control over both the enterprises or individuals and the Group;
+Bills receivable
+(2,761)
+(3,155)
+(75,787)
+(83,449)
+78,548
+86,604
+Bills payable and accounts payable
+Accounts payable
+(5,454)
+(16,327)
+Dividends receivable
+5,454
+16,327
+Other receivables
+(471)
+(157)
+38,803
+(38,332)
+1 January
+2017
+RMB million
+37,766
+(37,609)
+RMB million
+31 December
+2017
+Bills receivable and accounts receivable
+Accounts receivable
+Item
+and accounts payable into bills and accounts payable
+The Company combined presents dividends receivable
+and other receivables into other receivables
+The Company combined presents bills payable
+Contents and reasons of the changes
+6,423
+(6,423)
+Year of 2017
+RMB million
+Research and development expenses
+General and administrative expenses
+Bills payable
+Item
+Contents and reasons of the changes
+Item
+4,230
+(4,230)
+124,793
+(124,793)
+At 31 December 2018 (RMB million)
+The Group
+The Company
+Advances from customers
+Contract liabilities
+Item
+Financial statement items as at 31 December 2018 that affected by the implementation of New Revenue Standard compared to the original
+revenue standard is as follows:
+(3,413)
+3,413
+The Company
+(120,734)
+120,734
+At 1 January 2018 (RMB million)
+The Group
+Advances from customers
+Contract liabilities
+Advances from customers were reclassified as contract liabilities
+by implementation of the New Revenue Standard
+Item
+Contents and reasons of the changes
+The New Revenue Standard has no significant impact on the shareholder's equity in the consolidated balance sheet. Other financial statement
+items that affected by the initial implementation of the standard is as follows:
+(b) MOF issued revised "No.14 Accounting Standard for Business Enterprises ⚫ Revenue" ("New Revenue Standard") in 2017 and the New
+Revenue Standard was effective on 1 January 2018. In accordance with the New Revenue Standard, the Group adjusted the first year's
+retained earnings and other related items of the financial statements according to the cumulative impact of the New Revenue Standard for
+the first time, while the comparative financial statements have not been restated. The Group has adopted the above standard to prepare the
+financial statements of 2018, while the comparative financial statements of 2017 have not been restated.
+(26) Changes in significant accounting policies (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+5,445
+(5,445)
+RMB million
+Year of 2017
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Research and development expenses
+General and administrative expenses
+The research and development expenses originally included
+in the general and administrative expenses were separately
+presented as the research and development expenses
+in income statements
+(d) investors that have joint control or exercise significant influence over the Group;
+(ii) The impact to the Company's financial statements is as follows:
+Dividends payable
+1 January
+2017
+RMB million
+31 December
+2017
+(i) The impact to the Group's financial statements is as follows:
+(a) MOF issued Cai Kuai [2018] No. 15 “Announcement of the revision of general enterprise financial statements format for 2018". The Group
+has adopted the above guidelines to prepare the financial statements of 2018. The comparative financial statements of 2017 have been
+adjusted.
+(26) Changes in significant accounting policies
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+106
+Financial Statements (PRC)
+105
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment
+accounting policies are consistent with those for the consolidated financial statements.
+for which financial information regarding financial position, results of operations and cash flows are available.
+whose operating results are regularly reviewed by the Group's management to make decisions about resource to be allocated to the segment
+and assess its performance; and
+⋅
+•
+engage in business activities from which it may earn revenues and incur expenses;
+•
+Reportable segments are identified based on operating segments which are determined based on the structure of the Group's internal
+organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the
+following respective conditions:
+(25) Segment reporting
+(I) an entity which is under control, joint control of principle individual investor, key management personnel or close family members of such
+individuals.
+(k) close family members of key management personnel of the Company's holding company; and
+(j) key management personnel of the Company's holding company;
+(i) key management personnel of the Group, and close family members of such individuals;
+(h) principle individual investors of the Group and close family members of such individuals;
+(g) associates of the Group, including subsidiaries of the associates;
+(f) joint ventures of the Group, including subsidiaries of the joint ventures;
+Contents and reasons of the changes
+The research and development expenses originally included
+in the general and administrative expenses were separately
+presented as the research and development
+expenses in income statements
+The Group combined presents bills receivable
+and accounts receivable into bills
+and accounts receivable
+and fixed assets pending for disposal into fixed assets
+The Group combined presents bills payable
+Other payables
+Other non-current assets
+(2,006)
+(6,843)
+2,006
+6,843
+(5,828)
+(6,462)
+Bills payable
+(174,301)
+(200,073)
+180,129
+206,535
+The Group combined presents fixed assets
+Bills payable and accounts payable
+Accounts payable
+146
+and accounts payable into bills and accounts payable
+The Group combined presents interests payable,
+dividends payable and other payables
+into other payables
+Contents and reasons of the changes
+Item
+Bills receivable and accounts receivable
+Accounts receivable
+(146)
+Bills receivable
+RMB million
+84,701
+(68,494)
+63,486
+(50,289)
+(16,207)
+(13,197)
+Fixed assets
+Financial Statements (PRC)
+617,762
+50
+617,812
+and distribution
+(229)
+(2)
+(5,164)
+(4,108)
+(2)
+(9,272)
+(444)
+(247)
+(691)
+805
+757
+(78)
+1,484
+51
+51
+6
+6
+57,134
+90,273
+(1,686)
+145,721
+Investments in Investments in Investments in
+subsidiaries Joint ventures
+RMB million
+Provision for
+impairment
+(222)
+RMB million
+(7)
+7,251
+Balance at 1 January 2018
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive loss under the equity method
+Other equity movements under the equity method
+Dividends declared
+Disposals for the year
+Other movements
+Movement of provision for impairment
+Balance at 31 December 2018
+Investments in
+joint ventures
+RMB million
+Investments in
+associates
+RMB million
+Provision for
+impairment
+52,272
+80,429
+losses
+RMB million
+(1,614)
+Total
+RMB million
+131,087
+2,900
+6,413
+9,313
+6,723
+13,974
+associates
+RMB million
+losses
+253,011
+8,351
+For the year ended 31 December 2018, the Group and the Company had no individually significant long-term investment impairment.
+Details of the Company's principal subsidiaries are set out in Note 54.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+113
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+Principal joint ventures and associates of the Group are as follows:
+(a) Principal joint ventures and associates
+Name of investees
+Principal
+place of
+business
+Register
+location
+Legal
+representative
+Principal
+activities
+Registered
+Capital RMB
+million
+Percentage of
+equity/voting
+right directly
+or indirectly
+held by the
+Company
+1.Joint ventures
+Fujian Refining & Petrochemical Company
+Limited ("FREP")
+PRC
+PRC
+Gu Yuefeng
+Manufacturing
+289,207
+(128)
+(128)
+(7,983)
+21,163
+14,822
+15,579
+RMB million
+(7,855)
+Total
+RMB million
+275,557
+699
+5,014
+14,064
+3,047
+1,212
+4,259
+The Company
+(64)
+(64)
+1
+(1,432)
+4
+(2,204)
+(327)
+56
+(637)
+58
+(2,841)
+(1,759)
+118
+259,934
+16,093
+1
+Balance at 31 December 2018
+Movement of provision for impairment
+Other movements
+22.6
+1
+12,920
+19.9
+1
+Between two and three years
+9,747
+16.6
+2,570
+4.0
+2
+0.1
+Over three years
+8,481
+14.5
+1,116
+13.2
+9,219
+14.2
+1,159
+12.6
+Total
+58,549
+13,233
+-
+61.9
+40,273
+to total other
+to other
+receivables
+Percentage
+to total other
+Amount
+receivables
+Allowance
+balance
+Amount
+receivables
+RMB million
+%
+100.0
+RMB million
+%
+RMB million
+%
+Allowance
+RMB million
+to other
+receivables
+%
+Within one year
+Between one and two years
+27,088
+46.3
+0%
+14,758
+1,117
+100.0
+RMB million
+85,469
+85,975
+13,690
+14,774
+88,929
+84,448
+2,872
+2,651
+190,960
+6,376
+184,584
+187,848
+1,155
+186,693
+For the year ended 31 December 2018, the provision for diminution in value of inventories of the Group amounted to RMB 5,535 million mainly
+related to crude oil, finished goods and work in progress of refined oil products and chemical products (2017: RMB 436 million mainly related to
+the spare parts and consumables in refining segment and chemical segment).
+12 LONG-TERM EQUITY INVESTMENTS
+The Group
+Balance at 1 January 2018
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive loss under the equity method
+Other equity movements under the equity method
+Dividends declared
+Disposals for the year
+Foreign currency translation differences
+RMB million
+2017
+At 31 December
+At 31 December
+2018
+1,162
+At 31 December 2018 and 2017, the total amounts of the top five other receivables of the Group are set out below:
+At 31 December
+At 31 December
+Total amount (RMB million)
+Ageing
+Percentage to the total balance of other receivables
+2018
+6,837
+Within one year
+25.5%
+2017
+5,947
+Within one year
+34.1%
+Allowance for doubtful accounts
+64,982
+During the year ended 31 December 2018 and 2017, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+112
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+11 INVENTORIES
+The Group
+Raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+Less: Provision for diminution in value of inventories
+Total
+During the year ended 31 December 2018 and 2017, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided for in prior years.
+Percentage
+50.00%
+products
+5,795
+5,335
+3,689
+2,462
+10,267
+10,816
+4,007
+2,709
+Total current assets
+16,636
+16,785
+7,377
+7,135
+7,095
+4,814
+11,197
+15,732
+9,117
+9,233
+Non-current assets
+19,271
+19,740
+11,086
+11,013
+12,075
+9,248
+6,524
+2018
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+Cash and cash equivalents
+7,388
+5,772
+1,582
+1,800
+3,406
+2,352
+930
+4,916
+5,110
+Other current assets
+9,216
+7,978
+51,873
+(6,184)
+(2,547)
+(2,215)
+(2,183)
+(1,934)
+(17,023)
+(17,271)
+(3,007)
+(5,782)
+Non-current liabilities
+Non-current financial liabilities
+(12,454)
+(13,654)
+(218)
+(955)
+(72)
+(72)
+(32,364)
+(35,619)
+(3,651)
+(4,101)
+Other non-current liabilities
+(279)
+(6,139)
+Total current liabilities
+(4,546)
+(2,507)
+51,553
+13,990
+13,248
+Current liabilities
+Current financial liabilities
+(1,200)
+(1,135)
+(725)
+(233)
+(59)
+(20)
+2017
+(4,806)
+(500)
+(1,236)
+Other current liabilities
+(4,939)
+(5,049)
+(1,822)
+(1,982)
+(2,124)
+(1,914)
+(12,217)
+(11,864)
+(5,407)
+At 31
+December
+At 31
+December
+At 31
+December
+and processing
+Manufacturing
+of petrochemical
+products
+USD
+9,796
+50.00%
+2.Associates
+Sinopec Sichuan to East China Gas
+PRC
+PRC
+Quan Kai
+Operation of natural
+200
+50.00%
+Pipeline Co., Ltd. ("Pipeline Ltd")
+gas pipelines and
+auxiliary facilities
+Sinopec Finance Company Limited
+("Sinopec Finance")
+PRC
+PRC
+Zhao Dong
+Provision of non-
+18,000
+49.00%
+UWAIDH AL⚫
+HARETHI
+PRC
+PRC
+37.50%
+BASF-YPC Company Limited ("BASF-YPC") PRC
+PRC
+Wang Jingyi
+Manufacturing
+12,547
+40.00%
+and distribution
+of petrochemical
+products
+Company Ltd. ("YASREF”)
+Taihu Limited ("Taihu")
+banking financial
+Yanbu Aramco Sinopec Refining
+Company Limited ("Sinopec SABIC
+Tianjin")
+Russia
+Cyprus
+NA
+Saudi Arabia
+Saudi Arabia
+NA
+Crude oil and natural
+gas extraction
+Petroleum refining
+25,000 USD
+49.00%
+1,560 million
+Sinopec SABIC Tianjin Petrochemical
+refining oil
+services
+Russia
+114
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(b) Major financial information of principal joint ventures
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+FREP
+At 31
+December
+At 31
+December
+BASF-YPC
+At 31
+December
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+At 31
+December
+2018
+2017
+2018
+2017
+At 31
+December
+2018
+At 31
+December
+2017
+At 31
+December
+2018
+Except that SIBUR is a public joint stock company, other joint ventures and associates above are limited companies.
+gas extraction
+50.00%
+10,000 USD
+Russia
+NA
+Processing
+21,784 million
+10.00%
+natural gas and
+RUB
+manufacturing
+petrochemical
+Zhongtian Synergetic Energy
+PRC
+PAO SIBUR Holding ("SIBUR")
+PRC
+Company Limited ("Zhongtian
+Synergetic Energy")
+products
+Mining coal and
+manufacturing
+17,516
+38.75%
+of coal-chemical
+products
+Caspian Investments Resources Ltd.
+("CIR")
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+NA
+Crude oil and natural
+Peng Yi
+(236)
+Percentage of
+allowance
+of allowance
+144
+0.5
+30,120
+100.0
+94250
+receivable
+balance
+Amount
+% RMB million
+37,331
+accounts
+receivable
+Allowance
+% RMB million
+to accounts
+receivable
+balance
+%
+15
+12.0
+134
+10
+18.5
+154
+106
+73.6
+137
+131
+37,756
+80008
+98.8
+Over three years
+Total
+0.4
+0.2
+0.4
+69,106
+100.0
+612
+The Company
+At 31 December 2018
+Percentage
+Percentage
+At 31 December 2017
+Percentage
+Percentage
+of allowance
+of allowance
+to total
+to accounts
+to total
+Amount
+accounts
+receivable
+RMB million
+Allowance
+% RMB million
+Within one year
+Between one and two years
+Between two and three years
+29,797
+125
+98.9
+54
+17
+12.7
+0.4
+Total
+Ageing analysis of prepayments is as follows:
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+The Group
+The Company
+At 31 December
+2018
+RMB million
+At 31 December
+2017
+RMB million
+5,990
+53
+5,937
+4,926
+25
+4,901
+At 31 December
+2018
+RMB million
+2,493
+5
+2,488
+At 31 December
+2017
+RMB million
+4,433
+Less: Allowance for doubtful accounts
+Prepayments
+PREPAYMENTS
+9
+0.4
+100.0
+147
+201
+29
+18.8
+101
+73.7
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+8
+606
+BILLS RECEIVABLE AND ACCOUNTS RECEIVABLE (Continued)
+At 31 December 2018 and 31 December 2017, the total amounts of the top five accounts receivable of the Group are set out below:
+At 31 December
+Total amount (RMB million)
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+2018
+15,699
+27.3%
+At 31 December
+2017
+17,920
+25.9%
+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.
+Bills receivables and accounts receivable (net of impairment losses for bad and doubtful debts) primarily represent receivables that are neither
+past due nor impaired. These receivables relate to a wide range of customers for whom there is no recent history of default. Information about
+the impairment of trade accounts receivable and the Group exposure to credit risk can be found in Note 58.
+During 2018 and 2017, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+During 2018 and 2017, the Group and the Company had no individually significant write-off or recovery of doubtful debts which had been fully or
+substantially provided for in prior years.
+(b) Accounts receivable (Continued)
+100.0
+57,599
+80.8
+37,766
+Bills receivable represents mainly the bills of acceptance issued by banks for sales of goods and products.
+At 31 December 2018, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB 4,385 million (2017:
+RMB 12,190 million).
+At 31 December 2018, the Group considers that its bills of acceptance issued by banks do not pose a significant credit risk and will not cause
+any significant loss due to the default of drawers.
+(b) Accounts receivable
+Accounts receivable
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis on accounts receivable is as follows:
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+The Group
+The Company
+At 31 December
+2018
+At 31 December
+2017
+RMB million
+57,599
+606
+56,993
+RMB million
+At 31 December
+2018
+RMB million
+69,106
+612
+68,494
+30,120
+131
+29,989
+157
+37,609
+29,989
+30,145
+84,701
+64,879
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+7
+DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+Derivative financal assets and derivative financial liabilities of the Group are primarily commodity futures and swaps. See Note 58.
+8
+BILLS RECEIVABLE AND ACCOUNTS RECEIVABLE
+Bills receivable (a)
+Accounts receivable (b)
+Total
+(a) Bills receivable
+The Group
+At 31 December
+2017
+RMB million
+The Company
+2018
+At 31 December
+2017
+RMB million
+RMB million
+7,886
+16,207
+At 31 December
+2018
+RMB million
+156
+At 31 December
+2017
+RMB million
+56,993
+68,494
+At 31 December
+4
+4,429
+37,756
+147
+37,609
+Percentage
+436
+0.8
+83
+19.0
+715
+1.0
+142
+19.9
+289
+0.5
+165
+57.1
+87
+0.1
+44
+50.6
+443
+0.8
+358
+80.8
+527
+0.8
+426
+98.1
+67,777
+-
+97.9
+to total
+The Group
+Percentage
+of allowance
+At 31 December 2017
+Percentage
+Percentage
+of allowance
+Amount
+RMB million
+accounts
+receivable
+Allowance
+% RMB million
+At 31 December 2018
+to accounts
+receivable
+balance
+to accounts
+Amount
+accounts
+receivable
+receivable
+%
+RMB million
+%
+Allowance
+RMB million
+balance
+%
+56,431
+to total
+At 31 December 2017
+At 31 December 2018
+At 31 December 2017
+At 31 December
+2017
+RMB million
+26,793
+1,481
+25,312
+17,427
+1,486
+15,941
+58,549
+64,982
+1,117
+57,432
+1,162
+63,820
+The Group
+At 31 December 2018
+Percentage
+of allowance
+At 31 December 2017
+Percentage
+of allowance
+Percentage
+to total other
+to other
+receivables
+Percentage
+to total other
+to other
+receivables
+Amount
+At 31 December
+2018
+RMB million
+receivables
+At 31 December
+2017
+RMB million
+2018
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+9
+PREPAYMENTS (Continued)
+At 31 December 2018 and 31 December 2017, the total amounts of the top five prepayments of the Group are set out below:
+Total amount (RMB million)
+Percentage to the total balance of prepayments
+10 OTHER RECEIVABLES
+Other receivables
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of other receivables is as follows:
+At 31 December
+At 31 December
+2018
+2,009
+2017
+1,472
+33.5%
+29.9%
+The Group
+The Company
+At 31 December
+RMB million
+Allowance
+balance
+RMB million
+82
+16.1
+21
+6.6
+433
+2.5
+44
+10.2
+1,407
+76.3
+1,820
+10.4
+1,360
+74.7
+26,793
+100.0
+1,481
+17,427
+100.0
+1,486
+The Company
+At 31 December 2018
+Percentage
+2.9
+509
+16.1
+53
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+24,301
+%
+90.7
+RMB million
+%
+Amount
+RMB million
+receivables
+Allowance
+Financial Statements (PRC)
+balance
+RMB million
+01
+14.665
+84.2
+329
+1.2
+320
+1.2
+1,843
+6.9
+222
+%
+111
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+4
+5
+8.3
+85
+10
+12.8
+5,990
+100.0
+53
+63
+4,926
+33118
+93.5
+3.5
+1.7
+1.3
+100.0
+55539
+-
+14
+8.1
+4
+4.7
+7
+11.1
+13
+1.3
+78
+1.0
+Percentage
+Percentage of
+allowance to
+Amount
+RMB million
+to total
+prepayments
+prepayments
+Allowance
+balance
+%
+RMB million
+%
+Amount
+RMB million
+25
+Percentage
+to total
+prepayments
+%
+Allowance
+RMB million
+balance
+%
+5,683
+94.9
+169
+2.8
+38
+22.5
+4,605
+173
+60
+Percentage of
+allowance to
+prepayments
+The Group
+The Company
+Amount
+3.2
+3
+123
+187
+2.8
+3.7
+2,493
+100.0
+5
+4,433
+21283
+95.3
+100.0
+33680
+52010
+2.3
+1
+1.0
+0.6
+-
+1.8
+3
+3.8
+81
+1
+1.4
+36
+Percentage
+to total
+prepayments
+Percentage of
+allowance to
+prepayments
+RMB million
+%
+Allowance
+RMB million
+balance
+%
+Amount
+Percentage
+to total
+prepayments
+RMB million
+%
+At 31 December 2018
+Allowance
+RMB million
+Percentage of
+allowance to
+prepayments
+balance
+%
+2,306
+92.6
+4,227
+70
+2.8
+1
+1.4
+101
+At 31 December 2017
+110
+(17)
+(2,271)
+2018
+capitalised at
+31 December
+Accumulated
+interest
+Source of
+funding
+amount
+2018
+RMB million
+RMB million
+RMB million
+RMB million
+Percentage
+of project
+investment
+to budgeted
+Balance at
+31 December
+Net change
+for the year
+2018
+Balance at
+1 January
+Budgeted
+amount
+Project name
+50,046
+51,598
+136,963
+118,645
+413
+1,854
+47
+RMB million
+(1)
+Zhongke Refine Integration Project
+6,990
+180
+Bank loans &
+86%
+2,038
+(1,116)
+3,154
+13,639
+Tianjin LNG Project
+self-financing
+(First-stage)
+51
+Bank loans &
+25%
+3,428
+2,099
+1,329
+13,865
+Wen 23 Gas Storage Project
+184
+Bank loans &
+self-financing
+51%
+17,779
+10,789
+34,667
+28
+413
+1,780
+Balance at 31 December 2018
+Exchange adjustments
+Transferred to fixed assets
+Reclassification to other assets
+Disposals for the year
+Transferred to subsidiaries
+Dry hole costs written off
+Balance at 1 January 2018
+Additions for the year
+Cost:
+14 CONSTRUCTION IN PROGRESS
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2018 and 31 December 2017, the Group and the Company had no individually significant fully depreciated fixed assets which
+were still in use.
+At 31 December 2018 and 31 December 2017, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal.
+At 31 December 2018 and 31 December 2017, the Group and the Company had no individually significant fixed assets which were pledged.
+Impairment losses on fixed assets for the year ended 31 December 2018 primarily represent impairment losses recognised in the exploration
+and production ("E&P") segment of RMB 4,274 million (2017: RMB 12,611 million) on fixed assets, for the chemicals segment of RMB 1,252
+million (2017: RMB 4,779 million) of fixed assets and for the refining segment of RMB 353 million (2017: RMB 1,836 million) of fixed assets.
+The primary factor resulting in the E&P segment impairment loss was downward revision of oil and gas reserve in certain fields. The carrying
+values of these E&P properties were written down to recoverable amounts which were determined based on the present values of the expected
+future cash flows of the assets using a pre-tax discount rate 10.47% (2017: 10.47%). Further future downward revisions to the Group's oil price
+outlook would lead to further impairments which, in aggregate, are likely to be material. It is estimated that a general decrease of 5% in oil
+price, with all other variables held constant, would result in additional impairment loss in Group's fixed assets relating to oil and gas producing
+activities by approximately RMB 312 million (2017: RMB 3,145 million). It is estimated that a general increase of 5% in operating cost, with
+all other variables held constant, would result in additional impairment in Group's fixed assets relating to oil and gas producing activities by
+approximately RMB 315 million (2017: RMB 2,659 million). It is estimated that a general increase of 5% in discount rate, with all other variables
+held constant, would result in less impairment loss on the Group's properties, plant and equipment relating to oil and gas producing activities by
+approximately RMB 5 million (2017: additional RMB 461 million). The assets in the refining segment were written down due to the suspension
+of operations of certain production facilities, while the assets in the chemical segment were written down because of evidence indicates the
+economic performance of certain production facilities are worse than expected and due to the suspension of operations of certain production
+facilities.
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2018 included RMB 1,567 million (2017:
+RMB 1,627 million) (Note 30) and RMB 1,292 million (2017: RMB 982 million), respectively of the estimated dismantlement costs for site
+restoration.
+329,814
+163,266
+Balance at 31 December 2017
+Balance at 31 December 2018
+Net book value:
+Balance at 31 December 2018
+Decreases for the year
+Transferred from subsidiaries
+Provision for impairment losses:
+Balance at 1 January 2018
+Additions for the year
+Decreases for the year
+52,011
+138,817
+54
+(1,314)
+(10,066)
+(39,651)
+(73,210)
+(6,527)
+(6,921)
+(378)
+(4)
+self-financing
+49,426
+120,425
+108,555
+(20)
+RMB million
+RMB million
+The Company
+The Group
+At 31 December 2018, major construction projects of the Group are as follows:
+Balance at 31 December 2017
+Balance at 31 December 2018
+Net book value:
+Balance at 31 December 2018
+Exchange adjustments
+50,459
+Xinjiang Coal-based Substitute
+11,589
+1,692
+2,997
+3,397
+19,986
+Balance at 31 December 2018
+(79)
+(45)
+(1)
+(183)
+Decreases for the year
+7,125
+426
+3,010
+268
+230
+3,191
+Additions for the year
+39,996
+2,870
+14,206
+2,774
+3,168
+16,978
+Balance at 1 January 2018
+17,137
+(96)
+3,200
+(404)
+46,717
+899
+17
+145
+24
+482
+231
+Net book value:
+Balance at 31 December 2018
+(5)
+(3)
+(2)
+Accumulated amortisation:
+Decreases for the year
+9
+9
+Additions for the year
+886
+17
+139
+24
+482
+224
+Balance at 1 January 2018
+Provision for impairment losses:
+18
+Reclassifications
+151,471
+52,216
+Operation
+rights
+RMB million
+RMB million
+Non-patent
+technology
+Patents
+RMB million
+RMB million
+Land use
+rights
+The Group
+15 INTANGIBLE ASSETS
+6
+Bank loans &
+self-financing
+70%
+2,594
+1,800
+794
+3,680
+Construction Project (First-stage)
+Hainan Refine Paraxylene plant and
+supporting project
+self-financing
+Natural Gas (SNG) Export Pipeline
+50
+Bank loans &
+49%
+5,682
+3,990
+Others
+RMB million
+Total
+RMB million
+Cost:
+4,029
+5,230
+84,731
+Balance at 31 December 2018
+(1,210)
+(107)
+(345)
+(44)
+(18)
+(696)
+Decreases for the year
+5,265
+14,673
+4,662
+710
+3,948
+228
+88
+9,699
+Additions for the year
+48,613
+3,845
+5,160
+75,728
+Balance at 1 January 2018
+138,008
+Balance at 31 December 2018
+302,048
+119,067
+141,725
+4,027
+274
+Additions for the year
+74,135
+30,945
+39,358
+3,832
+Balance at 1 January 2018
+Provision for impairment losses:
+1,863
+1,086,435
+528,459
+506,771
+51,205
+Balance at 31 December 2018
+76
+1,744
+43
+Exchange adjustments
+(18,405)
+(570)
+(16,543)
+(124)
+76
+494
+(1,738)
+Decreases for the year
+Decreases for the year
+(177)
+1,848
+(1,178)
+Total
+Fixed assets pending for disposal
+Fixed assets (a)
+The Company
+617,762
+650,774
+411,121
+171,840
+67,813
+Balance at 31 December 2017
+405,419
+145,436
+66,907
+Balance at 31 December 2018
+Net book value:
+135
+79,063
+31,617
+43,517
+3,929
+Balance at 31 December 2018
+2
+133
+Exchange adjustments
+6,149
+(1,356)
+(1)
+Reclassifications
+99,904
+47,250
+45,103
+940,312
+3,856
+667,657
+1,567
+24,366
+3,741
+221
+120,013
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2018
+Cost:
+Total
+RMB million
+and others
+RMB million
+gas properties
+RMB million
+and buildings
+RMB million
+machinery
+Oil and
+Plants
+Equipment,
+146
+650,920
+650,774
+RMB million
+2017
+At 31 December
+1,727,982
+5,644
+73,210
+Reclassifications
+Decreases for the year
+Exchange adjustments
+48,616
+4,038
+1,003,073
+498,246
+456,459
+48,368
+Additions for the year
+Balance at 1 January 2018
+2,387
+1,783,260
+965,495
+695,724
+At 31 December
+2018
+RMB million
+122,041
+2,142
+98
+(25,963)
+(22,151)
+(146)
+(3,666)
+(1,772)
+138
+1,634
+Accumulated depreciation:
+Balance at 31 December 2018
+147
+302,048
+34
+302,082
+Decreases for the year
+(336)
+(23)
+(249)
+(64)
+417
+299
+115
+3
+(200)
+(2)
+202
+673,388
+61,743
+21,391
+38,728
+1,624
+271,849
+379,137
+22,402
+1,091,121
+467,357
+574,937
+48,827
+(998)
+(156)
+(7,278)
+(8,432)
+23,778
+24,823
+(339)
+62,293
+22,116
+38,297
+(314)
+(1)
+(24)
+1,880
+31
+31
+57,892
+4,709
+575
+(10,862)
+4,027
+Additions for the year
+21,824
+34,271
+1,797
+Balance at 1 January 2018
+Provision for impairment losses:
+726,780
+286,038
+417,573
+23,169
+Balance at 31 December 2018
+107
+159,203
+(8,655)
+(1,984)
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2018
+Cost:
+Total
+RMB million
+and others
+RMB million
+Equipment,
+machinery
+Oil and
+gas properties
+RMB million
+RMB million
+and buildings
+Plants
+(a) Fixed assets
+The Company (Continued)
+13 FIXED ASSETS (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+118
+Financial Statements (PRC)
+117
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+329,814
+At 31 December
+2017
+RMB million
+329,814
+Reclassifications
+Transferred from subsidiaries
+Transferred to subsidiaries
+49,022
+Transferred to subsidiaries
+Reclassifications
+Additions for the year
+Balance at 1 January 2018
+Accumulated depreciation:
+Balance at 31 December 2018
+Decreases for the year
+Transferred from subsidiaries
+(1,080)
+(71)
+(876)
+(223)
+(133)
+542
+132
+5
+(1,089)
+(3)
+1,092
+1,061,094
+1,639
+39,651
+19,344
+456,939
+347
+555,133
+1,292
+19,482
+825
+679
+(19)
+Balance at 31 December 2017
+1,351
+1,510
+(1,151)
+(729)
+(553)
+(249)
+57
+(993)
+(1,279)
+Profit/(loss) for the year
+2,985
+5,278
+2,728
+3,414
+2,764
+1,144
+(1,818)
+605
+2,923
+3,834
+Other comprehensive income/(loss)
+921
+25
+1,059
+(554)
+(897)
+Total comprehensive income/(loss)
+(1,699)
+Tax expense
+104
+Interest expense
+(647)
+(857)
+(43)
+(71)
+(151)
+(142)
+(1,382)
+(1,382)
+(167)
+(223)
+Profit/(loss) before taxation
+3,920
+6,977
+3,625
+4,565
+3,493
+1,697
+(1,569)
+548
+3,916
+5,113
+(935)
+2,985
+5,278
+2,728
+12
+397
+(208)
+The share of profit and other comprehensive loss for the year ended 31 December 2018 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 2,052 million (2017: RMB 3,925 million) and RMB 839 million (2017: other comprehensive
+income RMB 994 million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 22,982 million (31 December 2017: RMB 21,552 million).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+115
+Financial Statements (PRC)
+116
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(c) Major financial information of principal associates
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+Pipeline Ltd
+At 31
+December
+At 31
+December
+2018
+2017
+RMB million
+RMB million
+Sinopec Finance
+At 31
+December
+2018
+RMB million
+At 31
+December
+2017
+RMB million
+435
+income/(loss) from joint ventures (ii)
+Share of other comprehensive
+1,917
+3,414
+3,685
+1,169
+(759)
+51
+2,923
+3,834
+Dividends from joint ventures
+1,200
+1,250
+1,226
+169
+1,109
+Share of net profit/(loss) from
+joint ventures
+1,493
+2,639
+1,091
+1,366
+1,307
+541
+(682)
+227
+1,462
+1,375
+45
+101
+142
+of the company
+17,035
+16,451
+15,681
+16,021
+11,373
+7,818
+12,746
+13,505
+16,118
+12,557
+Net assets attributable to
+minority interests
+412
+282
+Share of net assets from joint ventures
+8,518
+8,226
+6,272
+6,409
+5,573
+3,831
+4,780
+Net assets attributable to owners
+12,557
+16.118
+13.505
+(2,686)
+(937)
+(890)
+(331)
+(41)
+Total non-current liabilities
+(12,733)
+(13,890)
+(235)
+(974)
+(2,343)
+5,064
+(2,758)
+(36,509)
+(3,982)
+(4,142)
+Net assets
+17,035
+16,451
+15,681
+16,021
+11,785
+8,100
+12,746
+(33,301)
+SIBUR (i)
+At 31
+December
+2018
+RMB million
+8,059
+Carrying Amounts
+RMB million
+2018
+RMB million
+Turnover
+52,469
+49,356
+21,574
+21,020
+14,944
+12,520
+77,561
+2017
+RMB million
+61,587
+2018
+2017
+RMB million
+RMB million
+23,501
+22,286
+Interest income
+157
+208
+41
+36
+141
+RMB million
+RMB million
+RMB million
+RMB million
+8,518
+8,226
+6,272
+6,409
+5,573
+3,831
+4,780
+5,064
+8,059
+6,279
+Summarised income statement
+6,279
+Year ended 31 December
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+2018
+2017
+2018
+2017
+2018
+2017
+RMB million
+FREP
+64,514
+58,526
+Zhongtian Synergetic Energy
+At 31
+December
+59,927
+52,496
+12,235
+3,569
+2,856
+2,563
+2,022
+2,543
+1,868
+1,536
+10,400
+9,601
+1,142
+123
+583
+(610)
+(157)
+(246)
+6,410
+(260)
+116
+(334)
+2,022
+3,542
+2,543
+4,536
+4,746
+2017
+SIBUR (i)
+2018
+Zhongtian Synergetic Energy
+CIR
+2017
+2018
+2017
+2018
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Turnover
+Profit/(loss) for the year
+Other comprehensive (loss)/income
+Total comprehensive income/(loss)
+5,644
+1,711
+1,290
+16,810
+The share of profit and other comprehensive loss for the year ended 31 December 2018 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 3,550 million (2017: RMB 3,182 million) and RMB 844 million (2017 other comprehensive income:
+RMB 569 million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial associates accounted for using equity
+method in aggregate was RMB 31,370 million (31 December 2017: RMB 23,899 million).
+Note:
+(i) Sinopec is able to exercise significant influence in SIBUR since Sinopec has a member in SIBUR's Board of Director and has a member in SIBUR's Management
+Board.
+(ii) Including foreign currency translation differences.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+13 FIXED ASSETS
+The Group
+Fixed assets (a)
+Fixed assets pending for disposal
+Total
+(a) Fixed assets
+At 31 December
+2018
+RMB million
+Financial Statements (PRC)
+119
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2018 is RMB 5,414 million (2017: RMB 4,468 million).
+97,126
+103,855
+2,048
+1,775
+34,934
+34,268
+1,008
+1,047
+(167)
+58
+(26)
+641
+9,341
+1,142
+123
+699
+(944)
+Dividends declared by associates
+1,207
+490
+271
+221
+Share of profit/(loss) from associates
+2018
+1,011
+915
+753
+1,040
+960
+443
+48
+292
+(305)
+Share of other comprehensive
+(loss)/income from associates (ii)
+(121)
+1,272
+2017
+Sinopec Finance
+Pipeline Ltd
+2018
+158,938
+49.961
+51,553
+1,828
+1.673
+Current liabilities
+(1,020)
+(933)
+(200,402)
+(154,212)
+(23,293)
+(20,554)
+(7,252)
+(10,668)
+(961)
+(908)
+Non-current liabilities
+(3,026)
+(3,176)
+(332)
+(6)
+(58,628)
+(61,771)
+170,796
+17.782
+5,612
+6,712
+At 31
+December
+CIR
+At 31
+December
+At 31
+December
+2017
+2018
+2017
+2018
+2017
+RMB million
+RMB million
+RMB million
+(31,436)
+RMB million
+Current assets
+Non-current assets
+12,498
+11,317
+39,320
+40.972
+209,837
+16,359
+161,187
+22,502
+20,719
+7,477
+8,232
+RMB million
+At 31
+December
+(31,494)
+(170)
+23,886
+24,090
+12,476
+12,128
+11,086
+9,676
+7,266
+6,829
+3,453
+3,104
+Carrying Amounts
+23,886
+24,090
+12,476
+12,128
+11,086
+9,676
+7,266
+6,829
+3,453
+3,104
+Summarised income statement
+Year ended 31 December
+Share of net assets from associates
+571
+517
+minority interests
+Net assets
+47,772
+48,180
+25,462
+24,751
+111,377
+97,332
+18,750
+17,623
+6,906
+6,207
+(673)
+Net assets attributable to owners
+47,772
+48,180
+25,462
+24,751
+110,860
+96,761
+18,750
+17,623
+6,906
+6,207
+Net assets attributable to
+of the Company
+Financial Statements (PRC)
+balance
+petroleum products
+12,008
+(262)
+(1,466)
+(28)
+114
+102
+99,981
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB 1.00 each at the Placing Price
+of HKD 8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD 24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.00.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+121
+Financial Statements (PRC)
+122
+89,587
+Financial Statements (PRC)
+For the year ended 31 December 2018
+21 SHORT-TERM LOANS
+The Group's short-term loans represent:
+Short-term bank loans
+-Renminbi loans
+-US Dollar loans
+Short-term other loans
+-Renminbi loans
+Short-term loans from Sinopec Group Company
+and fellow subsidiaries
+-Renminbi loans
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+97
+33
+(16)
+(16)
+32 SHARE CAPITAL (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+126
+Financial Statements (PRC)
+125
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+All A shares and H shares rank pari passu in all material aspects.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB 1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB 1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+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.
+15
+899
+Goodwill
+16
+7,861
+7,861
+-
+7,861
+Others
+49
+Total
+89,603
+-US Dollar loans
+-HK Dollar loans
+-Singapore Dollar loans
+-Euro loans
+299
+27,304
+23,297
+3,061
+1,706
+3,319
+1,645
+6.8632
+0.8762
+22,780
+3,010
+6.5342
+19,668
+1,441
+2,277
+0.8359
+1,903
+4
+4.8831
+20
+3
+7.8473
+22
+7.8023
+44,692
+54,701
+300
+Capital management
+299
+7,420
+Total
+At 31 December 2018
+At 31 December 2017
+Original
+currency
+Original
+Exchange
+RMB
+currency
+Exchange
+RMB
+million
+rates
+million
+million
+rates
+million
+17,088
+31,105
+13,201
+23,685
+566
+6.8632
+3,887
+1,136
+6.5342
+300
+Management optimises the structure of the Group's capital, which comprises of equity and debts and bonds. In order to maintain or adjust the
+capital structure of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce
+debt, or adjust the proportion of short-term and long-term loans and bonds. Management monitors capital on the basis of the debt-to-capital ratio,
+which is calculated by dividing long-term loans (excluding current portion) and debentures payable, by the total of equity attributable to owners of
+the Company and long-term loans (excluding current portion) and debentures payable, and liability-to-asset ratio, which is calculated by dividing
+total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and investment needs
+and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a range considered
+reasonable. As at 31 December 2018, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 11.5% (2017: 12.0%) and 46.1%
+(2017: 46.5%), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 28 and 55, respectively.
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+(72)
+575
+consolidated income statement
+Reclassification adjustments for amounts transferred to the
+3
+(1)
+4
+Less/(Add): Adjustments of amounts transferred to initial carrying amount of
+hedged items
+(1,074)
+240
+(1,314)
+recognised during the year
+Net-of-tax
+amount
+RMB million
+Tax effect
+RMB million
+RMB million
+Before-tax
+amount
+Year ended 31 December 2017
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+(a) The changes of other comprehensive income in consolidated income statement (Continued)
+The Group (Continued)
+34 OTHER COMPREHENSIVE INCOME (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Subtotal
+(6,624)
+(1,893)
+503
+(1,580)
+income
+Total other
+comprehensive
+Minority
+interests
+Equity Attributable to shareholders of the company
+(4,376)
+313
+(4,689)
+(3,792)
+(3,792)
+(3,792)
+(3,792)
+(b) The change of each item in other comprehensive income
+Other comprehensive income
+Subtotal
+Foreign currency translation differences
+1,053
+1,053
+1,053
+1,053
+Share of other comprehensive loss in associates and joint ventures
+Subtotal
+(57)
+(57)
+(57)
+(57)
+Changes in fair value of available-for-sale financial assets recognised during the year
+Subtotal
+313
+At 31 December 2018, the Group's interest rates on short-term loans were from interest 0.80% to 5.22% (At 31 December 2017: from interest 0.70%
+to 6.09%). The majority of the above loans are by credit.
+2,028
+Other comprehensive income
+(10,341)
+2,159
+(12,500)
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+Net-of-tax
+amount
+RMB million
+RMB million
+RMB million
+Tax
+effect
+Year ended 31 December 2018
+Before-tax
+amount
+(a) The changes of other comprehensive income in consolidated income statement
+The Group
+34 OTHER COMPREHENSIVE INCOME
+Capital reserve represents mainly: (a) the difference between the total amount of the par value of shares issued and the amount of the net assets
+transferred from Sinopec Group Company in connection with the Reorganisation; (b) share premiums derived from issuances of H shares and
+A shares by the Company and excess of cash paid by investors over their proportionate shares in share capital, the proportionate shares of
+unexercised portion of the Bond with Warrants at the expiration date, and the amount transferred from the proportionate liability component and
+the derivative component of the converted portion of the 2011 Convertible Bonds; (c) difference between consideration paid for the combination of
+entities under common control and the transactions with minority interests over the carrying amount of the net assets acquired.
+119,192
+(353)
+(12)
+119,557
+RMB million
+Balance at 31 December 2018
+Transaction with minority interests
+Others
+Balance at 1 January 2018
+The movements in capital reserve of the Group are as follows:
+33 CAPITAL RESERVE
+(Less)/Add: Reclassification adjustments for amounts transferred to the
+consolidated income statement
+(8,652)
+(730)
+(600)
+3,399
+3,399
+Subtotal
+3,399
+3,399
+Foreign currency translation differencess
+(229)
+11
+1
+(240)
+Subtotal
+(229)
+11
+(240)
+Other comprehensive income that can be converted into profit or loss
+under the equity method
+(53)
+(12)
+(41)
+(53)
+(12)
+(41)
+Changes in fair value of other equity instrument investments
+Subtotal
+(9,741)
+2,029
+Subtotal
+130
+At 31 December 2018 and 31 December 2017, the Group had no significant overdue short-term loans.
+22 BILLS PAYABLE AND ACCOUNTS PAYABLE
+The Group
+45,334
+free to 4.99% per annum at 31
+December 2018 with maturities
+through 2030
+Less: Current portion
+(4,361)
+Long-term loans from Sinopec Group Company and fellow
+subsidiaries
+Total
+42,516
+61,576
+The maturity analysis of the Group's long-term loans is as follows:
+Between one and two years
+Between two and five years
+After five years
+Total
+Long-term loans are primarily unsecured, and carried at amortised costs.
+29 DEBENTURES PAYABLE
+The Group
+Debentures payable:
+- Corporate Bonds (i)
+Less: Current portion
+Total
+Note:
+(2,014)
+43,320
+67,754
+46,877
+At 31 December
+2018
+RMB million
+Interest rates ranging from interest
+(1,402)
+24,434
+At 31 December 2017
+Original
+Original
+currency
+million
+Exchange
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+RMB
+million
+31,025
+25,644
+- US Dollar loans
+Interest rates ranging from interest
+1.55% to 4.29% per annum at 31
+December 2018 with maturities
+through 2031
+16
+6.8632
+109
+29
+6.5342
+192
+Less: Current portion
+Long-term bank loans
+Long-term loans from Sinopec Group Company and fellow
+subsidiaries
+(12,074)
+19,060
+- Renminbi loans
+At 31 December 2018
+At 31 December
+2017
+40,004
+95,557,771,046 domestic listed A shares (2017: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 overseas listed H shares (2017: 25,513,438,600) of RMB 1.00 each
+The Group
+RMB million
+39,407
+1,567
+1,438
+(598)
+193
+42,007
+At 31 December
+2018
+At 31 December
+2017
+RMB million
+RMB million
+95,558
+95,558
+25,513
+25,513
+121,071
+Total
+121,071
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB 1.00
+each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB 1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB 1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD 1.59 per H share and USD 20.645 per ADS,
+respectively, by way of a global initial public offering to Hong Kong and overseas investors. As part of the global initial public offering, 1,678,049,000
+state-owned ordinary shares of RMB 1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong Kong and
+overseas investors.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB 1.00 each at RMB 4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB 1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB 1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+Registered, issued and fully paid:
+RMB million
+The Group
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+16,822
+11,999
+48,238
+9,573
+61,576
+2,694
+67,754
+At 31 December
+2018
+RMB million
+31,951
+At 31 December
+2017
+RMB million
+53,902
+(22,532)
+31,951
+31,370
+(i) These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB 11,951 million, and RMB denominated corporate bonds
+of RMB 20,000 million (2017: USD denominated corporate bonds of RMB 17,902 million, and RMB denominated corporate bonds of RMB 36,000 million). At 31
+December 2018, corporate bonds of RMB 11,951 million (2017: RMB 17,902 million) are guaranteed by Sinopec Group Company.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+30 PROVISIONS
+Provisions primarily represent provision for future dismantlement costs of oil and gas properties. The Group has established certain standardised
+measures for the dismantlement of its retired oil and gas properties by making reference to the industry practices and is thereafter constructively
+obligated to take dismantlement measures of its retired oil and gas properties. Movement of provision of the Group's obligations for the
+dismantlement of its retired oil and gas properties is as follows:
+Balance at 1 January 2018
+Provision for the year
+Accretion expenses
+Utilised for the year
+Exchange adjustments
+Balance at 31 December 2018
+31 OTHER NON-CURRENT LIABILITIES
+32 SHARE CAPITAL
+31 December 2016
+Interest rates ranging from interest
+1.08% to 4.66% per annum at 31
+December 2018 with maturities
+through 2033
+Long-term bank loans
+Total
+26 OTHER PAYABLES
+At 31 December
+2018
+RMB million
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+At 31 December
+2017
+RMB million
+9,810
+8,899
+59,944
+39,623
+6,699
+13,015
+138
+175
+10,469
+10,228
+87,060
+71,940
+At 31 December 2018 and 31 December 2017, other payables of the Group over one year primarily represented payables for constructions.
+27 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+The Group's non-current liabilities due within one year represent:
+4,043
+At 31 December 2018
+Other taxes
+Original
+currency
+million
+Mineral resources compensation fee payable
+Consumption tax payable
+Bills payable (a)
+Accounts payable (b)
+Total
+(a) Bills payable
+At 31 December
+2018
+RMB million
+6,416
+186,341
+192,757
+At 31 December
+2017
+RMB million
+6,462
+200,073
+206,535
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+At 31 December 2018 and 31 December 2017, the Group had no overdue unpaid bills.
+(b) Accounts payable
+At 31 December 2018 and 31 December 2017, the Group had no individually significant accounts payable aged over one year.
+23 CONTRACT LIABILITIES
+As at 31 December 2018, the Group's contract liabilities primarily present advances from customers. Related performance obligations are satisfied
+and revenue is recognised within one year.
+As at 1 January 2018, the Group's contract liabilities was RMB 120,734 million, of which RMB 119,138 million was recognised as revenue in 2018.
+24 EMPLOYEE BENEFITS PAYABLE
+At 31 December 2018 and 31 December 2017, the Group's employee benefits payable primarily represented wages payable and social insurance
+payables.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+25 TAXES PAYABLE
+The Group
+Value-added tax payable
+Income tax payable
+- Renminbi loans
+At 31 December 2017
+Original
+rates
+16,435
+2,014
+2,014
+petrochemical products and
+3,416
+16,000
+1,000
+6.5342
+6,532
+22,532
+1,015
+733
+17,450
+26,681
+At 31 December 2018 and 31 December 2017, the Group had no significant overdue long-term loans.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+123
+Financial Statements (PRC)
+Financial Statements (PRC)
+124
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+28 LONG-TERM LOANS
+The Group's long-term loans represent:
+Interest rate and final maturity
+4,361
+Exchange
+4,361
+Others
+RMB
+million
+currency
+million
+Exchange
+RMB
+rates
+million
+Long-term bank loans
+- Renminbi loans
+12,039
+1,379
+5
+6.8632
+35
+12,074
+4
+6.5342
+23
+1,402
+- US Dollar loans
+Long-term loans from Sinopec Group Company and
+fellow subsidiaries
+Renminbi loans
+Long-term loans due within one year
+Debentures payable due within one year
+- Renminbi debentures
+US Dollar debentures
+Non-current liabilities due within one year
+Changes in 2017
+(11,770)
+Changes in
+43,205
+34,277
+77,572
+61,998
+335,357
+249,997
+107,633
+65,566
+64,503
+58,930
+793
+2,360,193
+1,063
+2,891,179
+37 TAXES AND SURCHARGES
+59,723
+124,618
+115,739
+168,823
+Rental income
+Total
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical by-products and joint products.
+2018
+RMB million
+2,825,613
+2017
+RMB million
+2,300,470
+519,910
+421,585
+711,236
+600,113
+594,008
+503,406
+250,884
+205,722
+The Group
+2018
+RMB million
+2017
+RMB million
+128
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+38 FINANCIAL EXPENSES
+The Group
+2018
+2017
+Interest expenses incurred
+Less: Capitalised interest expenses
+Net interest expenses
+Accretion expenses (Note 30)
+Interest income
+RMB million
+6,376
+RMB million
+6,368
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+Sale of materials and others
+235,292
+Total
+Consumption tax
+City construction tax
+Education surcharge
+201,901
+192,907
+18,237
+18,274
+13,187
+13,811
+Resources tax
+6,021
+4,841
+Others
+7,152
+5,459
+246,498
+493
+Income from other operations
+Others (i)
+For the year ended 31 December 2018
+35 SURPLUS RESERVES
+Movements in surplus reserves are as follows:
+Balance at 1 January 2018
+Appropriation
+Balance at 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Statutory
+82,682
+3,996
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+86,678
+117,000
+Total
+surplus reserve
+RMB million
+Financial Statements (PRC)
+Financial Statements (PRC)
+Other
+comprehensive
+income that can
+be converted
+into profit or
+loss under the
+At 31 December
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+18 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+4,339
+3,709
+4,339
+3,709
+At 31 December
+2017
+RMB million
+(6,774)
+(1,789)
+(8,563)
+As at 31 December 2018, cash flow hedge reserve amounted to a loss of RMB 4,932 million (31 December 2017: a loss of RMB 460 million), of
+which a loss of RMB 4,917 million was attribute to shareholders of the Company (31 December 2017: a loss of RMB 510 million).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+RMB million
+199,682
+3,996
+203,678
+2,401,012
+59,723
+2,360,193
+1,890,398
+1,058,493
+812,355
+633,114
+The income from principal operations mainly represents revenue from sales of crude oil, natural gas, refined petroleum products and chemical
+products. The income from other operations mainly represents revenue from sale of materials, service, rental income and others. Operating costs
+primarily represent the products cost related to the principal operations. The Group's segmental information is set out in Note 57.
+The detailed information about the Group's operating income is as follows:
+Income from principal operations
+Crude oil
+Gasoline
+Diesel
+Basic chemical feedstock
+Kerosene
+Synthetic resin
+Natural gas
+857,478
+Synthetic fiber monomers and polymers
+2,891,179
+824,100
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+(a) 10% of the net profit is transferred to the statutory surplus reserve. In the event that the reserve balance reaches 50% of the registered capital,
+no transfer is needed;
+(b) After the transfer to the statutory surplus reserve, a transfer to discretionary surplus reserve can be made upon the passing of a resolution at the
+shareholders' meeting.
+36 OPERATING INCOME AND OPERATING COSTS
+Income from principal operations
+Income from other operations
+Total
+Operating costs
+The Group
+2018
+RMB million
+2,825,613
+2017
+RMB million
+The Company
+2018
+RMB million
+2017
+RMB million
+2,300,470
+65,566
+1,022,195
+36,298
+33,378
+2018
+723
+5,645
+180
+174
+Others
+(1)
+(535)
+227
+474
+Deferred tax assets/(liabilities)
+Intangible assets
+Other equity instrument investments
+117
+Available-for-sale securities
+2,325
+3,709
+Tax value of losses carried forward
+117
+25,403
+19,470
+(428)
+(9,657)
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Sinopec Zhenhai Refining and Chemical Branch ("Sinopec Zhenhai")
+Sinopec Beijing Yanshan Petrochemical Branch ("Sinopec Yanshan")
+Principal activities
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+16 GOODWILL
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+Financial Statements (PRC)
+120
+At 31 December
+2018
+RMB million
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Deferred tax liabilities
+Deferred tax assets
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(563)
+(264)
+(10,805)
+(50)
+(9,928)
+(27)
+(8,666)
+14,150
+15,427
+17 LONG-TERM DEFERRED EXPENSES
+Key assumptions used for cash flow forecasts for these entities are the gross margin and sales volume. Management determined the budgeted gross
+margin based on the gross margin achieved in the period immediately before the budget period and management's expectation on the future trend
+of the prices of crude oil and petrochemical products. The sales volume was based on the production capacity and/or the sales volume in the period
+immediately before the budget period.
+Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The recoverable amounts of the
+above cash generating units are determined based on value in use calculations. These calculations use cash flow projections based on financial
+budgets approved by management covering a one-year period and pre-tax discount rates primarily ranging from 11.7% to 12.3% (2017: 10.8% to
+11.4%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+8,634
+8,676
+167
+167
+879
+921
+2,541
+2,541
+Trading of petrochemical
+products
+petrochemical products
+Production and sale of
+4,043
+Long-term deferred expenses primarily represent prepaid rental expenses and catalysts expenditures.
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO") (Note 51)
+18 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets
+At 31 December
+2018
+RMB million
+165
+1,131
+381
+1,925
+1,808
+2,563
+Fixed assets
+Cash flow hedges
+Payables
+Receivables and inventories
+2017
+RMB million
+At 31 December
+RMB million
+2018
+Deferred tax liabilities
+At 31 December
+At 31 December
+2017
+RMB million
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+5,883
+Sinopec (Hong Kong) Limited
+At 31 December
+40 RESEARCH AND DEVELOPMENT EXPENSES
+2018
+RMB million
+2,292,983
+2017
+RMB million
+1,770,651
+77,721
+74,854
+Total
+109,967
+10,744
+11,089
+61,083
+64,566
+2,552,498
+2,036,470
+115,310
+Other expenses
+Exploration expenses (including dry holes)
+Depreciation, depletion and amortisation
+1,438
+1,501
+(7,726)
+(5,254)
+Net foreign exchange gain
+(596)
+(332)
+Total
+(1,001)
+1,560
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2018 by the Group ranged from 2.37%
+to 4.66% (2017: 2.37% to 4.41%).
+39 CLASSIFICATION OF EXPENSES BY NATURE
+The operation costs, selling and distribution expenses, general and administrative expenses, research and development expenses and exploration
+expenses (including dry holes) in consolidated income statement classified by nature are as follows:
+Purchased crude oil, products and operating supplies and expenses
+Personnel 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.
+41 EXPLORATION EXPENSES
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+42 IMPAIRMENT LOSSES
+252
+19
+215
+11,605
+21,791
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+129
+Financial Statements (PRC)
+Manufacturing of intermediate
+1,004
+1,004
+2017
+RMB million
+At 31 December
+RMB million
+2018
+19,836
+Other units without individual significant goodwill
+Total
+936
+5,421
+7
+6,149
+28
+The Group
+Receivables
+Inventories
+Long-term equity investment
+Fixed assets
+Construciton in Progress
+Intangible assets
+Others
+Total
+43 OTHER INCOME
+Other income are mainly the government grants related to the business activities.
+2018
+RMB million
+2017
+RMB million
+110
+423
+Deferred tax assets
+Deferred tax liabilities
+127
+21,694
+5,948
+(217)
+(114)
+5,535
+1,155
+1,155
+11
+17
+Inventories
+11
+(38)
+(148)
+192
+2,123
+2,123
+2,140
+6,376
+Long-term equity investments
+12
+Construction in progress
+79,063
+(26)
+(1,195)
+6,149
+74,135
+74,135
+13
+Fixed assets
+1,686
+78
+(13)
+7
+1,614
+1,614
+1,481
+14
+4
+(69)
+612
+8
+Included: Bills receivable and accounts receivable
+Allowance for doubtful accounts
+2018
+RMB million
+Balance at
+31 December
+612
+Other
+increase/
+(decrease)
+RMB million
+Written off
+for the year
+Provision for Written back for
+the year
+the year
+RMB million
+RMB million
+RMB million
+RMB million
+Balance at
+1 January
+2018
+RMB million
+RMB million
+(77)
+(19)
+78
+1,486
+1,486
+10
+Other receivables
+53
+(1)
+(2)
+31
+25
+25
+9
+Prepayments
+606
+7
+(18)
+1,780
+1,780
+28
+97
+1,132
+2,000
+(932)
+(1,888)
+(2,820)
+(4,161)
+680
+(1,642)
+(2,479)
+(3,481)
+(895)
+(4,376)
+31 December 2017
+(40)
+RMB million
+RMB million
+RMB million
+Changes in
+fair value of
+available-for-sale
+fair value of
+other equity
+instrument
+equity method financial assets
+Foreign currency
+translation
+investments Cash flow hedges
+differences
+Subtotal
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+(3,481)
+57
+(510)
+(479)
+(41)
+4
+(4,407)
+(4,917)
+2,282
+1,803
+(2,349)
+994
+(1,355)
+(2)
+886
+886
+15
+Intangible assets
+1,854
+47
+(1)
+(183)
+(3,664)
+policies
+(Note 3(26))
+31 December 2018
+(7,208)
+(4,413)
+(2,783)
+(7,196)
+Change in accounting policy
+(57)
+45
+(12)
+(12)
+1 January 2018
+(3,481)
+45
+(510)
+(479)
+(4,425)
+(2,783)
+Changes in 2018
+accounting
+83
+Note
+Other non-current assets mainly represent long-term receivables, prepayments for construction projects and purchases of equipment.
+20 DETAILS OF IMPAIRMENT LOSSES
+At 31 December
+2017
+6,466
+At 31 December 2018, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 18,308 million
+(2017: RMB 20,821 million), of which RMB 2,437 million (2017: RMB 5,938 million) was incurred for the year ended 31 December 2018, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB 2,373 million, RMB 3,887 million,
+RMB 3,673 million, RMB 5,938 million and RMB 2,437 million will expire in 2019, 2020, 2021, 2022, 2023 and after, respectively.
+Periodically, management performed assessment on the probability that future taxable profit will be available over the period which the deferred tax
+assets can be realised or utilised. In assessing the probability, both positive and negative evidence was considered, including whether it is probable
+that the operations will have sufficient future taxable profits over the periods which the deferred tax assets are deductible or utilised and whether the
+tax losses result from identifiable causes which are unlikely to recur. During the year ended 31 December 2018, write-down of deferred tax assets
+amounted to RMB 188 million (2017: RMB 26 million) (Note 48).
+19 OTHER NON-CURRENT ASSETS
+RMB million
+15,131
+Balance at
+31 December
+2017
+RMB million
+At 31 December 2018, impairment losses of the Group are analysed as follows:
+Changes in
+significant
+52 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+(b) The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as agreed to in the above
+Mutual Provision Agreement.
+(c) The Company has entered into a number of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+(d) The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+(e) The Company has entered into a service station franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+136
+For the year ended 31 December 2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+•
+The balances with the Group's related parties at 31 December 2018 and 31 December 2017 are as follows:
+The ultimate holding company
+At 31 December At 31 December
+2018
+2017
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+(f) On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Fifth Supplementary Agreement and the Fourth Revised Memorandum of land use rights leasing contract on August 24, 2018,
+which took effect on January 1, 2019 and made adjustment to "Mutual Supply Agreement", "Agreement for Provision of Cultural and
+Educational, Health Care and Community Services", "Buildings Leasing Contract", "Intellectual Property Contract" and "Land Use Rights
+Leasing Contract" etc.,. The memorandum was effective since January 1, 2019. Sinopec Group Company agreed to lease 410 million square
+meters of land to the Company, and to adjust the total fee of land to about RMB 14 billion, according to the newly confirmed area of leasing
+land and the situation of land market.
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+•
+where there is no government-prescribed price, the government-guidance price;
+Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services,
+sanitation, accommodation, canteens and property maintenance.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(viii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(ix) Interest income represents interest received from deposits placed with Sinopec Finance and Sinopec Century Bright Capital Investment Limited, finance
+companies controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate.
+(x)
+Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(xi) The Group obtained loans, discounted bills and others from to Sinopec Group Company and fellow subsidiaries.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+135
+⋅
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+52 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows: (Continued)
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2018.
+The terms of these agreements are summarised as follows:
+(a) The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months' notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+•
+the government-prescribed price;
+Cash and cash equivalents
+Financial Statements (PRC)
+Bills receivable and accounts receivable
+Contract liabilities
+Prepayments and other current assets
+20,726
+19
+43
+17,511
+24,061
+12
+2,763
+25
+3,248
+2
+104
+18,158
+18,111
+12,470
+10,165
+27,304
+23,297
+23,482
+Other receivables
+189
+5,411
+Other non-current assets
+Bills payable and accounts payable
+Advances from customers
+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.
+2018
+RMB million
+2017
+RMB million
+-
+41,057
+47,514
+11
+33
+19
+7,544
+13,155
+33
+6,901
+731
+Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(v)
+(vi)
+Operating lease charges for buildings
+Other operating lease charges
+Agency commission income
+Interest income
+Interest expense
+Note
+The Group
+2018
+RMB million
+Operating lease charges for land
+2017
+RMB million
+272,789
+244,211
+(ii)
+192,224
+165,993
+(iii)
+7,319
+7,716
+(i)
+Ancillary and social services
+Production related services
+Exploration and development services
+Sinopec Finance
+SIBUR
+Zhongtian Synergetic Energy
+CIR
+Joint ventures of the Group:
+FREP
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+134
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+52 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows:
+Sales of goods
+Purchases
+Transportation and storage
+(iv)
+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.
+23,489
+(v)
+554
+(ix)
+6,457
+(7,441)
+(xi)
+31,684
+Net deposits withdrawn from/(placed with) related parties
+Net funds obtained from related parties
+1,110
+19,661
+Included in the transactions disclosed above, for the year ended 31 December 2018 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 140,570 million (2017: RMB 128,863 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 123,772
+million (2017: RMB 112,619 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,664
+million (2017: RMB 6,652 million), operating lease charges for land, buildings and others paid by the Group of RMB 7,765 million, RMB 521
+million and RMB 738 million (2017: RMB 8,015 million, RMB 510 million and RMB 513 million), respectively and interest expenses of RMB
+1,110 million (2017: RMB 554 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 59,472
+million (2017: RMB 60,045 million), comprising RMB 58,606 million (2017: RMB 59,213 million) for sales of goods, RMB 848 million (2017:
+RMB 807 million) for interest income and RMB 18 million (2017: RMB 25 million) for agency commission income.
+As at 31 December 2018 and 31 December 2017 there was no guarantee given to banks by the Group in respect of banking facilities to Sinopec
+Group Company and fellow subsidiaries, associates and joint ventures, except for the disclosure set out in Note 56(b). Guarantees given to banks
+by the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 56(b).
+Notes:
+(i)
+Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(ii)
+(iii)
+(iv)
+The amounts set out in the table above in respect of the year ended 31 December 2018 and 2017 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+(x)
+807
+848
+28,472
+20,824
+(vi)
+6,664
+6,653
+(vii)
+7,765
+8,015
+(vii)
+521
+510
+(vii)
+869
+626
+46,877
+(viii)
+113
+127
+(ix)
+21,210
+45,334
+(5,939)
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 21 and Note 28.
+(383)
+(376)
+(96)
+(96)
+(99)
+(1,438)
+(1,438)
+(538)
+(4,032)
+(4,032)
+(1,984)
+(1,786)
+17,729
+12,405
+10,196
+(383)
+The goodwill is attributable to the high profitability of the acquired business and synergy to be achieved post the Transaction among Shanghai
+SECCO and the Group's existing petrochemical operations located in eastern China.
+(35)
+(2,115)
+613
+117
+117
+168
+11
+12
+19
+7
+12,883
+5,887
+6,582
+23,547
+16,437
+12,180
+(2,115)
+(936)
+As of Acquisition Date, a gain of RMB 3,941 million was recognised as a result of remeasuring the 50% equity interest held before the Transaction
+to its fair value, which is included in investment income (Note 44) in the Group's consolidated income statement for the year ended 31 December
+2017.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+133
+(2) Related parties not having the ability to exercise control over the Group
+Related parties under common control of a parent company with the Company:
+Sinopec Finance (Note)
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Assets Management Corporation
+Sinopec Engineering Incorporation
+Sinopec Century Bright Capital Investment Limited
+Sinopec Petroleum Storage and Reserve Limited
+Associates of the Group:
+Pipeline Ltd
+Registered
+capital/
+paid-up capital
+million
+at 31
+December
+2018
+million
+voting right
+held by the
+Group
+at 31
+December
+2018
+%
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 68.77%
+shareholding of the Company.
+RMB 274,900 million
+Dai Houliang
+State-owned
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+52 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+(1) Related parties having the ability to exercise control over the Group
+The name of the company
+662
+Unified social credit identifier
+Registered address
+Relationship with the Group
+Types of legal entity
+Authorised representative
+Registered capital
+China Petrochemical Corporation
+9111000010169286X1
+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
+Principal activities
+2,937
+117
+229
+51 BUSINESS COMBAINATION (Continued)
+Business combination involving entities not under common control (Continued)
+Details of the net assets acquired are as follows:
+Cash and cash equivalents
+Note: The long-term borrowings mainly include an interest-free loan with a maturity period of 20 years amounting to RMB 35,560 million from the Sinopec Group
+Company through the Sinopec Finance. This borrowing is a special arrangement to reduce financing costs and improve liquidity of the Company during its initial
+global offering in 2000.
+Accounts and other receivables
+Inventories
+Prepayments
+Other current assets
+Total current assets
+Fixed assets
+Construction in progress
+Intangible assets
+Long-term deferred expenses
+Deferred tax assets
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+2,541
+17,729
+million
+end of year
+end of year
+Details of combination cost and goodwill are as follows:
+Purchase consideration
+- Cash consideration for the purchase of 50% equity interest acquired
+- Acquisition-date fair value of the 50% equity interest held before the acquisition
+Other non-current assets
+Total purchase consideration
+Goodwill (Note 16)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+over acquiree
+Shanghai SECCO
+RMB million
+10,135
+10,135
+20,270
+Less: Net assets acquired
+RMB million
+Total non-current assets
+Accounts and other payables
+1,558
+1,643
+1,349
+1,349
+354
+761
+791
+386
+10,664
+10,550
+5,598
+9,587
+4,860
+5,665
+231
+1,702
+251
+558
+558
+Bills payable
+Advances from customers
+Employee benefits payable
+Taxes payable
+Total current liabilities
+Deferred tax liabilities
+Net assets acquired
+Total assets
+Fair value
+at the
+Book value
+at the
+Acquisition Date
+5,653
+Book value
+At December 31
+2016
+2,343
+641
+641
+621
+Acquisition Date
+5,653
+million
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum and
+Chemical Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+RMB 5,294
+RMB 5,240
+98.98
+119
+petrochemical products
+Manufacturing of intermediate petrochemical
+RMB 5,000
+RMB 4,250
+85.00
+1,810
+products and petroleum products
+Production, sale, research and development of
+RMB 6,270
+RMB 4,076
+65.00
+production and sale of coal chemical products
+Import and processing of crude oil, production,
+storage and sale of petroleum products and
+4,560
+(28)
+RMB 22,795
+RMB 8,000
+RMB 8,000
+100.00
+17,952
+sale of petroleum and natural gas
+Investment holding of overseas business
+USD 1,662
+USD 1,662
+100.00
+Marketing and distribution of petrochemical products
+RMB 1,000
+RMB 1,165
+100.00
+70
+RMB 22,761
+100.00
+ethylene and downstream byproducts
+Manufacturing of intermediate petrochemical
+RMB 3,986
+The minority interests of subsidiaries which the Group holds 100% of equity interests at the end of the year are the minority interests of their subsidiaries.
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong, respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC.
+Note:
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those return through its power over the entity.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 139
+Financial Statements (PRC)
+Other payables
+Other non-current liabilities
+Short-term loans
+Long-term loans (including current portion) (Note)
+RMB million
+At 31 December
+Other related companies
+At 31 December
+RMB million
+*
+("Shanghai SECCO") (note 51)
+5,802
+67.60
+RMB 2,990
+75.00
+2,582
+Gaoqiao Petrochemical Company Limited
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+RMB 1,595
+RMB 7,233
+Investment in exploration, production and
+100.00
+RMB 4,804
+55.00
+6,851
+(d) Subsidiaries acquired through business combination not under common control:
+Shanghai SECCO Petrochemical Company Limited
+Production and sale of petrochemical products
+RMB 7,801
+RMB 7,801
+RMB 10,000
+petrochemical products and petroleum products
+5,761
+50.00
+RMB 12,000
+RMB 12,000
+100.00
+Production and sale of refined petroleum products,
+RMB 3,374
+RMB 3,374
+100.00
+65
+Sinopec Yizheng Chemical Fibre Limited
+lubricant base oil, and petrochemical materials
+Production and sale of polyester chips and
+RMB 4,000
+RMB 6,713
+100.00
+Company Limited
+Liability Company
+100.00
+RMB 15,651
+RMB 15,651
+271
+Sinopec Pipeline Storage & Transportation
+Company Limited
+Sinopec Lubricant Company Limited
+Trading of petrochemical products
+Trading of crude oil and petrochemical products
+Production and sale of catalyst products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Pipeline storage and transportation of crude oil
+RMB 1,400
+RMB 1,856
+Sinopec Marketing Co. Limited
+("Marketing Company")
+100.00
+RMB 3,000
+RMB 4,585
+100.00
+4,355
+RMB 1,500
+RMB 1,562
+100.00
+27
+Sinopec Catalyst Company Limited
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Fujian Petrochemical Company Limited
+Provision of crude oil jetty services and natural gas
+pipeline transmission services
+HKD 248
+HKD 3,952
+60.33
+4,085
+Manufacturing of synthetic fibres, resin and plastics,
+RMB 10,824
+RMB 5,820
+50.44
+15,168
+intermediate petrochemical products and
+petroleum products
+Manufacturing of plastics, intermediate
+RMB 8,140
+RMB 4,070
+petroleum products
+66,827
+70.42
+RMB 20,000
+("Fujian Petrochemical") (i)
+(b) Subsidiaries established by the Group:
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Sinopec Great Wall Energy & Chemical Company Limited Coal chemical industry investment management,
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Sinopec Beihai Refining and Chemical Limited Liability
+Company
+Sinopec-SK (Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+polyester fibres
+Marketing and distribution of refined
+RMB 28,403
+Sinopec Qingdao Refining and Chemical
+RMB 7,205
+Bills receivable
+Net profits of
+the acquiree
+from
+acquisition
+date to
+end of year
+RMB 726
+million
+(157)
+(374)
+103
+22
+41
+2,656
+(13)
+Others
+Total
+46 NON-OPERATING INCOME
+The Group
+Government grants
+Others
+Total
+47 NON-OPERATING EXPENSES
+3,008
+The Group
+Changes in fair value of financial assets and financial liabilities at fair value through gain/(loss), net
+Unrealised (losses)/gains from ineffective portion cash flow hedges, net
+RMB million
+(1,940)
+(1,604)
+(752)
+692
+(916)
+7
+(88)
+3,941
+86
+11,428
+89
+19,060
+742
+28,336
+1,262
+38,058
+2018
+2017
+RMB million
+Fines, penalties and compensation
+Donations
+Others
+Total
+180
+152
+2,586
+1,468
+3,042
+1,709
+2018
+2017
+RMB million
+RMB million
+27,176
+(6,244)
+26,668
+(10,317)
+(719)
+(72)
+89
+276
+2017
+RMB million
+2018
+RMB million
+48 INCOME TAX EXPENSE
+The Group
+Provision for income tax for the year
+Deferred taxation
+Under-provision for income tax in respect of preceding year
+Total
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Group
+2018
+2017
+RMB million
+RMB 1,639
+427
+1,282
+890
+2,070
+1,317
+RMB million
+RMB million
+45 GAIN FROM CHANGES IN FAIR VALUE
+Total
+53 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+(a) Oil and gas properties and reserves
+The accounting for the exploration and production segment's oil and gas activities is subject to accounting rules that are unique to the oil and
+gas industry. The Group has used the successful efforts method to account for oil and gas business activities. The successful efforts method
+reflects the volatility that is inherent in exploring for mineral resources in that costs of unsuccessful exploratory efforts are charged to expense.
+These costs primarily include dry hole costs, seismic costs and other exploratory costs.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have
+to be met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated
+at least annually and take into account recent production and technical information about each field. In addition, as prices and cost levels
+change from year to year, the estimate of proved and proved developed reserves also changes. This change is considered a change in estimate
+for accounting purposes and is reflected on a prospective basis in related depreciation rates. Oil and gas reserves have a direct impact on
+the assessment of the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves
+estimates are revised downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's
+carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with industry practices in the similar geographic area, including estimation
+of economic life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are
+capitalised as oil and gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment
+expense and future dismantlement costs. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based
+on volumes produced and reserves.
+(b) Impairment for assets
+If circumstances indicate that the net book value of a long-lived asset may not be recoverable, the asset may be considered “impaired", and
+an impairment loss may be recognised in accordance with "CASS 8 - Impairment of Assets". The carrying amounts of long-lived assets are
+reviewed periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for
+impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a
+decline has occurred, the carrying amount is reduced to recoverable amount. For goodwill, the recoverable amount is estimated annually. The
+recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows. It is difficult to precisely
+estimate the fair value because quoted market prices for the Group's assets or cash-generating units are not readily available. In determining
+the value of expected future cash flows, expected cash flows generated by the asset or the cash-generating unit are discounted to their present
+value, which requires significant judgement relating to sales volume, selling price, amount of operating costs and discount rate. The Group uses
+all readily available information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based
+on reasonable and supportable assumptions and projections of sales volume, selling price, amount of operating costs and discount rate.
+(c) Depreciation
+Fixed assets are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual
+value. Management reviews the estimated useful lives of the assets at least annually in order to determine the amount of depreciation expense
+to be recorded during any reporting year. The useful lives are based on the Group's historical experience with similar assets and taking into
+account anticipated technological changes. The depreciation expense for future years is adjusted if there are significant changes from previous
+estimates.
+(d) Measurement of expected credit losses
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+(e) Allowance for diminution in value of inventories
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised.
+Net realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the
+estimated costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of
+the finished goods and raw materials, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were
+to be higher than estimated, the actual allowance for diminution in value of inventories would be higher than estimated.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+138
+As at and for the year ended 31 December 2018, and as at and for the year ended 31 December 2017, no individually significant impairment
+losses for bad and doubtful debts were recorded in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates
+and joint ventures.
+(5) Key management personnel emoluments
+Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
+Group, directly or indirectly, including directors and supervisors of the Group. The key management personnel compensations are as follows:
+Short-term employee benefits
+Retirement scheme contributions
+Total
+53 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+2018
+2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+RMB thousand
+5,745
+351
+6,096
+5,344
+424
+5,768
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the financial statements. The Group bases the assumptions and estimates on historical experience and on various other assumptions
+that it believes to be reasonable and which form the basis for making judgements about matters that are not readily apparent from other sources.
+On an on-going basis, management evaluates its estimates. Actual results may differ from those estimates as facts, circumstances and conditions
+change.
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The significant
+accounting policies are set forth in Note 3. The Group believes the following critical accounting policies involve the most significant judgements and
+estimates used in the preparation of the financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+137
+Financial Statements (PRC)
+RMB thousand
+20,213
+For the year ended 31 December 2018
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2018. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+31,118
+5,774
+397
+(26)
+515
+(2,768)
+14
+(21)
+199
+13
+Income from investment of subsidiaries accounted for under
+cost method
+Income from investment accounted for under equity method
+Investment income/(loss) from disposal of long-term
+equity investments
+Dividend income from holding of other equity instruments
+Investment income from holding/disposal of available-for
+sale financial assets
+Investment (loss)/income from disposal of financial assets and
+liabilities and derivative financial instruments at fair value
+through profit or loss
+(Loss)/gain from ineffective portion of cash flow hedges
+Gain on remeasurement of interests in Shanghai SECCO
+Others
+25,390
+4,259
+16,525
+13,974
+RMB million
+Actual Percentage of
+investment equity interest/
+Minority
+Interests
+Full name of enterprise
+Principal activities
+Financial Statements (PRC)
+130
+54 PRINCIPAL SUBSIDIARIES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+44 INVESTMENT INCOME
+The Group
+2018
+The Company
+2017
+RMB million
+2018
+RMB million
+2017
+For the year ended 31 December 2018
+16,279
+788
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+50 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT (Continued)
+The Group (Continued)
+(b) Net change in cash:
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Less: Cash at the beginning of the year
+Net decrease of cash
+(c) The analysis of cash held by the Group is as follows:
+2018
+2017
+RMB million
+113,218
+RMB million
+111,922
+113,218
+(1,296)
+132
+2018
+RMB million
+Financial Statements (PRC)
+131
+13
+(359)
+676
+(11,428)
+(19,060)
+(5,079)
+(4,707)
+(1,165)
+(5,610)
+(3,312)
+(28,903)
+909
+(1,043)
+(10,448)
+175,868
+126
+(31,151)
+63,762
+190,935
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Financial Statements (PRC)
+124,468
+(11,250)
+2017
+Income of
+the acquiree
+Acquiree
+Shanghai
+Time of
+acquisition
+26/10/2017
+Cost
+of acquisition
+Share of
+acquired
+equity
+SECCO
+RMB 10,135
+million
+50%
+Acquisition
+method
+Cash
+Acquisition date
+26/10/2017
+Basis of
+determination
+on acquisition date
+Acquirer gaining
+actual control
+from
+acquisition
+date to
+end of year
+RMB 5,222
+million
+acquisition
+date to
+from
+the acquiree
+flow of
+RMB million
+Cash at bank and on hand
+- Cash on hand
+- Demand deposits
+Cash at the end of the year
+51 BUSINESS COMBAINATION
+Business combination involving entities not under common control
+(2,656)
+For the year ended 31 December 2018, significant business combination didn't occur in the Group.
+111,840
+111,922
+14
+113,204
+113,218
+On 26 October 2017, a subsidiary of the Company, Gaoqiao Petrochemical Co., Ltd., purchased 50% equity interest in Shanghai SECCO from BP
+Chemicals East China Investment Limited with a cash consideration of RMB 10,135 million ("the Transaction"). Before the Transaction, the Company
+and one of its subsidiaries held 30% and 20% equity interest in Shanghai SECCO, respectively. After the Transaction, the Company, together with
+its subsidiaries, hold 100% equity interest of Shanghai SECCO, which became a subsidiary of the Company.
+Shanghai SECCO is principally engaged in the production and sale of petrochemical products including acrylonitrile, polystyrene, polyethylene, etc.
+Operating
+cash flow of
+the acquiree
+from
+acquisition
+date to
+Net cash
+82
+1,518
+Cash balance at the end of the year
+6,876
+Effect of income taxes at foreign operations
+77
+(1,394)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised
+(779)
+(613)
+609
+1,485
+Write-down of deferred tax assets
+188
+26
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+(719)
+(72)
+20,213
+(793)
+(1,259)
+Tax effect of preferential tax rate (i)
+(5,019)
+48 INCOME TAX EXPENSE (Continued)
+The Group (Continued)
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+2018
+2017
+Profit before taxation
+RMB million
+100,502
+16,279
+RMB million
+Expected income tax expense at a tax rate of 25%
+1,526
+21,643
+Tax effect of non-deductible expenses
+1,989
+1,936
+Tax effect of non-taxable income
+86,573
+Note:
+25,126
+49 DIVIDENDS
+Decrease in deferred tax liabilities
+Increase in inventories
+Safety fund reserve
+Increase in operating receivables
+(Decrease)/increase in operating payables
+Net cash flow from operating activities
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate of
+15% through the year 2020.
+Increase in deferred tax assets
+2018
+2017
+RMB million
+70,294
+21,791
+141
+99,462
+106,149
+10,505
+9,161
+6,921
+RMB million
+80,289
+11,605
+Investment income
+Dry hole costs written off
+Fair value (gain)/loss
+Financial expenses
+(a) Reconciliation of net profit to cash flows from operating activities:
+The Group
+Net profit
+Pursuant to the shareholders' approval at the Annual General Meeting on 28 June 2017, a final dividend of RMB 0.17 per share totaling RMB
+20,582 million according to total shares of 18 July 2017 was approved. All dividends have been paid in the year ended 31 December 2017.
+Pursuant to the shareholders' approval at the Annual General Meeting on 15 May 2018, a final dividend of RMB 0.40 per share totaling RMB
+48,428 million according to total shares of 4 June 2018 was approved. All dividends have been paid in the year ended 31 December 2018.
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 24 August 2018, the directors authorised
+to declare the interim dividends for the year ending 31 December 2018 of RMB 0.16 (2017: RMB 0.10) per share totaling RMB 19,371 million
+(2017: RMB 12,107 million).
+(b) Dividends of ordinary shares declared during the year
+50 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+(a) Dividends of ordinary shares declared after the balance sheet date
+Add:
+Impairment losses on assets
+Credit impairment losses
+Depreciation of fixed assets
+Amortisation of intangible assets and long-term deferred expenses
+Net loss on disposal of non-current assets
+Pursuant to a resolution passed at the director's meeting on 22 March 2019, final dividends in respect of the year ended 31 December 2018
+of RMB 0.26 (2017: RMB 0.40) per share totaling RMB 31,479 million (2017: RMB 48,428 million) were proposed for shareholders' approval
+at the Annual General Meeting. Final cash dividend proposed after the balance sheet date has not been recognised as a liability at the balance
+sheet date.
+16,296
+15,463
+13,379
+109,967
+1,797
+1,723
+115,310
+12,873
+18,408
+6,906
+66,843
+60,331
+99,384
+117,976
+2,398
+4,274
+23,028
+19,578
+21,539
+18,164
+13,556
+675
+1,894
+979,329
+48,572
+2017
+RMB million
+At 31 December
+332,479
+2,360,193
+989,668
+50,892
+1,040,560
+RMB million
+2018
+At 31 December
+376,470
+2,891,179
+1,758,365
+269,349
+2,119,580
+395,129
+RMB million
+RMB million
+353
+2017
+Others
+Non-current assets
+Mainland China
+Others
+Mainland China
+External sales
+The following tables set out information about the geographical information of the Group's external sales and the Group's non-current assets,
+excluding financial instruments and deferred tax assets. In presenting information on the basis of geographical segments, segment revenue is
+based on the geographical location of customers, and segment assets are based on the geographical location of the assets.
+21,258
+6,281
+211
+16
+4,922
+1,374
+264
+2018
+Singapore
+12,612
+13,571
+The carrying amounts of cash at bank and on hand, financial assets held for trading, derivative financial assets, bills receivable and accounts
+receivable and other receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+(ii) Impairment of financial assets
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivables and other
+receivables.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+-
+For trade accounts receivables, the group applies the "No.22 Accounting Standards for Business Enterprises Financial instruments:
+recognition and measurement" simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
+trade accounts receivables.
+To measure the expected credit losses, trade accounts receivables have been grouped based on shared credit risk characteristics and the
+days past due.
+The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31 December 2018 or 1 Janurary 2018,
+respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect
+current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
+The detailed analysis of trade accounts receivables, based on which the Group generated its payment profile is listed in note 8.
+All of the entity's other receivables are considered to have low credit risk, and the loss allowance recognised during the period was therefore
+limited to 12 months expected losses. The Group considers "low credit risk" for other receivables when they have a low risk of default and
+the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+146
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+58 FINANCIAL INSTRUMENTS (Continued)
+Liquidity risk
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
+obligations, and arises principally from the Group's deposits placed with financial institutions (including structured deposit) and receivables
+from customers. To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large financial
+institution in the PRC with acceptable credit ratings. The majority of the Group's accounts receivable relates to sales of petroleum and
+chemical products to related parties and third parties operating in the petroleum and chemical industries. No single customer accounted for
+greater than 10% of total accounts receivable at 31 December 2018, except for the amounts due from Sinopec Group Company and fellow
+subsidiaries. The Group performs ongoing credit evaluations of its customers' financial condition and generally does not require collateral
+on accounts receivable. The Group maintains an impairment loss for doubtful accounts and actual losses have been within management's
+expectations.
+Liquidity risk is the risk that the Group encounters short fall of capital when meeting its obligation of financial liabilities. The Group's approach to
+managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal
+and stressed capital conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group prepares monthly
+cash flow budget to ensure that they will always have sufficient liquidity to meet its financial obligation as they fall due. The Group arranges and
+negotiates financing with financial institutions and maintains a certain level of standby credit facilities to reduce the liquidity risk.
+(i) Risk management
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management 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.
+1,027,901
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+145
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+58 FINANCIAL INSTRUMENTS
+Overview
+Financial assets of the Group include cash at bank and on hand, financial assets held for trading, derivative financial assets, bills receivable and
+accounts receivable, other equity instrument investments and other receivables. Financial liabilities of the Group include short-term, derivative
+financial liabilities, bills payable and accounts payable, debentures payable, employee benefits payable, other payables and long-term loans.
+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.
+Credit risk
+21,429
+At 31 December 2018, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB
+387,748 million (2017: RMB 361,852 million) on an unsecured basis, at a weighted average interest rate of 3.87% (2017: 3.40 %). At 31 December
+2018, the Group's outstanding borrowings under these facilities were RMB 21,236 million (2017: RMB 56,567 million) and were included in loans.
+The following table sets out the remaining contractual maturities at the balance sheet date of the Group's financial liabilities, which are based on
+contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on prevailing rates at the
+balance sheet date) and the earliest date the Group would be required to repay:
+amount
+18,053
+18,053
+61,576
+66,387
+792
+31,951
+38,674
+1,269
+40,885
+14,030
+13,807
+10,903
+17,124
+6,251
+13,571
+13,571
+17,450
+Carrying undiscounted
+45,040
+44,692
+RMB million
+cash flow
+RMB million
+Within
+one year or
+on demand
+RMB million
+two years
+RMB million
+Total
+contractual
+At 31 December 2018
+More than
+one year but
+less than
+More than
+two years but
+less than
+five years
+RMB million
+More than
+five years
+RMB million
+Short-term loans
+Non-current liabilities due within one year
+Long-term loans
+Debentures payable
+Derivative financial liabilties
+45,040
+21,075
+6,905
+31,344
+55,451
+55,451
+54,701
+RMB million
+five years
+RMB million
+five years
+less than
+two years
+RMB million
+More than
+two years but
+More than
+26,681
+More than
+one year but
+less than
+At 31 December 2017
+cash flow
+undiscounted
+contractual
+Total
+RMB million
+RMB million
+Carrying
+amount
+Total
+Other payables and employee benefits payable
+Bills payable and accounts payable
+Derivative financial liabilties
+Within
+one year or
+on demand
+RMB million
+Debentures payable
+27,261
+67,754
+147
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Management believes that the Group's current cash on hand, expected cash flows from operations and available standby credit facilities from
+financial institutions will be sufficient to meet the Group's short-term and long-term capital requirements.
+17,243
+71,323
+18,916
+96,190
+390,355
+497,837
+96,190
+96,190
+485,896
+206,535
+206,535
+27,261
+206,535
+2,665
+2,665
+14,337
+2,906
+49,038
+22,285
+1,250
+1,250
+39,122
+31,370
+17,666
+1,003
+70,613
+2,665
+Long-term loans
+Non-current liabilities due within one year
+Short-term loans
+RMB million
+RMB million
+2018
+RMB million
+2017
+Shanghai Petrochemical
+At 31
+December
+2018
+Fujian Petrochemical
+At 31
+December
+At 31
+December
+At 31
+December
+Sinopec Kantons
+At 31
+At 31
+December
+2017
+2017
+2017
+2018
+December
+2017
+Shanghai SECCO
+At 31
+At 31
+December
+December
+Zhonghan Wuhan
+At 31
+December
+At 31
+December
+2018
+2017
+2018
+2017
+2018
+2018
+December
+December
+17,154
+30,931
+54,915
+356,257
+459,257
+446,772
+84,775
+84,775
+84,775
+Other payables and employee benefits payable
+Total
+192,757
+192,757
+192,757
+Bills payable and accounts payable
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+54 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material minority interests
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary that has minority
+interests that are material to the Group.
+Summarised consolidated balance sheet
+Marketing Company
+At 31
+At 31
+SIPL
+At 31
+At 31
+December
+December
+Financial Statements (PRC)
+148
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+26,873
+7,013
+1,183
+1,450
+1,323
+127
+7.887
+7,013
+874
+182
+182
+25,550
+35,069
+25,550
+Level 3
+RMB million
+RMB million
+RMB million
+Level 2
+Level 1
+- Derivative financial liabilities
+Derivative financial liabilities:
+Liabilities
+Available-for-sale financial assets:
+- Listed
+- Derivative financial assets
+Derivative financial assets:
+- Structured deposits
+Total
+RMB million
+27,908
+8,071
+5,500
+149
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Management of the Group uses discounted cash flow model with inputted interest rate and commodity index, which were influenced by historical
+fluctuation and the probability of market fluctuation, to evaluate the fair value of the structured deposits classified as Level 3 financial assets.
+During the year ended 31 December 2018, there was no transfer between instruments in Level 1 and Level 2.
+2,665
+2,665
+1,388
+1,388
+1,277
+1,277
+51,900
+51,196
+183
+521
+178
+178
+526
+183
+343
+51,196
+51,196
+Total
+RMB million
+Level 3
+RMB million
+Level 2
+RMB million
+RMB million
+Level 1
+13,571
+13,571
+8,071
+Financial assets held for trading
+RMB million
+Assets
+At 31 December 2017
+Other than the amounts as disclosed above, the amounts of other financial assets and liabilities of the Group are substantially denominated in
+the functional currency of respective entity of the Group.
+50
+2017
+million
+2018
+million
+172
+At 31 December
+At 31 December
+US Dollars
+The Group
+A 5 percent strengthening/weakening of Renminbi against the following currencies at 31 December 2018 and 31 December 2017 would have
+increased/decreased net profit for the year of the Group by the amounts shown below. This analysis has been determined assuming that the
+change in foreign exchange rates had occurred at the balance sheet date and had been applied to the foreign currency balances to which
+the Group has significant exposure as stated above, and that all other variables, in particular interest rates, remain constant. The analysis is
+performed on the same basis for 2017.
+204
+668
+Gross exposure arising from loans and borrowings
+US Dollars
+(b) Interest rate risk
+million
+2017
+2018
+At 31 December
+At 31 December
+The Group
+Included in short-term and long-term debts are the following amounts denominated in a currency other than the functional currency of the entity
+to which they relate:
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured.
+The Group's currency risk exposure primarily relates to short-term and long-term debts denominated in US Dollars, and the Group enters into
+foreign exchange contracts to manage currency risk exposure.
+(a) Currency risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+Market risk
+58 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2018
+million
+The Group's interest rate risk exposure arises primarily from its short-term and long-term loans. Loans carrying interest at variable interest rates
+and at fixed interest rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates and
+terms of repayment of short-term and long-term loans of the Group are disclosed in Note 21 and Note 28, respectively.
+At 31 December 2018, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables
+held constant, would decrease/increase the Group's net profit for the year by approximately RMB 424 million (at 31 December 2017: decrease/
+increase RMB 450 million). This sensitivity analysis has been determined assuming that the change in interest rates had occurred at the balance
+sheet date and the change was applied to the Group's loans outstanding at that date with exposure to cash flow interest rate risk. The analysis
+is performed on the same basis for 2017.
+(c) Commodity price risk
+- Derivative financial liabilities
+Derivative financial liabilities:
+Liabilities
+Other equity security investments:
+- Other Investments
+- Derivative financial assets
+Derivative financial assets:
+- Structured deposits
+– Equity investments, listed and at quoted market price
+Financial assets held for trading
+Assets
+The Group
+At 31 December 2018
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which
+all significant inputs are directly or indirectly based on observable market data.
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+•
+•
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy. With the fair value of each financial instrument categorised in its entirely based on the lowest level of input that is
+significant to that fair value measurement. The levels are defined as follows:
+(i) Financial instruments carried at fair value
+Fair values
+58 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2018, it is estimated that a general increase/decrease of USD 10 per barrel in basic price of derivative financial instruments,
+with all other variables held constant, would impact the fair value of derivative financial instruments which would decrease/increase the Group's
+profit for the year by approximately RMB 197 million (2017: decrease/increase RMB 4,049 million), and increase/decrease the Group's other
+comprehensive income by approximately RMB 6,850 million (2017: decrease/increase RMB 701 million). This sensitivity analysis has been
+determined assuming that the change in prices had occurred at the balance sheet date and the change was applied to the Group's derivative
+financial instruments at that date with exposure to commodity price risk. The analysis is performed on the same basis for 2017.
+At 31 December 2018, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. At 31 December 2018, the net fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 7,844 million (2017: RMB 515 million) recognised in other receivables and derivative financial liabilities of
+RMB 13,568 million (2017: RMB 2,624 million) recognised in other payables.
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products
+and chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the
+Group. The Group uses derivative financial instruments, including commodity futures and swaps, to manage a portion of such risk.
+The Group
+Financial Statements (PRC)
+RMB million
+RMB million
+1,046
+1,065
+2,757
+1,595
+6,152
+5,277
+1,075
+3,272
+27,517
+21,995
+Profit for the year
+16,139
+3,099
+17,134
+26,320
+1,498
+1,398
+6,068
+5,261
+92,014
+107,765
+6,136
+5,037
+1,221,530
+1,443,698
+Turnover
+5,222
+RMB million
+726
+2,733
+98
+798
+3,081
+2,612
+(38)
+2,737
+9.033
+7,780
+interests
+(loss) attributable to minority
+Comprehensive income/
+2,733
+1,879
+1,879
+3,099
+1,146
+1,067
+2,757
+1,595
+6,152
+5,270
+396
+4,536
+26,983
+22,538
+Total comprehensive income
+726
+RMB million
+RMB million
+RMB million
+13,598
+12,612
+11.057
+10,603
+10,659
+12,763
+9,244
+10,756
+19,597
+19,101
+6,246
+6,970
+Summarised consolidated statement of comprehensive income and cash flow
+258.976 251,681
+(1,740)
+(1,698)
+(2,430)
+(132)
+(681)
+(688)
+(146)
+(140)
+(28,523)
+(2,086) (1,774) (31,050)
+Non-current liabilities
+13,598
+Net non-current assets
+Year ended 31 December
+Marketing Company
+2018
+SIPL
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+Zhonghan Wuhan
+Shanghai SECCO (ii)
+Sinopec Kantons
+Fujian Petrochemical
+2018
+2017
+2018
+2017
+2018
+2017
+Shanghai Petrochemical
+1,378
+Dividends paid to minority
+interests
+3,964
+(3,722)
+(2,351)
+(2,233)
+(4,174)
+(2,333)
+(3,975)
+Net current (liabilities)/assets
+(50,905)
+(56,126)
+16,248
+12,437
+11,386
+(376)
+8.944
+616
+(2,513)
+(1,155)
+7,304
+7.428
+417
+(2,339)
+Non-current assets
+261,062
+253,455
+38,020
+34,769
+766
+(50)
+(10,922)
+(13,913)
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+130,861
+156,494
+16,731
+19,555
+25,299
+19,866
+816
+992
+1,209
+1,196
+9,537
+11,602
+2,750
+1,636
+Current liabilities
+(181,766)
+(212,620)
+(483)
+(7,118)
+19,241
+RMB million
+19,743
+9,925
+104
+957
+658
+235
+1,004
+433
+399
+88
+38
+(558)
+38
+7,078
+70
+6,695
+3.467
+51,038
+(used in) operating activities 24,825
+Net cash generated from/
+104
+99
+625
+600
+0
+1,344
+1,616
+9,544
+2,758
+1,191
+738
+968
+12,895
+13,089
+12,301
+RMB million
+RMB million
+At 31 December
+Total
+Between four and five years
+Thereafter
+Between one and two years
+Between two and three years
+Between three and four years
+Within one year
+2017
+2018
+At 31 December
+At 31 December 2018 and 31 December 2017, the future minimum lease payments of the Group under operating leases are as follows:
+The Group lease land and buildings, service stations and other equipment through non-cancellable operating leases. These operating leases do not
+contain provisions for contingent lease rentals. None of the rental agreements contains escalation provisions that may require higher future rental
+payments.
+Operating lease commitments
+55 COMMITMENTS
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+140
+(ii) On 26 October 2017, a subsidiary of the Company, Gaoqiao Petrochemical Co., Ltd., purchased 50% equity interest in Shanghai SECCO from BP Chemicals East
+China Investment Limited. Therefore summarised consolidated statement of comprehensive income and cash flow of Shanghai SECCO presents the results from the
+acquisition date to 31 December 2017.
+Note:
+2.976
+3,308
+1,639
+3,766
+11,444
+15,625
+5,500
+533,108
+At 31 December
+2017
+RMB million
+5,033
+12,168
+940
+13,520
+7,197
+9,732
+24,398
+24,192
+2018
+RMB million
+Others
+(i) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB
+17,050 million. At 31 December 2018, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 12,168
+million (2017: RMB 13,520 million).
+The Group monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss has occurred, and recognises any
+such losses under guarantees when those losses are reliably estimable. At 31 December 2018 and 31 December 2017, it was not probable that the
+Group will be required to make payments under the guarantees. Thus no liabilities have been accrued for a loss related to the Group's obligation
+under these guarantee arrangements.
+Environmental contingencies
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect the Group's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature and
+extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development areas,
+whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv) changes
+in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is indeterminable
+due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective actions that may be
+required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot reasonably be estimated at
+present, and could be material.
+The Group paid normal routine pollutant discharge fees of approximately RMB 7,940 million in the consolidated financial statements for the year
+ended 31 December 2018 (2017: RMB 7,851 million).
+Legal contingencies
+The Group is a defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business.
+Management has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any
+resulting liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+57 SEGMENT REPORTING
+Total
+At 31 December
+Joint ventures
+Associates (i)
+(b) At 31 December 2018 and 31 December 2017, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+32
+Between three and four years
+Between four and five years
+Thereafter
+Total
+28
+28
+28
+28
+852
+1,400
+882
+1,258
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+141
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+56 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.
+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.
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+External sales
+Inter-segment sales
+Elimination of inter-segment sales
+Consolidated income from principal operations
+Income from other operations
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+2018
+2017
+Inter-segment sales
+33
+External sales
+Inter-segment sales
+(iii) Marketing and distribution which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(iv) Chemicals — which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external
+customers.
+(v) Others which largely comprise the trading activities of the import and export companies of the Group and research and development
+undertaken by other subsidiaries.
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and corporate and others businesses separately. The reportable segments are each managed separately because they manufacture and/
+or distribute distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+142
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+57 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for cash at bank and on hand, long-term equity investments, deferred tax assets and other
+unallocated assets. Segment liabilities exclude short-term loans, short-term debentures payable, non-current liabilities due within one year, long-
+term loans, debentures payable, deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+Reportable information on the Group's operating segments is as follows:
+Income from principal operations
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Marketing and distribution
+Between two and three years
+83
+79
+16,440
+27,276
+6,466
+5,948
+31,370
+31,951
+67,754
+61,576
+26,681
+17,450
+54,701
+44,692
+517,439
+538,129
+117,756
+144,138
+35,207
+37,380
+163,680
+7,627
+159,028
+20,583
+741,434
+93,874
+Exploration and production
+Impairment losses on long-lived assets
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Depreciation, depletion and amortisation
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Capital expenditure
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+57 SEGMENT REPORTING (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+734,649
+RMB million
+101,429
+99,367
+195,437
+178,383
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+Note:
+(i) The investment commitments of the Group is RMB 5,553 million (2017: RMB 3,364 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
+and recognised in profit and loss. Expenses recognised were approximately RMB 231 million for the year ended 31 December 2018 (2017: RMB
+308 million).
+Estimated future annual payments of the Group are as follows:
+At 31 December
+2018
+At 31 December
+2017
+RMB million
+RMB million
+Within one year
+Between one and two years
+380
+205
+Authorised and contracted for (i)
+Authorised but not contracted for
+Total
+103,709
+57,997
+141,045
+54,392
+11,114
+14,668
+11,492
+13,986
+10,730
+13,734
+10,552
+13,494
+10,428
+281,287
+202,806
+352,794
+257,122
+Capital commitments
+At 31 December 2018 and 31 December 2017, the capital commitments of the Group are as follows:
+At 31 December
+At 31 December
+2018
+RMB million
+2017
+RMB million
+120,386
+42,155
+RMB million
+Consolidated income from other operations
+Consolidated operating income
+64,047
+24,106
+32,011
+25,970
+22,796
+(8,151)
+(3,160)
+(3,634)
+(1,655)
+80,437
+66,640
+2,595
+1,401
+429
+1,017
+2,676
+2,951
+12,797
+13,648
+53,703
+(1,177)
+(47,399)
+2017
+RMB million
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Total segment liabilities
+Short-term loans
+Non-current liabilities due within one year
+Long-term loans
+Debentures payable
+Deferred tax liabilities
+Other non-current liabilities
+Other unallocated liabilities
+Total liabilities
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+2018
+RMB million
+(11,557)
+Corporate and others
+43
+19.060
+273,123
+317,641
+309,727
+156,865
+158,472
+152,799
+170,045
+1,220,347
+1,254,771
+167,015
+165,004
+145,721
+131,087
+21,694
+15,131
+37,531
+29,511
+1,592,308
+1,595,504
+271,356
+11.428
+343,404
+RMB million
+(1,001)
+1,560
+6,694
+4,356
+2,656
+(13)
+(742)
+(1,518)
+101,474
+86,965
+2,070
+1,317
+1,709
+86,573
+3,042
+100,502
+At 31 December
+2018
+RMB million
+At 31 December
+2017
+321,686
+Deferred tax assets.
+Other unallocated assets
+Cash at bank and on hand
+49,615
+531,241
+423,429
+716,789
+650,271
+440,303
+1,367,060
+973,411
+73,835
+(1,934,372)
+2,825,613
+2,300,470
+10,738
+10,533
+5,389
+5,104
+32,424
+Long-term equity investments
+(1,445,955)
+373,814
+457,406
+1,195,864
+2018
+2017
+RMB million
+RMB million
+93,499
+69,168
+95,954
+77,804
+189,453
+146,972
+148,930
+132,478
+1,109,088
+874,271
+1,258,018
+1,006,749
+1,408,989
+5,224
+1,414,213
+1,191,902
+3,962
+15,492
+14,314
+28,333
+65,566
+1,523
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Total segment investment income
+Less: Financial expenses
+Add: Other income
+Gain/(loss) from changes in fair value
+Loss from asset disposal
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Assets
+Segment assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Total segment assets
+Investment income
+Total segment operating profit
+Exploration and production
+Corporate and others
+1,439
+59,723
+2,891,179
+2,360,193
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+143
+Financial Statements (PRC)
+144
+Elimination
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+57 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Operating (loss)/profit
+By segment
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+For the year ended 31 December 2018
+(9,741)
+55,093
+Derivatives financial assets
+51,786
+Financial assets at fair value through profit or loss
+Trade accounts receivable and bills receivable
+51,196
+Prepaid expenses and other current assets
+RMB
+RMB
+RMB
+equity
+Total
+Non-
+controlling
+interests
+Company
+shareholders
+of the
+RMB
+Retained
+earnings
+reserve
+reserve
+premium
+reserve
+capital
+Other
+Statutory Discretionary
+surplus
+surplus
+reserves
+RMB
+RMB
+RMB
+(a) According to the PRC Company Law and the Articles of Association of the Company, the Company is required to transfer 10% of its net profit determined in accordance
+with the accounting policies complying with Accounting Standards for Business Enterprises ("CASS"), adopted by the Group to statutory surplus reserve. In the event
+that the reserve balance reaches 50% of the registered capital, no transfer is required. The transfer to this reserve must be made before distribution of a dividend to
+shareholders. Statutory surplus reserve can be used to make good previous years' losses, if any, and may be converted into share capital by issuing of new shares to
+shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by them, provided that the balance after such issue is
+not less than 25% of the registered capital.
+During the year ended 31 December 2018, the Company transferred RMB 3,996 million (2017: RMB 3,042 million) to the statutory surplus reserve, being 10% of the
+current year's net profit determined in accordance with the accounting policies complying with CASS to this reserve.
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+(c) As at 31 December 2018, the amount of retained earnings available for distribution was RMB 143,148 million (2017: RMB 177,049 million), being the amount
+determined in accordance with CASS. According to the Articles of Association of the Company, the amount of retained earnings available for distribution to shareholders
+of the Company is lower of the amount determined in accordance with the accounting policies complying with CASS and the amount determined in accordance with the
+accounting policies complying with International Financial Reporting Standards ("IFRS").
+(d) The capital reserve represents (i) the difference between the total amount of the par value of shares issued and the amount of the net assets transferred from Sinopec
+Group Company in connection with the Reorganisation (Note1); and (ii) the difference between the considerations paid over or received the amount of the net assets of
+entities and related operations acquired from or sold to Sinopec Group Company and non-controlling interests.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+159
+Financial Statements (International)
+117,000
+82.682
+55,850
+26,326
+121,071
+Balance at 31 December 2017
+RMB
+RMB
+RMB
+Share
+856,535
+Capital
+to
+3,042
+711
+724
+(13)
+(13)
+(13)
+(45,190)
+(12,501)
+(35,731)
+(32,689)
+3,042
+(12,501)
+(12,501)
+(3,042)
+3,042
+(12,107)
+(12,107)
+(12,107)
+(35,731)
+(32,702)
+(11,777)
+(44,479)
+attributable
+Total equity
+for the year ended 31 December 2018
+(Amounts in million)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+92
+852,890
+27
+126,770
+65
+726,120
+326,125
+(2,934)
+117,000
+82,682
+55,850
+(107)
+123
+49
+26,326
+121,071
+Share
+(20,582)
+139,251
+315,109
+994
+(6,624)
+Total comprehensive income for the year
+(7,618)
+61,618
+54,000
+18,273
+72,273
+(7,618)
+Amounts transferred to cash flow hedge
+5,269
+5,269
+reserves initially recognised by hedged items
+Transactions with owners, recorded directly in equity:
+Contributions by and distributions to owners:
+Final dividend for 2017 (Note 13)
+Interim dividend for 2018 (Note 13)
+Appropriation (Note (a))
+----- 5,269
+(7,618)
+Other comprehensive income (Note 14)
+78,897
+126,770
+852,890
+Change in accounting policy (Note 1(a))
+(12)
+12
+Balance at 1 January 2018
+Profit for the year
+121,071
+26,326
+55,850
+82,682
+117,000
+(2,946)
+326,137
+726,120
+126,770
+852,890
+61.618
+61,618
+17,279
+Distributions to non-controlling interests
+717,284
+Contributions to subsidiaries from
+Total contributions by and distributions to owners
+(299)
+(311)
+121,071
+(12)
+(261)
+26,053
+3.996
+(71,795)
+(67,811)
+(5,715)
+(12)
+(73,526)
+(851)
+(294)
+(77)
+(371)
+55,850
+86,678
+117,000
+(4,477)
+818
+(12)
+(73,215)
+(5,416)
+Transaction with non-controlling interests
+Total transactions with owners
+Others
+Balance at 31 December 2018
+Note:
+(48,428) (48,428)
+(48,428)
+(19,371)
+(19,371)
+(19,371)
+3,996
+(3,996)
+(7,476)
+(7,476)
+2,060
+2,060
+3,996
+(71,795)
+(67,799)
+non-controlling interests
+Inventories
+(20,582)
+|||||
+42,800
+33
+6,466
+5,948
+28
+55,804
+43,320
+51,011
+42,516
+2223
+39,958
+Provisions
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+29
+Long-term debts
+Non-current liabilities
+1,016,058
+1,027,210
+50,397
+60,978
+29
+Other long-term liabilities
+28,400
+17,620
+139,251
+Total equity
+Non-controlling interests
+726,120
+717,284
+Total equity attributable to shareholders of the Company
+605,049
+596,213
+121,071
+121,071
+34
+Reserves
+Share capital
+852,890
+856,535
+163,168
+170,675
+Equity
+Total non-current liabilities
+579,446
+126,770
+565,098
+6,699
+55,338
+29,462
+29
+Short-term debts
+Current liabilities
+529,049
+504,120
+Total current assets
+Loans from Sinopec Group Company and fellow subsidiaries
+40,929
+186,693
+184,584
+84,701
+64,879
+526
+7,887
+25,732
+22222
+54,023
+29
+31,665
+25,311
+Total assets less current liabilities
+Net current liabilities
+Total current liabilities
+Income tax payable
+276,582
+166,151
+32,1(a)
+Other payables
+124,793
+31,1(a)
+Contract liabilities
+206,535
+192,757
+30
+Trade accounts payable and bills payable
+2,665
+13,571
+24
+Derivatives financial liabilities
+13,015
+(20,582)
+856,535
+Approved and authorised for issue by the board of directors on 22 March 2019.
+51,244
+831,235
+120,241
+710,994
+310,719
+424
+117,000
+79.640
+51,244
+55,850
+121,071
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+26,290
+19,174
+70,418
+-----(3,481)
+Balance at 31 December 2017
+Others
+Total transactions with owners
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+Distributions to non-controlling interests
+Appropriation (Note (a))
+Interim dividend for 2017 (Note 13)
+Final dividend for 2016 (Note 13).
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+66,042
+18,279
+47,763
+51,244
+(3,481)
+(4,376)
+(895)
+(3,481)
+RMB
+852,890
+RMB
+Total equity
+Total comprehensive income for the year
+Other comprehensive income (Note 14)
+Profit for the year
+Balance at 1 January 2017
+for the year ended 31 December 2017
+(Amounts in million)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+158
+Financial Statements (International)
+Total equity
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+Chief Financial Officer
+Wang Dehua
+Ma Yongsheng
+President
+(Legal representative)
+Chairman
+Dai Houliang
+157
+attributable
+to
+Share
+interests
+Company
+earnings
+reserves
+reserve
+reserve
+premium
+reserve
+capital
+controlling
+of the
+Retained
+Other
+Non-
+shareholders
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+RMB
+(1,580)
+70,418
+Earnings per share:
+Decrease in prices of international crude oil along with its highly.
+correlated products, such as refined oil products, in the fourth quarter
+of the year ended 31 December 2018 gave rise to the risk that net
+realisable values of crude oil, finished goods and work in progress of
+refined oil products were lower than their respective book values as at
+31 December 2018.
+Refer to note 2(e) "Inventories", note 26 "Inventories" and note 42
+"Accounting estimates and judgements" to the consolidated financial
+statements.
+Net realisable value (NRV) of crude oil, finished goods and work in
+progress of refined oil products
+Because of the significance of the carrying amount of property, plant
+and equipment relating to oil and gas producing activities as at 31
+December 2018, together with the use of significant estimations or
+assumptions in determining their respective value in use, we had placed
+our audit emphasis on this matter.
+Discount rates.
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Decrease in prices of international crude oil in the fourth quarter of the
+year ended 31 December 2018 gave rise to possible indication that the
+carrying amount of property, plant and equipment relating to oil and
+gas producing activities as at 31 December 2018 might be impaired.
+The Group has adopted value in use as the respective recoverable
+amounts of property, plant and equipment relating to oil and gas
+producing activities, which involved key estimations or assumptions
+including:
+Refer to note 8 "Other operating expense, net", note 16 "Property, plant
+and equipment” and note 42 "Accounting estimates and judgements" to
+the consolidated financial statements.
+Recoverability of the carrying amount of property, plant and equipment
+relating to oil and gas producing activities
+Key Audit Matter
+Management has determined the NRVs of crude oil, finished goods
+and work in progress of refined oil products based on the respective
+estimated selling prices less the estimated costs to completion, other
+necessary costs of sales and the related taxes, which involved key
+estimations or assumptions including:
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+152
+T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
+PricewaterhouseCoopers, 22/F, Prince's Building, Central, Hong Kong
+Net realisable value (NRV) of crude oil, finished goods and work in progress of refined oil products
+Recoverability of the carrying amount of property, plant and equipment relating to oil and gas producing activities
+•
+•
+Key audit matters identified in our audit are summarised as follows:
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements
+of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
+opinion thereon, and we do not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants ("the Code"), and we have fulfilled our
+other ethical responsibilities in accordance with the Code.
+Estimated selling prices;
+Because of the significance of the book value of crude oil, finished
+goods and work in progress of refined oil products as at 31 December
+2018, together with the use of significant estimations or assumptions in
+determining their respective NRVs, we had placed our audit emphasis
+on this matter.
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Financial Statements (International)
+153
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual
+report other than the consolidated financial statements and our auditor's report thereon.
+On a sampling basis, compared the costs to completion, other necessary
+costs of sales and related taxes against historical data of the Group.
+Based on the work, we found that the key assumptions and data adopted in
+the NRV models were supported by the evidence we obtained.
+• On a sampling basis, compared the estimated selling prices of
+inventories used in the NRV models against the recently realised selling
+prices, and the prices available on domestic and international markets.
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the NRV models.
+• Evaluated and tested the key controls relating to the preparation of the
+NRV models of crude oil, finished goods and work in progress of refined
+oil products.
+Estimated costs to completion, other necessary costs of sales and
+related taxes.
+In auditing the NRVS of crude oil, finished goods and work in progress of
+refined oil products, we performed the following key procedures on the
+inventory NRV models prepared by the management.
+• Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+• Independently estimated a range of relevant discount rates, and found
+that the discount rates adopted by management were within the range.
+• Tested selected other key data inputs, such as natural gas prices and
+production profiles in the projections by reference to historical data
+and/or relevant budgets of the Group.
+• Compared the future production profiles against the oil and gas
+reserve estimation report approved by the management. Evaluated
+the competence, capability and objectivity of the management's
+experts engaged in estimating the oil and gas reserves. Assessed key
+estimations or assumptions used in the reserve estimation, by reference
+to historical data, management plans and/or reputable external data.
+Compared the future cost profiles against historical costs and relevant
+budgets of the Group.
+Compared estimates of future crude oil prices adopted by the Group
+against a range of reputable published crude oil price forecasts.
+Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+Evaluated and tested the key controls in respect of the preparation of
+the discounted cash flow projections of property, plant and equipment
+relating to oil and gas producing activities.
+In auditing the respective value in use calculations of property, plant and
+equipment relating to oil and gas producing activities, we performed the
+following key procedures on the relevant discounted cash flow projections
+prepared by management:
+How our audit addressed the Key Audit Matter
+OTHER INFORMATION
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we obtained.
+Independence
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the Hong Kong Institute of Certified Public
+Accountants ("HKICPA"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the
+Consolidated Financial Statements section of our report.
+6.37
+0.493
+0.493
+8.20
+equity shareholders
+losses attributable to the Company's ordinary
+Net profit deducted extraordinary gains and
+ordinary equity shareholders
+Net profit attributable to the Company's
+0.422
+0.376
+0.422
+0.521
+0.521
+8.67
+per share
+(RMB/Share)
+(RMB/Share)
+(%)
+earnings
+earnings
+per share
+net assets
+per share
+(RMB/Share)
+7.14
+0.376
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+151
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December
+2018, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") as issued by the International Accounting Standard Board and have been properly prepared in compliance with the
+disclosure requirements of the Hong Kong Companies Ordinance.
+Our opinion
+the notes to the consolidated financial statements, which include a summary of significant accounting policies.
+the consolidated statement of cash flows for the year then ended; and
+•
+the consolidated statement of changes in equity for the year then ended;
+the consolidated statement of comprehensive income for the year then ended;
+•
+the consolidated income statement for the year then ended;
+•
+the consolidated balance sheet as at 31 December 2018;
+•
+The consolidated financial statements of China Petroleum & Chemical Corporation (the "Company") and its subsidiaries (the "Group") set out on pages
+155 to 211, which comprise:
+羅兵咸永道
+What we have audited
+OPINION
+To the Shareholders of China Petroleum & Chemical Corporation
+(incorporated in the People's Republic of China with limited liability)
+Independent Auditor's Report
+pwc
+REPORT OF THE INTERNATIONAL AUDITOR
+Financial Statements (International)
+Financial Statements (PRC)
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
+whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise
+appears to be materially misstated.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
+fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance
+with IFRSS and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is
+necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
+1,001
+Net finance costs
+596
+Foreign currency exchange gains, net
+7,726
+Interest income
+(7,146)
+(7,321)
+9
+71,470
+5,254
+332
+(1,560)
+(2,288,723)
+(16,554)
+(5,360)
+(235,292)
+(246,498)
+7
+(74,854)
+(77,721)
+6
+819
+Interest expense
+(2,808,915)
+82,264
+Investment income
+1,871
+262
+78,897
+Profit for the year
+19,174
+17,279
+Non-controlling interests
+51,244
+61,618
+Shareholders of the Company
+Attributable to:
+70,418
+78,897
+Profit for the year
+(16,279)
+(20,213)
+10
+Income tax expense
+86,697
+99,110
+Profit before taxation
+16,525
+13.974
+19, 20
+Share of profits less losses from associates and joint ventures
+Finance costs
+Diluted
+Operating profit
+Other operating expense, net
+Note
+(Amounts in million, except per share data)
+for the year ended 31 December 2018
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS”)
+CONSOLIDATED INCOME STATEMENT
+154 Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Hong Kong, 22 March 2019
+PricewaterhouseCoopers
+Certified Public Accountants
+Financial Statements (International)
+The engagement partner on the audit resulting in this independent auditor's report is CHAN KWONG TAK.
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the
+consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report
+unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
+be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+Year ended 31 December
+2018
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
+and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
+related safeguards.
+Auditor's Responsibilities for the Audit of the Consolidated Financial Statements (cont'd)
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
+opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained,
+whether a material uncertainty exists relating to events or conditions that may cast significant doubt on the Group's ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
+consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
+obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
+Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the
+consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
+directors.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but
+not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform
+audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
+intentional omissions, misrepresentations, or the override of internal control.
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement,
+whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, and for no
+other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is
+a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAS will always detect a material misstatement when it
+exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
+to influence the economic decisions of users taken on the basis of these consolidated financial statements.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern,
+disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to
+liquidate the Group or to cease operations, or have no realistic alternative but to do so.
+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.
+RMB
+2017
+RMB
+Turnover and other operating revenues
+Taxes other than income tax
+Personnel expenses
+(11,089)
+(10,744)
+Exploration expenses, including dry holes.
+(115,310)
+(109,967)
+Depreciation, depletion and amortisation
+(64,973)
+(65,642)
+5
+Selling, general and administrative expenses
+(1,770,651)
+(2,292,983)
+Purchased crude oil, products and operating supplies and expenses
+Operating expenses
+59,723
+2,360,193
+2,300,470
+2,825,613
+65,566
+2,891,179
+4
+Other operating revenues
+3
+Turnover
+Total operating expenses
+3,399
+Basic
+Diluted
+earnings
+17
+650,774
+617,762
+16
+Goodwill
+Construction in progress
+Property, plant and equipment, net
+Non-current assets
+RMB
+RMB
+136,963
+2017
+31 December
+31 December
+Notes
+(Amounts in million)
+As at 31 December 2018
+CONSOLIDATED BALANCE SHEET
+66,042
+72,273
+18,279
+18,273
+2018
+47,763
+118,645
+8,676
+64,514
+21
+Lease prepayments
+15,131
+21,694
+28
+Deferred tax assets
+1,450
+1(a)
+Financial assets at fair value through other comprehensive income
+18
+1,676
+Available-for-sale financial assets
+51,361
+56,184
+20
+Interest in joint ventures
+79,726
+89,537
+19
+Interest in associates
+8,634
+1(a)
+54,000
+66,042
+72,273
+Total other comprehensive income
+Total comprehensive income for the year
+Attributable to:
+Shareholders of the Company
+Non-controlling interests
+Total comprehensive income for the year
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note
+Year ended 31 December
+Total items that may be reclassified subsequently to profit or loss
+2018
+RMB
+RMB
+78,897
+70,418
+14
+(53)
+(53)
+(229)
+1,053
+(57)
+2017
+Foreign currency translation differences
+Cash flow hedges
+Share of other comprehensive (income)/loss of associates and joint ventures
+Available-for-sale securities
+(4,376)
+(6,624)
+(4,376)
+(6,571)
+(3,792)
+0.509
+0.423
+0.509
+0.423
+The notes on pages 162 to 211 form part of these consolidated financial statements. Details of dividends payable to shareholders of the Company
+attributable to the profit for the year are set out in Note 13.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+155
+Financial Statements (International)
+156
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2018
+(Amounts in million)
+Profit for the year
+Other comprehensive income:
+Items that maynot be reclassified subsequently to profit or loss
+Equity investments at fair value through other comprehensive income
+Total items that maynot be reclassified subsequently to profit or loss
+Items that may be reclassified subsequently to profit or loss
+58,526
+Long-term prepayments and other assets
+22
+91,408
+2017
+2018
+The calculation of the weighted average number of ordinary shares is as follows:
+0.422
+121,071
+51,119
+2017
+2018
+63,089
+121,071
+0.521
+Net profit attributable to equity shareholders of the Company (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+Basic earnings per share is calculated by the net profit attributable to equity shareholders of the Company and the weighted average number of
+outstanding ordinary shares of the Company:
+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)
+(i) Basic earnings per share
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(5,537)
+1
+(199)
+(3,459)
+(5,536)
+(3,658)
+976
+2,312
+(6,512)
+60 BASIC AND DILUTED EARNINGS PER SHARE
+121,071
+121,071
+121,071
+121,071
+Basic
+earnings
+per share
+(RMB/Share)
+(%)
+net assets
+Weighted
+average
+return on
+2017
+2018
+In accordance with "Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares No.9 - Calculation and Disclosure
+of the Return on Net Assets and Earnings Per Share" (2010 revised) issued by the CSRC and relevant accounting standards, the Group's return on
+net assets and earnings per share are calculated as follows:
+61 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+121,071
+121,071
+121,071
+121,071
+2017
+2018
+0.422
+121,071
+51,117
+2017
+2018
+63,089
+121,071
+0.521
+Weighted average number of the ordinary shares issued at 31 December (million)
+Weighted average number of the ordinary shares issued at 31 December (diluted) (million)
+The calculation of the weighted average number of ordinary shares (diluted) is as follows:
+Net profit attributable to equity shareholders of the Company (diluted) (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (diluted) (million)
+Diluted earnings per share (RMB/share)
+Diluted earnings per share is calculated by the net profit attributable to equity shareholders of the Company (diluted) and the weighted average
+number of ordinary shares of the Company (diluted):
+(ii) Diluted earnings per share
+(5,970)
+Weighted
+average
+return on
+690
+(3,941)
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially
+the same characteristic and maturities range from 2.76% to 4.90% (2017: 1.79% to 4.90%). The following table presents the carrying amount
+and fair value of the Group's long-term indebtedness other than loans from Sinopec Group Company and fellow subsidiaries at 31 December
+2018 and 31 December 2017:
+(ii) Fair values of financial instruments carried at other than fair value
+Fair values (Continued)
+58 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+150
+326,125
+Basic
+Carrying amount
+Fair value
+Diluted
+Time deposits with financial institutions
+113,218
+111,922
+Cash and cash equivalents
+Current assets
+-------
+1,066,455
+1,088,188
+Total non-current assets
+81,982
+15
+At 31 December
+2018
+RMB million
+63,085
+62,656
+At 31 December
+2017
+RMB million
+79,738
+78,040
+(148)
+1,518
+152
+(4,783)
+(7,482)
+(1,023)
+742
+180
+2017
+RMB million
+RMB million
+2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Equity shareholders of the Company
+Minority interests
+Attributable to:
+Total
+Tax effect
+Other non-operating loss, net
+Gain on remeasurement of interests in the Shanghai SECCO (Note 51)
+Gain on holding and disposal of various investments
+Government grants
+Donations
+Net loss on disposal of non-current assets
+Extraordinary (gains)/losses for the year:
+Pursuant to "Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public- Extraordinary Gain
+and Loss" (2008), the extraordinary gains and losses of the Group are as follows:
+59 EXTRAORDINARY GAINS AND LOSSES
+Except for the above items, the financial assets and liabilities of the Group are carried at amounts not materially different from their fair values
+at 31 December 2018 and 31 December 2017.
+The Group has not developed an internal valuation model necessary to make the estimate of the fair value of loans from Sinopec Group Company
+and fellow subsidiaries as it is not considered practicable to estimate their fair value because the cost of obtaining discount and borrowing rates
+for comparable borrowings would be excessive based on the Reorganisation of the Group, its existing capital structure and the terms of the
+borrowings.
+1,613
+726,120
+(2,934)
+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.
+An associate is an entity, not being a subsidiary, in which the Group exercises significant influence over its management. Significant influence
+is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
+(ii) Associates and joint ventures
+The particulars of the Group's principal subsidiaries are set out in Note 40.
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(o)).
+When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain
+or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair
+value and this amount is regarded as the fair value on initial recognition of a financial asset (Note 2(k)) or, when appropriate, the cost on
+initial recognition of an investment in an associate or joint venture (Note 2(a) (ii)).
+If a business combination involving entities not under common control is achieved in stages, the acquisition date carrying value of the
+acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from
+such remeasurement are recognised in the consolidated income statement.
+Changes in the Group's interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby
+adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative
+interests, but no adjustments are made to goodwill and no gain or loss is recognised.
+Non-controlling interests at the balance sheet date, being the portion of the net assets of subsidiaries attributable to equity interests that
+are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and
+consolidated statement of changes in equity within equity, separately from equity attributable to the shareholders of the Company. Non-
+controlling interests in the results of the Group are presented on the face of the consolidated income statement and the consolidated
+statement of comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-
+controlling interests and the shareholders of the Company.
+The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively
+commences until the date that control effectively ceases.
+Subsidiaries are those entities controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable
+returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
+(i) Subsidiaries and non-controlling interests
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+(a) Basis of consolidation
+2 SIGNIFICANT ACCOUNTING POLICIES
+Key assumptions and estimation made by management in the application of IFRS that have significant effect on the consolidated financial
+statements and the major sources of estimation uncertainty are disclosed in Note 42.
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
+which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
+current and future periods.
+The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and
+assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosure of contingent assets and
+liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The
+estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under
+the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not
+readily apparent from other sources. Actual results could differ from those estimates.
+(b) New and amended standards and interpretations not yet adopted by the Group (Continued)
+Basis of preparation (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+for the year ended 31 December 2018
+The investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
+obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the
+parties that have joint control of the arrangement have rights to the net assets of the arrangement.
+Investments in associates and joint ventures are accounted for in the consolidated and separate financial statements using the equity method
+from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. Under the
+equity method, the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group's share of the
+investee's net assets and any impairment loss relating to the investment (Note 2(j) and (o)).
+The Group's share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in the
+consolidated income statement, whereas the Group's share of the post-acquisition, post-tax items of the investees' other comprehensive
+income is recognised in the consolidated statement of comprehensive income.
+164 Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 165
+Trade, bills and other receivables are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method,
+less impairment losses for bad and doubtful debts (Note 2(o)). Trade, bills and other receivables are derecognised if the Group's contractual
+rights to the cash flows from these financial assets expire or if the Group transfers these financial assets to another party without retaining
+control or substantially all risks and rewards of the assets.
+(d) Trade, bills and other receivables
+Cash equivalents consist of time deposits with financial institutions with an initial term of less than three months when purchased. Cash
+equivalents are stated at cost, which approximates fair value.
+(c) Cash and cash equivalents
+On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from
+equity to the consolidated income statement when the profit or loss on disposal is recognised.
+The results of foreign operations are translated into Renminbi at the applicable rates quoted by the PBOC prevailing on the transaction dates.
+Balance sheet items, including goodwill arising on consolidation of foreign operations are translated into Renminbi at the closing foreign
+exchange rates at the balance sheet date. The income and expenses of foreign operation are translated into Renminbi at the spot exchange rates
+or an exchange rate that approximates the spot exchange rates on the transaction dates. The resulting exchange differences are recognised in
+other comprehensive income and accumulated in equity in the other reserves.
+Exchange differences, other than those capitalised as construction in progress, are recognised as income or expense in the "finance costs"
+section of the consolidated income statement.
+The presentation currency of the Group is Renminbi. Foreign currency transactions during the year are translated into Renminbi at the applicable
+rates of exchange quoted by the People's Bank of China ("PBOC") prevailing on the transaction dates. Foreign currency monetary assets and
+liabilities are translated into Renminbi at the PBOC's rates at the balance sheet date.
+(b) Translation of foreign currencies
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+A uniform set of accounting policies is adopted by those entities. All intra-group transactions, balances and unrealised gains on transactions
+between combining entities or businesses are eliminated on consolidation. Transaction costs, including professional fees, registration fees,
+costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously separate businesses, etc.,
+incurred in relation to the common control combination that is to be accounted for by using merger accounting is recognised as an expense
+in the period in which it is incurred.
+The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common
+control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the
+control of the controlling party. The net assets of the combining entities or businesses are combined using the existing book values from the
+controlling parties' perspective. No amount is recognised as consideration for goodwill or excess of acquirers' interest in the net fair value of
+acquiree's identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the
+continuation of the controlling party's interest.
+(iv) Merger accounting for common control combination
+Inter-company balances and transactions and any unrealised gains arising from inter-company transactions are eliminated on consolidation.
+Unrealised gains arising from transactions with associates and joint ventures are eliminated to the extent of the Group's interest in the entity.
+Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
+(iii)Transactions eliminated on consolidation
+When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as a disposal of
+the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee
+at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the fair value on initial
+recognition of a financial asset (see Note 2(k)) or, when appropriate, the cost on initial recognition of an investment in an associate (see Note
+2(a) (ii)).
+(ii) Associates and joint ventures (Continued)
+(a) Basis of consolidation (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The consolidated income statement includes the results of each of the combining entities or businesses from the earliest date presented or
+since the date when the combining entities or businesses first came under the common control, where there is a shorter period, regardless
+of the date of the common control combination. The comparative amounts in the consolidated financial statements are presented as if the
+entities or businesses had been combined at the previous balance sheet date or when they first came under common control, whichever is
+shorter.
+Financial Statements (International)
+Financial Statements (International)
+163
+326,125
+(2,934)
+852,890
+163,168
+579,446
+276,582
+529,049
+1,676
+(1,676)
+1,676
+1,066,455
+Total equity
+Retained earnings
+Other reserves
+Equity
+Total non-current liabilities
+Non-current liabilities
+Total current liabilities
+Other payables(i)
+Contract liabilities(i)
+Current liabilities
+Total current assets
+Current assets
+852,890
+22
+(12)
+12
+1,676
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The Group expects to recognise right-of-use assets of approximately RMB 207.5 billion on 1 January 2019, lease liabilities of RMB 198.6 billion
+(after adjustments for prepayments and accrued lease payments recognised as at 31 December 2018).
+The Group has set up a project team which has reviewed all of the Group's leasing arrangements over the last year in light of the new lease
+accounting rules in IFRS 16. The standard will affect primarily the accounting for the Group's operating leases.
+the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases
+•
+the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
+•
+In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
+The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group intends to apply the simplified transition
+approach and will not restate comparative amounts for the year prior to first adoption. All right-of-use assets will be measured at the amount of
+the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).
+IFRS 16, 'Leases', was issued in January 2016. It will result in almost all leases being recognised on the balance sheet by lessees, as the
+distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial
+liability to pay rentals are recognised. Leases to explore for or use oil and natural gas are not applied to IFRS 16.
+Financial Statements (International)
+(i) Advances from customers were reclassified as contract liabilities by implementation of IFRS 15 'Revenue from Contracts with Customers'.
+(b) New and amended standards and interpretations not yet adopted by the Group
+(2,946)
+326,137
+852,890
+163,168
+579,446
+155,848
+(120,734)
+120,734
+120,734
+529,049
+1,066,455
+852,890
+166
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable, trade accounts payable, other
+payables, and loans, etc. These financial liabilities are initially measured at the amount of their fair value after deducting transaction costs and
+use the effective interest rate method for subsequent measurement.
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or financial
+liabilities at fair value through profit or loss.
+(I) Financial liabilities
+The impairment loss is measured as the difference between the asset's carrying amount and the estimated future cash flows, discounted at
+the current market rate of return for a similar financial asset where the effect of discounting is material, and is recognised as an expense
+in the consolidated income statement. Impairment losses for trade and other receivables are reversed through the consolidated income
+statement if in a subsequent period the amount of the impairment losses decreases. Impairment losses for equity securities carried at cost
+are not reversed.
+Trade accounts receivables, other receivables and investment in equity securities that do not have a quoted market price in an active market
+are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists, an
+impairment loss is determined and recognised.
+Impairment
+When securities classified as available-for-sale were derecognised or impaired, the accumulated gains or losses recognised in other
+comprehensive income were reclassified to the consolidated income statement.
+Available-for-sale financial assets and financial assets at fair value through profit or loss were subsequently carried at fair value. Gains or
+losses arising from changes in the fair value were recognised as follows: for financial assets at fair value through profit or loss in profit or
+loss within other gains/(losses), for available-for-sale financial assets in other comprehensive income.
+Subsequent to the initial recognition, loans and receivables and held-to-maturity investments were carried at amortised cost using the
+effective interest method.
+The measurement at initial recognition did not change on adoption of IFRS 9.
+Subsequent measurement
+The classification depended on the purpose for which the investments were acquired. Management determined the classification of its
+investments at initial recognition.
+Until 31 December 2017, the group classified its financial assets in the following categories: financial assets at fair value through profit or
+loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets.
+Classification
+(iv) Accounting policy applied until 31 December 2017
+On derecognition of financial assets at fair value through other comprehensive income, the difference between the carrying amounts and the
+sum of the consideration received and any accumulated gain or loss previously recognised in other comprehensive income, is recognised in
+retained earnings. While on derecognition of other financial assets, this difference is recognised in profit or loss.
+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
+(k) Financial assets (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+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 Statements (International)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+169
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+For cash flow hedges, other than those covered by the preceding policy statements, that amount is reclassified from the cash flow hedge reserve
+to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit
+or loss.
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast
+transaction for a non-financial asset or a nonfinancial liability becomes a firm commitment for which fair value hedge accounting is applied, the
+entity removes that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or
+the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+(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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(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.
+(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 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.
+(n) Derivative financial instruments and hedge accounting
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+(m)Determination of fair value for financial instruments
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+(ii) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+168
+Financial Statements (International)
+167
+Construction in progress is transferred to property, plant and equipment when the asset is substantially ready for its intended use.
+Construction in progress represents buildings, oil and gas properties, various plant and equipment under construction and pending installation,
+and is stated at cost less impairment losses (Note 2(o)). Cost comprises direct costs of construction as well as interest charges, and foreign
+exchange differences on related borrowed funds to the extent that they are regarded as an adjustment to interest charges, during the periods of
+construction.
+(i) Construction in progress
+Lease prepayments represent land use rights paid to the relevant government authorities. Land use rights are carried at cost less accumulated
+amount charged to expense and impairment losses (Note 2(o)). The cost of lease prepayments is charged to expense on a straight-line basis
+over the respective periods of the rights.
+(h) Lease prepayments
+Management estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into
+consideration the anticipated method of dismantlement required in accordance with the industry practices and the future cash flows are adjusted
+to reflect such risks specific to the liability, as appropriate. These estimated future dismantlement costs are discounted at pre-tax risk-free rate
+and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs of the oil and gas properties.
+The Group uses the successful efforts method of accounting for its oil and gas producing activities. Under this method, costs of development
+wells, the related supporting equipment and proved mineral interests in properties are capitalised. The cost of exploratory wells is initially
+capitalised as construction in progress pending determination of whether the well has found proved reserves. The impairment of exploratory well
+costs occurs upon the determination that the well has not found proved reserves. The exploratory well costs are usually not carried as an asset
+for more than one year following completion of drilling, unless (i) the well has found a sufficient quantity of reserves to justify its completion as
+a producing well if the required capital expenditure is made; (ii) drilling of the additional exploratory wells is under way or firmly planned for the
+near future; or (iii) other activities are being undertaken to sufficiently progress the assessing of the reserves and the economic and operating
+viability of the project. All other exploration costs, including geological and geophysical costs, other dry hole costs and annual lease rentals to
+explore for or use oil and natural gas, are expensed as incurred. Capitalised costs of proved oil and gas properties are amortised on a unit-of-
+production method based on volumes produced and reserves.
+Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis
+between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reassessed annually.
+(g) Oil and gas properties
+3%
+3%
+residuals rate
+No depreciation is provided in respect of construction in progress.
+Estimated
+Equipment, machinery and others
+Buildings
+Depreciation is provided to write off the cost amount of items of property, plant and equipment, other than oil and gas properties, over its
+estimated useful life on a straight-line basis, after taking into account its estimated residual value, as follows:
+Gains or losses arising from the retirement or disposal of an item of property, plant and equipment, other than oil and gas properties, are
+determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised as income or expense
+in the consolidated income statement on the date of retirement or disposal.
+An item of property, plant and equipment is initially recorded at cost, less accumulated depreciation and impairment losses (Note 2(o)). The cost
+of an asset comprises its purchase price, any directly attributable costs of bringing the asset to working condition and location for its intended
+use. The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when
+that cost is incurred, when it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the
+item can be measured reliably. All other expenditure is recognised as an expense in the consolidated income statement in the year in which it is
+incurred.
+(f) Property, plant and equipment
+Inventories are stated at the lower of cost and net realisable value. Cost includes the cost of purchase computed using the weighted average
+method and, in the case of work in progress and finished goods, direct labour and an appropriate proportion of production overheads. Net
+realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs
+necessary to make the sale.
+(e) Inventories
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+Estimated
+usage period
+12 to 50 years
+4 to 30 years
+Total non-current assets
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2018
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+For receivables related to revenue, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the third
+stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment allowance and
+effective interest rate.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in credit
+risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss allowance
+at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial recognition of
+a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance at an amount equal
+to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial instrument, on third stage, the
+Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for expected credit losses on a financial asset that is measured at amortised cost.
+(ii) Impairment
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at fair value through other
+comprehensive income, are presented in financial assets at fair value through other comprehensive income. The relevant dividends of these
+financial assets are recognised in profit or loss. When derecognised, the cumulative gain or loss previously recognised in other comprehensive
+income is transferred to retained earnings.
+Equity instruments 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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Equity 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.
+Debt instruments
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant transaction
+costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised amount. Trade
+accounts receivable and bills receivable arising from sale of goods or rendering services, without significant financing component, are initially
+recognised based on the transaction price expected to be entitled by the Group.
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: a) financial assets measured at amortised cost, b) financial assets measured at
+fair value through other comprehensive income, c) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does not
+affect the classification of the financial asset.
+(i) Classification and measurement
+(k) Financial assets
+Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating
+unit, or groups of cash-generating units, that is expected to benefit the synergies of the combination and is tested annually for impairment
+(Note 2(0)). In respect of associates or joint ventures, the carrying amount of goodwill is included in the carrying amount of the interest in the
+associate or joint venture and the investment as a whole is tested for impairment whenever there is objective evidence of impairment (Note 2(o)).
+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.
+(j) Goodwill
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The contractual cash
+flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
+out-standing. Interest income from these financial assets is recognised using the effective interest rate method.
+other comprehensive income
+Available-for-sale financial assets
+Financial assets at fair value through
+Non-current assets
+(5,535)
+(5,984)
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+Cash and cash equivalents at 1 January
+Net decrease in cash and cash equivalents
+Net cash used in financing activities
+Finance lease payment
+Payments made to acquire non-controlling interests
+Interest paid
+(7,539)
+(13,700)
+Distributions by subsidiaries to non-controlling interests
+(32,689)
+(67,799)
+946
+1,886
+Contributions to subsidiaries from non-controlling interests
+Dividends paid by the Company
+(536,380)
+(772,072)
+Repayments of bank and other loans
+524,843
+(160)
+(86)
+(155)
+(111,260)
+Adjustments for:
+Profit before taxation
+Operating activities
+RMB
+RMB
+2017
+Year ended 31 December
+2018
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+(Amounts in million)
+for the year ended 31 December 2018
+746,655
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+160
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+113,218
+111,922
+(353)
+518
+124,468
+(10,897)
+(1,814)
+113,218
+(56,509)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(145,323)
+(66,422)
+8,506
+(7,407)
+(8,261)
+(63,541)
+(94,753)
+190,935
+175,868
+(a)
+Proceeds from disposal of investments and investments in associates
+Payment for acquisition of subsidiary, net of cash acquired
+Proceeds from sale of financial assets at fair value through profit or loss
+(10,116)
+Purchase of investments, investments in associates and investments in joint ventures
+Payment for financial assets at fair value through profit or loss
+Capital expenditure
+Investing activities
+Net cash generated from operating activities
+RMB
+RMB
+2017
+Year ended 31 December
+2018
+Note
+(Amounts in million)
+for the year ended 31 December 2018
+Exploratory wells expenditure
+Depreciation, depletion and amortisation
+(6,431)
+(51,196)
+10,720
+Proceeds from bank and other loans
+Financing activities
+Net cash used in investing activities
+Investment and dividend income received
+3,669
+5,810
+48,820
+78,401
+Decrease in time deposits with maturities over three months
+Interest received
+(29,550)
+(82,577)
+1,313
+9,666
+Increase in time deposits with maturities over three months
+non-current assets
+Proceeds from disposal of property, plant, equipment and other
+4,809
+1,557
+(1,288)
+(3,188)
+55,000
+(81,708)
+Financial Statements (International)
+Dry hole costs written off
+Investment income
+(a) any adjustments to carrying amounts of financial assets or liabilities are recognised at the beginning of the current reporting period, with the
+difference recognised in opening retained earnings
+The Group has elected to apply the limited exemption in IFRS 9 relating to transition for classification and measurement and impairment, and
+accordingly has not restated comparative periods in the year of initial application:
+Classification and measurement
+Transition options of IFRS 9 'Financial Instruments'
+The adoption of IFRS 9 'Financial Instruments' ('IFRS 9') and IFRS 15 ‘Revenue from Contracts with Customers' ('IFRS 15') from 1 January 2018
+by the Group resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements.
+IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers'- Impact of adoption
+IFRS 15 'Revenue from Contracts with Customers'
+•
+IFRS 9 'Financial Instruments', and
+•
+A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies
+as a result of adopting the following standards:
+(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.
+The accompanying consolidated financial statements have been prepared in accordance with all applicable IFRS as issued by the International
+Accounting Standards Board ("IASB"). IFRS includes International Accounting Standards ("IAS") and related interpretations ("IFRIC"). These
+consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock
+Exchange of Hong Kong Limited. A summary of the significant accounting policies adopted by the Group are set out in Note 2.
+Basis of preparation
+As part of the Reorganisation, certain of Sinopec Group Company's core oil and gas and chemical operations and businesses together with the
+related assets and liabilities were transferred to the Company. On 25 February 2000, in consideration for Sinopec Group Company transferring such
+oil and gas and chemical operations and businesses and the related assets and liabilities to the Company, the Company issued 68.8 billion domestic
+state-owned ordinary shares with a par value of RMB 1.00 each to Sinopec Group Company. The shares issued to Sinopec Group Company on 25
+February 2000 represented the entire registered and issued share capital of the Company on that date. The oil and gas and chemical operations and
+businesses transferred to the Company were related to (i) the exploration, development and production of crude oil and natural gas, (ii) the refining,
+transportation, storage and marketing of crude oil and petroleum products, and (iii) the production and sales of chemicals.
+The Company was established in the PRC on 25 February 2000 as a joint stock limited company as part of the reorganisation (the "Reorganisation")
+of China Petrochemical Corporation ("Sinopec Group Company"), the ultimate holding company of the Group and a ministry-level enterprise under
+the direct supervision of the State Council of the PRC. Prior to the incorporation of the Company, the oil and gas and chemical operations of the
+Group were carried on by oil administration bureaux, petrochemical and refining production enterprises and sales and marketing companies of
+Sinopec Group Company.
+Organisation
+China Petroleum & Chemical Corporation (the "Company") is an energy and chemical company that, through its subsidiaries (hereinafter collectively
+referred to as the "Group"), engages in oil and gas and chemical operations in the People's Republic of China (the "PRC"). Oil and gas operations
+consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil and natural gas by pipelines; refining crude oil
+into finished petroleum products; and marketing crude oil, natural gas and refined petroleum products. Chemical operations include the manufacture
+and marketing of a wide range of chemicals for industrial uses.
+Principal activities
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+(b) financial assets are not reclassified in the balance sheet for the comparative period
+(c) provisions for impairment have not been restated in the comparative period
+Impairment
+The Group has adopted the simplified expected credit loss model for its trade receivables and contract assets, as required by IFRS 9, and
+the general expected credit loss model for receivables and contract assets carried at amortised. The Group assessed the loss allowance
+for receivables under the expected credit loss model on 1 January 2018, no significant difference compared with the loss allowance under
+accounting policies applied until 31 December 2017.
+1 January
+2018
+RMB million
+of IFRS 15
+RMB million
+Adjustment
+from Adoption
+of IFRS 9
+RMB million
+Adjustment
+from Adoption
+RMB million
+31 December
+2017
+Consolidated balance sheet (extract)
+The following tables show the adjustments recognised for each individual line item. Line items that were not affected by the changes have not
+been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided.
+The adjustments arising from the new accounting policies are therefore recognised in the opening balance sheet on 1 January 2018, comparative
+figures have not been restated. The new accounting policies are disclosed in Note 2. The adoption of IFRS 9 and IFRS 15 has no significant
+impact on the Group's financial statements.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2018
+The Group has decided to reclassify contract assets and contract liabilities and present them as a separate line item in the balance sheet based
+on the significance of the item.
+The Group has elected to apply the simplified transition method, retrospectively with the cumulative effect of initially applying IFRS 15 as an
+adjustment to the balance on 1 January 2018.
+Transition options of IFRS 15 'Revenue from Contracts with Customers'
+The Group has applied the hedging accounting prospectively to the derivatives held for hedging purpose.
+Financial instruments accounting policy applied until 31 December 2017 is disclosed in Note 2 (k) (iv).
+Hedging
+(a) New and amended standards and interpretations adopted by the Group (Continued)
+Basis of preparation (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+162 Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Presentation and description of contract assets and contract liabilities
+Financial Statements (International)
+Financial Statements (International)
+161
+1,518
+1,526
+(1,547)
+(1,835)
+Gain on foreign currency exchange rate changes and derivative financial instruments
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Impairment losses on assets
+7,146
+7,321
+(5,254)
+(7,726)
+(3,941)
+11,605
+(262)
+(16,525)
+(13,974)
+6,876
+115,310
+109,967
+6,921
+86,697
+99,110
+Interest expense
+Interest income
+Gain on remeasurement of interests in the Shanghai SECCO (Note 36)
+(1,871)
+Share of profits from associates and joint ventures
+21,791
+141
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+190,935
+175,868
+(20,030)
+(33,073)
+Net cash generated from operating activities
+Income tax paid
+210,965
+208,941
+Credit impairment losses
+59,210
+Accounts payable and other current liabilities
+(28,903)
+(3,312)
+Inventories
+(31,151)
+(1,043)
+Accounts receivable and other current assets
+Net changes from:
+211,809
+211,185
+2,111
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Financial Statements (International)
+94
+Profit before taxation
+2017
+2018
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+16,279
+20,213
+(10,317)
+(6,244)
+26,668
+(72)
+27,176
+(719)
+Deferred taxation (Note 28)
+- Adjustment of prior years
+- Provision for the year
+Current tax
+RMB million
+2017
+2018
+RMB million
+2.37% to 4.41%
+2.37% to 4.66%
+7,146
+7,321
+RMB million
+99,110
+1,501
+RMB million
+86,697
+24,778
+188
+Write-down of deferred tax assets
+1,485
+609
+Tax effect of tax losses not recognised
+(613)
+(779)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+(1,394)
+77
+Effect of income taxes at foreign operations
+(793)
+(1,259)
+Tax effect of preferential tax rate (i)
+(5,939)
+(5,033)
+Tax effect of non-taxable income
+1,905
+2,351
+Tax effect of non-deductible expenses
+21,674
+Expected PRC income tax expense at a statutory tax rate of 25%
+26
+1,438
+5,883
+3,941
+(152)
+(180)
+(89)
+(276)
+(1,518)
+(1,526)
+(21,258)
+(6,281)
+(909)
+191
+(813)
+4,893
+7,539
+(1,978)
+RMB million
+RMB million
+2017
+2018
+1,495.20
+1,218.00
+1,711.52
+(2,849)
+5,645
+(649)
+(16,554)
+(723)
+(493)
+6,368
+RMB million
+RMB million
+6,376
+2017
+2018
+Income tax expense in the consolidated income statement represents:
+10 INCOME TAX EXPENSE
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+Interest expense
+Accretion expenses (Note 33)
+Less: Interest expense capitalised*
+Interest expense incurred
+9 INTEREST EXPENSE
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(ii) Impairment losses on long-lived assets for the year ended 31 December 2018 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB 4,274 million (2017: RMB 13,556 million), the chemicals segment of RMB 1,374 million (2017: RMB 4,922 million) and for the refining
+segment of RMB 353 million (2017: RMB 1,894 million), most of which are impairment losses on property, plant and equipment. The primary factor resulting in
+the E&P segment impairment loss was downward revision of oil and gas reserve in certain fields. The carrying values of these E&P properties were written down to
+recoverable amounts which were determined based on the present values of the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2017:
+10.47%). Further future downward revisions to the Group's oil price outlook would lead to further impairments which, in aggregate, are likely to be material. It is
+estimated that a general decrease of 5% in oil price, with all other variables held constant, would result in additional impairment loss on the Group's properties, plant
+and equipment relating to oil and gas producing activities by approximately RMB 312 million (2017: RMB 3,145 million). It is estimated that a general increase of
+5% in operating cost, with all other variables held constant, would result in additional impairment loss on the Group's properties, plant and equipment relating to
+oil and gas producing activities by approximately RMB 315 million (2017: RMB 2,659 million). It is estimated that a general increase of 5% in discount rate, with
+all other variables held constant, would result in less impairment loss on the Group's properties, plant and equipment relating to oil and gas producing activities by
+approximately RMB 5 million (2017: additional RMB 461 million). The assets in the refining segment were written down due to the suspension of operations of certain
+production facilities, while the assets in the chemical segment were written down because of evidence indicates the economic performance of certain production
+facilities are worse than expected and due to the suspension of operations of certain production facilities.
+(i) Government grants for the years ended 31 December 2018 and 2017 primarily represent financial appropriation income and non-income tax refunds received from
+respective government agencies without conditions or other contingencies attached to the receipts of the grants.
+Note:
+(5,360)
+1,948.64
+Adjustment of prior years
+(719)
+233
+233
+233
+333
+333
+333
+333
+483
+395
+|||||||||||||
+456
+21
+14
+328
+53
+468
+Total
+RMB'000
+RMB'000
+Supervisors' fee
+Directors'/
+Company or
+its subsidiary
+undertaking
+233
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+125
+125
+1,382
+351
+2,997
+1,366
+1,008
+74
+636
+298
+985
+74
+613
+298
+340
+44
+122
+174
+1,035
+74
+663
+298
+125
+125
+Actual income tax expense
+65
+224
+Liu Zhongyun (iii)
+Ling Yiqun (iii)
+Ma Yongsheng (i)
+Yu Baocai (ii)
+Li Yunpeng
+Dai Houliang (i)
+Directors
+Name
+The emoluments of every director and supervisor is set out below:
+(a) Directors' and supervisors' emoluments
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+for the year ended 31 December 2018
+Financial Statements (International)
+Financial Statements (International)
+175
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate of
+15% through the year 2020.
+Note:
+16,279
+20,213
+(72)
+Li Yong (iii)
+179
+Wang Zhigang (iv)
+Jiao Fangzheng (V)
+Bonuses
+RMB'000
+RMB'000
+Salaries,
+allowances and
+benefits in kind
+Emoluments paid or receivable in respect of director's
+other services in connection with the management of the
+affairs of the Company or its subsidiary undertaking
+2018
+Retirement
+scheme
+contributions
+RMB'000
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+176
+Total
+Yu Renming
+Yu Xizhi
+Zhou Hengyou
+Zou Huiping
+Zhang Baolong (iii)
+Yang Changjiang (iii)
+Zhao Dong
+Jiang Zhenying
+Supervisors
+Andrew Y. Yan (vi)
+Jiang Xiaoming (vi)
+Johnny Karling Ng (iii)
+Cai Hongbin (iii)
+Fan Gang
+Tang Min
+Independent non-executive directors
+Zhang Haichao (iv)
+6,096
+2,105.20
+2,109.76
+2018
+Turnover primarily represents revenue from the sales of crude oil, refined petroleum products, chemical products and natural gas.
+3 TURNOVER
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+172
+Financial Statements (International)
+Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial
+information provided regularly to the Group's chief operating decision maker for the purposes of allocating resources to, and assessing the
+performance of the Group's various lines of business.
+(cc) Segment reporting
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorized and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+(bb) Dividends
+The tax value of losses expected to be available for utilisation against future taxable income is set off against the deferred tax liability within the
+same legal tax unit and jurisdiction to the extent appropriate, and is not available for set off against the taxable profit of another legal tax unit.
+The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable
+that the related tax benefit will be realised.
+Income tax comprises current and deferred tax. Current tax is calculated on taxable income by applying the applicable tax rates. Deferred tax is
+provided using the balance sheet liability method on all temporary differences between the carrying amounts of assets and liabilities for financial
+reporting purposes and the amounts used for taxation purposes only to the extent that it is probable that future taxable income will be available
+against which the assets can be utilised. Deferred tax is calculated on the basis of the enacted tax rates or substantially enacted tax rates that
+are expected to apply in the period when the asset is realised or the liability is settled. The effect on deferred tax of any changes in tax rates is
+charged or credited to the consolidated income statement, except for the effect of a change in tax rate on the carrying amount of deferred tax
+assets and liabilities which were previously charged or credited to other comprehensive income or directly in equity.
+(aa) Income tax
+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 38.
+Operating lease payments are charged to the consolidated income statement on a straight-line basis over the period of the respective leases.
+(z) Employee benefits
+(y) Operating leases
+Research and development expenditures that cannot be capitalised are expensed in the period in which they are incurred. Research and
+development expense amounted to RMB 7,956 million for the year ended 31 December 2018 (2017: RMB 6,423 million).
+(x) Research and development expense
+2017
+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.
+RMB million
+Crude oil
+43,205
+107,633
+124,618
+115,739
+168,823
+205,722
+250,884
+Others(i)
+Synthetic fiber monomers and polymers
+Synthetic resin
+Basic chemical feedstock
+Natural gas
+Kerosene
+503,406
+594,008
+600,113
+711,236
+Diesel
+Gasoline
+421,585
+519,910
+RMB million
+34,277
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+Repairs and maintenance expenditure is expensed as incurred.
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
+bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the consolidated
+income statement over the period of borrowings using the effective interest method.
+(q) Interest-bearing borrowings
+Trade, bills and other payables are initially recognised at fair value and thereafter stated at amortised cost unless the effect of discounting would
+be immaterial, in which case they are stated at cost.
+(p) Trade, bills and other payables
+Management assesses at each balance sheet date whether there is any indication that an impairment loss recognised for an asset, except in the
+case of goodwill, in prior years may no longer exist. An impairment loss is reversed if there has been a favourable change in the estimates used
+to determine the recoverable amount. A subsequent increase in the recoverable amount of an asset, when the circumstances and events that led
+to the write-down or write-off cease to exist, is recognised as an income. The reversal is reduced by the amount that would have been recognised
+as depreciation had the write-down or write-off not occurred. An impairment loss in respect of goodwill is not reversed.
+The amount of the reduction is recognised as an expense in the consolidated income statement. Impairment losses recognised in respect of
+cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to reduce
+the carrying amount of the other assets in the unit on a pro rata basis, except that the carrying value of an asset will not be reduced below its
+individual fair value less costs to disposal, or value in use, if determinable.
+The recoverable amount is the greater of the fair value less costs to disposal and the value in use. In determining the value in use, expected
+future cash flows generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market
+assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent
+of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e.
+a cash-generating unit).
+The carrying amounts of assets, including property, plant and equipment, construction in progress, lease prepayments and other assets, are
+reviewed at each balance sheet date to identify indicators that the assets may be impaired. These assets are tested for impairment whenever
+events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a decline has occurred,
+the carrying amount is reduced to the recoverable amount. For goodwill, the recoverable amount is estimated at each balance sheet date.
+(o) Impairment of assets
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (ie the
+entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised, or there is no
+longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value
+changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the Group discontinues prospectively
+the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that amount remains in the cash flow hedge
+reserve and is accounted for as cash flow hedges. If the hedged future cash flows are no longer expected to occur, that amount is immediately
+reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment. A hedged future cash flow that is no longer highly
+probable to occur may still be expected to occur, if the hedged future cash flows are still expected to occur, that amount remains in the cash
+flow hedge reserve and is accounted for as cash flow hedges.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss will not
+be recovered in one or more future periods, the Group immediately reclassifies the amount that is not expected to be recovered into profit or
+loss.
+Cash flow hedges (Continued)
+(n) Derivative financial instruments and hedge accounting (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+170
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(w) Environmental expenditures
+(r) Provisions and contingent liability
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+cost, is reflected as an adjustment to the provision and oil and gas properties.
+(v) Repairs and maintenance expenditure
+Borrowing costs are expensed in the consolidated income statement in the period in which they are incurred, except to the extent that they are
+capitalised as being attributable to the construction of an asset which necessarily takes a period of time to get ready for its intended use.
+(u) Borrowing costs
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+171
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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.
+(t) Government grants
+Revenues associated with the sale of crude oil, natural gas, petroleum and chemical products and ancillary materials are recorded when the
+customer accepts the goods and the significant risks and rewards of ownership and title have been transferred to the buyer. Revenue from
+the rendering of services is recognised in the consolidated income statement upon performance of the services. No revenue is recognised if
+there are significant uncertainties regarding recovery of the consideration due, the possible return of goods, or when the amount of revenue
+and the costs incurred or to be incurred in respect of the transaction cannot be measured reliably.
+The Group has applied IFRS 15 retrospectively, but has elected not to restate comparative information. As a result, the comparative
+information provided continues to be accounted for in accordance with the Group's previous accounting policy.
+(ii) Accounting policy applied until 31 December 2017
+Sales are recognised when control of the goods have transferred, being when the products are delivered to the customer. Advance from
+customers but goods not yet delivered is recorded as contract liabilities and is recognised as revenues when a customer obtains control over
+the relevant goods.
+(i) Sales of goods
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recogniesd according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+(s) Revenue recognition
+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.
+1,411.20
+77,572
+335,357
+(ii) City construction tax is levied on an entity based on its total paid amount of value-added tax and consumption tax.
+Jet fuel oil
+Fuel oil
+Lubricant oil
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+Products
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Note:
+Others
+Education surcharge
+Resources tax
+City construction tax (ii)
+Consumption tax (i)
+7 TAXES OTHER THAN INCOME TAX
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+174
+Financial Statements (International)
+Financial Statements (International)
+8 OTHER OPERATING EXPENSE, NET
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 173
+Government grant (i)
+Net realised and unrealised gain/(loss) on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (ii)
+Effective from
+13 January 2015
+RMB/Ton
+235,292
+246,498
+5,459
+7,152
+4,841
+6,021
+13,811
+13,187
+18,274
+18,237
+192,907
+RMB million
+RMB million
+201,901
+2017
+2018
+Others
+Gain on remeasurement of interests in the Shanghai SECCO (Note 36)
+Donations
+Fines, penalties and compensations
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Ineffective portion of change in fair value of cash flow hedges
+61,998
+74,854
+65,873
+RMB million
+2017
+2018
+6 PERSONNEL EXPENSES
+- accounts prepayments
+- other receivables
+- trade accounts receivable
+Impairment losses:
+- others
+- audit services
+Auditor's remuneration:
+Operating lease charges
+The following items are included in selling, general and administrative expenses:
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+Sale of materials and others
+Rental income
+OTHER OPERATING REVENUES
+4
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical by-products and joint products.
+2,300,470
+2,825,613
+249,997
+RMB million
+8,981
+64,503
+1,063
+793
+68,425
+9,296
+77,721
+RMB million
+2017
+2018
+RMB million
+Salaries, wages and other benefits
+Contributions to retirement schemes (Note 38)
+2
+159
+9
+(51)
+642
+29
+25
+9
+72
+12,104
+2017
+RMB million
+RMB million
+12,297
+2018
+59,723
+65,566
+58,930
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+240
+(1,074)
+Amounts transferred to initial carrying
+amount of hedged items
+(4)
+1
+(3)
+Reclassification adjustments for amounts
+transferred to the consolidated income statement
+730
+(130)
+600
+(575)
+72
+(503)
+Net movement during the year
+recognised in other comprehensive income(i)
+(11,770)
+2,029
+(9,741)
+(1,893)
+313
+(1,580)
+(1,314)
+(10,341)
+2,159
+(12,500)
+2017
+RMB million
+20,582
+Pursuant to the shareholders' approval at the Annual General Meeting on 15 May 2018, a final dividend of RMB 0.40 per share totaling RMB 48,428
+million according to total shares of 4 June 2018 was approved. All dividends have been paid in the year ended 31 December 2018.
+Pursuant to the shareholders' approval at the Annual General Meeting on 28 June 2017, a final dividend of RMB 0.17 per share totaling RMB
+20,582 million according to total shares of 18 July 2017 was approved. All dividends have been paid in the year ended 31 December 2017.
+178
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+14 OTHER COMPREHENSIVE INCOME
+Cash flow hedges:
+Available-for-sale financial assets:
+2018
+Before tax
+amount
+Tax
+effect
+RMB million RMB million
+Net of tax
+amount
+RMB million
+Before tax
+amount
+RMB million
+Tax
+Net of tax
+effect
+RMB million
+amount
+RMB million
+Effective portion of changes in fair value
+of hedging instruments recognised during the year
+2017
+Changes in fair value recognised
+during the year
+(57)
+(57)
+1,053
+(4,376)
+(i) As at 31 December 2018, cash flow hedge reserve amounted to a loss of RMB 4,932 million (31 December 2017: a loss of RMB 460 million), of
+which a loss of RMB 4,917 million was attribute to shareholders of the Company (31 December 2017: a loss of RMB 510 million).
+15 BASIC AND DILUTED EARNINGS PER SHARE
+The calculation of basic earnings per share for the year ended 31 December 2018 is based on the profit attributable to ordinary shareholders
+of the Company of RMB 61,618 million (2017: RMB 51,244 million) and the weighted average number of shares of 121,071,209,646 (2017:
+121,071,209,646) during the year.
+The calculation of diluted earnings per share for the year ended 31 December 2018 is based on the profit attributable to ordinary shareholders of
+the Company (diluted) of RMB 61,618 million (2017: RMB 51,242 million) and the weighted average number of shares of 121,071,209,646 (2017:
+121,071,209,646) calculated as follows:
+(i) Profit attributable to ordinary shareholders of the Company (diluted)
+Profit attributable to ordinary shareholders of the Company
+After tax effect of employee share option scheme of Shanghai Petrochemical
+Profit attributable to ordinary shareholders of the Company (diluted)
+(ii) Weighted average number of shares (diluted)
+313
+Weighted average number of shares at 31 December
+2018
+RMB million
+61,618
+2017
+RMB million
+51,244
+61,618
+(2)
+51,242
+2018
+2017
+Number of shares Number of shares
+121,071,209,646
+121,071,209,646
+121,071,209,646
+121,071,209,646
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 179
+Financial Statements (International)
+for the year ended 31 December 2018
+Weighted average number of shares (diluted) at 31 December
+48,428
+(4,689)
+2,028
+(57)
+Changes in the fair value of instruments at fair value
+through other comprehensive income
+(41)
+(12)
+(53)
+Net movement during the year
+recognised in other comprehensive income
+(41)
+(12)
+(53)
+(6,624)
+(57)
+of associates and joint ventures
+(240)
+11
+(229)
+1,053
+Foreign currency translation differences
+3,399
+3,399
+(3,792)
+Other comprehensive income
+(8,652)
+Share of other comprehensive profit
+2018
+RMB million
+(3,792)
+Pursuant to a resolution passed at the director's meeting on 22 March 2019, final dividends in respect of the year ended 31 December 2018 of
+RMB 0.26 (2017: RMB 0.40) per share totaling RMB 31,479 million (2017: RMB 48,428 million) were proposed for shareholders' approval at the
+Annual General Meeting. Final cash dividend proposed after the balance sheet date has not been recognised as a liability at the balance sheet date.
+Dividends payable to shareholders of the Company attributable to the previous financial year, approved during the year represent:
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+Bonuses
+RMB'000
+Retirement
+scheme
+contributions
+Directors'/
+RMB'000
+Supervisors' fee
+RMB'000
+Total
+RMB'000
+227
+537
+Emoluments paid
+or receivable
+in respect of a
+person's services
+76
+207
+487
+76
+840
+770
+300
+300
+300
+300
+300
+300
+-
+300
+in kind
+RMB'000
+Emoluments paid or receivable in respect of director's
+other services in connection with the management of the
+affairs of the Company or its subsidiary undertaking
+2017
+(a) Directors' and supervisors' emoluments (Continued)
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMB 0.40 per share (2017: RMB 0.17 per share)
+The emoluments of every director and supervisor is set out below: (Continued)
+Name
+Directors
+Wang Yupu(vii)
+Dai Houliang
+Li Yunpeng
+Wang Zhigang
+Zhang Haichao
+Jiao Fangzheng
+Ma Yongsheng
+Salaries,
+allowances
+and benefits
+Independent non-executive directors
+Tang Min
+Fan Gang
+Supervisors
+Zhao Dong
+Liu Zhongyun
+Zhou Hengyou
+Zou Huiping
+Jiang Zhenying
+Yu Renming
+Yu Xizhi
+Liu Yun(vii)
+Wang Yajun(vii)
+Total
+Notes:
+Jiang Xiaoming
+300
+Andrew Y. Yan
+480
+(vi) Mr. Jiang Xiaoming ceased being independent non-executive director from 15 May 2018; Mr. Andrew Y. Yan ceased being independent non-executive director from
+15 May 2018.
+(vii) Mr. Wang Yupu ceased being chairman and independent director from 22 September 2017; Mr. Liu Yun ceased being supervisor and chairman of board of
+supervisor from 16 March 2017; Mr. Wang Yajun ceased being supervisor from 28 June 2017.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+177
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+For the year ended 31 December 2018, the five highest paid individuals in the Company included two supervisors and three senior management.
+The emolument paid to each of two supervisors and three senior management was above RMB 1,000 thousand. The total salaries, wages and other
+benefits was RMB 5,089 thousand, and the total amount of their retirement scheme contributions was RMB 370 thousand. For the year ended 31
+December 2017, the five highest paid individuals in the Company included one director and four senior management.
+13 DIVIDENDS
+Dividends payable to shareholders of the Company attributable to the year represent:
+Dividends declared and paid during the year of RMB 0.16 per share (2017: RMB 0.10 per share)
+Dividends declared after the balance sheet date of RMB 0.26 per share (2017: RMB 0.40 per share)
+2018
+2017
+RMB million
+19,371
+31,479
+12,107
+48,428
+50,850
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 24 August 2018, the directors authorised to
+declare the interim dividends for the year ending 31 December 2018 of RMB 0.16 (2017: RMB 0.10) per share totaling RMB 19,371 million (2017:
+RMB 12,107 million). Dividends were paid on 12 September 2018.
+207
+60,535
+(v) Mr. Jiao Fangzheng ceased being director from 7 June 2018.
+(iv) Mr. Wang Zhigang ceased being director from 29 January 2018; Mr. Zhang Haichao ceased being director from 29 January 2018.
+RMB million
+(ii) Mr. Yu Baocai was elected to be director from 23 October 2018.
+207
+480
+(iii) Mr. Ling Yiqun was elected to be director from 15 May 2018; Mr. Liu Zhongyun was elected to be director from 15 May 2018; Mr. Li Yong was elected to be
+director from 15 May 2018; Mr. Cai Hongbin was elected to be independent non-executive director from 15 May 2018; Mr. Johnny Karling Ng was elected to be
+independent non-executive director from 15 May 2018; Mr. Yang Changjiang was elected to be supervisor from 15 May 2018; Mr. Zhang Baolong was elected to be
+supervisor from 15 May 2018;
+71
+71
+207
+480
+122
+103
+42
+51
+349
+17
+71
+1,228
+5,768
+267
+758
+(i) Mr. Ma Yongsheng was appointed as president from 30 October 2018. Mr. Dai Houliang ceased being president and executive director and was elected as non-
+executive director from 30 October 2018.
+758
+1,200
+424
+2,916
+758
+417
+(43)
+Less: Accumulated impairment losses
+136,963
+118,645
+As at 31 December 2018, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 7,296 million (2017: RMB 9,737 million). The geological and geophysical costs paid during the year ended 31
+December 2018 were RMB 3,511 million (2017: RMB 3,710 million).
+18 GOODWILL
+Cost
+RMB million
+16,537
+Goodwill is allocated to the following Group's cash-generating units:
+31 December
+2018
+(7,861)
+Sinopec Beijing Yanshan Petrochemical Branch
+("Sinopec Yanshan")
+(7,861)
+8,676
+31 December
+2017
+RMB million
+8,634
+7
+16,495
+Impairment tests for cash-generating units containing goodwill
+(315)
+108,555
+(252)
+Reclassification to lease prepayments and other long-term assets
+Impairment losses for the year
+Disposals
+Principal activities
+Exchange adjustments
+Balance at 31 December
+2018
+2017
+RMB million
+118,645
+RMB million
+129,581
+85,552
+(6,921)
+(6,876)
+(73,210)
+(81,229)
+(10,066)
+(7,773)
+(28)
+(19)
+31 December
+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.
+RMB million
+181
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+19 INTEREST IN ASSOCIATES
+The Group's investments in associates are with companies primarily engaged in the oil and gas, petrochemical, and marketing and distribution
+operations in the PRC.
+The Group's principal associates are as follows:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Name of company
+Principal activities
+Measurement
+method
+Country of
+incorporation
+Principal place
+Sinopec Sichuan To East China Gas
+Transferred to property, plant and equipment
+Operation of natural gas
+50.00
+% of
+ownership
+interests
+Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The recoverable amounts of the
+above cash generating units are determined based on value in use calculations. These calculations use cash flow projections based on financial
+budgets approved by management covering a one-year period and pre-tax discount rates primarily ranging from 11.7% to 12.3% (2017: 10.8% to
+11.4%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+8,634
+Other units without individually significant goodwill
+31 December
+2017
+RMB million
+Manufacturing of intermediate petrochemical
+products and petroleum products
+1,004
+1,004
+Shanghai SECCO Petrochemical Company Limited
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+4,043
+4,043
+2,541
+2,541
+Trading of petrochemical products
+921
+879
+167
+167
+8,676
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+("Shanghai SECCO") (Note36)
+Sinopec (Hong Kong) Limited
+2018
+Dry hole costs written off
+Depreciation for the year
+Balance at 1 January
+(96)
+(2,209)
+Balance at 31 December 2017
+52,200
+495,817
+529,191
+1,077,208
+Balance at 1 January 2018
+(2,056)
+52,200
+529,191
+1,077,208
+4,038
+48,616
+47,250
+99,904
+Impairment losses for the year
+274
+495,817
+(57)
+Exchange adjustments
+(9,858)
+Impairment losses for the year
+Equity method
+554
+8,832
+10,450
+19,836
+Reclassifications
+(122)
+(77)
+199
+Reclassification to lease prepayments and other long-term assets
+(238)
+(1,305)
+(2,682)
+(4,225)
+Disposals
+(584)
+(195)
+(9,079)
+4,027
+Additions
+1,848
+494
+Balance at 31 December 2017
+67,813
+171,840
+411,121
+650,774
+Balance at 31 December 2018
+66,907
+145,436
+690,594
+405,419
+The additions to oil and gas properties of the Group for the year ended 31 December 2018 included RMB 1,567 million (2017: RMB 1,627 million)
+of estimated dismantlement costs for site restoration (Note 33).
+At 31 December 2018 and 31 December 2017, the Group had no individually significant fixed assets which were pledged.
+At 31 December 2018 and 31 December 2017, the Group had no individually significant fixed assets which were temporarily idle or pending for
+disposal.
+At 31 December 2018 and 31 December 2017, the Group had no individually significant fully depreciated fixed assets which were still in use.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+17 CONSTRUCTION IN PROGRESS
+617,762
+409,122
+215,124
+66,348
+76
+Reclassification to lease prepayments and other long-term assets
+(120)
+Disposals
+(1,795)
+(125)
+(570)
+(1,390)
+(16,331)
+Exchange adjustments
+43
+1,877
+78
+Balance at 31 December 2018
+55,134
+550,288
+560,076
+6,149
+(1,510)
+(18,251)
+1,998
+1,165,498
+Net book value:
+Balance at 1 January 2017
+Reclassifications
+2,543
+158,938
+2,563
+6,712
+8,232
+7,477
+20,719
+22,502
+161,187
+RMB million
+31 December
+2017
+5,612
+31 December 31 December
+2017
+2018
+RMB million RMB million
+RMB million
+2017
+2018
+RMB million
+31 December
+PRC
+31 December 31 December
+2017
+RMB million
+CIR
+SIBUR(i)
+2018
+RMB million
+39,320
+40,972
+16,359
+(3,026)
+Non-current liabilities
+(908)
+(961)
+(10,668)
+(7,252)
+(20,554)
+(23,293)
+(154,212)
+(200,402)
+(933)
+(1,020)
+Current liabilities
+1,673
+1,828
+51,553
+49,961
+170,796
+17,782
+Sinopec Finance
+(3,176)
+Zhongtian Synergetic Energy
+31 December
+31 December 31 December
+2017
+2018
+RMB million RMB million
+209,837
+petrochemical products
+Russia
+Russia
+Equity method
+Processing natural gas
+and manufacturing
+10.00
+PAO SIBUR Holding ("SIBUR")
+PRC
+Zhongtian Synergetic Energy
+PRC
+Provision of non-banking
+financial services
+("Sinopec Finance")
+49.00
+Sinopec Finance Company Limited
+pipelines and auxiliary
+facilities
+Pipeline Co., Ltd. ("Pipeline Ltd")
+of business
+PRC
+105,717
+Equity method
+Company Limited
+("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+11,317
+12,498
+Current assets
+Non-current assets
+RMB million
+2018
+31 December
+Pipeline Ltd
+British Virgin Islands The Republic of
+Kazakhstan
+Equity method
+Crude oil and natural gas
+extraction
+50.00
+coal-chemical products
+manufacturing of
+PRC
+PRC
+Equity method
+Mining coal and
+38.75
+("CIR") extraction
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+2,022
+(332)
+(58,628)
+RMB million
+2017
+Pipeline Ltd
+2018
+income from associates (ii)
+Other comprehensive (loss)/income
+Total comprehensive income/(loss)
+Dividends declared by associates
+Share of profit/(loss) from associates
+Share of other comprehensive (loss) /
+Profit/(loss) for the year
+Turnover
+Year ended 31 December
+RMB million
+Summarised statement of comprehensive income
+3,453
+6.829
+7,266
+9,676
+11,086
+12,128
+12,476
+24,090
+3,104
+Sinopec Finance
+2018
+RMB million
+2017
+RMB million
+SIBUR(i)
+2018
+2,856
+3,569
+12,235
+52,496
+59,927
+3,542
+4,536
+5,644
+4,746
+RMB million
+RMB million
+2017
+2018
+2017
+RMB million
+2018
+RMB million
+2017
+RMB million
+RMB million
+CIR
+Zhongtian Synergetic Energy
+23,886
+(6)
+Carrying Amounts
+3,453
+owners of the Company
+Net assets attributable to
+6,207
+6,906
+17,623
+18,750
+97,332
+111,377
+47,772
+24,751
+48,180
+47,772
+Net assets
+(170)
+(673)
+(31,494)
+(31,436)
+(61,771)
+25,462
+48,180
+25,462
+24,751
+6,829
+7,266
+9,676
+11,086
+12,128
+12,476
+24,090
+23,886
+Share of net assets from associates
+571
+517
+non-controlling interests
+Net assets attributable to
+6,207
+6,906
+17,623
+18,750
+96,761
+110,860
+3,104
+46,585
+for the year ended 31 December 2018
+4,075
+USD denominated
+RMB denominated
+Current portion of long-term bank loans
+RMB denominated
+Short-term other loans
+US Dollar ("USD") denominated
+RMB denominated
+Short-term bank loans
+Current portion of long-term corporate bonds
+Third parties' debts
+31 December
+2018
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Short-term debts represent:
+15,746
+(1,031)
+(37)
+1,905
+(254)
+RMB million
+(26)
+RMB denominated
+17,088
+6,532
+16,000
+22,532
+23
+35
+1,379
+12,039
+1,402
+USD denominated
+12,074
+300
+299
+300
+7,420
+3,887
+31,105
+23,685
+31 December
+2017
+RMB million
+13,201
+299
+(2)
+(142)
+6,244
+8,665
+3
+RMB million
+2018
+31 December
+Transferred
+from
+reserve
+RMB million
+(36)
+6
+1,414
+2,563
+2,325
+19
+(130)
+2,650
+4,222
+Property, plant and equipment
+2,029
+(10)
+115
+Tax losses carried forward
+1,808
+1
+(1,031)
+Net deferred tax assets/(liabilities)
+(84)
+Others
+(61)
+116
+117
+2
+273
+(336)
+Intangible assets
+(1)
+other comprehensive income
+Financial assets at fair value through
+(117)
+117
+Available-for-sale financial assets
+Balance at
+3,709
+6,761
+1,104
+12,074
+23,934
+29,462
+55,338
+Less: Current portion
+RMB denominated
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+Less: Current portion
+Total third parties' long-term debts
+4.25% per annum at 31 December 2018
+with maturities through 2043
+17,902
+11,951
+Interest rates ranging from interest free to
+4.99% per annum at 31 December 2018
+with maturities through 2030
+Fixed interest rates ranging from 3.13% to
+with maturity through 2022
+4.90% per annum at 31 December 2018
+36,000
+20,000
+Fixed interest rates ranging from 3.70% to
+RMB denominated
+Corporate bonds (i)
+25,836
+USD denominated
+31,951
+53,902
+63,085
+Financial Statements (International)
+189
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(i) These corporate bonds are carried at amortised cost. At 31 December 2018, RMB 11,951 million (2017: RMB 17,902 million) (USD denominated corporate bonds) are
+guaranteed by Sinopec Group Company.
+Note:
+Short-term and long-term bank loans, short-term other loans and loans from Sinopec Group Company and fellow subsidiaries are primarily
+unsecured and carried at amortised cost.
+99,124
+43,320
+(2,014)
+93,527
+42,516
+(4,361)
+45,334
+46,877
+55,804
+51,011
+(23,934)
+(12,074)
+79,738
+31,134
+Cash flow hedges
+4.29% per annum at 31 December 2018
+with maturities through 2031
+109
+20
+2,014
+2,014
+4,361
+RMB denominated
+4,361
+1,706
+19,668
+1,903
+1,441
+22
+22,780
+Current portion of long-term loans
+31,665
+Singapore Dollar ("SGD") denominated
+Hong Kong Dollar ("HKD") denominated
+USD denominated
+3,061
+RMB denominated
+23,297
+27,304
+Short-term loans
+Loans from Sinopec Group Company and fellow subsidiaries
+EUR denominated
+25,311
+61,127
+80,649
+25,644
+2017
+RMB million
+31 December
+31,025
+RMB million
+31 December
+2018
+Interest rates ranging from 1.55% to
+Interest rates ranging from 1.08% to
+4.66% per annum at 31 December 2018
+with maturities through 2033
+USD denominated
+Interest rate and final maturity
+RMB denominated
+Third parties' debts
+Long-term bank loans
+Long-term debts represent:
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+188
+The Group's weighted average interest rates on short-term loans were 3.37% (2017: 2.72 %) at 31 December 2018. The above borrowings are
+unsecured.
+192
+-
+(117)
+1,868
+Reclassification to lease prepayments and other long-term assets
+(859)
+(1,702)
+Disposals
+(878)
+(211)
+(8,751)
+(10,985)
+(11,312)
+723
+(12,074)
+(140)
+(2,573)
+Balance at 31 December 2017
+120,013
+667,657
+(199)
+940,312
+(2,912)
+1,727,982
+Exchange adjustments
+(50)
+(673)
+Reclassifications
+for the year ended 31 December 2018
+16 PROPERTY, PLANT AND EQUIPMENT
+Plants and
+buildings
+RMB million
+Oil and gas,
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Cost:
+Balance at 1 January 2017
+114,920
+Additions
+854
+650,685
+1,627
+892,936
+11,983
+Transferred from construction in progress
+6,789
+19,881
+54,605
+Total
+RMB million
+1,658,541
+14,464
+81,275
+Balance at 1 January 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+120,013
+940,312
+(21,652)
+Exchange adjustments
+98
+2,142
+147
+2,387
+Balance at 31 December 2018
+122,041
+(18,323)
+695,724
+1,783,260
+Accumulated depreciation:
+Balance at 1 January 2017
+48,572
+435,561
+483,814
+967,947
+Depreciation for the year
+965,495
+(146)
+(3,183)
+Disposals
+1,727,982
+Additions
+221
+1,567
+3,856
+5,644
+Transferred from construction in progress
+3,741
+24,366
+45,103
+73,210
+Reclassifications
+1,634
+138
+(1,772)
+Reclassification to lease prepayments and other long-term assets
+(483)
+(3,828)
+(4,311)
+667,657
+55,057
+Financial Statements (International)
+Receivables and inventories
+10,317
+(447)
+(84)
+(36)
+4
+44
+(96)
+(336)
+582
+(569)
+260
+117
+117
+2,325
+(17)
+(135)
+2,477
+4,222
+(27)
+(1)
+(1,786)
+8,665
+1,925
+Payables
+3
+2,176
+381
+Receivables and inventories
+Others
+RMB million
+RMB million
+RMB million
+RMB million
+income
+statement
+income comprehensive
+1 January
+2018
+in other
+consolidated
+Balance at
+Recognised
+Recognised in
+(1,181)
+180
+(8)
+8,475
+income
+statement
+31 December
+Balance at
+Acquisition of
+Shanghai
+income comprehensive
+in other
+consolidated
+Others
+Balance at
+1 January
+2017
+Recognised in
+Net deferred tax (liabilities)/assets
+Others
+Available-for-sale financial assets
+Intangible assets
+Tax losses carried forward
+Property, plant and equipment
+Cash flow hedges
+Payables
+Recognised
+SECCO
+2017
+RMB million
+(3,351)
+115
+8
+313
+9
+(215)
+1,925
+1,534
+391
+381
+(1)
+(5)
+300
+87
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+287
+1,536
+13,505
+9,601
+617
+2,027
+(154)
+(770)
+(31)
+(266)
+64
+(91)
+2,076
+20,217
+64,514
+58,526
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+22 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+Operating rights of service stations
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+17,202
+Balance at 31 December
+2,519
+17,202
+RMB million
+2017
+RMB million
+75,728
+68,467
+249
+2,614
+7,829
+4,151
+14,226
+1,402
+(544)
+(2,603)
+(152)
+(531)
+219
+(357)
+84,731
+75,728
+3,987
+Note:
+31 December
+2018
+RMB million
+34,934
+Decreases
+Balance at 31 December
+Net book value at 31 December
+23 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+2018
+2017
+RMB million
+RMB million
+Additions
+48,613
+3,948
+11,837
+(345)
+(132)
+52,216
+48,613
+14,345
+10,012
+36,908
+Balance at 1 January
+Accumulated amortisation:
+Balance at 31 December
+31 December
+2017
+RMB million
+34,268
+26,513
+20,726
+5,502
+4,999
+24,459
+21,989
+91,408
+81,982
+(i) Others mainly comprise prepaid operating lease charges and catalyst expenditures.
+The cost of operating rights of service stations is charged to expense on a straight-line basis over the respective periods of the rights. The movement
+of operating rights of service stations is as follows:
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+184
+Net book value:
+3,414
+2,764
+1,144
+(1,818)
+605
+2,923
+3,834
+921
+2,728
+25
+(554)
+2,985
+5,278
+2,728
+3,414
+3,685
+1,169
+(759)
+1,059
+5,278
+2,985
+Total comprehensive income/(loss)
+3,493
+1,697
+(1,569)
+548
+3,916
+5,113
+Tax expense
+(935)
+(1,699)
+(897)
+(1,151)
+(729)
+(553)
+(249)
+57
+(993)
+(1,279)
+Profit/(loss) for the year
+Other comprehensive income/(loss)
+51
+3,019
+2,923
+Dividends declared by joint ventures
+21 LEASE PREPAYMENTS
+10,400
+Balance at 1 January
+Additions
+Transferred from construction in progress
+Transferred from other long-term assets
+Reclassification to other assets
+Disposals
+The share of profit and other comprehensive loss for the year ended 31 December 2018 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 2,052 million (2017: RMB 3,925 million) and RMB 839 million (2017: other comprehensive income
+RMB 994 million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial joint ventures accounted for using equity
+method in aggregate was RMB 22,982 million (2017: RMB 21,552 million).
+Exchange adjustments
+Accumulated amortisation:
+Balance at 1 January
+Amortisation charge for the year
+Transferred from other long-term assets
+Movements in the deferred tax assets and liabilities are as follows:
+Disposals
+Exchange adjustments
+Balance at 31 December
+Balance at 31 December
+(208)
+397
+12
+1,200
+1,250
+1,226
+1,109
+1,375
+Share of net profit/(loss) from joint ventures
+1,493
+2,639
+1,091
+1,366
+1,307
+541
+(682)
+227
+1,462
+1,917
+Share of other comprehensive income/
+(loss) from joint ventures
+435
+3,834
+4,361
+(82)
+(28)
+186,693
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 2,366,199 million for the year ended
+31 December 2018 (2017: RMB 1,854,629 million). It includes the write-down of inventories of RMB 5,535 million mainly related to crude oil,
+finished goods and work in progress of refined oil products and chemical products (2017: RMB 436 million mainly related to the spare parts and
+consumables in refining segment and chemical segment).
+27 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Other receivables
+Advances to suppliers
+Value-added input tax to be deducted
+Prepaid income tax
+28 DEFERRED TAX ASSETS AND LIABILITIES
+184,584
+31 December
+2018
+RMB million
+26,455
+5,937
+21,331
+300
+54,023
+17,704
+4,901
+17,926
+398
+40,929
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+31 December
+2017
+RMB million
+(1,155)
+(6,376)
+187,848
+Crude oil and other raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+Less: Allowance for diminution in value of inventories
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+85,469
+85,975
+13,690
+14,774
+88,929
+84,448
+2,872
+2,651
+190,960
+Deferred tax assets
+31 December
+2018
+RMB million
+26 INVENTORIES
+Receivables and inventories
+Payables
+(535)
+(563)
+Others
+174
+Deferred tax assets/(liabilities)
+25,403
+180
+19,470
+(428)
+227
+(264)
+(10,805)
+At 31 December 2018, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 18,308 million
+(2017: RMB 20,821 million), of which RMB 2,437 million (2017: RMB 5,938 million) was incurred for the year ended 31 December 2018, because
+it was not probable that the future taxable profits will be realised. These deductible losses carried forward of RMB 2,373 million, RMB 3,887 million,
+RMB 3,673 million, RMB 5,938 million and RMB 2,437 will expire in 2019, 2020, 2021, 2022,2023 and after, respectively.
+Periodically, management performed assessment on the probability that future taxable profit will be available over the period which the deferred tax
+assets can be realised or utilised. In assessing the probability, both positive and negative evidence was considered, including whether it is probable
+that the operations will have sufficient future taxable profits over the periods which the deferred tax assets are deductible or utilised and whether the
+tax losses result from identifiable causes which are unlikely to recur. During the year ended 31 December 2018, write-down of deferred tax assets
+amounted to RMB 188 million (2017: RMB 26 million) (Note 10).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+187
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(9,657)
+474
+(1)
+117
+1,808
+31 December
+2017
+RMB million
+381
+1,925
+Deferred tax liabilities
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Cash flow hedges
+1,131
+165
+Property, plant and equipment
+15,427
+14,150
+(27)
+(8,666)
+(50)
+(9,928)
+Tax losses carried forward
+3,709
+2,325
+Available-for-sale financial assets
+117
+Financial assets at fair value through other comprehensive income
+Intangible assets
+2,563
+4,565
+for the year ended 31 December 2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Amounts due from third parties
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+Less: Impairment losses for bad and doubtful debts
+Trade accounts receivable, net
+Bills receivable
+50,108
+56,203
+RMB million
+3,170
+4,321
+4,962
+57,599
+69,106
+(606)
+(612)
+56,993
+68,494
+7,941
+2017
+31 December
+RMB million
+17,282
+34,934
+14,345
+34,268
+Structured deposit
+Equity investments, listed and at quoted market price
+31 December
+2018
+RMB million
+25,550
+182
+25,732
+31 December
+2017
+RMB million
+51,196
+51,196
+The financial assets are the structured deposit with financial institutions, which are presented as current assets since they are expected to be
+expired within 12 months from the end of the reporting period.
+24 DERIVATIVES FINANCIAL ASSETS AND DERIVATIVES FINANCIAL LIABILITIES
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps. See Note 41.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+185
+Financial Statements (International)
+186
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+25 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
+31 December
+2018
+7,886
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+16,207
+84,701
+Provision for the year
+Written back for the year
+Written off for the year
+Others
+612
+683
+83
+49
+(77)
+Balance at 1 January
+(100)
+(21)
+7
+1
+Balance at 31 December
+606
+612
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+Sinopec Group Company and fellow subsidiaries are repayable under the same terms.
+Trade accounts receivable and bills receivables (net of impairment losses for bad and doubtful debts) primarily represent receivables that are
+neither past due nor impaired. These receivables relate to a wide range of customers for whom there is no recent history of default.
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 41.
+(19)
+RMB million
+2017
+2018
+RMB million
+The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as follows:
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+64,317
+83,984
+353
+573
+124
+43
+85
+101
+64,879
+84,701
+Impairment losses for bad and doubtful debts are analysed as follows:
+64,879
+3,625
+Cost:
+3,920
+RMB million
+Current assets
+Cash and cash equivalents
+7,388
+5,772
+1,582
+1,800
+3,406
+RMB million
+2,352
+4,916
+5,110
+6,524
+Other current assets
+9,248
+11,013
+5,795
+5,335
+930
+2017
+2018
+2017
+RMB million
+Manufacturing
+and distribution of
+petrochemical products
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+Equity method
+PRC
+PRC
+FREP
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+31 December
+2018
+RMB million
+31 December 31 December
+2017
+2018
+RMB million RMB million
+31 December 31 December
+2017
+2018
+RMB million RMB million
+6,977
+31 December
+31 December
+3,689
+("Sinopec SABIC Tianjin")
+2,462
+10,816
+13,248
+Current liabilities
+Current financial liabilities
+(1,200)
+(1,135)
+(725)
+(233)
+(59)
+13,990
+(20)
+(5,407)
+(500)
+(1,236)
+Other current liabilities
+(4,939)
+(5,049)
+(1,822)
+(1,982)
+(4,806)
+51,553
+51,873
+7,978
+4,007
+2,709
+Total current assets
+16,636
+16,785
+7,377
+7,135
+7,095
+4,814
+11,197
+15,732
+9,117
+9,233
+Non-current assets
+19,271
+19,740
+11,086
+12,075
+9,216
+10,267
+(2,124)
+Company Limited
+Sinopec SABIC Tianjin Petrochemical
+221
+1,011
+1,272
+915
+753
+1,040
+960
+443
+271
+48
+(305)
+(77)
+(121)
+641
+(26)
+- - 58
+(167)
+The share of profit and other comprehensive loss for the year ended 31 December 2018 in all individually immaterial associates accounted for using
+equity method in aggregate was RMB 3,550 million (2017: RMB 3,182 million) and RMB 844 million (2017: other comprehensive income RMB 569
+million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial associates accounted for using equity method in
+aggregate was RMB 31,370 million (2017: RMB 23,899 million).
+292
+490
+1,207
+(944)
+1,142
+123
+583
+(610)
+(157)
+(246)
+6,410
+(260)
+116
+(334)
+2,022
+2,543
+1,711
+1,290
+16,810
+9,341
+1,142
+123
+699
+Notes:
+50.00
+(i) Sinopec is able to exercise significant influence in SIBUR since Sinopec has a member in SIBUR's Board of Director and has a member in SIBUR's Management Board.
+(ii) Including foreign currency translation differences.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Equity method
+PRC
+PRC
+and distribution of
+Taihu Limited ("Taihu")
+49.00
+petrochemical products
+Crude oil and natural gas
+extraction
+Equity method
+Manufacturing
+Cyprus
+Yanbu Aramco Sinopec Refining
+37.50
+Petroleum refining and
+Equity method
+Saudi Arabia
+Saudi Arabia
+Company Ltd. ("YASREF")
+processing business
+Russia
+40.00
+BASF-YPC Company Limited
+("BASF-YPC")
+oil products
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+20 INTEREST IN JOINT VENTURES
+The Group's principal interests in joint ventures are as follows:
+% of
+ownership
+Name of entity
+Fujian Refining & Petrochemical
+interests
+Principal activities
+Measurement
+method
+Country of
+incorporation
+of business
+Principal place
+50.00
+Manufacturing refining
+Equity method
+PRC
+PRC
+Company Limited ("FREP")
+182
+(1,914)
+31 December 31 December 31 December
+2017
+2018
+RMB million RMB million
+(11,864)
+2018
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2018
+Sinopec SABIC Tianjin
+YASREF
+6,409
+5,573
+3,831
+4,780
+5,064
+8,059
+6,279
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+183
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+20 INTEREST IN JOINT VENTURES (Continued)
+Summarised statement of comprehensive income
+Year ended 31 December
+FREP
+BASF-YPC
+Taihu
+Turnover
+6,272
+52,469
+21,574
+141
+(12,217)
+101
+45
+169
+104
+Interest expense
+(647)
+36
+(857)
+(71)
+(151)
+(142)
+(1,382)
+(1,382)
+(167)
+(223)
+Profit/(loss) before taxation
+(43)
+41
+208
+157
+21,020
+14,944
+12,520
+77,561
+61,587
+23,501
+22,286
+Depreciation, depletion and amortisation
+(2,250)
+(16)
+(1,521)
+(1,793)
+(664)
+(715)
+(2,823)
+(2,763)
+(1,104)
+(36)
+Interest income
+49,356
+8,226
+142
+Carrying Amounts
+(35,619)
+(3,651)
+(4,101)
+Other non-current liabilities
+(279)
+(236)
+(17)
+(19)
+(32,364)
+(2,271)
+(937)
+(890)
+(331)
+(41)
+Total non-current liabilities
+(12,733)
+(13,890)
+(235)
+(2,686)
+(72)
+(72)
+(955)
+8,518
+(2,507)
+(4,546)
+Total current liabilities
+(6,139)
+(6,184)
+(2,547)
+(2,215)
+(2,183)
+(1,934)
+(17,023)
+(17,271)
+(3,007)
+(5,782)
+Non-current liabilities
+Non-current financial liabilities
+(12,454)
+(13,654)
+(218)
+(974)
+(2,343)
+Reclassification to other assets
+(33,301)
+13,505
+16,118
+12,557
+Net assets attributable to
+non-controlling interests
+412
+282
+Share of net assets from joint ventures
+12,746
+8,518
+6,272
+6,409
+3,831
+4,780
+5,064
+8,059
+(2,758)
+6,279
+8,226
+7,818
+5,573
+16,021
+11,373
+(36,509)
+(4,142)
+Net assets
+17,035
+(3,982)
+15,681
+16,021
+11,785
+8,100
+16,451
+28 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+16,118
+12,557
+Net assets attributable to owners
+of the company
+17,035
+16,451
+15,681
+12,746
+1,533
+1,429
+1,244
+1,124
+1,244
+1,124
+313
+910
+811
+334
+289
+305
+27
+32
+1,599
+Others
+31 December 17
+Shengli
+Others
+261
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Proved undeveloped reserves
+China
+Consolidated subsidiaries
+Shengli
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Crude oil reserves (mmbbls)
+31 December 18
+1,666
+273
+China
+170
+Puguang
+Fuling
+Others
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Proved undeveloped reserves
+China
+Consolidated subsidiaries
+Consolidated subsidiaries
+Others
+Exploration and Production Activities
+Natural gas reserves (bcf)
+31 December 18
+31 December 17
+6,807
+Fuling
+Consolidated subsidiaries
+Proved developed reserves
+Proved reserves
+96
+137
+96
+137
+16
+49
+80
+88
+38
+33
+0
+38
+33
+198303
+Items
+134
+China
+0.6
+Proved reserves
+0
+Trend of International Crude Oil Prices
+WTH-NYMEX
+ICE BRENT
+DTD BRENT
+DUBAI
+1 MARKET REVIEW
+10
+(1) Crude Oil & Natural Gas Market
+In 2018, international crude oil prices
+fluctuated upward in the first three
+quarters, but slided rapidly in the fourth
+quarter. The spot price of Platt's Brent
+for the year averaged USD 71.03 per
+barrel, up by 31.1%. Along with the
+changes in China's energy mix, domestic
+demand for natural gas remained strong.
+Domestic apparent consumption of
+natural gas reached 280.3 billion cubic
+meters, up by 18.1% year on year.
+In 2018, domestic demand for refined
+oil products maintained its growth while
+market supply was in surplus, which
+led to intense competition. According
+to statistics released by the NDRC, the
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) was 325 million tonnes, up
+by 6.0% from the previous year, with
+gasoline up by 7.8%, kerosene up by
+8.4% and diesel up by 4.1%. Prices
+for domestic refined oil products were
+adjusted timely with the international oil
+prices. There were 24 price adjustments
+throughout the year with 13 increases
+and 11 decreases.
+(3) Chemical Products Market
+Domestic demand for chemicals kept
+strong momentum in 2018. Based on
+our statistics, domestic consumption
+of ethylene equivalent was up by 9.2%
+from the previous year, and the apparent
+consumption of synthetic resin, synthetic
+fibre and synthetic rubber rose by 7.7%,
+7.6% and 0.6%, respectively. Domestic
+chemical product prices followed the
+same trend with international chemical
+product prices.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Business Review and Prospects
+12
+Business Review and Prospects
+(2) Refined Oil Products Market
+20
+30
+40
+6,012
+6,997
+LOKE
+BUSINESS REVIEW AND PROSPECTS
+BUSINESS REVIEW
+In 2018, the global economic recovery was
+slow while China maintained an overall stable
+economic performance with its gross domestic
+product (GDP) up by 6.6%. International oil
+prices fluctuated in a wide range. Domestic
+demand for natural gas grew rapidly. Domestic
+oil products market saw fierce competition
+because of oversupply, and demand for
+chemicals increased steadily. Meanwhile,
+China's environmental regulations became
+more stringent. The Company actively coped
+with market changes by focusing on reform,
+management, innovation and development. We
+coordinated all aspects of our work by pressing
+ahead measures for optimised operation, market
+expansion, cost reduction, risk control, reform
+promotion, and management enforcement, which
+helped the company achieve solid operating
+results.
+US$/barrel
+100
+90
+80
+70
+60
+60
+50
+40
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Proved developed reserves
+2 PRODUCTION & OPERATIONS REVIEW
+In 2018, we pressed ahead with high-
+efficiency exploration and profit-oriented
+development. Measures were taken to
+accelerate the formation of an integrated
+value chain of natural gas business
+including production, supply, storage and
+marketing and continuously reduce cost
+and expenditure on all fronts. Tangible
+results were achieved in maintaining
+oil production, increasing gas output
+and reducing cost. We reinforced
+248.88
+253.15
+0.02
+39.58
+44.78
+50.36
+248.93
+(11.6)
+977.32
+912.50
+766.12
+7.1
+Summary of Reserves of Crude Oil and Natural Gas
+Items
+Natural gas production (bcf)
+(1.8)
+303.51
+293.66
+preliminary exploration in new areas
+and strengthened integrated detailed
+evaluation in mature fields, which led
+to new discoveries in Tarim, Yin'e and
+Sichuan basins. The Company's newly
+added proved reserves in China reached
+458.2 million barrels of oil equivalent,
+with crude oil reserve replacement ratio
+at 131.7%. In crude oil development,
+we made a full-fledged push to build
+profitable production capacity, deepen
+the structural adjustment of mature
+fields, reduce natural decline rate and
+ensure steady production. In natural
+Summary of Operations for the Exploration and Production Segment
+gas development, we constantly pushed
+forward capacity building in Hangjinqi
+of Neimongol, the eastern slope of west
+Sichuan Depression and Weirong shale
+gas fields. We optimised production
+and distribution and promoted a
+coordinated growth along the value
+chain. The Company's production of oil
+and gas reached 451.46 million barrels
+of oil equivalent, with domestic crude
+production registering 248.93 million
+barrels and natural gas production
+totaling 977.32 billion cubic feet, up by
+7.1%.
+2018
+2017
+2016
+Change from
+2017 to 2018(%)
+Oil and gas production (mmboe)
+Crude oil production (mmbbls)
+China
+Overseas
+451.46
+448.79
+431.29
+288.51
+(1) Exploration and Production
+11
+5,822
+5,835
+857
+5.7
+9,343
+1,218
+9,439
+1,220
+9,275
+(1.0)
+1,242
+(0.2)
+well as the discovery of Weirong deep
+shale gas field. The pilot test of 185°C
+high temperature measurement while
+drilling was successfully conducted
+in the ultra-deep well in Shunbei. In
+refining, we realised the industrialisation
+of technologies including new sulfuric
+acid alkylation and hydro-isomerisation
+dewaxing for producing high grade
+base oil. In chemicals, the industrial
+demonstration unit of HPPO achieved
+stable operation and new products
+like PE film turned into commercial
+production. In addition, SOR, the
+framework type code of a novel structured
+zeolite synthesized by us, has been
+approved by the Structure Commission of
+International Zeolite Association, making
+us the first Chinese company to achieve
+a breakthrough in this area. In 2018, the
+Company had 6,074 patent applications
+at home and abroad, among which 4,434
+were granted. The Company also won
+one second prize of National Technology
+Invention and three second prizes of
+National Sci-tech Progress, four silver
+and four excellent prizes of National
+Patent Awards.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+15
+Business Review and Prospects
+16
+848
+896
+(0.1)
+15,201
+Ethylene
+Synthetic resin
+Synthetic rubber
+Synthetic fiber monomer and polymer
+Synthetic fiber
+Note: Includes 100% of the production of domestic joint ventures.
+(5) Research and Development
+Business Review and Prospects
+In 2018, with the emphasis on reinforcing
+innovation-driven strategy, the Company
+accomplished notable results in R&D,
+deepened reform of R&D mechanism
+and pushed ahead with efforts in key
+and frontier technologies. In upstream
+segment, further advancement in
+evaluation technology of buried hill
+bedrock and deep carbonate reservoir
+and fracturing technology of deep shale
+gas field brought the breakthroughs in
+the exploration of Guaizihu Depression
+in Yin'e Basin and new series of strata
+in Maokou Formation in Yuanba area as
+11,512
+2017
+11,610
+2016
+11,059
+Change from
+2017 to 2018 (%)
+(0.8)
+15,923
+15,938
+2018
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+(6) Health, Safety, Security and Environment
+In 2018, the Company constantly
+promoted the HSSE management.
+We implemented the concept of
+"Comprehensive Health" by integrating
+the management of occupational,
+physical and mental health of our
+employees. The Company took stringent
+measures to control risks and supervise
+the safety and operations of contractors.
+We also strengthened safety measures
+at all levels, removing potential hazards
+and enhancing our emergency response
+capability, all acheived sound and reliable
+production and operation. Public security
+management capability was strengthened
+with improvement in risk evaluation,
+monitoring and early warning and
+emergency response mechanism. The
+green and low-carbon growth strategy
+was further carried out by promoting
+clean energy and green development,
+such as steadily pushing forward our
+Green Enterprise Campaign and Efficiency
+Doubling Plan. We accomplished all
+emission reduction targets by pursuing
+clean production and preventing
+pollutions. For more detailed information,
+please refer to "Communication on
+Progress for Sustainable Development
+2018 of Sinopec Crop".
+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 2018, the Company's turnover and other operating revenues was RMB 2,891.2 billion, increased by 22.5% compared with that of 2017. The
+operating profit was RMB 82.3 billion, representing a year on year increase of 15.1%.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+Year ended 31 December
+2018
+RMB million
+2017
+RMB million
+17
+Change (%)
+2,891,179
+2,360,193
+22.5
+Turnover
+2,825,613
+2,300,470
+22.8
+Turnover and other operating revenues
+Unit: thousand tonnes
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Capital Expenditures, in 2019, we will
+further focus on investment quality and
+profitability through constantly optimising
+capital projects. Capital expenditures
+for the year are budgeted at RMB 136.3
+billion. Of which RMB 59.6 billion will be
+invested in exploration and production
+with focuses on the production capacity
+building of Shengli Oilfield, Northwest
+Oilfield, Leikou Slope in western Sichuan,
+Fuling Shale Gas Filed and Weirong Shale
+Gas Field, and the construction of natural
+gas pipelines and storage facilities as
+well as overseas oil and gas projects.
+The capital expenditure for refining will
+amount to RMB 27.9 billion which will
+be spent on the construction of Zhongke
+and Zhenhai Projects, and the refining
+structural adjustment projects of Tianjin,
+Maoming, Luoyang, Wuhan, Beihai and
+Yangzi. RMB 21.8 billion are budgeted for
+marketing and distribution with emphases
+on the construction of depots and storage
+facilities for refined oil products, pipelines
+and service stations, non-fuel business
+development, as well as renovation of
+underground oil storage tanks. The share
+for chemicals will be RMB 23.3 billion
+which will be used on Zhongke, Zhenhai,
+Gulei, Hainan and Wuhan, coal chemical
+projects of Bijie and Zhongan, and
+comprehensive resource utilisation and
+structural adjustment projects of Yangzi
+and SSTPC. The capital expenditure for
+corporate and others will reach RMB
+3.7 billion, mainly for R&D facilities and
+information technology projects.
+(7) Capital Expenditures
+In 2018, focusing on quality and
+profitability of investment, the Company
+continuously optimised its capital
+projects, with total capital expenditures
+of RMB 118 billion. Capital expenditure
+for the exploration and production
+segment was RMB 42.2 billion, mainly
+for Fuling and Weirong shale gas
+development projects, Hangjingi natural
+gas development project, Shengli and
+Northwest crude oil development projects,
+phase I of Xinjiang gas pipeline, phase I
+of Erdos-Anping-Cangzhou gas pipeline,
+Wen 23 and Jintan gas storages, as well
+as overseas projects. Capital expenditure
+for the refining segment was RMB 27.9
+billion, mainly for Zhongke Refining
+and Petrochemical project, Zhenhai,
+Tianjin, Maoming and Luoyang refineries,
+the gasoline and diesel GB VI quality
+upgrading projects and the construction
+of Rizhao-Puyang-Luoyang crude pipeline.
+Capital expenditure for the marketing
+and distribution segment was RMB
+21.4 billion, mainly for construction of
+oil products depots, pipelines, service
+stations, non-fuel business and the
+renovation of underground oil tanks to
+remove potential safety hazards. Capital
+expenditure for the chemicals segment
+was RMB 19.6 billion, mainly for ethylene
+projects in Zhongke, Zhenhai and Gulei,
+Phase II of Hainan high-efficiency and
+environmentally-friendly aromatics
+project, Sinopec-SABIC Polycarbonate
+project and Zhongan coal chemical
+project. Capital expenditure for corporate
+and others was RMB 6.9 billion, mainly
+for setting up the joint-venture of Sinopec
+Capital Company with Sinopec Group,
+R&D facilities and information technology
+projects.
+BUSINESS PROSPECTS
+(1) Market Outlook
+Looking ahead to 2019, the international
+economy is expected to show a slower
+growth rate in the midst of a complex
+and uncertain global political and
+economic environment. Meanwhile,
+continued growth of China's economy
+will further drive up domestic demand
+for high-end refined oil products and
+petrochemicals. As the adjustment of
+China's energy mix deepens, demand
+for natural gas will continue to grow at
+a rapid pace. Considering uncertainties
+of supply capacity of major oil producing
+countries, global oil demand and
+geopolitical issues, etc., the international
+oil price is expected to fluctuate within a
+wide range.
+(2) Operations
+In 2019, adhering to the concept of
+innovative, coordinated, green, open and
+share development, we will continue to
+consolidate development foundation,
+focus on long term strategies and push
+forward high-quality development in an
+all-round way to achieve sound results.
+In 2019, adhering to the general principle
+of seeking progress while maintaining
+stability, the new development philosophy
+and the operating guidelines of
+"specialised development, market-based
+operation, internationalisation and overall
+coordination". The following activities will
+be prioritized during the year.
+Exploration and Production, by
+fully implementing the action plan
+of redoubling efforts in oil and gas
+exploration and production, we will
+advance high-efficiency exploration,
+continuously increase proved reserves
+and expand resource base. In crude oil
+development, more efforts will be made
+in promoting the capacity building of
+the Tahe Oilfield, making technological
+breakthrough for undeveloped oil-bearing
+reservoirs, improving refined reservoir
+characterization of mature fields in order
+to increase reserve development rate and
+recovery rate. In natural gas development,
+we will accelerate the capacity
+construction of key projects, optimise the
+system of natural gas production, supply,
+storage and marketing as well as the
+market layout so as to foster coordinated
+development of the whole business value
+chain. In 2019, we plan to produce 288
+million barrels of crude oil, among which
+overseas production will be 39 million
+barrels, and 1,019.1 billion cubic feet of
+natural gas.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Business Review and Prospects
+The quality upgrading plan for new spec
+marine fuel oil will be implemented to
+raise capacity utilisation ratio. Marketing
+mechanisms will be improved to push up
+the total trading volume of other refined
+oil products. In 2019, we plan to process
+246 million tonnes of crude oil and
+produce 157 million tonnes of refined oil
+products.
+Marketing and Distribution, insisting the
+marketing strategy of balancing profits
+and sales volume, we will continue to
+optimise resources allocation, expand
+market, and increase operation profit.
+We will carry out targeted and differential
+marketing with customers at its core so
+as to constantly improve service quality.
+The marketing and distribution network
+will be further improved to amplify the
+existing advantages. We will accelerate
+the construction and operation of natural
+gas stations and expand natural gas
+market for automobiles. Substantial
+progress will be made in hydrogen
+refueling stations and charging and
+battery swap stations. We will explore
+the new business mode of "Internet +
+service stations + convenience stores +
+comprehensive services" to advance the
+development and marketing of self-owned
+brands and to advance the growth of non-
+fuel business. In 2019, we plan to sell
+182 million tonnes of refined oil products
+in the domestic market.
+Chemicals, we will further adjust
+feedstock mix, product slate and facilities
+structure to constantly strengthen
+competitiveness. The continuous
+feedstock mix optimisation will diversify
+feedstock procurement channels and
+reduce costs. More efforts will be
+made in adjusting product slate and
+coordinating production, marketing,
+research and application to raise the
+proportion of high-end products. We will
+enhance the dynamic optimisation of
+facilities and product chain, and improve
+the utilisation and production scheduling
+based on market demand. We will
+strengthen market analysis to actively
+expand market, thus increasing market
+shares. Meanwhile, advantages cultivation
+and production capacity building will be
+accelerated to produce high-end products
+and create more value. In 2019, we
+plan to produce 12.12 million tonnes of
+ethylene.
+Research and Development, we
+I will continue to fully implement the
+innovation-driven development strategy,
+deepen the reform of scientific and
+technological systems, accelerate key
+technological breakthroughs, push
+ahead with frontier research on leading
+technologies, and step up the commercial
+application of technological achievement
+so as to strive for sustainable
+development in an all-round way. With
+the emphasis on constantly advancing
+oil and gas exploration and production
+technologies, we will focus on achieving
+breakthroughs in oil and gas exploration
+and production and resource evaluation
+technologies. In refining, more efforts will
+be made in making progress in refined oil
+product quality upgrading technologies,
+enhancing the technology development
+of self-owned refined oil product, and
+reinforcing the research on refinery total
+process optimisation technology. In
+chemicals, we will continue to improve
+the technological system for chemical
+products and strengthen development
+of high-value-added new materials.
+Technological breakthrough in safety and
+environmental protection will be stepped
+up. At the same time, prospective and
+basic research will be carried out on
+such leading and new areas including
+new energy, new materials, artificial
+intelligence and low-carbon so as to
+boost innovation.
+Refining, with integrated planning, we will
+optimise crude oil allocation, reinforce
+inventory management, and push forward
+the high-efficiency operation of the
+refining value chain. Maintenance will be
+arranged according to market changes
+so as to achieve maximum overall profit.
+We will further optimise product mix
+by lowering diesel-to-gasoline ratio and
+increasing the production of gasoline,
+jet fuel and light chemical feedstock.
+several key projects. Annual ethylene
+production was 11.51 million tonnes. The
+Company also intensified its efforts to
+enhance the efficiency of the integration
+among production, marketing, R&D, and
+application as well as promoted targeted
+marketing and servicing to further
+expand our business, with total chemical
+sales volume increased by 10.3% to 86.6
+million tonnes, hitting a record high.
+0.1
+0.1
+94.93
+94.88
+94.70
+0.15 percentage points
+0.05 percentage points
+achieved sustained growth in both total
+domestic sales volume and retail scale.
+We adopted a flexible and targeted
+marketing strategy and upgraded our
+distribution network to further strengthen
+our existing advantages. We proactively
+promoted vehicle natural gas business
+and accelerated the construction and
+operation of CNG stations. Total sales
+volume of refined oil products for the
+year was 198 million tonnes, of which
+domestic sales volume accounted for
+180 million tonnes. Meanwhile, we
+strengthened development and marketing
+of self-owned brands to speed up the
+growth of non-fuel business.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+76.33
+Summary of Operations for the Marketing and Distribution Segment
+2018
+2017
+2016
+2017 to 2018 (%)
+Total sales volume of oil products (million tonnes)
+198.32
+198.75
+Change from
+194.84
+75.85
+(0.2)
+2.7
+61.16
+57.03
+56.36
+7.2
+64.72
+66.76
+76.00
+67.34
+28.91
+26.88
+25.47
+7.6
+38.52
+38.60
+38.54
+(3.1)
+Other operating revenues
+(0.2)
+180.24
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+(4) Chemicals
+In 2018, the Company sticked to the
+development philosophy of "basic plus
+high-end" to enhance effective supply. We
+persistently fine-tuned chemical feedstock
+mix to lower cost. We optimised products
+slate and increased high-end products
+output. The ratio of new and specialty
+products in synthetic resin reached
+Summary of Operations for the Chemicals Segment
+31 December
+2018
+31 December
+2017
+previous year to
+the end of the
+reporting period
+31 December
+30,661
+30,655
+30,633
+30,603
+30,627
+30,597
+64.3%, the ratio of high-value-added
+products in synthetic rubber amounted
+to 26.3%, and our differential ratio
+of synthetic fibre reached 90.4%. By
+optimising utilisation rate and production
+plan based on market demand, we
+improved the operation of chemical
+units. To reinforce the capacity structural
+adjustment, we actively promoted
+(%)
+2016
+Total domestic sales volume of oil products (million tonnes)
+the end of the
+0.3
+177.76
+172.70
+1.4
+Retail sales (million tonnes)
+121.64
+121.56
+120.14
+Change from
+0.1
+58.61
+56.20
+52.56
+4.3
+3,979
+3,969
+3,926
+Direct sales and distribution (million tonnes).
+Annual average throughput per station (tonne/station)
+65,566
+59,723
+9.8
+Synthetic resin
+15.5
+6,038
+6,971
+8.4
+10,267
+11,127
+14,433
+Monomer and polymer for synthetic fibre.
+4,855
+5,488
+12.7
+35,964
+40,520
+Basic chemical feedstock
+29.2
+13.0
+3,531
+13,199
+8,634
+(10.9)
+11,913
+10,619
+(1.2)
+1,128
+1,114
+Synthetic rubber
+9.3
+13.5
+9,712
+0.8
+1,304
+1,314
+Synthetic fibre
+5.9
+8,155
+8,556
+Chemical fertiliser
+4,562
+25,557
+22,529
+24,197
+Natural gas (million cubic meters)
+29.7
+2,390
+3,100
+0.4
+7.4
+6,567
+Crude oil
+Change (%)
+2017
+2018
+Change (%)
+2017
+2018
+6,595
+0.9
+1,400
+8.5
+25,787
+Kerosene
+19.0
+5,038
+5,996
+(4.7)
+88,848
+1,290
+84,630
+13.4
+6,941
+7,870
+4.9
+83,933
+88,057
+Gasoline
+Diesel
+149.17
+794
+13.8
+Personnel expenses
+(77,721)
+(74,854)
+3.8
+Taxes other than income tax
+(246,498)
+(235,292)
+(3.1)
+4.8
+(5,360)
+(16,554)
+(67.6)
+Operating profit
+82,264
+71,470
+15.1
+Other operating expense, net
+Net finance costs
+(11,089)
+Exploration expenses, including dry holes
+Operating expenses
+(2,808,915)
+(2,288,723)
+22.7
+Purchased crude oil, product and operating supplies and expenses
+(2,292,983)
+(1,770,651)
+(10,744)
+29.5
+(65,642)
+(64,973)
+1.0
+Depreciation, depletion and amortisation
+(109,967)
+(115,310)
+(4.6)
+Selling, general and administrative expenses
+698
+1,001
+(164.2)
+20.2
+Non-controlling interests
+17,279
+19,174
+(9.9)
+(1) Turnover and other operating revenues
+In 2018, the Company's turnover was RMB 2,825.6 billion, representing an increase of 22.8% over 2017. This was mainly attributed to the
+prices increase of major products. Meanwhile, sales volume also increased as a result of the Company's efforts in bringing our advantages
+in distribution network into full play, constantly promoting targeted marketing, optimising allocation of internal and external resources and
+reinforcing market expansion.
+51,244
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2018 and 2017:
+and Analysis
+Management's Discussion
+19
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+4.3
+2,010
+2,096
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+(1,560)
+61,618
+Attributable to:
+Investment income and share of profits less losses from associates and joint ventures
+15,845
+16,787
+(5.6)
+Profit before taxation
+99,110
+86,697
+Shareholders of the Company
+14.3
+(20,213)
+(16,279)
+24.2
+Profit for the year
+78,897
+70,418
+12.0
+Income tax expense
+150.67
+Sales volume (thousand tonnes)
+Year ended 31 December
+2.3
+0
+Total
+286
+131
+2,011
+6
+268
+150
+1,561
+9
+Wells drilling (as of 31 December)
+2018
+2017
+Gross
+Net
+119
+1
+2
+0
+2,769
+1,121
+1,149
+2,127
+1,904
+6,000
+5,822
+Gross
+6,000
+0
+0
+0
+Equity accounted entities.
+0
+0
+70
+0
+Net
+Exploratory Development Exploratory Development Exploratory Development
+Exploratory Development
+25
+72
+19
+0
+19
+Others
+44
+72
+205
+205
+43
+147
+43
+Overseas
+0
+10
+44
+2,752
+25
+147
+147
+China
+69
+277
+69
+277
+62
+147
+Shengli
+62
+69
+277
+69
+277
+62
+147
+62
+Consolidated subsidiaries
+13
+12
+0
+60
+137
+Others
+1
+845
+71
+151
+740
+5
+71
+149
+Shengli
+9
+1,442
+149
+266
+1,201
+6
+1
+78
+154.79
+0
+0
+0
+Consolidated subsidiaries
+0
+119
+115
+1
+0
+70
+0
+0
+Overseas
+8
+597
+2
+0
+1,941
+286
+2017
+2018
+Wells drilled (as of 31 December)
+798
+777
+187
+195
+Exploratory
+985
+985
+972
+985
+972
+12
+13
+0
+972
+131
+Development
+Development
+Consolidated subsidiaries
+9
+1,442
+149
+266
+6
+1,941
+Exploratory
+131
+China
+Dry
+Dry Productive
+Productive
+Dry
+Dry Productive
+Productive
+286
+10
+0
+Consolidated subsidiaries
+266
+266
+Others
+4,642
+4,602
+4,477
+4,439
+368
+Total
+5,028
+4,800
+4,762
+Acreage with exploration licenses
+China
+Acreage with development licenses
+China
+Overseas
+5,068
+Unit: Square kilometers
+368
+57
+Net
+Gross
+Net
+5,068
+5,028
+4,800
+4,762
+Fuling
+Consolidated subsidiaries
+5,028
+4,800
+4,762
+Puguang
+58
+58
+57
+5,068
+Gross
+Area under license (as of 31 December)
+525,269
+Kerosene
+Light chemical feedstock production
+Light product yield (%)
+Refinery yield (%)
+Note: Includes 100% of the production from domestic joint ventures.
+(3) Marketing and Distribution
+In 2018, confronted with fierce market
+Diesel
+competition, the Company aimed
+to achieve a balance between sales
+volume and profits. We brought our
+advantages of integrated business
+and distribution network into full play,
+and increased marketing efforts, thus,
+2017
+2016
+2017 to 2018 (%)
+244.01
+238.50
+235.53
+0
+2018
+2018
+Gasoline
+Refinery throughput
+525,269
+36,748
+31,643
+2017
+621,529
+621,529
+36,604
+Gasoline, diesel and kerosene production
+31,498
+(2) Refining
+In 2018, with market-oriented approach,
+we optimised product mix to produce
+more gasoline, jet fuel and chemical
+feedstock, production of high value-
+added products further increased, and
+diesel-to-gasoline ratio declined to 1.06.
+Summary of Operations for the Refining Segment
+We proactively promoted structural
+adjustment and quality upgrading
+projects, the GB VI standard upgrading
+is completed successfully. We moderately
+increased the export of oil products to
+keep a relatively high utilisation rate.
+Optimisation of resources allocation
+were carried out to reduce crude oil
+cost. In 2018, the Company processed
+244 million tonnes of crude oil, up by
+2.3% and produced 155 million tonnes
+of refined oil products, up by 2.7%, with
+gasoline up by 7.2% and kerosene up by
+7.6% year on year.
+Unit: million tonnes
+Change from
+5,106
+Region
+China
+5,106
+2018
+147
+5
+0
+5
+152
+Oil productive wells (as of 31 December)
+2018
+2017
+0
+Gross
+Gross
+Net
+China
+51,030
+51,030
+50,121
+50,121
+Net
+Consolidated subsidiaries
+230002
+2000
+0
+2017
+0
+0
+0
+Equity accounted entities
+0
+62
+10
+10
+Total
+69
+287
+69
+287
+62
+0
+51,030
+5052
+50,121
+28
+14
+Equity accounted entities
+7,265
+Total
+58,323
+3,925
+54,969
+14
+3,954
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+13
+Business Review and Prospects
+14
+Business Review and Prospects
+51,030
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+54,089
+28
+7,322
+57,471
+3,968
+50,121
+Shengli
+Consolidated subsidiaries
+32,805
+Natural gas productive wells (as of 31 December)
+32,805
+32,105
+Others
+18,225
+32,105
+18,225
+18,016
+18,016
+Overseas
+7,293
+3,939
+7,350
+Other operating lease charges
+Exploration and development services
+Production related services
+Ancillary and social services
+Operating lease charges for land
+Operating lease charges for buildings
+Purchases
+Transportation and storage
+Agency commission income
+(i)
+Interest expense
+Net deposits withdrawn from/(placed with) related parties
+Net funds obtained from related parties
+Note
+2018
+RMB million
+272,789
+(ii)
+Sales of goods
+192,224
+Interest income
+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:
+(96)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+11
+2017
+RMB million
+244,211
+165,993
+12,883
+23,547
+(2,115)
+(383)
+(1,438)
+(4,032)
+(1,786)
+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.
+17,729
+The goodwill is attributable to the high profitability of the acquired business and synergy to be achieved post the Transaction among Shanghai
+SECCO and the Group's existing petrochemical operations located in eastern China.
+As of Acquisition Date, a gain of RMB 3,941 million was recognised as a result of remeasuring the 50% equity interest held before the Transaction
+to its fair value, which is included in other operating (expense)/income in the Group's consolidated income statement for the year ended 31
+December 2017.
+Shanghai SECCO contributed revenue of RMB 5,222 million and net profit of RMB 726 million to the Group for the period from the Acquisition Date
+to 31 December 2017.
+If the acquisition had occurred on 1 January 2017, consolidated pro-forma revenue and profit for the year ended 31 December 2017 would have
+been RMB 2,365,632 million and RMB 74,930 million respectively. These amounts have been calculated using the subsidiary's results and adjusting
+them for the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and
+equipment and intangible assets had applied from 1 January 2017, together with the consequential tax effects.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+37 RELATED PARTY TRANSACTIONS
+Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control or jointly control the party or exercise
+significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to
+control or common control. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their
+close family members) or other entities and include entities which are under the significant influence of related parties of the Group where those
+parties are individuals, and post-employment benefit plans which are for the benefit of employees of the Group or of any entity that is a related
+party of the Group.
+2,541
+(iii)
+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.
+7,716
+1,110
+554
+(ix)
+(xi)
+6,457
+(7,441)
+31.684
+19,661
+The amounts set out in the table above in respect of the year ended 31 December 2018 and 2017 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+Included in the transactions disclosed above, for the year ended 31 December 2018 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 140,570 million (2017: RMB 128,863 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 123,772
+million (2017: RMB 112,619 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,664
+million (2017: RMB 6,652 million), operating lease charges for land, buildings and others paid by the Group of RMB 7,765 million, RMB 521
+million and RMB 738 million (2017: RMB 8,015 million, RMB 510 million and RMB 513 million), respectively and interest expenses of RMB
+1,110 million (2017: RMB 554 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 59,472
+million (2017: RMB 60,045 million), comprising RMB 58,606 million (2017: RMB 59,213 million) for sales of goods, RMB 848 million (2017:
+RMB 807 million) for interest income and RMB 18 million (2017: RMB 25 million) for agency commission income.
+At 31 December 2018 and 2017, there was no guarantee given to banks by the Group in respect of banking facilities to related parties, except
+for the guarantees disclosed in Note 35.
+Note:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management,
+environmental protection and management services.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+195
+117
+(x)
+807
+848
+(ix)
+23,489
+21,210
+(v)
+28,472
+20,824
+(vi)
+6,664
+6,653
+(vii)
+7,319
+7,765
+(vii)
+521
+510
+(vii)
+869
+626
+(viii)
+113
+127
+8,015
+231
+1,258
+1,920
+31 December
+2017
+RMB million
+RMB million
+5,033
+12,168
+7,197
+940
+13,520
+9,732
+24,398
+24,192
+31 December
+2018
+Management monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss will occur, and recognises any
+such losses under guarantees when those losses are reliabily estimable. At 31 December 2018 and 2017, it was not probable that the Group will
+be required to make payments under the guarantees. Thus no liability has been accrued for a loss related to the Group's obligation under these
+guarantee arrangements.
+(ii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB 17,050 million. At 31
+December 2018, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 12,168 million (2017: RMB 13,520 million).
+Environmental contingencies
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect management's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature
+and extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development
+areas, whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv)
+changes in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is
+indeterminable due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective
+actions that may be required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot
+reasonably be estimated at present, and could be material.
+The Group paid normal routine pollutant discharge fees of approximately RMB 7,940 million in the consolidated financial statements for the year
+ended 31 December 2018 (2017: RMB 7,851 million).
+Legal contingencies
+The Group is a defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business.
+Management has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any
+resulting liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+193
+Financial Statements (International)
+Note:
+194
+Others
+At 31 December 2018 and 2017, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+RMB million
+RMB million
+380
+205
+79
+83
+33
+32
+28
+Joint ventures
+Associates(ii)
+28
+28
+852
+882
+1,400
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+35 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+Contingent liabilities
+28
+1,017
+Financial Statements (International)
+for the year ended 31 December 2018
+Long-term prepaid expenses
+Deferred tax assets
+Total non-current assets
+Total assets
+Trade
+and other payables
+Advances received
+Employee benefits payable
+Tax payable
+Construction in progress
+Total current liabilities
+Net assets acquired
+Goodwill
+5,653
+641
+1,702
+558
+1,349
+761
+10,664
+9,587
+Deferred tax liabilities (Note 28)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Intangible assets
+Property, plant and equipment, net
+36 BUSINESS COMBINATION
+For the year ended 31 December 2018, significant business combination didn't occur in the Group.
+On 26 October 2017, a subsidiary of the Company, Gaoqiao Petrochemical Co., Ltd., purchased 50% equity interest in Shanghai SECCO from BP
+Chemicals East China Investment Limited with a cash consideration of RMB 10,135 million ("the Transaction"). Before the Transaction, the Company
+and one of its subsidiaries held 30% and 20% equity interest in Shanghai SECCO, respectively. After the Transaction, the Company, together with
+its subsidiaries, hold 100% equity interest of Shanghai SECCO, which became a subsidiary of the Company.
+Shanghai SECCO is principally engaged in the production and sale of petrochemical products including acrylonitrile, polystyrene, polyethylene, etc.
+Based on the purchase price allocation performed, details of the purchase consideration, the net assets acquired and goodwill are as follows:
+Purchase consideration:
+Acquisition Date (26 October 2017)
+- Cash consideration for the purchase of 50% equity interest acquired
+Acquisition-date fair value of the 50% equity interest held before the acquisition
+Total purchase consideration
+RMB million
+10,135
+Lease prepayments
+10,135
+Fair value at the
+Acquisition Date
+RMB million
+The assets and liabilities recognised as a result of the acquisition are as follows:
+Cash and cash equivalents
+Bills receivable
+Inventories
+Prepayments
+Other current assets
+Total current assets
+20,270
+196
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+for the year ended 31 December 2018
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+Exploration and production
+External sales
+Corporate and others
+93,499
+69,168
+95,954
+77,804
+189,453
+146,972
+148,930
+132,478
+Inter-segment sales
+1,109,088
+Turnover
+RMB million
+38 EMPLOYEE BENEFITS PLAN
+As stipulated by the regulations of the PRC, the Group participates in various defined contribution retirement plans organised by municipal and
+provincial governments for its staff. The Group is required to make contributions to the retirement plans at rates ranging from 13.0% to 20.0% of
+the salaries, bonuses and certain allowances of its staff. In addition, the Group provides a supplementary retirement plan for its staff at rates not
+exceeding 5% of the salaries. The Group has no other material obligation for the payment of pension benefits associated with these plans beyond
+the annual contributions described above. The Group's contributions for the year ended 31 December 2018 were RMB 9,296 million (2017: RMB
+8,981 million).
+39 SEGMENT REPORTING
+Segment information is presented in respect of the Group's business segments. The format is based on the Group's management and internal
+reporting structure.
+In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker for the purposes of
+resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been
+aggregated to form the following reportable segments.
+(i) Exploration and production, which explores and develops oil fields, produces crude oil and natural gas and sells such products to the refining
+segment of the Group and external customers.
+(ii) Refining, which processes and purifies crude oil, that is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(iii) Marketing and distribution, which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(iv) Chemicals, which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products mainly to
+external customers.
+2017
+RMB million
+(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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+39 SEGMENT REPORTING (Continued)
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and others businesses separately. The reportable segments are each managed separately because they manufacture and/or distribute
+distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for interest in associates and joint ventures, investments, deferred tax assets, cash and cash
+equivalents, time deposits with financial institutions and other unallocated assets. Segment liabilities exclude short-term debts, long-term debts,
+loans from Sinopec Group Company and fellow subsidiaries, income tax payable, deferred tax liabilities and other unallocated liabilities.
+Information of the Group's reportable segments is as follows:
+2018
+198
+state-controlled.
+874,271
+1,006,749
+10,533
+Refining
+5,389
+5,104
+Marketing and distribution
+32,424
+28,333
+Chemicals
+15,492
+10,738
+14,314
+Other operating revenues
+Turnover and other operating revenues
+1,523
+65,566
+2,891,179
+1,439
+59,723
+2,360,193
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+199
+Financial Statements (International)
+Corporate and others
+1,258,018
+Exploration and production
+2,300,470
+1,408,989
+5,224
+1,414,213
+1,191,902
+3,962
+1,195,864
+457,406
+73,835
+373,814
+49,615
+531,241
+423,429
+External sales
+Other operating revenues
+716,789
+Inter-segment sales
+650,271
+440,303
+1,367,060
+Elimination of inter-segment sales
+(1,934,372)
+973,411
+(1,445,955)
+Turnover
+2,825,613
+533,108
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+37 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+Trade accounts receivable and bills receivable
+Prepaid expenses and other current assets
+Long-term prepayments and other assets
+Total
+Trade accounts payable and bills payable
+Contract liabilities
+Other payables
+Other long-term liabilities
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Short-term loans and current portion of long-term loans from Sinopec Group Company
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Total
+31 December
+2018
+31 December
+2017
+RMB million
+RMB million
+7,555
+13,174
+7,665
+5,633
+and fellow subsidiaries
+23,482
+Financial Statements (International)
+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.
+37 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+(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) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(viii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(ix) Interest income represents interest received from deposits placed with Sinopec Finance Company Limited and Sinopec Century Bright Capital Investment Limited,
+finance companies controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate. The
+balance of deposits at 31 December 2018 was RMB 41,057 million (2017: RMB 47,514 million).
+(x) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(xi) The Group obtained loans, discounted bills and others from Sinopec Group Company and fellow subsidiaries.
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2018.
+The terms of these agreements are summarised as follows:
+On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Fifth Supplementary Agreement and the Fourth Revised Memorandum of land use rights leasing contract on August 24, 2018,
+which took effect on January 1, 2019 and made adjustment to “Mutual Supply Agreement”, “Agreement for Provision of Cultural and
+Educational, Health Care and Community Services", "Buildings Leasing Contract", "Intellectual Property Contract" and "Land Use Rights
+Leasing Contract" etc.,. The memorandum was effective since January 1, 2019. Sinopec Group Company agreed to lease 410 million square
+meters of land to the Company, and to adjust the total fee of land to about RMB 14 billion, according to the newly confirmed area of leasing
+land and the situation of land market.
+•
+•
+•
+The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+(1) the government-prescribed price;
+(2) where there is no government-prescribed price, the government-guidance price;
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(4) where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as described in the above
+Mutual Provision Agreement.
+The Company has entered into a series of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+•
+uses of public utilities.
+20,726
+39,533
+6,096
+5,768
+(c) Contributions to defined contribution retirement plans
+The Group participates in various defined contribution retirement plans organised by municipal and provincial governments for its staff. The
+details of the Group's employee benefits plan are disclosed in Note 38. As at 31 December 2018 and 2017, the accrual for the contribution to
+post-employment benefit plans was not material.
+2017
+197
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+424
+for the year ended 31 December 2018
+(d) Transactions with other state-controlled entities in the PRC
+The Group is a state-controlled energy and chemical enterprise and operates in an economic regime currently dominated by entities directly
+or indirectly controlled by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively
+referred as "state-controlled entities").
+Apart from transactions with Sinopec Group Company and fellow subsidiaries, the Group has transactions with other state-controlled entities,
+include but not limited to the followings:
+•
+sales and purchases of goods and ancillary materials;
+• rendering and receiving services;
+•
+lease of assets;
+• depositing and borrowing money; and
+37 RELATED PARTY TRANSACTIONS (Continued)
+38,702
+5,344
+2017
+17,530
+24,104
+3,273
+18,160
+20,990
+12,470
+10,165
+31,665
+25,311
+RMB'000
+42,516
+125,614
+123,890
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 29.
+The long-term borrowings mainly include an interest-free loan with a maturity period of 20 years amounting to RMB 35,560 million from the
+Sinopec Group Company (a state-owned enterprise) through the Sinopec Finance. This borrowing is a special arrangement to reduce financing
+costs and improve liquidity of the Company during its initial global offering in 2000.
+As at and for the year ended 31 December 2018, and as at and for the year ended 31 December 2017, no individually significant impairment
+losses for bad and doubtful debts were recognised in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates
+and joint ventures.
+(b) Key management personnel emoluments
+Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
+Group, directly or indirectly, including directors and supervisors of the Group. The key management personnel compensation is as follows:
+Short-term employee benefits
+Retirement scheme contributions
+2018
+RMB'000
+5,745
+351
+43,320
+31 December
+(iv)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+80,361
+96,923
+85,790
+29,028
+22,852
+60,010
+54,992
+723
+58,925
+7,162
+2017
+RMB million
+31 December
+31 December
+2018
+RMB million
+33 PROVISIONS
+Receipts in advance (Note 1 (a))
+Financial liabilities carried at amortised costs
+Taxes other than income tax
+Other payables
+7,312
+634
+Payables for constructions
+120,734
+276,582
+42,007
+(172)
+193
+(467)
+(598)
+1,501
+1,438
+1,627
+166,151
+36,918
+RMB million
+39,407
+1,567
+2017
+2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Accretion expenses
+Utilised for the year
+Exchange adjustments
+Balance at 31 December
+Provision for the year
+Balance at 1 January
+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:
+RMB million
+Interest payable
+Salaries and welfare payable
+32 OTHER PAYABLES
+177,224
+RMB million
+2017
+31 December
+170,818
+RMB million
+31 December
+2018
+The ageing analysis of trade accounts and bills payables are as follows:
+13,350
+Trade accounts and bills payables measured at amortised cost
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to associates and joint ventures
+Amounts due to third parties
+30 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+190
+Financial Statements (International)
+31 December
+2018
+Bills payable
+9,142
+6,381
+9,499
+As at 1 January 2018, the Group's contract liabilities was RMB 120,734 million, of which RMB 119,138 million was recognised as revenue in 2018.
+As at 31 December 2018, the Group's contract liabilities primarily represent advances from customers. Related performance obligations are
+satisfied and revenue is recognised within one year.
+31 CONTRACT LIABILITIES
+206,535
+192,757
+3,270
+3,324
+8,076
+195,189
+182,763
+6,670
+RMB million
+Between 1 month and 6 months
+Over 6 months
+Within 1 month or on demand
+31 December
+2017
+6,462
+206,535
+RMB million
+31 December
+2018
+200,073
+186,341
+6,416
+192,757
+39,407
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Trade and other receivables
+34 SHARE CAPITAL
+281,287
+10,428
+13,494
+10,552
+13,734
+10,730
+13,986
+11,492
+202,806
+14,668
+15,625
+RMB million
+RMB million
+31 December
+2017
+31 December
+2018
+Authorised and contracted for (i)
+Authorised but not contracted for
+At 31 December 2018 and 2017, the capital commitments of the Group are as follows:
+Capital commitments
+11,114
+Between four and five years
+Thereafter
+352,794
+31 December
+Between four and five years
+Thereafter
+for the year ended 31 December 2018
+Between three and four years
+Between two and three years
+Within one year
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB 231 million for the year ended 31 December 2018 (2017: RMB 308 million).
+Estimated future annual payments are as follows:
+Exploration licenses for exploration activities are registered with the Ministry of Natural Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual minimum exploration investment relating to the exploration blocks in respect of which the license
+is issued. The Ministry of Natural Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+Exploration and production licenses
+257,122
+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.
+(i) The investment commitments of the Group is RMB 5,553 million (2017: RMB 3,364 million).
+Note:
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+178,383
+195,437
+31 December
+2017
+RMB million
+120,386
+57,997
+141,045
+54,392
+2018
+RMB million
+Commitments to joint ventures
+Between three and four years
+Between one and two years
+Within one year
+Registered, issued and fully paid
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB 1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB 1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB 1.00 each at RMB 4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD 1.59 per H share and USD 20.645 per ADS,
+respectively, by way of a global initial public offering to Hong Kong and overseas investors. As part of the global initial public offering, 1,678,049,000
+state-owned ordinary shares of RMB 1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong Kong and
+overseas investors.
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB 1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB 1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB 1.00
+each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+121,071
+25,513
+121,071
+25,513
+95,558
+95,558
+RMB million
+RMB million
+2017
+31 December
+2018
+Between one and two years
+Between two and three years
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB 1.00 each at the Placing Price
+of HKD 8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD 24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.00.
+31 December
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+At 31 December 2018 and 2017, the future minimum lease payments of the Group under operating leases are as follows:
+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.
+The Group leases land and buildings, service stations and other equipment through non-cancellable operating leases. These operating leases do not
+contain provisions for contingent lease rentals. None of the rental agreements contains escalation provisions that may require higher future rental
+payments.
+Operating lease commitments
+35 COMMITMENTS AND CONTINGENT LIABILITIES
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+192
+Financial Statements (International)
+95,557,771,046 listed A shares (2017: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2017: 25,513,438,600) of RMB 1.00 each
+191
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 29 and 35, respectively.
+Management optimises the structure of the Group's capital, which comprises of equity and debts. In order to maintain or adjust the capital structure
+of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce debt, or adjust the
+proportion of short-term and long-term loans. Management monitors capital on the basis of the debt-to-capital ratio, which is calculated by dividing
+long-term loans (excluding current portion), including long-term debts and loans from Sinopec Group Company and fellow subsidiaries, by the total
+of equity attributable to shareholders of the Company and long-term loans (excluding current portion), and liability-to-asset ratio, which is calculated
+by dividing total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and
+investment needs and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a
+range considered reasonable. As at 31 December 2018, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 11.5% (2017: 12.0
+%) and 46.2% (2017: 46.5 %), respectively.
+Capital management
+Financial Statements (International)
+All A shares and H shares rank pari passu in all material aspects.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+Mainland China
+External sales
+The following tables set out information about the geographical information of the Group's external sales and the Group's non-current assets,
+excluding financial instruments and deferred tax assets. In presenting information on the basis of geographical segments, segment revenue is
+based on the geographical location of customers, and segment assets are based on the geographical location of the assets.
+211
+21,258
+16
+6,281
+4,922
+1,894
+675
+264
+353
+13,556
+4,274
+115,310
+109,967
+1,723
+1,374
+Singapore
+Others
+Non-current assets
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+1,797
+48,572
+1,027,901
+979,329
+2017
+RMB million
+31 December
+332,479
+2,360,193
+Others
+989,668
+50,892
+1,040,560
+2018
+2,119,580
+395,129
+376,470
+2,891,179
+1,758,365
+269,349
+RMB million
+2017
+2018
+RMB million
+Mainland China
+RMB million
+31 December
+42,155
+13,379
+(2) Geographical information
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Impairment losses on long-lived assets
+Corporate and others.
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Depreciation, depletion and amortisation
+Corporate and others.
+Chemicals
+201
+Marketing and distribution
+2018
+12,873
+2017
+RMB million
+15,463
+16,296
+18,408
+18,164
+66,843
+60,331
+99,384
+117,976
+2,398
+6,906
+23,028
+19,578
+21,539
+21,429
+21,075
+27,908
+31,344
+RMB million
+Financial Statements (International)
+100.00
+for the year ended 31 December 2018
+75.00
+RMB 3,986
+Sinopec Hainan Refining and Chemical
+15.00
+85.00
+RMB 5,000
+Sinopec Qingdao Refining and Chemical
+Company Limited
+25.00
+Limited Liability Company
+98.98
+RMB 5,294
+Sinopec Beihai Refining and Chemical
+100.00
+RMB 1,000
+Sinopec Chemical Sales Company Limited
+100.00
+1.02
+Company Limited
+Interests held
+by non-
+controlling
+interests %
+petrochemical products
+Marketing and distribution of
+Trading of petrochemical products
+Production and sale of catalyst products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+petrochemical products
+Trading of crude oil and
+oil, and petrochemical materials
+petroleum products, lubricant base
+chips and polyester fibres
+Production and sale of refined
+Investment in exploration, production
+and sale of petroleum and natural gas
+Production and sale of polyester
+Investment holding of overseas business
+petrochemical products and petroleum products
+Pipeline storage and transportation of crude oil
+Manufacturing of intermediate
+management, production and sale
+of coal chemical products
+Coal chemical industry investment
+Principal activities
+RMB 1,400
+China Petrochemical International Company
+Limited
+Refining
+RMB 1,500
+Sinopec Overseas Investment Holding
+Company Limited
+100.00
+RMB 12,000
+Sinopec Pipeline Storage & Transportation
+Limited
+100.00
+RMB 15,651
+Sinopec Yangzi Petrochemical Company
+Company %
+100.00
+(million)
+RMB 22,761
+Interests
+held by the
+Particulars
+of issued capital
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Name of company
+At 31 December 2018, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+40 PRINCIPAL SUBSIDIARIES
+USD 1,662
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+100.00
+Sinopec International Petroleum Exploration
+Sinopec Catalyst Company Limited
+100.00
+RMB 1,595
+Sinopec Qingdao Petrochemical Company
+Limited
+100.00
+RMB 3,000
+China International United Petroleum and
+Chemical Company Limited
+100.00
+RMB 3,374
+Sinopec Lubricant Company Limited
+Liability Company
+100.00
+RMB 4,000
+Sinopec Yizheng Chemical Fibre Limited
+and Production Limited ("SIPL")
+100.00
+RMB 8,000
+Limited ("SOIH")
+Exploration and production
+94,170
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+40
+(3)
+- Exploration and production
+Aggregate investment income
+Investment (losses)/income
+13,974
+Aggregate share of profits from associates and joint ventures
+1,521
+1,814
+Corporate and others
+9,621
+6,298
+16,525
+Net finance costs
+Profit before taxation
+315
+RMB million
+2017
+31 December
+RMB million
+2018
+(1,560)
+86,697
+99,110
+1,001
+262
+1,871
+18
+920
+86
+596
+90
+43
+28
+- Chemicals
+2,945
+3,155
+989
+Total segment operating profit
+Elimination
+- Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+- Exploration and production
+By segment
+Operating (loss)/profit
+Result
+2017
+RMB million
+RMB million
+2018
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+39 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Share of profits from associates and joint ventures
+Assets
+- Exploration and production
+- Marketing and distribution
+109
+1,449
+2,598
+71,470
+82,264
+(1,655)
+(3,634)
+(4,484)
+(9,293)
+26,977
+27,007
+31,569
+23,464
+65,007
+54,827
+(45,944)
+(10,107)
+- Refining
+Capital expenditure
+Segment assets
+- Exploration and production
+Income tax payable
+55,338
+29,462
+Short-term debts
+518,172
+539,144
+Total segment liabilities
+6,699
+117,781
+- Corporate and others
+35,293
+37,413
+- Chemicals
+164,101
+159,536
+- Marketing and distribution
+144,216
+13,015
+Long-term debts
+51,011
+39 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+200
+742,614
+735,773
+Total liabilities
+25,188
+29,328
+Other unallocated liabilities
+6,466
+5,948
+68,631
+74,181
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+55,804
+99,568
+101,429
+103,809
+Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+- Refining
+1,254,771
+1,220,347
+170,045
+152,799
+158,472
+156,865
+309,727
+317,641
+273,123
+271,356
+343,404
+321,686
+Total segment assets
+- Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+Interest in associates and joint ventures
+-
+145,721
+Available-for-sale financial assets
+- Exploration and production
+Segment liabilities
+Liabilities
+1,595,504
+1,592,308
+Total assets
+27,835
+36,081
+165,004
+167,015
+Cash and cash equivalents, time deposits with financial institutions
+Other unallocated assets
+15,131
+21,694
+Deferred tax assets
+1,450
+Financial assets at fair value through other comprehensive income
+1,676
+131,087
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Manufacturing of intermediate petrochemical
+Shanghai Petrochemical
+2018
+Fujian Petrochemical
+Sinopec Kantons
+Shanghai SECCO (ii)
+Zhonghan Wuhan
+2017
+2018
+2017
+2017
+2017
+2018
+2017
+2018
+2017
+RMB million
+RMB million RMB million RMB million
+2018
+2018
+2017
+SIPL
+66,827
+63,006
+17,952
+15,215
+15,168
+14,262
+5,761
+4.930
+4,085
+3,788
+5,802
+5.989
+4,560
+3,941
+Summarised consolidated statement of comprehensive income
+Year ended 31 December
+Marketing Company
+2018
+RMB million
+Attributable to non-controlling interests
+RMB million
+RMB million
+3,272
+1,075
+5,336
+6,154
+1,576
+2,726
+1,065
+27,520
+1,046
+Total comprehensive income
+22,589
+26,986
+4.536
+396
+5.336
+6,153
+3,099
+22,046
+Profit for the year
+5,222
+RMB million
+RMB million
+RMB million RMB million
+RMB million
+RMB million
+Turnover
+1,443,698
+1,221,530
+5,037
+6,136
+107,689
+91,962
+5.261
+6,068
+1,398
+1,498
+26,320
+RMB million
+7,318
+8,469
+12,496
+12,895
+13,089
+12,301 12,797
+12.612
+13.598
+Non-current liabilities
+(2,086) (1,774)
+9.925
+(31,050)
+(10)
+(6)
+(688)
+(681)
+(132)
+(2,430)
+(1,698)
+(28,523)
+11,444
+19,577
+19,087
+Financial Statements (International)
+11,386
+8,944
+766
+616
+(2,513)
+(1,155)
+13
+7,304
+7,428
+417
+(2,339)
+Non-current assets
+261,062
+253,455
+38,020
+34,769
+(1,740)
+Net non-current assets
+258,976 251,681
+6.970
+9,504
+17,907
+18,485
+13,029
+11,259
+Attributable to owners of the Company
+141,244
+132,549
+5,266
+3,468
+15.295
+14,253
+5,761
+4,930
+6,165
+5,716
+12,105
+10,250
+1,576
+9,860
+28,515
+6,246
+19,077
+19,571
+10,756
+9,244
+12,763
+10,659
+10,603
+11,057
+12.612
+13,598
+Net assets
+208,071
+195.555
+23.218
+18,683
+30,463
+11,522
+products and petroleum products
+2,726
+1.146
+At
+Sinopec Kantons
+At
+At
+Fujian Petrochemical
+At
+At
+Shanghai Petrochemical
+At
+At
+Shanghai SECCO
+At
+SIPL
+At
+At
+Marketing Company
+Summarised consolidated balance sheet
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary that has non-
+controlling interests that are material to the Group.
+Summarised financial information on subsidiaries with material non-controlling interests
+40 PRINCIPAL SUBSIDIARIES (Continued)
+for the year ended 31 December 2018
+At
+At
+Zhonghan Wuhan
+At
+At
+130,861
+Current assets
+RMB million
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2018
+2018
+2017
+2018
+2017
+2018
+2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+156,494
+202
+50.00
+HKD 248
+Company Limited ("Zhonghan Wuhan")
+Sinopec Kantons Holdings Limited
+("Sinopec Kantons")
+65.00
+RMB 6,270
+Limited ("Shanghai SECCO") (Note 36)
+Sinopec-SK (Wuhan) Petrochemical
+Production and sale of petrochemical products
+32.40
+60.33
+67.60
+Shanghai SECCO Petrochemical Company
+Marketing and distribution of refined petroleum
+products
+("Marketing Company")
+29.58
+70.42
+RMB 28,403
+Sinopec Marketing Co. Limited
+RMB 7,801
+Gaoqiao Petrochemical Company Limited
+RMB 10,000
+55.00
+49.56
+45.00
+39.67
+35.00
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those returns through its power over the entity.
+Note:
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC. All of the above principal subsidiaries are limited companies.
+products and petroleum products
+intermediate petrochemical
+Manufacturing of plastics,
+Production, sale, research and development
+of ethylene and downstream byproducts
+Provision of crude oil jetty services and
+natural gas pipeline transmission services
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+50.00
+RMB 8,140
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+50.44
+RMB 10,824
+Sinopec Shanghai Petrochemical Company
+Limited ("Shanghai Petrochemical")
+Financial Statements (International)
+RMB million
+RMB million
+RMB million
+433
+1,004
+235
+658
+956
+Dividends paid to non-controlling interests
+3.964
+399
+9,544
+1.344
+600
+625
+104
+70
+1.191
+Summarised statement of cash flows
+1,616
+1,363
+788
+3,052
+3,099
+222
+17,134
+16,139
+726
+1.879
+2,730
+726
+1,879
+2,730
+Comprehensive income/(loss) attributable to
+non-controlling interests
+7,794
+9,033
+2,737
+(38)
+2.645
+Year ended 31 December
+Marketing Company
+2018
+2017
+11,602
+RMB million
+RMB million
+RMB million
+RMB million
+9,537
+1,196
+1,209
+992
+816
+19,866
+25,299
+19,555
+16,731
+RMB million
+RMB million
+RMB million
+RMB million
+2,750
+1,067
+1,636
+(181,766)
+SIPL
+Shanghai Petrochemical
+Fujian Petrochemical
+12,437
+(50,905) (56,126) 16,248
+Net current (liabilities)/ assets
+(3,975)
+(2,333)
+(2,351) (2,233) (4,174)
+(3,722)
+(376)
+(50)
+(10,922)
+(13,913)
+(7,118)
+(483)
+(212,620)
+Current liabilities
+RMB million
+31 December
+2018
+13,571
+Interest rate risk
+Other than the amounts as disclosed above, the amounts of other financial assets and liabilities of the Group are substantially denominated in the
+functional currency of respective entity within the Group.
+50
+million
+2017
+31 December
+172
+million
+2018
+31 December
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts. Debts bearing interest at variable rates and at fixed
+rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates of short-term and long-term
+debts, and loans from Sinopec Group Company and fellow subsidiaries of the Group are disclosed in Note 29.
+USD
+million
+2017
+31 December
+668
+million
+2018
+31 December
+Gross exposure arising from loans
+USD
+Included in short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries of the Group are the following amounts
+denominated in a currency other than the functional currency of the entity to which they relate:
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The
+Group's currency risk exposure primarily relates to short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries
+denominated in USD. The Group enters into foreign exchange contracts to manage its currency risk exposure.
+204
+Currency risk
+As at 31 December 2018, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables held
+constant, would decrease/increase the Group's net profit for the year by approximately RMB 424 million (2017: decrease/increase by approximately
+RMB 450 million). This sensitivity analysis has been determined assuming that the change of interest rates was applied to the Group's debts
+outstanding at the balance sheet date with exposure to cash flow interest rate risk. The analysis is performed on the same basis for 2017.
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products and
+chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the Group.
+The Group uses derivative financial instruments, including commodity futures and swaps, to manage a portion of this risk.
+RMB million
+Level 3
+Level 2
+Level 1
+Financial assets at fair value through profit or loss:
+Assets
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+At 31 December 2018
+•
+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.
+.
+Commodity price risk
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy defined in IFRS 7, ‘Financial Instruments: Disclosures', with the fair value of each financial instrument categorised in
+(i) Financial instruments carried at fair value
+Fair values
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+As at 31 December 2018, it is estimated that a general increase/decrease of USD 10 per barrel in basic price of derivative financial instruments,
+with all other variables held constant, would impact the fair value of derivative financial instruments, which would decrease/increase the Group's
+profit for the period by approximately RMB 197 million (2017: decrease/increase RMB 4,049 million), and increase/decrease the Group's other
+reserves by approximately RMB 6,850 million (2017: decrease/increase RMB 701 million). This sensitivity analysis has been determined assuming
+that the change in prices had occurred at the balance sheet date and the change was applied to the Group's derivative financial instruments at that
+date with exposure to commodity price risk. The analysis is performed on the same basis for 2017.
+As at 31 December 2018, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. As at 31 December 2018, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 7,844 million (2017: RMB 515 million) and derivative financial liabilities of RMB 13,568 million (2017: RMB 2,624
+million).
+•
+RMB million
+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.
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+4,439
+25,504
+68,950
+68,631
+Loans from Sinopec Group Company and fellow
+subsidiaries
+17,243
+32,316
+14,477
+56,562
+2,166
+66,202
+39,007
+55,804
+56,562
+55,338
+Short-term debts
+RMB million
+More than
+5 years
+More than 2
+years but less
+than 5 years
+RMB million
+year but less
+than 2 years
+RMB million
+on demand
+RMB million
+cash flow
+RMB million
+Long-term debts
+Market risk
+Derivatives financial liabilities
+2,665
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+206
+Financial Statements (International)
+Financial Statements (International)
+205
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Management believes that the Group's current cash on hand, expected cash flows from operations and available standby credit facilities from
+financial institutions will be sufficient to meet the Group's short-term and long-term capital requirements.
+17,243
+71,323
+2,665
+18,916
+497,837
+96,923
+96,923
+96,923
+485,896
+Other payables
+206,535
+206,535
+206,535
+Trade accounts payable and bills payable
+2,665
+390,355
+RMB million
+RMB million
+- Structured deposit
+31 December
+2018
+RMB million
+63,085
+62,656
+Fair value
+Carrying amount
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group that range from 2.76% to
+4.90% (2017: 1.79% to 4.90%). The following table presents the carrying amount and fair value of the Group's long-term indebtedness other
+than loans from Sinopec Group Company and fellow subsidiaries at 31 December 2018 and 2017:
+The disclosures of the fair value estimates, and their methods and assumptions of the Group's financial instruments, are made to comply
+with the requirements of IFRS 7 and IFRS 9 and should be read in conjunction with the Group's consolidated financial statements and related
+notes. The estimated fair value amounts have been determined by the Group using market information and valuation methodologies considered
+appropriate. However, considerable judgement is required to interpret market data to develop the estimates of fair value. Accordingly, the
+estimates presented herein are not necessarily indicative of the amounts the Group could realise in a current market exchange. The use of
+different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
+(ii) Fair values of financial instruments carried at other than fair value
+Fair values (Continued)
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+31 December
+2017
+RMB million
+79,738
+Financial Statements (International)
+Financial Statements (International)
+207
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+During the years ended 31 December 2018 and 2017, there was no transfer between instruments in Level 1 and Level 2.
+Management of the Group uses discounted cash flow model with inputted interest rate and commodity index, which were influenced by historical
+fluctuation and the probability of market fluctuation, to evaluate the fair value of the structural deposits classified as Level 3 financial assets.
+2,665
+2,665
+1,388
+1,388
+1,277
+1,277
+51,900
+51,196
+208
+183
+78,040
+42 ACCOUNTING ESTIMATES AND JUDGEMENTS
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 209
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2018 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+43 PARENT AND ULTIMATE HOLDING COMPANY
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised. Net
+realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated
+costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of the finished
+goods and raw materials, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were to be higher
+than estimated, the actual allowance for diminution in value of inventories could be higher than estimated.
+Allowance for diminution in value of inventories
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+Measurement of expected credit losses
+Property, plant and equipment, other than oil and gas properties, are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. Management reviews the estimated useful lives of the assets at least annually in order
+to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Group's historical
+experience with similar assets and take into account anticipated technological changes. The depreciation expense for future periods is adjusted if
+there are significant changes from previous estimates.
+Depreciation
+The Group has not developed an internal valuation model necessary to estimate the fair values of loans from Sinopec Group Company and
+fellow subsidiaries as it is not considered practicable to estimate their fair values because the cost of obtaining discount and borrowing rates for
+comparable borrowings would be excessive based on the Reorganisation, the Group's existing capital structure and the terms of the borrowings.
+Except for the above items, the financial assets and liabilities of the Group are carried at amounts not materially different from their fair values
+at 31 December 2018 and 2017.
+If circumstances indicate that the net book value of a long-lived asset may not be recoverable, the asset may be considered “impaired", and an
+impairment loss may be recognised in accordance with IAS 36 “Impairment of Assets". The carrying amounts of long-lived assets are reviewed
+periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for impairment
+whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a decline has
+occurred, the carrying amount is reduced to recoverable amount. For goodwill, the recoverable amount is estimated annually. The recoverable
+amount is the greater of the net selling price and the value in use. It is difficult to precisely estimate selling price because quoted market prices for
+the Group's assets or cash-generating units are not readily available. In determining the value in use, expected cash flows generated by the asset
+or the cash-generating unit are discounted to their present value, which requires significant judgement relating to level of sale volume, selling price,
+amount of operating costs and discount rate. Management uses all readily available information in determining an amount that is a reasonable
+approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of sale volume, selling
+price, amount of operating costs and discount rate.
+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.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated at least
+annually and take into account recent production and technical information about each field. In addition, as prices and cost levels change from
+year to year, the estimate of proved and proved developed reserves also changes. This change is considered a change in estimate for accounting
+purposes and is reflected on a prospective basis in relation to depreciation rates. Oil and gas reserves have a direct impact on the assessment of
+the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves estimates are revised
+downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration the
+anticipated method of dismantlement required in accordance with industry practices in similar geographic area, including estimation of economic
+life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are capitalised as oil and
+gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+The accounting for the exploration and production's oil and gas activities is subject to accounting rules that are unique to the oil and gas industry.
+There are two methods to account for oil and gas business activities, the successful efforts method and the full cost method. The Group has elected
+to use the successful efforts method. The successful efforts method reflects the volatility that is inherent in exploring for mineral resources in that
+costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include dry hole costs, seismic costs
+and other exploratory costs. Under the full cost method, these costs are capitalised and written-off or depreciated over time.
+Oil and gas properties and reserves
+42 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of such policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the consolidated financial statements. The
+significant accounting policies are set forth in Note 2. Management believes the following critical accounting policies involve the most significant
+judgements and estimates used in the preparation of the consolidated financial statements.
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the consolidated financial statements. Management bases the assumptions and estimates on historical experience and on
+various other assumptions that it believes to be reasonable and which form the basis for making judgements about matters that are not readily
+apparent from other sources. On an ongoing basis, management evaluates its estimates. Actual results may differ from those estimates as facts,
+circumstances and conditions change.
+Impairment for long-lived assets
+Total
+RMB million
+521
+183
+5,500
+- Derivative financial liabilities
+-
+Derivative financial liabilities:
+Liabilities
+35,069
+1,450
+1,323
+26,873
+7,013
+1,183
+8,071
+127
+7,887
+7,013
+874
+- Derivative financial assets
+Derivative financial assets:
+182
+182
+Equity investments, listed and at quoted market price
+25,550
+25,550
+Financial assets at fair value through other comprehensive income:
+Equity investments
+526
+5,500
+13,571
+343
+178
+178
+51,196
+51,196
+Total
+RMB million
+Level 3
+RMB million
+RMB million
+RMB million
+Level 2
+8,071
+Level 1
+Derivative financial liabilities:
+Liabilities
+- Derivative financial assets
+Derivative financial assets:
+- Listed
+Available-for-sale financial assets:
+- Structured deposit
+Financial assets at fair value through profit or loss:
+Assets
+At 31 December 2017
+· Derivative financial liabilities
+More than 1
+A 5 percent strengthening/weakening of RMB against the following currencies at 31 December 2018 and 2017 would have increased/decreased net
+profit for the year of the Group by the amounts shown below. This analysis has been determined assuming that the change in foreign exchange rates
+had occurred at the balance sheet date and had been applied to the foreign currency balances to which the Group has significant exposure as stated
+above, and that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2017.
+1
+68
+(165)
+(491)
+(134)
+2,070
+1,224
+790
+(1,199) 2,144
+1,080
+equivalents
+(390)
+Net increase/(decrease) in cash and cash
+525
+(3,676)
+(1,093)
+(1,551)
+(158)
+43
+(2,590)
+(3,507)
+243
+(5,419)
+(631)
+(16,499)
+7,206
+(70)
+-
+(7)
+14
+(230)
+244
+(253)
+141
+Effect of foreign currency exchange rate changes
+134
+64
+734
+7,205
+343
+717
+226
+5,441
+7,504
+3,045
+3,605
+14,373
+12,921
+Cash and cash equivalents at 1 January
+289
+20
+(32,084)
+Net cash (used in)/generated from
+6,659
+2.758
+3,467
+51,038
+24,825
+operating activities
+Net cash generated from/ (used in)
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+RMB million RMB million RMB million RMB million RMB million RMB million
+2017
+7,061
+2018
+2017
+Shanghai SECCO (ii)
+2018
+2017
+2018
+Sinopec Kantons
+2017
+2018
+2017
+2018
+2017
+Zhonghan Wuhan
+financing activities
+38
+738
+(2,415)
+(3,099)
+5,567
+(480)
+193
+648
+225
+(215)
+(2,401)
+Within
+year or
+(558)
+(2,211)
+8,339 (35,738)
+investing activities
+Net cash generated from/(used in)
+2.976
+3,308
+1,639
+3.766
+88
+968
+38
+4,096
+(14)
+(1,928)
+(1)
+75,207
+74,181
+15,792
+27,190
+16,938
+More than
+5 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+Within
+1 year or
+on demand
+RMB million
+30,123
+1,889
+61,809
+32,127
+51,011
+29,462
+fellow subsidiaries
+Loans from Sinopec Group Company and
+Long-term debts
+Short-term debts
+RMB million RMB million
+Carrying undiscounted
+amount cash flow
+31 December 2018
+Total
+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 current
+at the balance sheet date) and the earliest date the Group would be required to repay:
+30,123
+37,977
+3,741
+1,362
+2
+undiscounted
+Carrying
+amount
+contractual
+Total
+31 December 2017
+17,154
+30,931
+54,915
+356,257
+459,257
+446,772
+85,790
+85,790
+85,790
+Other payables
+192,757
+192,757
+192,757
+Trade accounts payable and bills payable
+13,571
+13,571
+Derivatives financial liabilities
+At 31 December 2018, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB 387,748
+million (2017: RMB 361,852 million) on an unsecured basis, at a weighted average interest rate of 3.87% per annum (2017: 3.40%). At 31
+December 2018, the Group's outstanding borrowings under these facilities were RMB 21,236 million (2017: RMB 56,567 million) and were included
+in debts.
+Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach in managing
+liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
+conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Management prepares monthly cash flow budget
+to ensure that the Group will always have sufficient liquidity to meet its financial obligations as they fall due. The Group arranges and negotiates
+financing with financial institutions and maintains a certain level of standby credit facilities to reduce the Group's liquidity risk.
+13,571
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+204
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 203
+(ii) The summarized consolidated statement of comprehensive income and the summarized statement of cash flow of Shanghai SECCO present the results from the
+acquisition date to 31 December 2017.
+64
+798
+7,205
+6,817
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+198
+92
+7,504
+8,742
+3,605
+5,993
+12.921
+14,142
+Cash and cash equivalents at 31 December
+Liquidity risk
+-
+226
+Overview
+343
+The Group has exposure to the following risks from its uses of financial instruments:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, investments, financial assets at fair
+value through profit or loss, derivative financial assets, bills receivable, trade accounts receivable, amounts due from Sinopec Group Company
+and fellow subsidiaries, amounts due from associates and joint ventures, financial assets at fair value through other comprehensive income and
+other receivables. Financial liabilities of the Group include short-term debts, loans from Sinopec Group Company and fellow subsidiaries, derivative
+financial liabilities, bills payable, trade accounts payable, amounts due to Sinopec Group Company and fellow subsidiaries, other payables and long-
+term debts.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+All of the entity's other receivables (Note 25) are considered to have low credit risk, and the loss allowance recognised during the period was
+therefore limited to 12 months expected losses. The Group considers 'low credit risk' for other receivables when they have a low risk of default
+and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+The detailed analysis of trade accounts receivables, based on which the Group generated its payment profile is listed in note 25.
+The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31 December 2018 or 1 January 2018,
+respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
+and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
+For trade accounts receivables, the group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
+expected loss allowance for all trade accounts receivables.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivables and other
+receivables.
+(ii) Impairment of financial assets
+To measure the expected credit losses, trade accounts receivables have been grouped based on shared credit risk characteristics and the days
+past due.
+for the year ended 31 December 2018
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
+obligations, and arises principally from the Group's deposits placed with financial institutions (including structured deposit) and receivables from
+customers. To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large financial institutions in
+the PRC with acceptable credit ratings. The majority of the Group's trade accounts receivable relate to sales of petroleum and chemical products
+to related parties and third parties operating in the petroleum and chemical industries. No single customer accounted for greater than 10% of
+total accounts receivable at 31 December 2018, except the amounts due from Sinopec Group Company and fellow subsidiaries. Management
+performs ongoing credit evaluations of the Group's customers' financial condition and generally does not require collateral on trade accounts
+receivable. The Group maintains an impairment loss for doubtful accounts and actual losses have been within management's expectations.
+(i) Risk management
+Credit risk
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management controls and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+The Board of Directors has overall responsibility for the establishment, oversight of the Group's risk management framework, and developing and
+monitoring the Group's risk management policies.
+• market risk.
+⚫ liquidity risk; and
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, trade accounts and bills receivables, derivative
+financial instruments, financial assets at fair value through profit or loss and other receivables, represent the Group's maximum exposure to
+credit risk in relation to financial assets.
+credit risk;
+793
+793
+724
+724
+40,354
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+917
+Financial Statements
+43,157
+213
+134
+858
+39,437
+42,299
+27,329
+42,433
+124
+39,437
+39,561
+134
+30,710
+30,844
+124
+27,453
+11,589
+12,108
+Supplemental Information on Oil and
+11,589
+12,108
+42,299
+Gas Producing Activities (Unaudited)
+73,447
+Financial Statements
+110,955
+6,136
+Other
+countries
+117,091
+5,037
+142,392
+147,429
+6,136
+67,311
+5,037
+84,532
+89,569
+Transfers
+43,644
+214
+43,644
+57,860
+2017
+RMB million
+Other
+countries
+China
+Total
+2018
+RMB million
+Other
+countries
+China
+Total
+Sales
+Revenues
+The Group
+Table III: Results of operations related to oil and gas producing activities
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+57,860
+China
+Total capitalised costs
+Other
+countries
+(39,500)
+4,718
+273,012
+277,730
+Net capitalised costs
+(618,593)
+(658,093)
+amortisation and impairment losses
+Accumulated depreciation, depletion,
+8
+42,061
+877,704
+919,765
+44,218
+891,605
+935,823
+41,389
+41,397
+8
+40,770
+40,778
+Uncompleted wells, equipments and facilities
+17
+42,036
+625,621
+210,694
+210,711
+17
+199,304
+199,321
+Production costs excluding taxes
+Supporting equipments and facilities
+(601,318)
+318,447
+(565,651)
+(35,667)
+312,053
+China
+Total
+2017
+RMB million
+2018
+RMB million
+exploration and development costs
+Total of the Group's and its equity method investments'
+of associates and joint ventures
+Share of costs of exploration and development
+Equity method investments
+Total costs incurred
+Development
+Exploration
+The Group
+Table II: Costs incurred in oil and gas exploration and development
+Total
+12,751
+324,804
+11,022
+273,012
+284,034
+6,357
+6,357
+6,304
+6,304
+investments' net capitalised costs
+Total of the Group's and its equity method
+and joint ventures
+Share of net capitalised costs of associates
+Equity method investments
+6,394
+312,053
+(47,227)
+43,587
+(1,274)
+"Net" reserves exclude royalties and interests owned by others and reflect contractual arrangements and obligation of rental fee in effect at the time of
+the estimate.
+Proved developed oil and gas reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and
+operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well.
+Proved oil and gas reserves are those quantities of oil and gas, which by analysis of geoscience and engineering data, can be estimated with reasonable
+certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods,
+and government regulation before contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain,
+regardless of whether the estimate is a deterministic estimate or probabilistic estimate. Due to the inherent uncertainties and the limited nature of
+reservoir data, estimates of underground reserves are subject to change as additional information becomes available.
+The Group's and its equity method investments' estimated net proved underground oil and gas reserves and changes thereto for the years ended 31
+December 2018 and 2017 are shown in the following table.
+Table IV: Reserve quantities information
+The results of operations for producing activities for the years ended 31 December 2018 and 2017 are shown above. Revenues include sales to
+unaffiliated parties and transfers (essentially at third-party sales prices) to other segments of the Group. Income taxes are based on statutory tax
+rates, reflecting allowable deductions and tax credits. General corporate overhead and interest income and expense are excluded from the results of
+operations.
+561
+(28,693)
+(28,132)
+3,687
+13,418
+17,105
+114
+114
+1,170
+1,170
+(347)
+(347)
+(667)
+(667)
+461
+461
+1,837
+1,837
+(3,628)
+(3,628)
+(4,075)
+(4,075)
+(1,243)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table IV: Reserve quantities information (Continued)
+2018
+667,657
+86
+90
+3
+148
+151
+40
+1,216
+1,256
+225
+90
+95
+Improved recovery
+158
+(1,243)
+160
+1,261
+1,293
+Beginning of year
+(oil) (million barrels)
+Proved developed and undeveloped reserves
+The Group
+Other
+countries
+China
+Total
+countries
+China
+Total
+Other
+2017
+Revisions of previous estimates
+(1,163)
+(1,163)
+(2,748)
+709
+Income tax expense
+(741)
+(28,693)
+(29,434)
+1,808
+13,418
+15,226
+(8,726)
+(8,726)
+(11,400)
+(11,400)
+(5,543)
+(74,856)
+709
+(80,399)
+(60,877)
+(62,832)
+(11,089)
+(11,089)
+(10,744)
+(10,744)
+Profit before taxation
+Taxes other than income tax
+and impairment losses
+Depreciation, depletion, amortisation
+Exploration expenses
+(1,334)
+(44,977)
+(46,311)
+(1,955)
+(45,953)
+Results of operation from producing activities
+13,418
+8,080
+8,080
+(2,748)
+(2,455)
+8,080
+9,530
+8,080
+9,530
+(2,455)
+9,530
+9,530
+results of operations for producing activities
+Total of the Group's and its equity method investments'
+associates and joint ventures
+15,935
+Share of profit for producing activities of
+Profit before taxation
+Taxes other than income tax
+and impairment losses
+Depreciation, depletion, amortisation
+Exploration expenses
+Production costs excluding taxes
+Sales
+Revenues
+Equity method investments
+447
+(28,693)
+1,188
+1,188
+(28,246)
+2,517
+Income tax expense
+44,193
+45,825
+695,724
+317,563
+288,877
+194,291
+178,936
+4,230
+Total equity
+Share capital
+Reserves
+Equity
+Total non-current liabilities
+Other long-term liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Provisions
+Long-term debts
+Non-current liabilities
+------------
+Total assets less current liabilities
+Net current (liabilities)/assets
+Total current liabilities
+Other payables
+Contract liabilities
+86,604
+84,418
+Trade accounts payable and bills payable
+967
+33,454
+3,214
+5,815
+Loans from Sinopec Group Company and fellow subsidiaries
+Derivative financial liabilities
+14,511
+Short-term debts
+Current liabilities
+(31,773)
+1,298
+642,726
+684,932
+2017
+RMB million
+RMB million
+The Company
+2018
+The reconciliation between the opening and closing balances of each component of the Group's consolidated reserves is set out in the
+consolidated statement of changes in equity. Details of the change in the Company's individual component of reserves between the beginning
+and the end of the year are as follows:
+(a) RESERVES MOVEMENT OF THE COMPANY
+44 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+210
+Financial Statements (International)
+566,247
+536,218
+445,176
+318,861
+415,147
+121,071
+121,071
+566,247
+536,218
+118,685
+106,508
+3,613
+5,310
+31,405
+33,094
+43,225
+40,904
+40,442
+27,200
+(a)
+Capital reserve
+257,104
+79,111
+Financial assets at fair value through other comprehensive income
+395
+Available-for-sale financial assets
+43,587
+16,094
+Interest in joint ventures
+15,579
+21,143
+Interest in associates
+245,156
+251,970
+Investment in subsidiaries
+50,046
+51,598
+Construction in progress
+329,814
+302,048
+Property, plant and equipment, net
+Non-current assets
+RMB
+RMB
+2017
+31 December
+31 December
+2018
+Note
+BALANCE SHEET OF THE COMPANY (Amounts in million)
+44 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+395
+Deferred tax assets
+11,021
+6,834
+73,442
+Prepaid expenses and other current assets.
+44,933
+4
+Inventories
+16,327
+2,313
+Dividends receivable
+37,766
+30,145
+Trade accounts receivable and bills receivable
+48,179
+22,500
+Financial assets at fair value through profit or loss
+Total current assets
+20,236
+72,309
+59,120
+683,634
+674,499
+14,072
+13.129
+Long-term prepayments and other assets
+6,916
+7,101
+Time deposits with financial institutions
+Cash and cash equivalents
+Current assets
+Total non-current assets
+Lease prepayments
+23,759
+651,531
+Balance at 1 January
+Balance at 31 December
+2018
+Note
+Effects of major differences between the net profit under CASs and the profit for the year under IFRS are analysed as follows:
+852,890
+856,535
+Total equity under IFRS*
+(1,180)
+(1,124)
+(i)
+Government grants
+854,070
+Shareholders' equity under CASS
+Adjustments:
+RMB million
+2017
+31 December
+2018
+RMB million
+857,659
+31 December
+Note
+Under CASS, safety production fund should be recognised in profit or loss with a corresponding increase in reserve according to PRC regulations.
+Such reserve is reduced for expenses incurred for safety production purposes or, when safety production related fixed assets are purchased, is
+reduced by the purchased cost with a corresponding increase in the accumulated depreciation. Such fixed assets are not depreciated thereafter.
+Under IFRS, payments are expensed as incurred, or capitalised as fixed assets and depreciated according to applicable depreciation methods.
+Effects of major differences between the shareholders' equity under CASS and the total equity under IFRS are analysed as follows:
+(II) SAFETY PRODUCTION FUND
+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.
+(I) GOVERNMENT GRANTS
+Other than the differences in the classifications of certain financial statements captions and the accounting for the items described below, there are no
+material differences between the Group's consolidated financial statements prepared in accordance with the accounting policies complying with 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:
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH CASS AND IFRS (UNAUDITED)
+(Unaudited)
+Financial Statements
+(Differences Between the CASS and IFRS)
+Financial Statements (International)
+211
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Net profit under CASS
+RMB million
+80,289
+2017
+RMB million
+70,294
+Property cost, wells and related equipments
+and facilities
+The Group
+Other
+countries
+China
+Total
+countries
+China
+Total
+2017
+RMB million
+2018
+RMB million
+Other
+Table 1: Capitalised costs related to oil and gas producing activities
+Tables | to VI of supplemental information on oil and gas producing activities set out below represent information of the Company and its consolidated
+subsidiaries and equity method investments.
+In accordance with "Accounting Standards Codification (ASC) Topic 932 Extractive Activities Oil and Gas", issued by the Financial Accounting
+Standards Board of the United States, “Rule 4-10 of Regulation S-X", issued by Securities and Exchange Commission (SEC), and in accordance with
+“Industrial Information Disclosure Guidelines for Public Company No.8 Oil and Gas Exploitation", issued by Shanghai Stock Exchange, this section
+provides supplemental information on oil and gas exploration and producing activities of the Group and its equity method investments at 31 December
+2018 and 2017, and for the years then ended in the following six separate tables. Tables I through III provide historical cost information under IFRS
+pertaining to capitalised costs related to oil and gas producing activities; costs incurred in oil and gas exploration and development; and results of
+operation related to oil and gas producing activities. Tables IV through VI present information on the Group's and its equity method investments'
+estimated net proved reserve quantities; standardised measure of discounted future net cash flows; and changes in the standardised measure of
+discounted cash flows.
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+445,176
+Annual Report 2018 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 2017 and 2018 which have been audited by PricewaterhouseCoopers.
+*
+70,418
+78,897
+Profit for the year under IFRS*
+(112)
+(2,357)
+126
+909
+110
+56
+(i)
+(ii)
+Government grants
+Safety production fund
+Others
+Adjustments:
+212
+Others
+415,147
+144,132
+117,000
+117,000
+Balance at 31 December
+117,000
+117,000
+Balance at 1 January
+Discretionary surplus reserve
+82,682
+86,678
+Balance at 31 December
+3,042
+3,996
+79,640
+82,682
+55,850
+55,850
+55,850
+55,850
+9,195
+9,201
+20
+9,175
+9,195
+6
+Appropriation
+Balance at 1 January
+Statutory surplus reserve
+Balance at 31 December
+Balance at 1 January
+Share premium
+Other reserves
+Balance at 1 January
+2,460
+2,438
+(15)
+(89)
+(507)
+(3,042)
+(3,996)
+30,488
+(32,689)
+(67,799)
+38,460
+183,321
+177,989
+Balance at 31 December
+Others
+Special reserve
+Appropriation
+177,989
+Distribution to owners (Note 13)
+Balance at 1 January
+Retained earnings
+2,460
+2,286
+Balance at 31 December
+89
+507
+Special reserve
+53
+(617)
+Cash flow hedges, net of deferred tax
+(120)
+(64)
+Share of other comprehensive loss of associates and joint ventures, net of deferred tax
+Profit for the year
+Extensions and discoveries
+14,822
+79
+Net changes in prices and production costs
+Sales and transfers of oil and gas produced, net of production costs
+The Group
+Table VI: Changes in the standardised measure of discounted cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+217
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+12,803
+222,844
+235,647
+15,993
+(13,012)
+(13,012)
+(9,803)
+(9,803)
+Standardised measure of
+discounted future net cash flows
+Net changes in estimated future development cost
+13,239
+12,555
+12,555
+Total of the Group's and its equity method
+investments' results of standardised measure
+of discounted future net cash flows
+307,456
+291,463
+13,239
+of cash flows
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Net changes in income taxes
+(28,894)
+48,778
+(12,462)
+20,909
+22,405
+5,747
+9,507
+20,608
+22,040
+29,799
+41,385
+(7,320)
+(5,468)
+7,487
+98,952
+(62,054)
+(88,802)
+2017
+RMB million
+Net changes for the year
+Equity method investments
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Net changes in estimated future development cost
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Previously estimated development costs incurred during the year
+Previously estimated development costs incurred during the year
+Accretion of discount
+Accretion of discount
+Net changes for the year
+Total of the Group's and its equity method investments' results of net changes for the year
+218
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+2018
+RMB million
+Net changes in income taxes
+(231)
+10% annual discount for estimated timing
+22,358
+(97,115)
+(97,082)
+(293)
+(126,617)
+(126,910)
+of cash flows
+10% annual discount for estimated timing
+215
+319,959
+320,174
+3,047
+418,080
+421,127
+Undiscounted future net cash flows
+(1,374)
+(1,374)
+(2,077)
+628,187
+11,149
+(287,914)
+(4,875)
+Future development costs
+(22,310)
+33
+(19,300)
+(24,999)
+(20,314)
+(4,685)
+Future income tax expenses
+(42,728)
+(40,651)
+(3,010)
+22,358
+Standardised measure of
+294,217
+26,251
+26,251
+Undiscounted future net cash flows
+(4,406)
+(4,406)
+(5,632)
+(5,632)
+Future income tax expenses
+(4,692)
+(4,692)
+(4,433)
+(4,433)
+Future development costs
+(12,131)
+(12,131)
+(12,462)
+Future production costs
+291,463
+2,754
+223,092
+222,844
+248
+Discounted future net cash flows attributable
+discounted future net cash flows
+to non-controlling interests
+1,239
+112
+112
+Equity method investments
+Future cash flows
+48,778
+1,239
+639,336
+(292,789)
+71,125
+(3,001)
+SINOPEC CORP
+Stock name
+Shanghai Stock Exchange
+A Shares:
+NAMES AND STOCK CODES
+PLACES OF LISTING OF SHARES, STOCK
+USA
+New York NY 10013
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+The US:
+Beijing, PRC
+Chaoyang District
+No.22 Chaoyangmen North Street,
+Board Secretariat
+China Petroleum & Chemical Corporation
+The PRC:
+A Shares:
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+Shanghai, PRC
+H Shares:
+Hong Kong Registrars Limited
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+: 600028
+Hong Kong
+The US:
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+United States of America
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+DEPOSITARY FOR ADRS
+REGISTRARS
+H Shares:
+ADRs:
+79
+: 00386
+New York Stock Exchange
+Stock code : SNP
+London Stock Exchange
+Stock code
+: SNP
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+Domestic Auditors: PricewaterhouseCoopers
+Address
+Overseas Auditors
+Address
+Zhong Tian LLP
+11th Floor
+PricewaterhouseCoopers,
+2 Corporate Avenue,
+202 Hu Bin Road,
+Huangpu District,
+Shanghai, PRC 200021
+PricewaterhouseCoopers
+: 22nd Floor,
+Prince's Building,
+Central, Hong Kong
+LEGAL ADVISORS
+Corporate Information
+219
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+London E14 5LB, U.K.
+Canada Square, Canary Wharf
+Citigroup Centre
+Hong Kong Stock Exchange
+Stock code
+Citibank, N.A.
+Postcode: 100020
+Beijing PRC
+No. 5, Dong San Huan Central Road
+Chaoyang District
+20th Floor, Fortune Financial Centre
+Haiwen & Partners
+People's Republic of China:
+The UK:
+14,945
+Beijing, PRC
+30/F, China World Office 2
+AUTHORISED REPRESENTATIVES
+Mr. Dai Houliang
+LEGAL REPRESENTATIVE
+Sinopec Corp.
+ENGLISH ABBREVIATION
+中国石化
+CHINESE ABBREVIATION
+China Petroleum & Chemical Corporation
+ENGLISH NAME
+中国石油化工股份有限公司
+STATUTORY NAME
+CORPORATE INFORMATION
+17,309
+71,809
+2,364
+684
+(621)
+(1,704)
+1,620
+2,479
+(196)
+(856)
+341
+Mr. Ma Yongsheng
+1,205
+688
+272
+206
+1,196
+967
+(366)
+818
+No. 1, Jian Guo Men Wai Avenue,
+Mr. Huang Wensheng
+Mr. Huang Wensheng
+Skadden, Arps, Slate, Meagher & Flom LLP
+U.S.A.:
+Central, Hong Kong
+15 Queen's Road
+23rd Floor, Gloucester Tower
+Herbert Smith Freehills
+Hong Kong:
+No change during the reporting period
+COPIES OF RELATIVE REPORTS
+INFORMATION DISCLOSURE AND PLACES FOR
+Hong Kong
+Wanchai
+1 Harbour Road
+Convention Plaza
+20th Floor, Office Tower
+PLACE OF BUSINESS IN HONG KONG
+:ir@sinopec.com
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zheng Baomin
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+No.22 Chaoyangmen North Street,
+Chaoyang District
+Beijing, PRC
+Postcode
+Tel.
+SECRETARY TO THE BOARD
+Fax
+E-mail addresses
+: 100728
+: 86-10-59960028
+: 86-10-59960386
+: http://www.sinopec.com/
+listco/
+Website
+(5,361)
+Stock code
+13,495
+985
+971
+971
+End of year
+724
+985
+985
+Beginning of year
+Proved undeveloped reserves
+6,000
+6,000
+5,822
+5,822
+End of year
+724
+985
+6,436
+6,000
+6,000
+Beginning of year
+Proved developed reserves
+6,985
+6,985
+6,793
+6,793
+End of year
+(909)
+(909)
+(974)
+(974)
+Production
+6,436
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+215
+Financial Statements
+4
+Proved undeveloped reserves
+End of year
+Proved developed reserves
+End of year
+Production
+Extensions and discoveries
+Improved recovery
+Beginning of year
+12
+Revisions of previous estimates
+306
+Beginning of year
+associates and joint ventures (oil) (million barrels)
+Proved developed and undeveloped reserves of
+Equity method investments
+countries
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Table IV: Reserve quantities information (Continued)
+769
+2018
+Total
+China
+Other
+countries
+Other
+Total
+China
+2017
+769
+680
+680
+1,244
+1,271
+Production
+(260)
+(249)
+(11)
+(264)
+(249)
+(15)
+End of year
+1,367
+1,339
+28
+1,293
+1,261
+32
+Non-controlling interest in proved developed and
+End of year
+40
+1,080
+1,120
+32
+1,124
+27
+1,156
+Proved developed reserves
+14
+14
+12
+12
+undeveloped reserves at the end of year
+Beginning of year
+5
+1,156
+1,124
+Extensions and discoveries
+72
+72
+142
+142
+Improved recovery
+(107)
+(107)
+(40)
+(40)
+Revisions of previous estimates
+7,160
+7,160
+6,985
+6,985
+Beginning of year
+reserves (gas) (billion cubic feet)
+32
+Proved undeveloped reserves
+Beginning of year
+137
+137
+136
+60
+136
+96
+95
+1
+137
+137
+Proved developed and undeveloped
+End of year
+(28)
+299
+273
+1,599
+327
+1,339
+1,666
+End of year
+336
+1,216
+1,552
+338
+1,261
+1,599
+Beginning of year
+(oil) (million barrels)
+Proved developed and undeveloped reserves
+12
+18
+82
+273
+273
+23
+33
+23
+| | |
+1,261
+18
+(4)
+(4)
+12
+12
+18
+12
+(2)
+306
+338
+(gas) (billion cubic feet)
+854,563
+868,058
+(381,893)
+Future production costs
+Future cash flows
+The Group
+2017
+RMB million
+Other
+countries
+China
+Total
+2018
+RMB million
+Other
+countries
+China
+Total
+The information provided does not represent management's estimate of the Group's and its equity method investments' expected future cash flows or
+value of proved oil and gas reserves. Estimates of proved reserve quantities are imprecise and change over time as new information becomes available.
+Moreover, probable and possible reserves, which may become proved in the future, are excluded from the calculations. The arbitrary valuation requires
+assumptions as to the timing and amount of future development and production costs. The calculations are made for the years ended 31 December
+2018 and 2017 and should not be relied upon as an indication of the Group's and its equity method investments' future cash flows or value of its oil
+and gas reserves.
+The standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with
+the requirements of "ASC Topic 932 Extractive Activities Oil and Gas", "SEC Rule 4-10 of Regulation S.X", and "Industrial Information Disclosure
+Guidelines for Public Company No.8 Oil and Gas Exploitation". Estimated future cash inflows from production are computed by applying the average,
+first-day-of-the-month price for oil and gas during the twelve-month period before the ending date of the period covered by the report to year-end
+quantities of estimated net proved reserves. Future price changes are limited to those provided by contractual arrangements in existence at the end
+of each reporting year. Future development and production costs are those estimated future expenditures necessary to develop and produce year-end
+estimated proved reserves based on year-end cost indices, assuming continuation of year-end economic conditions. Estimated future income taxes
+are calculated by applying appropriate year-end statutory tax rates to estimated future pre-tax net cash flows, less the tax basis of related assets.
+Discounted future net cash flows are calculated using 10% discount factors. This discounting requires a year-by-year estimate of when the future
+expenditure will be incurred and when the reserves will be produced.
+Table V: Standardised measure of discounted future net cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+216
+Beginning of year
+6,997
+6,985
+12
+7,178
+7,160
+Proved developed and undeveloped reserves
+18
+6,806
+6,793
+13
+6,997
+6,985
+12
+End of year
+(376,532)
+(30)
+8
+20
+5
+8
+4
+12
+12
+296
+306
+| | |
+|||||||||||||
+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
+261
+Beginning of year
+33
+38
+End of year
+Proved developed and undeveloped reserves of
+(28)
+associates and joint ventures (gas)
+Beginning of year
+Revisions of previous estimates
+Improved recovery
+Extensions and discoveries
+Production
+End of year
+(billion cubic feet)
+20
+(30)
+306
+12
+296
+|| | || | || | || | ||
+13
+12
+23
+13
+12
+23
+33
+13
+(3)
+=
+12
+2223m
+│| || | || | || || ||
+13
+273
+273
+261
+273
+33
+23
+299
+38
+12
+18
+(2)
+222 33
+-
+(3)
+33
+60
+By Order of the Board
+DOCUMENTS FOR INSPECTION
+Printed on environmentally friendly paper
+www.sinopec.com
+Beijing, China
+22 Chaoyangmen North Street, Chaoyang District,
+中國北京市朝陽區朝陽門北大街 22 號
+SINOPEC CORP.
+中国石油化工股份有限公司
+If there is any inconsistency between the Chinese
+and English versions of this annual report, the
+Chinese version shall prevail.
+Beijing, PRC, 22 March 2019
+Dai Houliang
+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
+Chairman
+a) The original copies of the 2018 annual report
+signed by Mr. Dai Houliang, the Chairman;
+The following documents will be available for
+inspection during normal business hours after
+22 March 2019 at the registered address of
+Sinopec Corp. upon requests by the relevant
+regulatory authorities and shareholders in
+accordance with the Articles of Association and
+the laws and regulations of PRC:
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+220
+Documents for Inspection
+b) The original copies of financial statements
+and consolidated financial statements as of
+31 December 2018 prepared under IFRS
+and CASS, signed by Mr. Dai Houliang,
+the Chairman, Mr. Wang Dehua, the Chief
+Financial Officer and head of the financial
+department of Sinopec Corp.;
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+The following table sets forth the sales volumes, average realised prices, and the respective percentage changes of the segment's four major
+refined oil products in 2018 and 2017, including breakdown in retail, direct sales and wholesale of gasoline and diesel:
+In 2018, the operating revenues of
+this segment was RMB 1,446.6 billion,
+representing an increase of 18.2% over
+2017, of which: the sales revenues of
+gasoline totaled RMB 693.1 billion,
+representing an increase of 18.9%
+compared with 2017; the sales revenues
+of diesel was RMB 509.0 billion,
+representing an increase of 13.3% over
+2017, and the sales revenues of kerosene
+was RMB 117.6 billion, representing an
+increase of 30.4% over 2017.
+(3) Marketing and Distribution Segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from
+the refining segment and third parties,
+conducting wholesale and direct sales to
+domestic customers and distributing oil
+products through the segment's retail
+and distribution network, as well as
+providing related services.
+In 2018, the operating profit of the
+segment totaled RMB 54.8 billion,
+representing a decline of RMB 10.2
+billion compared with 2017.
+The sales revenues of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock was
+RMB 203.5 billion, representing an
+increase of 18.2% over 2017.
+The sales revenues of chemical feedstock
+was RMB 150.6 billion, representing an
+increase of 27.2% over 2017.
+In 2018, the segment's operating
+expenses was RMB 1,208.6 billion,
+representing an increase of 27.6% over
+2017. This was mainly attributed to
+the increase in refinery throughput and
+procurement cost of crude oil.
+In 2018, the average processing cost
+for crude oil was RMB 3,548 per tonne,
+representing an increase of 27.9% over
+2017. Total crude oil processed was
+248.29 million tonnes (excluding volume
+processed for third parties), representing
+an increase of 7.8% over 2017. The total
+cost of crude oil processed was RMB
+880.8 billion, representing an increase of
+37.9% over 2017.
+In 2018, refining gross margin was RMB
+461 per tonne, representing a reduction
+of RMB 49 per tonne compared with
+2017. This is mainly due to the increased
+procurement cost of crude oil, as well
+as the narrowed gross margin of refined
+petroleum products other than gasoline,
+diesel, kerosene and chemical feedstock.
+2018
+In 2018, the unit refining cash operating
+cost (defined as operating expenses
+less the processing cost of crude oil
+and refining feedstock, depreciation and
+amortisation, taxes other than income
+tax and other operating expenses, then
+divided by the throughput of crude oil and
+refining feedstock) was RMB 180.2 per
+tonne, an increase of RMB 5.1 per tonne
+over 2017, mainly because of increased
+operating expenses resulted from quality
+upgrading of refined oil products as well
+as product mix optimisation.
+The sales revenues of kerosene was RMB
+101.2 billion, representing an increase of
+68.0% over 2017.
+The sales revenues of diesel was RMB
+361.4 billion, representing an increase of
+20.0% over 2017.
+2017
+2018
+20.5
+6,524
+5,412
+20.6
+Diesel
+84,865
+17,616
+89,146
+5,998
+5,039
+19.0
+Retail
+43,327
+44,736
+(4.8)
+Change (%)
+21,221
+12.9
+2017
+Change (%)
+Gasoline
+Retail
+88,076
+83,980
+4.9
+Direct sales and wholesale
+7,870
+13.4
+66,855
+66,364
+0.7
+8,296
+7,346
+6,941
+In 2018, sales revenues of gasoline
+was RMB 441.3 billion, representing an
+increase of 24.4% over 2017.
+1,592,308
+504,120
+Chemical feedstock
+3,527
+4,515
+31.3
+17,080
+22,418
+16.2
+4,962
+5,766
+3.3
+60,680
+62,676
+13.0
+6,538
+7,386
+10.1
+54,273
+59,746
+Change (%)
+2017
+2018
+Change (%)
+2017
+2018
+28.0
+Other refined petroleum products
+38,524
+4.3
+Kerosene
+Diesel
+Gasoline
+13.1
+2,929
+(24,929)
+(3.1)
+Average realised price (RMB/tonne)
+Year ended 31 December
+1,088,188
+1,066,455
+21,733
+735,773
+742,614
+(6,841)
+565,098
+579,446
+3,312
+4.5
+58,801
+61,439
+22.0
+3,204
+3,910
+36,951
+6,435
+5,588
+15.2
+Synthetic rubber
+4.2
+2,008
+2,093
+13.7
+700
+796
+(10.1)
+11,957
+10,750
+12.3
+1,138
+1,278
+13.5
+8,556
+Change
+9,712
+0.8
+1,304
+1,314
+Synthetic fibre
+6.0
+8,153
+8,646
+16.0
+13,215
+15,325
+Chemical fertiliser
+In 2018, the operating expenses of the
+chemicals segment was RMB 519.7
+billion, representing an increase of
+26.5% over 2017, mainly because of
+the significant increase in the price of
+externally procured raw materials as
+compared with the same period in 2017.
+In 2018, the segment seized the
+opportunities of high chemical margin,
+continuously optimised the structures
+of feedstock, product and facilities,
+strengthened the coordination among
+research, development, production
+and marketing, intensified allocation of
+resources, improved targeted marketing
+strategy, and achieved remarkable
+profits with increased sales volume of
+petrochemicals.
+In 2018, the operating profit of this
+segment was RMB 27.0 billion, achieving
+an increase as compared with 2017.
+2018
+31 December
+As of
+As of
+31 December
+Unit: RMB million
+Current assets was RMB 504.1 billion,
+representing a decrease of RMB 24.9
+billion compared with that of the end of
+2017, mainly becasue the financial assets
+at fair value through profit and loss
+and trade accounts receivable and bills
+receivable decreased by RMB 25.5 billion
+and RMB 19.8 billion respectively, as well
+as the prepayments and other current
+assets increased by RMB 13.1 billion.
+Non-current assets was RMB 1,088.2
+billion, representing an increase of RMB
+21.7 billion as compared with that of
+the end of 2017. This was mainly due
+to the depreciation and depletion of
+property, plant and equipment decreased
+As of 31 December 2018, the Company's
+total assets was RMB 1,592.3 billion,
+representing a decrease of RMB 3.2
+billion compared with that of the end of
+2017, of which:
+Total equity
+Non-controlling interests
+Reserves
+Share capital
+Total equity attributable to shareholders of the Company
+Non-current liabilities
+Synthetic resin
+Current liabilities
+Non-current assets
+Current assets
+Total assets
+The major funding sources of the Company are its operating activities and short-term and long-term loans. The major use of funds includes
+operating expenses, capital expenditures, and repayment of the short-term and long-term debts.
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+(1) Assets, liabilities and equity
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2017, the operating losses from
+corporate and others was RMB 9.3
+billion.
+In 2018, the operating expenses of
+corporate and others was RMB 1,377.9
+billion, representing an increase of 40.7%
+over 2017.
+revenues from crude oil and overseas
+refined oil products trading business,
+as well as the rapid growth of the
+petrochemicals business scale through
+Epec platform.
+In 2018, the operating revenues
+generated from corporate and others.
+was RMB 1,368.6 billion, representing
+an increase of 40.4% over 2017. This
+was mainly attributed to the increase in
+The business activities of corporate
+and others mainly consist of import
+and export business activities of the
+Company's subsidiaries, R&D activities of
+the Company, and managerial activities
+of headquarters.
+(5) Corporate and Others
+Total liabilities
+15.4
+6,047
+6,978
+Management's
+24
+and Analysis
+Management's Discussion
+23
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+32.1
+(3,196)
+2,251
+2,974
+0.3
+23,299
+23,372
+Discussion
+Fuel
+3,531
+4,562
+0.9
+25,555
+25,787
+Kerosene
+23.5
+4,486
+5,541
+(6.5)
+44,410
+41,537
+Direct sales and wholesale
+29.2
+2017
+1,595,504
+529,049
+and Analysis
+In 2018, the operating expenses of
+the segment was RMB 1,423.2 billion,
+representing an increase of RMB 230.5
+billion or 19.3% as compared with
+that of 2017. This was mainly due to
+the increase in refined oil products
+procurement price.
+8.9
+10,332
+11,252
+Synthetic fibre monomer and polymer
+12.7
+4,684
+5,281
+13.2
+46,351
+52,450
+Basic organic chemicals
+Change (%)
+2017
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+2018
+2017
+2018
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+The following table sets forth the sales volume, average realised prices and respective percentage changes of each of the segment's six major
+categories of chemical products in 2018 and 2017.
+The sales revenues generated by the
+segment's six major categories of
+chemical products (namely basic organic
+chemicals, synthetic resin, synthetic fibre
+monomer and polymer, synthetic fibre,
+synthetic rubber, and chemical fertiliser)
+totaled RMB 516.2 billion, representing
+an increase of 24.8% as compared with
+2017, and accounted for 94.4% of the
+operating revenues of the segment.
+In 2018, the operating revenue of the
+chemicals segment was RMB 546.7
+billion, representing an increase of 24.9%
+as compared with that of 2017, This was
+mainly due to increase in sales volume.
+and price of chemical products as a
+result of the Company's effort in actively
+expanding sales volume and market
+share, optimising product mix.
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment and
+third parties, producing, marketing and
+distributing petrochemical and inorganic
+chemical products.
+(4) Chemicals Segment
+In 2018, the operating profit of
+this segment was RMB 23.5 billion,
+representing a decrease of 25.7%
+compared with 2017.
+reinforcing the coordination of internal
+and external resources, constantly
+intensifying the market strategy of
+balancing profits and sales volume,
+and putting efforts to expand non-fuel
+business scale and profitability.
+In 2018, the segment actively coped
+with the fierce market competition by
+taking advantages of integrated business.
+and distribution network into full play,
+In 2018, the segment's marketing cash
+operating cost (defined as the operating
+expenses less purchase costs, taxes
+other than income tax, depreciation
+and amortisation, and then divided by
+the sales volume) was RMB 207 per
+tonne, representing an increase of 4.2%
+compared with that of 2017.
+Change (%)
+Sales Volume (thousand tonnes)
+Year ended 31 December
+Corporate and Others
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+External sales*
+Marketing and Distribution Segment
+26.6
+26.1
+1,011,853
+1,263,407
+Operating revenues
+23.0
+22.9
+874,271
+1,109,088
+Inter-segment sales
+5.8
+5.3
+3.6
+3.2
+137,582
+154,319
+External sales*
+4.1
+4.2
+157,505
+200,191
+2.0
+2.0
+1,441,413
+77,804
+1,220,235
+32.1
+437,743
+546,733
+1.3
+1.5
+49,615
+73,835
+16.5
+16.4
+10.2
+9.8
+388,128
+472,898
+External sales*
+Inter-segment sales
+Operating revenues
+Chemicals Segment
+32.2
+30.0
+1,224,197
+0.1
+0.1
+3,962
+5,224
+1,446,637
+Operating revenues
+Inter-segment sales
+51.7
+49.9
+29.9
+95,954
+3.4
+3.6
+(7) Profit attributable to shareholders of
+the Company was RMB 61.6 billion,
+representing an increase of 20.2% year
+on year.
+(6) Profit attributable to non-controlling
+interests was RMB 17.3 billion,
+representing an increase of RMB 1.9
+billion compared with 2017.
+(5) Income tax expense was RMB 20.2
+billion, representing an increase of 24.2%
+year on year, mainly due to the increase
+in profit and the decrease in exempt
+investment income.
+(3) Operating profit was RMB 82.3 billion,
+representing an increase of 15.1%
+compared with 2017. Loss from upstream
+business greatly reduced and downstream
+business achieved good profit under
+the fierce market competition, as the
+Company persistently centralised on
+value-oriented operation, focused on
+improving asset quality, increasing asset
+efficiency, and upgrading asset structure.
+(4) Profit before taxation was RMB 99.1
+billion, representing an increase of 14.3%
+compared with 2017.
+Other operating expense, net was RMB
+5.4 billion, decreased 67.6% over the
+same period of 2017. That was mainly
+due to the decrease in impairment during
+the year.
+Taxes other than income tax was RMB
+246.5 billion, representing an increase
+of 4.8% compared with 2017. That was
+mainly because of increased consumption
+tax as a result of the increase in the sales
+volume of refined oil products, as well
+as resource tax and special oil income
+levy increased resulting from increase in
+crude oil price.
+Personnel expenses was RMB 77.7
+billion, representing an increase of 3.8%
+over 2017.
+Exploration expenses was RMB 10.7
+billion, representing a decrease of 3.1%
+year on year. That was mainly due to
+the Company constantly reinforced the
+management of exploration investment,
+improved exploration success rate.
+Depreciation, depletion and amortisation
+was RMB 110.0 billion, representing a
+decrease of 4.6% compared with 2017.
+That was mainly due to the Company
+reinforced efficient exploration, enhanced
+profit-oriented production of refined
+reservoir with an emphasis on increasing
+proved reserves of crude oil and natural
+gas. Meanwhile, its depreciation and
+depletion decreased as a result of the
+Company's proved reserves increased in
+line with the increase in crude oil price.
+Selling, general and administrative
+expenses was RMB 65.6 billion,
+representing an increase of 1.0% over
+2017 as a result of the increase in R&D
+expenses.
+The Company's other purchasing
+expenses was RMB 580.7 billion,
+representing an increase of 23.8% over
+the same period of 2017. This was
+mainly due to the increase in prices of
+externally purchased oil related products
+in line with the increase in prices of
+crude oil.
+The Company's purchasing expense
+related to trading activities was RMB
+655.4 billion, representing an increase
+of 30.1% over the same period of 2017.
+This was mainly due to the increase in
+prices of externally purchased crude oil
+and refined oil products in the trading
+business.
+The Company's purchasing expenses
+of refined oil products was RMB 355.5
+billion, representing an increase of 18.3%
+over the same period of 2017. This was
+mainly due to the increase in prices of
+externally purchased refined oil products,
+which were in line with the increase in
+prices of crude oil.
+Crude oil purchasing expenses was RMB
+701.3 billion, representing an increase
+of 41.1% over the same period of 2017.
+Throughput of crude oil purchased
+externally in 2018 was 227.19 million
+tonnes (excluding the volume processed
+for third parties), representing an
+increase of 7.7% over the same period
+of 2017. The average cost of crude oil
+purchased externally was RMB 3,452 per
+tonne, representing an increase by 30.0%
+over 2017.
+Purchased crude oil, products and
+operating supplies and expenses was
+RMB 2,293.0 billion, representing an
+increase of 29.5% over the same period
+of 2017, accounting for 81.6% of the
+total operating expenses, of which:
+In 2018, the Company's operating
+expenses was RMB 2,808.9 billion,
+increased by 22.7% compared with 2017.
+The operating expenses mainly consisted
+of the following:
+(2) Operating expenses
+Chemical products sold by Chemicals
+Segment achieved external sales revenue
+of RMB 457.4 billion, representing an
+increase of 22.4% over 2017, accounting
+for 15.8% of the Company's total turnover
+and other operating revenues. This was
+mainly due to the increase in price and
+sales volume of chemical products, which
+resulting from the Company seized good
+market opportunities and strengthened
+the coordination between production and
+marketing to positively expand market
+share and trading scale.
+In 2018, petroleum products (mainly
+consisting of refined oil products and
+other refined petroleum products) sold
+by Refining Segment and Marketing and
+Distribution Segment achieved external
+sales revenues of RMB 1,557.9 billion
+(accounting for 53.9% of the Company's
+turnover and other operating revenues),
+representing an increase of 17.6%
+over 2017, mainly due to the increase
+in petroleum products' prices, as well
+as the Company actively coped with
+market challenge caused by resources
+oversupply, optimised production and
+operation with the market-oriented
+approach and maintained high utilisation
+rate. The sales revenue of gasoline,
+diesel and kerosene was RMB 1,318.1
+billion, representing an increase of
+17.6% over 2017, and accounting for
+84.6% of the total sales revenue of
+petroleum products. Turnover of other
+refined petroleum products was RMB
+239.8 billion, representing an increase of
+17.6% compared with 2017, accounting
+for 15.4% of the total sales revenue of
+petroleum products.
+Most crude oil and a small portion of
+natural gas produced by the Company
+were internally used for refining and
+chemical production, with the remaining
+sold to external customers. In 2018, the
+turnover from crude oil, natural gas and
+other upstream products sold externally
+amounted to RMB 93.5 billion, an
+increase of 35.2% over 2017. The change
+Iwas mainly due to the company seized
+opportunities of the prices increase in
+crude oil and natural gas to maintain
+steady crude oil production and rapidly
+expanded production of natural gas.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Discussion
+Management's
+(14,348)
+20
+20
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+2 RESULTS OF SEGMENT OPERATIONS
+2.1
+2.2
+79,701
+104,237
+Refining Segment
+Inter-segment sales
+External sales*
+Exploration and Production Segment
+Operating revenues
+(%)
+(%)
+(%)
+11.3
+(%)
+2017
+2018
+2017
+RMB million
+RMB million
+Operating revenues
+Year ended 31 December
+2018
+of inter-segment sales
+Year ended 31 December
+2018
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+As a percentage of
+consolidated operating
+revenue before elimination
+The following table shows the operating revenues by each segment, the contribution of external sales and inter-segment sales as a percentage
+of operating revenues before elimination of inter-segment sales, and the contribution of external sales as a percentage of consolidated operating
+revenues (i.e. after elimination of inter-segment sales) for the periods indicated.
+revenues.
+The Company manages its operations through four business segments, namely exploration and production segment, refining segment, marketing
+and distribution segment and chemicals segment, and corporate and others. Unless otherwise specified, the inter-segment transactions have not
+been eliminated from financial data discussed in this section. In addition, the operating revenue data of each segment include other operating
+2017
+11.5
+External sales*
+718,312
+40.7
+979,334
+1,377,876
+40.4
+974,850
+1,368,583
+0.1
+26,977
+27,007
+26.5
+410,766
+519,726
+24.9
+437,743
+546,733
+19.3
+(25.7)
+31,569
+18.2
+1,224,197
+1,192,628
+1,446,637
+1,423,173
+23,464
+Operating expenses
+Operating revenues
+Marketing and Distribution Segment
+(15.7)
+65,007
+(4,484)
+(1,655)
+Operating profit
+Chemicals Segment
+Operating revenues
+Operating expenses
+Operating profit
+Corporate and Others
+Operating revenues
+22
+22
+In 2018, the operating revenues of
+this segment was RMB 1,263.4 billion,
+representing an increase of 24.9% over
+2017. This was mainly attributed to the
+increase in products prices, as well as
+the Company's efforts in expanding the
+refinery throughput and increasing the
+sales volumes.
+Business activities of the refining
+segment include purchasing crude oil
+from third parties and the exploration
+and production segment of the Company,
+as well as processing crude oil into
+refined petroleum products. Gasoline,
+diesel and kerosene are sold internally to
+the marketing and distribution segment
+of the Company; part of the chemical
+feedstock is sold to the chemicals
+segment of the Company; and other
+refined petroleum products are sold
+externally to both domestic and overseas
+customers.
+(2) Refining Segment
+with 2017. By capturing the recovery of
+crude oil price, the segment reinforced
+efficient exploration, enhanced profitable
+production of refined reservoir, promoted
+stable production of crude oil, and
+rapidly expanded production of natural
+gas. By deducting the impairment losses
+on long-lived assets, the operating loss
+was RMB 5.8 billion.
+(9,293)
+(3,634)
+In 2018, the operating loss of the
+exploration and production segment was
+RMB 10.1 billion, representing a declined
+loss by RMB 35.8 billion as compared
+In 2018, the oil and gas lifting cost was
+RMB 796 per tonne, representing a year
+on year increase of 1.0%.
+assets decreased by RMB 9.3 billion
+year on year;
+Impairment losses on long-lived
+Depreciation, depletion and
+amortisation decreased by RMB 6.5
+billion year on year;
+27.6
+Procurement cost increased by RMB
+16.2 billion year on year, as a result
+of expansion of LNG business and
+increase in LNG price;
+Resource Tax and special oil income
+levy increased by RMB 2.8 billion
+year on year, as a result of increase
+in crude oil prices;
+.
+•
+•
+•
+In 2018, the operating expenses of
+this segment was RMB 210.3 billion,
+representing an increase of 3.4% over
+2017. That was mainly due to the
+following:
+In 2018, the segment sold 34.79 million
+tonnes of crude oil, representing a
+decrease of 1.5% over 2017. Natural
+gas sales volume was 26.25 billion cubic
+meters (bcm), representing an increase
+of 7.2% over 2017. Regasified LNG sales
+volume was 8.33 bcm, representing
+an increase of 72.9% over 2017. LNG
+sales volume was 2.856 million tonnes,
+representing an increase of 25.1% over
+2017. Average realised prices of crude
+oil, natural gas, Regasified LNG, and LNG
+were RMB 3,046 per tonne, RMB 1,410
+per thousand cubic meters, RMB 1,934
+per thousand cubic meters, and RMB
+3,779 per tonne, representing increase
+of 30.1%, 8.8%, 11.0%, and 23.7%
+respectively over 2017.
+In 2018, the operating revenues of
+this segment was RMB 200.2 billion,
+representing an increase of 27.1% over
+2017. This was mainly attributed to the
+rise of realised price of crude oil and
+natural gas as well as the expansion of
+natural gas and LNG business.
+(1) Exploration and Production Segment
+Most crude oil and a small portion of the
+natural gas produced by the exploration
+and production segment were used for
+the Company's refining and chemical
+production. Most of the natural gas and
+a small portion of crude oil were sold
+externally to other customers.
+Elimination of inter-segment (loss)/profit
+Operating loss
+Operating expenses
+Personnel expenses increased by RMB
+2.4 billion year on year;
+The following table sets forth the sales volumes, average realised prices and the respective changes of the Company's major refined oil products
+of the segment in 2018 and 2017.
+946,846
+Operating profit
+*. Other operating revenues are included.
+100.0
+100.0
+100.0
+100.0
+4,825,551
+3,806,148
+(1,934,372) (1,445,955)
+2,891,179
+2,360,193
+Turnover and other operating revenues
+Elimination of inter-segment sales
+inter-segment sales
+Operating revenue before elimination of
+25.6
+28.4
+974,850
+1,368,583
+Operating revenues
+11.6
+13.5
+440,303
+650,271
+Inter-segment sales
+22.6
+24.8
+14.0
+14.9
+534,547
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+21
+Management's Discussion
+and Analysis
+Operating expenses
+24.9
+1,011,853
+1,263,407
+(45,944)
+(10,107)
+3.4
+203,449
+210,298
+27.1
+157,505
+200,191
+1,208,580
+54,827
+Operating revenues
+Operating expenses
+Operating loss
+Operating revenues
+Exploration and Production Segment
+(%)
+Change
+2017
+RMB million
+Year ended 31 December
+2018
+RMB million
+The following table sets forth the operating revenues, operating expenses and operating profit by each segment before elimination of the inter-
+segment transactions for the periods indicated, and the percentage change of 2018 compared to 2017.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Discussion
+Management's
+Refining Segment
+170,675
+Profits and
+7,507
+Management's
+Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(2) Financial data prepared under CASS
+Total assets
+Non-current liabilities.
+Shareholders' equity
+December 2018
+RMB million
+As of 31
+As of 31
+December 2017
+Change
+RMB million
+Management's Discussion
+and Analysis
+1,595,504
+161,988
+7,563
+3,589
+1,592,308
+169,551
+857,659
+854,070
+At the end of 2018, the Company's total assets was RMB 1,592.3 billion, representing a decrease of RMB 3.2 billion compared with that of the
+end of 2017.
+At the end of 2018, the Company's non-current liabilities was RMB 169.6 billion, representing an increase of RMB 7.6 billion compared with that
+of the end of 2017.
+At the end of 2018, the shareholders' equity of the Company was RMB 857.7 billion, representing an increase of RMB 3.6 billion compared with
+that of the end of 2017.
+(3) The results of the principal operations by segments
+Segments
+Operation
+income
+RMB million
+Increase/
+(decrease) of
+operation
+income on
+(3,196)
+Operation cost
+RMB million
+27
+Net profit: In 2018, the net profit attributable to the equity shareholders of the Company was RMB 63.1 billion, representing an increase of RMB
+12.0 billion or 23.4% comparing with 2017.
+974,850
+(1,934,372)
+(1,445,955)
+2,891,179
+2,360,193
+(11,557)
+(47,399)
+53,703
+64,047
+24,106
+32,011
+25,970
+22,796
+Corporate and Others
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(8,151)
+Elimination of inter-segment sales
+(3,634)
+(1,655)
+Financial expenses, investment income, gains/(losses) from changes in fair value, asset disposal
+expense and other income
+21,037
+20,325
+Consolidated operating profit
+101,474
+86,965
+Net profit attributable to equity shareholders of the Company
+63,089
+51,119
+Operating profit: In 2018, the operating profit of the Company was RMB 101.5 billion, representing an increase of RMB 14.5 billion as
+compared with 2017.
+(3,160)
+1,368,583
+Gross profit
+margin* (%)
+basis (%)
+41.7
+(1.0)
+Elimination of inter-segment sales
+(1,934,372)
+(1,930,738)
+N/A
+N/A
+N/A
+N/A
+Total
+2,891,179
+2,401,013
+8.4
+22.5
+40.4
+27.0
+*.
+Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+28
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+5 THE CAUSE AND IMPACT OF THE CHANGE IN THE COMPANY'S ACCOUNTING POLICY
+Please refer to the note 3 in the financial statement complying with the PRC Accounting Standards for Business Enterprises (CASS).
+6 SIGNIFICANT CHANGES IN MAJOR ASSETS DURING THE REPORTING PERIOD
+During the reporting period, there are no significant changes in the Company's major assets.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+29
+29
+Management's Discussion
+and Analysis
+163,168
+(1.5)
+a year-on-year
+0.2
+1,368,583
+Increase/
+(decrease) of
+operation cost
+on a year-on-
+year basis (%)
+Increase/
+(decrease) of
+gross profit
+margin on a
+year-on-year
+basis (%)
+Exploration and Production
+Refining
+200,191
+165,444
+11.6
+27.1
+7.3
+15.1
+1,263,407
+952,577
+6.4
+24.9
+1,365,348
+35.4
+Marketing and Distribution
+1,446,637
+1,355,391
+6.1
+18.2
+20.2
+(1.5)
+Chemicals
+546,733
+492,991
+9.4
+27.7
+(1.7)
+Corporate and Others
+(2.2)
+437,743
+24.9
+Chemicals Segment
+In 2018, the net cash generated from
+operating activities of the company
+was RMB 175.9 billion, representing
+a decrease of RMB 15.1 billion as
+compared with 2017. Of which: profit
+before taxation increased by RMB
+12.4 billion, depreciation, depletion &
+amortization and assets impairment
+loss decreased by RMB 15.5 billion,
+accounts receivable and net change for
+other current assets decreased by RMB
+30.1 billion, net change for inventory
+decreased by RMB 25.6 billion, accounts
+payable and net change for other current
+liabilities decreased by RMB 57.1 billion,
+and the paid income tax increased by
+RMB 13.0 billion as compared with 2017.
+In 2018, the net cash used in investing
+activities was RMB 66.4 billion,
+representing a decrease of RMB 78.9
+billion over 2017. Of which: capital
+expenditure increased by RMB 31.2
+billion, income from the change of
+structured deposit increased by RMB
+76.6 billion, outcome from in time
+deposit with maturities over three months
+decreased by RMB 30.5 billion.
+In 2018, the net cash used in the
+Company's financing activities was RMB
+111.3 billion, representing an increase
+of cash out flow by RMB 54.8 billion
+over 2017. This was mainly due to the
+cash paid for dividends increased by
+RMB 35.1 billion, cash repayments
+of borrowings increased by RMB 13.9
+billion, and distributions by subsidiaries
+to non-controlling interests increased by
+RMB 6.2 billion.
+At the end of 2018, the cash and cash
+equivalents was RMB 111.9 billion.
+(3) Contingent Liabilities
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+"Significant Events" section of this report.
+(4) Capital Expenditures
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+Year ended 31 December
+2018
+175,868
+(66,422)
+(111,260)
+2017
+190,935
+(145,323)
+(56,509)
+(5) Research & development and
+environmental expenditures
+R&D expenditures occurred in the period
+including R&D expenses, expenditures
+for wildcat exploration, seismic data
+interpretation, and pilot demonstration
+project in upstream, expenditures for
+pilot test and relevant utilities of initial
+commercial trial in refining segment,
+as well as expenditures for research
+equipment. In 2018, the expenditures for
+R&D was RMB 12.876 billion, of which
+expense was RMB 7.96 billion (In 2017,
+the expenditures for R&D was RMB
+11.533 billion, of which expense was
+RMB 6.423 billion).
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2018, the Company paid
+environmental expenditures of RMB 7.94
+billion.
+(6) Measurement of fair values of derivatives
+and relevant system
+The Company has established sound
+decision-making mechanism, business
+process and internal control systems
+relevant to financial instrument
+accounting and information disclosure.
+Net cash used in investing activities
+Net cash used in financing activities
+26
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Items relevant to measurement of main fair values
+Unit: RMB million
+End of
+Beginning
+Items
+last year
+of the year
+the year
+End of
+losses from
+variation of fair
+values in the
+current year
+Accumulated
+variation of fair
+values recorded
+as equity
+Impairment
+loss provision
+26
+of the
+current year
+Net cash generated from operating activities
+Unit: RMB million
+546,733
+717,284
+726,120
+(8,836)
+121,071
+121,071
+596,213
+605,049
+(8,836)
+139,251
+126,770
+12,481
+852,890
+3,645
+Major items of cash flows
+by RMB 33.0 billion, construction in
+progress increased by RMB 18.3 billion.
+Equity of associates and joint ventures
+increased by RMB 9.8 billion, deferred
+tax assets increased by RMB 6.6 billion,
+lease prepayments increased by RMB 6.0.
+billion, long-term prepayment and other
+assets increased by RMB 9.4 billion.
+Current liabilities was RMB 565.1 billion,
+representing a decrease of RMB 14.3
+billion as compared with that of the
+end of 2017. This was mainly due to
+the short-term debts and loans from
+Sinopec Group decreased by RMB 19.5
+billion, derivative financial liabilities
+and liabilities from contracts and other
+payables increased by RMB 10.9 billion
+856,535
+and RMB 14.4 billion respectively, trade
+accounts payable and bills payable and
+taxes payable decreased by RMB 13.8
+billion and RMB 6.3 billion respectively.
+Non-current liabilities was RMB 170.7
+billion, representing an increase of RMB
+7.5 billion compared with that of the end
+of 2017. This was mainly due to long-
+term debts decreased by RMB 4.8 billion,
+provisions increased by RMB 2.8 billion,
+and other non-current liabilities increased
+by RMB 10.8 billion.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+25
+Management's Discussion
+and Analysis
+Management's
+Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(2) Cash Flow
+The following table sets forth the major items in the consolidated cash flow statements for 2018 and 2017.
+The Company's total liabilities was RMB
+735.8 billion, representing a decrease of
+RMB 6.8 billion compared with that of
+the end of 2017, of which:
+Financial assets at fair value through
+Total equity attributable to owners of
+the Company was RMB 717.3 billion,
+representing a decrease of RMB 8.8
+billion compared with that of the end
+of 2017, which was mainly due to the
+capital reserve was RMB 596.2 billion,
+representing a decrease of RMB 8.8
+billion. Minority interests was RMB 139.3
+billion, representing an increase of RMB
+12.5 billion.
+51,196
+(12,553)
+Funding
+source
+_ Self-owned fund
+Self-owned fund
+Self-owned fund
+Self-owned fund
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+The major differences between the Company's financial statements prepared under CASS and IFRS are set out in Section C of the financial
+statements of the Company on page 212 of this report.
+(1) Under CASs, the operating income and operating profit or loss by reportable segments were as follows:
+Operating income
+Exploration and Production Segment
+Year ended 31 December
+2018
+RMB million
+(902)
+200,191
+Refining Segment
+Marketing and Distribution Segment
+1,263,407
+1,446,637
+1,224,197
+Refining Segment
+Chemicals Segment
+Corporate and Others
+Elimination of inter-segment sales
+Consolidated operating income
+Operating (loss)/profit
+Exploration and Production Segment
+profit or loss of the reporting period
+Marketing and Distribution Segment
+2017
+RMB million
+21,498
+157,505
+1,011,853
+49,235
+Stock
+178
+Available for sale financial assets
+5
+182
+Stock
+178
+25,550
+51,196
+Structured Deposit
+885
+50,733
+51,196
+25,732
+51,196
+Derivative financial instruments
+880
+(522)
+(12,500)
+(53)
+(522)
+Total
+1,676
+1,450
+(1,978)
+(7,268)
+Other equity instruments investment
+(1,617)
+(1,617)
+Cash flow hedges
+191
+1,584
+Transaction date
+(date of signing)
+25-May-16
+Zhongtian Hechuang
+The listed
+completed
+Amount
+company
+Company
+12,168
+Guarantor
+Sinopec Corp.
+Whether
+connected
+Amount of
+Whether
+Name of
+Relationship
+with the
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+for
+overdue
+Whether
+guaranteed
+Unit: RMB million
+guaranteed
+overdue Counter-
+No
+Period of guarantee
+18 April 2018-31
+18-Apr-18
+7 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+5,033
+Zhong An United Coal
+The listed
+company itself
+Sinopec Corp.
+mature date is estimated)
+guarantee
+Yes
+No
+No
+Joint liability
+25 May 2016-31
+December 2023 (the
+Energy Co., Ltd
+company itself
+or no)"¹
+guarantee guaranteed
+or not
+or not
+Туре
+parties yes
+SIGNIFICANT EVENTS (CONTINUED)
+6
+38
+of the completion of such acquisition, after a thorough
+analysis from political, economic and other perspectives,
+Sinopec Corp. is entitled to require China Petrochemical
+Corporation to sell these assets to Sinopec Corp. China
+Petrochemical Corporation undertakes to transfer the
+assets as required by Sinopec Corp. under aforesaid
+Given that China Petrochemical Corporation engages in
+the same or similar businesses as Sinopec Corp. with
+regard to the exploration and production of overseas
+petroleum and natural gas, China Petrochemical
+Corporation hereby grants a 10-year option to Sinopec
+Corp. with the following provisions: (i) after a thorough
+analysis from political, economic and other perspectives,
+Sinopec Corp. is entitled to require China Petrochemical
+Corporation to sell its overseas oil and gas assets
+owned as of the date of the undertaking and still in its
+possession upon Sinopec Corp.'s exercise of the option
+to Sinopec Corp.; (ii) in relation to the overseas oil and
+gas assets acquired by China Petrochemical Corporation
+after the issuance of the undertaking, within 10 years
+Abandonment of business competition and conflicts
+of interest with Sinopec Corp.
+Granting licenses for intellectual property rights;
+Avoiding competition within the same industry;
+5
+4
+3 Implementation of the Reorganisation Agreement
+(please refer to the definition of Reorganisation
+Agreement in the H share prospectus of Sinopec
+Corp.);
+2 Solving the issues regarding the legality of land-
+use rights certificates and property ownership rights
+certificates within a specified period of time;
+Compliance with the connected transaction
+agreements;
+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.
+China Petrochemical
+Corporation
+Other undertakings
+China Petrochemical 1
+Corporation
+Public Offerings (IPOs)
+Contents
+Party
+Undertaking
+IPOs
+Undertakings related to Initial
+Joint liability
+Background
+Other
+Whether bears
+Whether strictly
+deadline or not
+38
+Significant Events
+37
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+During the reporting period, there is no
+significant assets or equity sale of the
+Company.
+6 SIGNIFICANT ASSETS AND EQUITY SALE
+For details of the transaction, please refer
+to the announcements published in China
+Securities Journal, Shanghai Securities,
+News Securities Times and the websites of
+Shanghai Stock Exchange on 11 July 2018
+and on the website of Hong Kong Stock
+Exchange on 10 July 2018.
+Pursuant to Chapter 14A of the Hong
+Kong Listing Rules, China Petrochemical
+Corporation, the controlling shareholder of
+Sinopec Corp., is a connected person of the
+Company. Therefore, the transaction between
+Sinopec Corp. and China Petrochemical
+Corporation constituted a connected
+transaction under the Hong Kong Listing
+Rules.
+registered capital of Sinopec Capital. Sinopec
+Corp. and China Petrochemical Corporation
+shall pay all their respective capital
+contribution to Sinopec Capital no later than
+31 December 2020. Upon the establishment
+of Sinopec Capital, its investments will
+focus on strategic emerging industries,
+including new energy, new material, energy
+conservation and environmental protection,
+and intelligence manufacturing in relation
+to the industry chain. In respect of the
+investment projects which are related to
+Sinopec Corp.'s principal business, Sinopec
+Corp. will have the right of first refusal to
+acquire such projects. The formation of
+Sinopec Capital will speed up investments
+in emerging industries and help support
+Sinopec Corp.'s own business development
+and industrial chain upgrade. It will play an
+important role in achieving comprehensive,
+sustainable and high-quality development of
+Sinopec Corp.
+On 9 July 2018, Sinopec Corp. entered
+into the Articles of Association (Sinopec
+Capital AOA) of Sinopec Capital Co., Ltd.
+(Sinopec Capital) with China Petrochemical
+Corporation. Pursuant to Sinopec Capital
+AOA, Sinopec Corp. proposed to establish
+Sinopec Capital with China Petrochemical
+Corporation with a registered capital of
+RMB 10 billion, of which, Sinopec Corp.
+will subscribe capital contribution of RMB
+4.9 billion by cash, representing 49% of
+the registered capital of Sinopec Capital;
+and China Petrochemical Corporation will
+subscribe capital contribution of RMB 5.1
+billion by cash, representing 51% of the
+5 SIGNIFICANT EQUITY INVESTMENT
+As of the date of this report, Sinopec Corp.
+had no undertakings in respect of financial
+performance, asset injections or asset
+restructuring that had not been fulfilled, nor
+did Sinopec Corp. make any profit forecast
+in relation to any asset or project.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+36
+Yes
+Yes
+Within 10 years after 29 April
+2014 or the date when China
+Petrochemical Corporation acquires
+the assets
+Term for performance
+performed or not
+Yes
+No
+From 22 June 2001
+Significant Events
+No
+No significant litigation, arbitration relating
+to the Company occurred during the report
+period.
+No
+During the reporting period, the Company
+and its controlling shareholder did not have
+any unperformed court's effective judgments
+which should be performed or any large
+amount of debt which should be repaid.
+FACTO CONTROLLER
+CONTROLLING SHAREHOLDERS AND DE
+12 CREDIBILITY FOR THE COMPANY,
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any significant
+contracts subject to disclosure obligations
+during the reporting period.
+11 OTHER MATERIAL CONTRACTS
+10 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+9 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO THE COMPANY
+Sinopec Corp. shall continue to strengthen
+its management and actively monitor
+guarantee risks. It shall strictly follow the
+approval and disclosure procedures in
+relation to guarantee businesses for any new
+external guarantees provided thereafter.
+13 TRUSTEESHIP, CONTRACTING AND LEASES
+During the reporting period, the Company
+was not involved in any events relating to
+significant trusteeship, contracting or leases
+for the assets of any other company, nor has
+it placed its assets with any other company
+under a trusteeship, contracting or lease
+agreement subject to disclosure obligations.
+We hereby present the following opinions:
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING EXTERNAL
+GUARANTEES PROVIDED BY THE COMPANY
+DURING AND BY THE END OF 2018:
+We, as independent directors of Sinopec
+Corp., hereby make the following statements
+after conducting a thorough check of external
+guarantees provided by the Company
+accumulated up to and during 2018 in
+accordance with the requirements of the
+domestic regulatory authorities:
+8 SPECIFIC STATEMENTS AND
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+*2: The amount of guarantees provided during the reporting period and the outstanding balance of guarantees amount at the end of the reporting period include the
+guarantees provided by the controlled subsidiaries to external parties. The amount of the guarantees provided by these subsidiaries is derived from multiplying the
+guarantees provided by Sinopec Corp.'s subsidiaries by the percentage of shareholding of Sinopec Corp. in such subsidiaries.
+None
+None
+2,771
+None
+2,771
+The external guarantees prior to 2018 had
+been disclosed in previous annual report.
+The aggregate balance of external guarantees
+provided by Sinopec Corp. for the year
+2018 was RMB 33.11 billion, accounting for
+approximately 4.61% of the Company's net
+assets.
+14 ENTRUSTED ASSET MANAGEMENT AND ENTRUSTED LOANS
+(1) Entrusted Asset Management
+During the reporting period, the Company has no entrusted asset management subject to disclosure obligation.
+Type of
+Significant Events
+39
+None
+None
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+During the reporting period, the Company has no other asset management or derivative investment subject to disclosure obligation.
+(3) Other asset management and derivative investment
+amount
+Overdue and
+uncollected
+Unit: RMB billion
+0.381
+balance
+0.5744
+0.1244
+0.154
+Amount
+Outstanding
+Source of fund
+Self-owned fund
+Self-owned fund
+Used for working capital
+Used for project construction.
+Categories
+(2) Entrusted loans
+4.61%
+33,110
+11,951
+5,033
+21,159
+Limited
+guarantee
+Company(YASREF)
+YASRFE requires supply guarantee
+amount agreed,
+Sinopec Refining
+company itself
+No
+No
+No
+Joint liability
+30 years from the date
+31-Dec-14
+No specific
+Yanbu Aramco
+The listed
+Sinopec Corp.
+guarantee
+December 2031
+Chemical Co., Ltd.
+No
+on contract
+No
+of hydrogen from Air
+Liquide Arabia LLC.
+SSI
+*1: As defined in the Listing Rules of the Shanghai Stock Exchange.
+Statement of guarantee status
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Total amount of the above three guarantee items (C+D+E)
+The amount of guarantees in excess of 50% of the net assets (E)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets
+Total amount of guarantees(A+B)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Guarantees by the Company to the controlled subsidiaries
+Total amount of guarantees outstanding at the end of reporting period *2 (A)
+Total amount of guarantees provided during the reporting period *2
+Sonangol E.P./SSI15
+No No - Yes_______No
+Joint liability
+guarantee
+Development Ltd./
+New Bright International 7,197
+Controlled
+subsidiary
+performance
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+No
+1.33
+EBITDA to total debt ratio
+Mainly due to the decrease of financial leverage by
+lowering debts compared with last year
+(0.33)
+percentage
+points
+46.47
+46.14
+Liability-to-asset ratio (%)
+Mainly due to the decrease of account receivable,
+and cash caused by the increase of dividend
+compared with last year
+(0.02)
+Interest coverage ratio
+0.59
+Quick ratio
+Mainly due to the decrease of account receivable
+and inventories compared with last year
+Mainly due to the increase of earnings compared
+with last year
+Reasons for change
+0.91
+0.89
+Current ratio
+Change
+8,824
+2017
+207,528
+0.57
+16.76
+1.11
+14.60
+0.22
+Pursuant to the requirements of the Hong
+Kong Listing Rules, the resolution relating to
+the Shanghai Petro A Share Option Incentive
+Scheme (Draft) was considered and passed
+at the 18th meeting of the fifth session
+of the Board of Directors and the first
+extraordinary general meeting of Sinopec
+Corp. for 2014. The Scheme came into effect
+on 23 December 2014 with a validity period
+of 10 years. The expiry date of the Scheme
+3 SHARE OPTION INCENTIVE SCHEME OF
+SINOPEC CORP.'S SUBSIDIARY, SINOPEC
+SHANGHAI PETROCHEMICAL COMPANY
+LIMITED (SHANGHAI PETRO), DURING THE
+REPORTING PERIOD
+annual interest rate of 3.125%; and the 30-
+year notes principal totaled USD 500 million,
+with an annual interest rate of 4.250%.
+These notes were listed on the Hong Kong
+Stock Exchange on 25 April 2013, with
+interest payable semi-annually. The first
+payment of interest was made on 24 October
+2013. During the reporting period, the
+Company has paid in full the current-period
+interests of all notes with maturity of 10
+years and 30 years.
+On 18 April 2013, Sinopec Capital
+(2013) Limited, a wholly-owned overseas
+subsidiary of Sinopec Corp., issued senior
+notes guaranteed by the Company with
+four different maturities, 3 years, 5 years,
+10 years and 30 years. The 3-year notes
+principal totaled USD 750 million, with an
+annual interest rate of 1.250% and had
+been repaid and delisted; the 5-year notes
+principal totaled USD 1 billion, with an
+annual interest rate of 1.875% and had
+been repaid and delisted; the 10-year notes
+principal totaled USD 1.25 billion, with an
+During the reporting period, the Company
+paid in full the interest accrued for the other
+bonds and debt financing instruments. As
+at 31 December 2018, the standby credit
+line provided by several domestic financial
+institutions to the Company was RMB 392.7
+billion in total, facilitating the Company
+to get such amount of unsecured loans.
+The Company has fulfilled all the relevant
+undertakings in the offering circular of
+corporate bonds and had no significant
+matters which could influence the Company's
+operation and debt paying ability.
+100
+100
+100
+100
+Loan repayment rate (%)
+Interest payment rate (%)
+Mainly due to the decrease of cash caused by the
+increase of dividend compared with last year
+Mainly due to the increase of EBITDA
+Mainly due to the increase of EBIT compared
+with last year
+1.34
+32.59
+33.93
+EBITDA-to-interest coverage ratio
+(3.19)
+39.11
+35.92
+Cash flow interest coverage ratio
+2.16
+Mainly due to the increase of EBITDA
+216,352
+EBITDA (RMB million)
+2018
+Principal data
+3.30
+3.70
+9
+9
+4.05
+7
+7
+4.90
+Simple interest is calculated and paid on an annual basis without compounding interests. The principal will be paid
+at maturity with last installment of interest.
+Sinopec Corp. had paid in full the interest accrued for the current period interest payment year and 1501 had
+been repaid and delisted from the Shanghai Stock Exchange.
+1501 and 15102 were publicly offered to qualified investors in accordance with Administration of the Issuance
+and Trading of Corporate Bonds
+Shanghai Stock Exchange
+China International Capital Corporation Limited
+27th-28th Floor, China World Office 2, 1 Jianguomenwai Avenue, Chaoyang District, Beijing
+Huang Xu, Zhai Ying
+(010) 6505 1166
+United Credit Ratings Co., Ltd.
+12th Floor, PICC building, No.2 Jianguomenwai Avenue, Chaoyang District, Beijing
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as disclosed. All
+the proceeds have been completely used.
+During the reporting period, United Credit ratings Co., Ltd. provided continuing credit rating for 1002, 1202,
+1501 and 1502 and reaffirmed AAA credit rating. The long term credit rating and outlook of the Company
+remained at AAA and stable respectively. Pursuant to relevant regulations, the Company will publish its latest credit
+rating results through medias designated by regulators within two months commencing from the announcement date
+of annual report.
+During the reporting period, there is no credit addition mechanism and change of the repayment arrangement for the
+above-mentioned corporate bonds. The Company strictly followed the provisions in the corporate bond prospectus
+to repay principals and interests of the corporate bonds. The guarantor of 1002 and 1202 is China
+Petrochemical Corporation. For more information of the guarantor, please refer to the annual report of corporate
+bonds which will be published on website of Shanghai Stock Exchange by China Petrochemical Corporation.
+During the reporting period, the bondholders' meeting has not been convened.
+During the durations of the above-mentioned bonds, the bond trustee, China International Capital Corporation
+Limited, has strictly followed the Bond Trustee Management Agreement and continuously tracked the Company's
+credit status, the use of bond proceeds and repayment of principals and interests of the bond. The bond trustee
+has also advised the Company to satisfy obligations as described in the corporate bond prospects and exercised its
+duty to protect the bondholders' legitimate rights and interests. The bond trustee is expected to disclose the Trustee
+Management Affairs Report after the publish of the Company's annual report. The details of such report will be
+available on the website of Shanghai Stock Exchange (http://www.sse.com.cn)
+SIGNIFICANT EVENTS (CONTINUED)
+4
+is 22 December 2024. Under the Scheme,
+the total number of underlying shares to
+be granted shall neither exceed 10% of
+the total share capital of Shanghai Petro
+(10,800 million shares) nor exceed 10% of
+the total A share capital of Shanghai Petro
+(7,305 million shares). As of 20 March 2019,
+there is no exercisable outstanding share
+options according to the Scheme. As of 20
+March 2019, the number of the underlying
+shares of the share options to be granted
+by Shanghai Petro to the participants was
+691,740,000 A shares, which represents
+6.4% of the total share capital of Shanghai
+Petro (10,823,813,500 shares). The vesting
+period for each grant under the Scheme shall
+be no less than two years.
+0
+16
+Principal accounting data and financial indicators for the two years ended 31 December 2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Credit addition mechanism, repayment scheme and
+other relative events for corporate bonds during
+the reporting period
+Convening of corporate bond holders' meeting
+Performance of corporate bonds trustee
+Sinopec Corp.
+2010 Corporate bond
+10石化02
+122052
+21 May 2010
+21 May 2020
+Sinopec Corp.
+2012 Corporate bond
+12石化02
+122150
+1 June 2012
+1 June 2022
+2015 Corporate bond (first issue)
+Sinopec Corp
+15石化01
+136039
+15石化022
+136040
+19 November 2015
+19 November
+19 November
+2018
+2020
+4
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(0.02)
+Significant Events
+32
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+Basic information of corporate bonds
+Bond name
+Abbreviation
+Code
+Issuance date
+Maturity date
+Amount issued (RMB billion)
+Outstanding balance (RMB billion)
+Interest rate (%)
+Principal and interest repayment
+Payment of interests
+Investor Qualification Arrangement
+Listing exchange
+Corporate bonds trustee
+Credit rating agency
+Use of proceeds
+Credit rating
+Significant Events
+Significant Events
+32
+35
+Significant Events
+a designed transmission capacity of
+6 billion cubic meters per year. It is
+expected to be completed and put into
+operation in July 2020. The Company's
+self-owned fund accounts for 38% of the
+project investment and bank loan is the
+main source of the remaining 62%. As
+of 31 December 2018, the aggregate
+investment was RMB 5.8 billion.
+G45
+car wash
+Modec
+SINOPEC
+SIGNIFICANT EVENTS
+1 MAJOR PROJECTS
+33
+The first phase of Tianjin LNG project
+with designed receiving capacity of 3.
+million tonnes per year consists mainly
+of the construction of wharf, terminal and
+transportation pipelines. It was completed
+and put into operation at the end of
+January 2018. The Company's self-owned
+fund accounts for approximately 40% of
+the project investment and bank loan is
+the main source of the remaining 60%.
+As of 31 December 2018, the aggregate
+investment was RMB 11.8 billion.
+(2) Hainan Refining and Chemical expansion
+project
+Hainan Refining and Chemical expansion
+project consists of 5,000,000 tpa refinery
+project and 1,000,000 tpa ethylene
+project, among which second set of
+high-efficiency and environment-friendly
+aromatics project started in August 2017
+and is expected to be put into operation
+in June 2019. The Company's self-owned
+fund accounts for approximately 30% of
+the project investment and bank loan is
+the main source of the remaining 70%.
+As of 31 December 2018, the aggregate
+investment was RMB 2.6 billion.
+(3) Zhongke integrated refining and
+chemical project
+Zhongke integrated refining and
+petrochemical project mainly consists
+of a 10,000,000 tpa refinery project,
+800,000 tpa ethylene unit, 300,000
+tonne capacity jetty and relevant utilities
+project. The mechanical completion is
+expected to be achieved in June 2020.
+The Company's self-owned fund accounts
+for 30% of the project investment, bank
+loan is the main sourceof the remaining
+70%. As of 31 December 2018, the
+aggregate investment was RMB 10.8
+billion.
+(4) Zhenhai Refining & Chemical expansion
+project
+Zhenhai Refining & Chemical expansion
+project consists of 15,000,000 tpa
+refinery project and 1,200,000 tpa
+ethylene project. The project was
+approved in June 2018, ethylene and
+relevant projects started at the end of
+October 2018 and is expected to be put
+into operation in 2021. The Company's
+self-owned fund accounts for 30% of
+the project investment, bank loan is the
+main source of the remaining 70%. As
+of 31 December 2018, the aggregate
+investment was RMB 1.6 billion.
+(5) E-An-Cang gas pipeline project
+The first phase of E-An-Cang gas pipeline
+project mainly consists of the main
+pipeline from Luquan to Cangzhou
+and two branch pipelines Puyang and
+Baoding. The total length of the pipeline
+is 736 kilometers with a designed
+transmission capacity of 9 billion cubic
+meters per year. It is expected to be
+completed and put into operation in
+December 2019. The Company's self-
+owned fund accounts for 30% of the
+project investment and bank loan is the
+main source of the remaining 70%. As
+of 31 December 2018, the aggregate
+investment was RMB 4.9 billion.
+(6) Wen 23 gas storage project
+The first phase of Wen 23 gas
+storage project mainly consists of the
+construction of injection and production
+wells and surface facilities with storage
+capacity of 8.431 billion cubic meters.
+The gas storage is expected to be
+officially put into operation in July 2020.
+The Company's self-owned fund accounts
+for 30% of the project investment and
+bank loan is the main source of the
+remaining 70%. As of 31 December
+2018, the aggregate investment was RMB
+3.5 billion.
+(7) Xinqi pipeline project
+The main project of the first phase
+of Xinqi pipeline project was the
+construction of the pipeline from
+Qianjiang to Shaoguan. The total length
+of the pipeline is 839.5 kilometers with
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 31
+Save as disclosed above and in
+previous relevant announcements,
+during the reporting period, Shanghai
+Petro granted no Share Option in
+accordance with the Scheme, none of
+the Share Options was exercised by
+the Participant and none of the share
+option was cancelled or lapsed.
+(1) Tianjin LNG project
+(ix) The progress of share option incentive
+up to the date of Shanghai Petro's
+2018 annual report
+Number of lapsed Share Options:
+Exercise date: 12 January 2018
+Number of exercisable Share Options:
+9,636,900 options
+(iii) The exercise condition of the second
+exercise period of Share Option under
+the first grant
+Exercise price: RMB 3.85/share
+Number of participants who exercised
+the option: 199
+Date of completion of the registration
+for newly increased shares:
+27 September 2017
+Number of exercised Share Options:
+14,176,600 options
+5,228,900 options
+Number of lapsed Share Options:
+Exercise date: 29 August 2017
+Number of exercisable Share Options:
+14,212,500 options
+(ii) The exercise condition of the first
+exercise period of share option under
+the first grant
+Number of Share Options Granted:
+38,760,000
+214 persons
+Grant Date: 6 January 2015
+Number of Participants:
+(i) Initial Grant of the Share Option:
+(2) Information on the Initial Grant of the
+Share Option of Shanghai Petro's A
+share (Share Option)
+For the details of the purpose of the
+Scheme, eligible participants and
+maximum entitlement of each participant,
+underlying shares and incentive
+instrument, validity period and the basis
+for the exercise price, please refer to
+page 31-33 of Sinopec Corp's 2015
+Annual Report published on 29 March
+2016.
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+None
+34
+520,700 options
+Number of exercised Share Options:
+9,636,900 options
+(1) Summary of the Scheme
+14 February 2018
+Date of completion of the registration
+for newly increased shares:
+The validity period of the Share
+Options shall be five years
+commencing from the grant date, but
+is subject to exercise arrangement
+for the Scheme. For the details of the
+exercise arrangement, please refer
+to the section of "Validity Period"
+on Page 32 of Sinopec Corp.'s 2015
+annual report published on 29 March
+2016.
+According to the pricing principle
+disclosed by Shanghai Petro on the
+determination of exercise price, the
+exercise price of the initial grant was
+(vii) Exercise price of the initial grant and
+the adjustment to the exercise price
+At the end of the Reporting Period,
+there is no outstanding Shares
+Options which were not exercisable
+held by Shanghai Petro's key business
+personnel.
+During the reporting period, a
+total of 8,984,600 Share Options
+granted to Shanghai Petro's key
+business personnel had lapsed due
+to participants' resignations and un-
+satisfaction of the exercise conditions
+for the third exercise period etc.
+During the reporting period, a total
+number of 9,153,900 outstanding
+Share Options had been exercised
+by Shanghai Petro's key business
+personnel during the second exercise
+period.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At the beginning of the reporting
+period, a total number of 18,138,500
+outstanding Share Options which were
+not exercised were held by Shanghai
+Petro' key business personnel.
+RMB4.20 per share (in the event of
+dividends payment, capitalisation
+of capital reserves, bonus issue,
+subdivision or reduction of shares
+or allotment of shares during the
+validity period, the exercise price
+shall be adjusted according to the
+Scheme). On 15 June 2016, the 2015
+annual profit distribution plan was
+considered and passed at Shanghai
+Petrol's 2015 annual general meeting,
+whereby a cash dividend of RMB1.00
+I was paid for each 10 shares. On 15
+June 2017, the 2016 annual profit
+distribution plan was considered and
+passed at Shanghai Petrol's 2016
+annual general meeting, whereby a
+cash dividend of RMB2.50 was paid
+for each 10 shares and the exercise
+price was adjusted to RMB3.85 per
+share accordingly. On 13 June 2018,
+the 2017 annual profit distribution
+plan was considered and passed
+at Shanghai Petrol's 2017 annual
+general meeting, whereby a cash
+dividend of RMB3.00 was paid for
+each 10 shares and the exercise price
+was adjusted to RMB3.55 per share
+accordingly.
+There is no outstanding Share
+Options which were not exercised
+held by directors, chief executives and
+substantial shareholders of Shanghai
+Petro as of the end of the Reporting
+Period.
+Number of participants who exercised
+the option: 185
+Exercise price: RMB 3.85/share
+(vi) Outstanding Share Options granted
+to employees other than the persons
+mentioned in item (v)
+(iv) The exercise condition of the third.
+exercise period of Share Option under
+the first grant
+Since the exercise conditions were not
+satisfied, the total amount of Share
+Options that have lapsed during the
+reporting period is: 8,946,900
+(viii) Validity of and exercise arrangements
+for the initial grant
+(v) Outstanding Share Options held
+by directors, chief executive and
+substantial shareholder of Shanghai
+Petro during the reporting period
+At the beginning of the Reporting
+Period, a total number of 966,000
+outstanding Share Options which
+were not exercised were held by
+the directors of Shanghai Petro Mr.
+Gao Jinping, Mr. Jin Qiang, Mr.
+Guo Xiaojun and Vice President of
+Shanghai Petro Mr. Jin Wenmin.
+During the reporting period, Vice
+President of Shanghai Petro Mr. Jin
+Wenmin was appointed as Director
+of Shanghai Petro on 13 June 2018.
+During the reporting period, a total
+of 483,000 Share Options had been
+exercised by Director of Shanghai
+Petro Mr. Gao Jinping, Mr. Jin Qiang,
+Mr Guo Xiaojun and Mr. Jin Wenmin
+during the second exercise period.
+During the reporting period, since
+Director of Shanghai Petro Mr. Gao
+Jinping resigned, the 150,000 A share
+options granted to him which were
+not exercised had lapsed. During
+the reporting period, since the third
+exercise conditions were not met, a
+total of 333,000 Share Options held
+by Director of Shanghai Petro Mr. Jin
+Qiang, Mr. Guo Xiaojun and Mr. Jin
+Wenmin had lapsed.
+d. during the reporting period, the
+Nomination Committee held
+two meetings (please refer to
+"Meetings held by the special
+committees of the Board" under
+the section "Report of the Board of
+Directors" in this annual report).
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+A.3 Board composition
+a. For details of the composition of
+the Board of Directors, please
+refer to the section "Directors,
+Supervisors, Other Senior
+Management and Employees"
+of this annual report. The Board
+has a fairly good diversity. The
+Executive Directors and Non-
+executive Director of Sinopec Corp.
+have petroleum and petrochemical
+technical background and/or
+extensive management experience
+in large-scale enterprises. The
+Independent Non-executive
+Directors are with professional
+backgrounds in economics,
+accounting and finance.
+b. Sinopec Corp. has received from
+each of the Independent Non-
+executive directors a letter of
+confirmation for 2018 regarding
+their compliance with relevant
+independence requirements set
+out in Rule 3.13 of the Hong
+Kong Listing Rules. Sinopec
+Corp. considers that each of
+the Independent Non-executive
+Directors is independent.
+A.4 Appointment, re-election and
+dismissal
+a. The term of each session of the
+Directors of Sinopec Corp. is three
+years, and the consecutive term
+of office of an Independent Non-
+executive Director cannot exceed
+six years. For details about the
+tenure of each director, please
+refer to the section "Directors,
+Supervisors, Other Senior
+b. All Directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary Directors.
+The review opinions were issued
+at each meeting and submitted to
+the Board.
+c. Sinopec Corp. engages
+professional consultants to
+prepare detailed materials for
+newly elected Directors, to notify
+them of the regulations of each
+listing place of Sinopec Corp. and
+to remind them of their rights,
+responsibilities and obligations as
+Directors.
+A.5 Nomination Committee
+of Chairman of the Board Mr.
+Dai Houliang, who served as
+the Chairman, and Independent
+Non-Executive Directors Mr.
+Tang Min and Mr. Ng, Kar Ling
+Johnny, who served as members.
+The major responsibilities of
+Nomination Committee are to
+provide suggestion on Board's size
+and composition, as well as the
+selecting standards, procedures
+and candidates for directors and
+senior management.
+b. The Board establishes the
+Board Diversity Policy which
+stipulates that the members of
+the Board shall be nominated
+and appointed based on the skills
+and experience for the overall
+optimum operation of the Board,
+while taking into account the
+targets and requirements of the
+board diversity. When deciding the
+composition of the Board, Sinopec
+Corp. shall consider several factors
+in relation to the diversity of the
+Board, including but not limited
+to profession experience, skills,
+knowledge, length of service,
+regions, cultural and educational
+backgrounds, gender and age.
+c. The members of the Nomination
+Committee can engage
+professions when performing
+its duties. Reasonable costs
+arising from such consultations
+are borne by Sinopec Corp. In
+the meantime, the Nomination
+Committee has also appointed
+consultants member and can
+require such member to provide
+advice. The working expenses of
+the Remuneration Committee are
+included in the budget of Sinopec
+Corp.
+c. The Chairman encourages open
+and active discussions. Directors
+actively and deeply participated
+in the discussions of significant
+decisions made by the Board in
+the Board meetings.
+Management and Employees"
+a. As approved at the annual general
+meeting for the year 2017, the
+Board of Sinopec Corp. established
+Nomination Committee, consisting
+A.1 Board of Directors
+a. The Chairman of the Board is
+elected by a majority vote of all
+Directors, and the President is
+nominated and appointed by
+the Board. The main duties and
+responsibilities of the Chairman
+and the President are clearly
+distinguished from each other,
+and the scope of their respective
+duties and responsibilities are set
+out in the Articles of Association.
+Mr. Dai Houliang serves as
+Chairman of the Board and Mr.
+Ma Yongsheng serves as President
+of Sinopec Corp.
+5 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+A.6 Responsibility of Directors
+The Company is independent from its
+controlling shareholder in terms of, among
+other matters, business, assets and
+finances. The Company has a well-integrated
+independent business and independent
+operational capabilities.
+6 COMPETITION BETWEEN SINOPEC CORP
+AND ITS CONTROLLING SHAREHOLDER
+Please refer to "Performance of Undertaking
+by China Petrochemical Corporation" under
+the section "Significant Events" in this
+annual report for details.
+7 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+For details of internal control self-assessment
+and internal control auditing, please refer to
+the internal control assessment report and
+the internal control auditing report disclosed
+by the Company on the same date of this
+annual report.
+8 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, incentive schemes and
+requirements for directors, supervisors and
+other senior management. Sinopec Corp. has
+implemented a number of incentive policies,
+including the Measures of Sinopec Corp.
+for the Implementation of Remuneration
+for Senior Managers and the Measures
+of Sinopec Corp. for the Management of
+Performance Evaluations.
+b. The Chairman of the Board places
+great emphasis on communication
+with the Independent Non-
+executive Directors. The Chairman
+independently held three meetings
+with the Independent Non-
+executive Directors in respect of
+development strategy, corporate
+governance and operational
+management, etc. of the Company.
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+Sinopec Corp. complied with all code.
+provisions set out in the Corporate
+Governance Code during the reporting
+period.
+A Board of Directors
+a. The Board is the decision-making
+body of Sinopec Corp. and abides
+by good corporate governance
+practices and procedures. All
+decisions made by the Board are
+implemented by the Management
+of Sinopec Corp.
+b. The meeting of the Board is
+held at least once a quarter. The
+Board will usually communicate
+the time and proposals of the
+Board meeting 14 days before
+convening of the meeting. The
+relevant documents and materials
+for Board meetings are usually
+sent to each Director 10 days in
+advance. In 2018, Sinopec Corp.
+held seven Board meetings. For
+details about each Director's
+attendance at the Board meetings
+and the general meetings, please
+refer to the section "Report of the
+Board of Directors" in this annual
+report.
+c. Each Director of the Board can
+submit proposals to be included
+in the agenda of Board meetings,
+and each Director is entitled to
+request other related information.
+d. The Board has reviewed and
+evaluated its performance in 2018
+and is of the view that the Board
+made decisions in compliance with
+domestic and overseas regulatory
+authorities' requirements and
+the Company's internal rules;
+that the Board have considered
+the suggestions from the Party
+organisation, Board of Supervisors
+and Management during its
+decision making process; and that
+the Board safeguarded the rights
+and interests of Sinopec Corp. and
+its shareholders.
+e. The Secretary to the Board assists
+the Directors in handling the daily
+work of the Board, continuously
+informs the Directors of any
+regulations, policies or other
+requirements of domestic or
+overseas regulatory authorities in
+relation to corporate governance
+and ensures that the Directors
+comply with domestic and
+overseas laws and regulations
+when performing their duties and
+responsibilities. Sinopec Corp.
+has purchased liability insurance
+for all Directors to minimise their
+risks that might incur from the
+performance of their duties.
+A.2 Chairman and President
+(1) Compliance with the Corporate
+Governance Code
+a. All Non-executive Directors have
+the same duties and powers as the
+Executive Directors. In addition,
+the Independent Non-executive
+Directors are entitled to certain
+specific powers. The Articles
+of Association and the Rules of
+Procedure of Board Meetings
+clearly prescribe the duties and
+powers of Directors, Non-executive
+Directors including Independent
+Non-executive Directors, which are
+published on the Sinopec Corp.'s
+website at http://www.sinopec.
+com/listco/.
+b. Sinopec Corp. provides Directors
+with information about the
+financial, production and operating
+data of the Company every month
+to ensure that the Directors
+can learn about the latest
+developments of the Company in a
+timely manner.
+C.
+C.2 Internal Control and Risk
+Management
+a. Sinopec Corp. has formulated
+and implemented its internal
+control and risk management
+system. The Board as a decision-
+making body is responsible
+for evaluating and review the
+effectiveness of its internal
+control and risk management.
+The Board and Audit Committee
+periodically (at least annually)
+receive reports of the Company
+regarding internal control and risk
+management information from the
+Management. All major internal
+control and risk management
+issues are reported to the Board
+and Audit Committee. Sinopec
+Corp. has set up its internal
+control and risk management
+department and internal auditing
+departments, which are equipped
+with sufficient staff, and these
+departments periodically (at least
+twice per year) report to the Audit
+Committee. The internal control
+and risk management system
+of the Company are designed to
+manage rather than eliminate all
+the risks of the Company.
+48
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+b. In terms of internal control,
+Sinopec Corp. adopted the internal
+control framework prescribed
+in the internationally accepted
+Committee of Sponsoring
+Organisations of the Treadway
+Commission Report (COSO).
+Based upon the Articles of
+Association and the applicable
+management policies currently in
+effect, as well as in accordance
+with relevant domestic and
+overseas applicable regulations,
+Sinopec Corp. formulated and
+continuously improves the Internal
+Control Manual to achieve internal
+control of all factors of internal
+environment, risk assessment,
+control activities, information
+and communication, and internal
+supervision. At the same time,
+Sinopec Corp. has constantly
+supervised and evaluated its
+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
+information registration policy. The
+Company regularly evaluates the
+policy implementation and makes
+disclosure in accordance with
+relevant regulations. Please refer
+to the website of Sinopec Corp.
+(http://www.sinopec.com/listco/)
+for the details of the information
+disclosure policy.
+d. The external auditors of Sinopec
+Corp. made a statement on their
+reporting responsibilities in the
+auditor's report contained in the
+financial report.
+c. In terms of risk management,
+Sinopec Corp. adopted the
+enterprise risk management
+framework provided by COSO, and
+established its risk management
+policy and risk management
+organisation system. The
+Company annually conducts risk
+evaluation to identify major and
+important risks and perform
+risk management duties. It has
+designed major and important
+risks tackling measures combined
+with its internal control system
+and periodically monitor their
+implementation to ensure
+adequate care, monitor and
+tackling of major risks.
+C.3 Audit Committee
+a. The Board has established
+an Audit Committee. The
+Audit Committee consists of
+Independent Non-executive
+Director Mr. Ng, Kar Ling Johnny,
+who serves as the Chairman,
+and Independent Non-executive
+Director Mr. Tang Min and
+Independent Non-executive
+Director Mr. Cai Hongbin, who
+serve as members. As verified,
+none of them has served as a
+partner or a former partner in our
+current auditing firm.
+b. During the reporting period, the
+Audit Committee held six meetings
+(please refer to the "Meetings
+held by the special committees
+of the Board" under the section
+of "Report of the Board of
+Directors" in this annual report).
+The review opinions were issued
+at each meeting and submitted to
+the Board. During the reporting
+period, the Board and the Audit
+Committee had no disagreement.
+c. Audit Committee members can
+engage independent professionals
+when performing its duties.
+Reasonable costs arising from
+such consultations are borne by
+Sinopec Corp. In the meantime,
+the Audit Committee has
+appointed consultants members
+and can request such member
+to provide advices. The working
+expenses of the Audit Committee
+are included in the budget of
+Sinopec Corp. In accordance with
+the policies of Sinopec Corp., the
+Senior Management and relevant
+departments of Sinopec Corp.
+shall actively cooperate with the
+Audit Committee.
+d. The Audit Committee has reviewed
+the adequacy and sufficiency
+of the resources for accounting
+and financial reporting and the
+qualifications and experience of
+the relevant employees as well
+as the sufficiency of the training
+courses provided to relevant
+employees. Audit Committee is
+of the view that the Management
+has fulfilled the duties to establish
+an effective internal control
+system. The Company established
+a whistle-blowing policy in its
+internal control system, providing
+several channels as online
+reporting, letter reporting, receipt
+of appeals and a complaint
+mailbox, etc. to employees to
+report behavior that violates the
+internal control system of the
+Company. The Audit Committee
+has reviewed and approved such
+policy.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+49
+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.
+b. Each of the Directors was able to
+devote sufficient time and efforts
+to handling the matters of Sinopec
+Corp.
+c. Sinopec Corp. has adopted an
+internal control mechanism to
+ensure that the Management
+and relevant departments have
+provided the Board and the Audit
+Committee with sufficient financial
+data and related explanations and
+materials.
+C.1 Financial reporting
+Each of the Directors confirmed
+that he has complied with the
+Model Code for Securities and
+Transactions by Directors of
+Listed Companies during the
+reporting period. In addition,
+Sinopec Corp. formulated the
+Rules Governing Shares Held by
+Company Directors, Supervisors
+and Senior Managers and Changes
+in Shares and the Model Code
+of Securities Transactions by
+Company Employees to regulate
+the purchase and sale of Sinopec
+Corp.'s securities by relevant
+personnel.
+d. Sinopec Corp. organised and
+arranged training sessions for
+Directors and paid the relevant
+fees as well as making relevant
+records. The Directors actively
+participated in the trainings and
+paid more attention on continuing
+professional development program
+to ensure that their contribution to
+the Board remains informed and
+relevant.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+47
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+A.7 Provision of and access to
+information
+a. Directors are responsible for
+supervising the preparation of
+accounts for each fiscal period to
+ensure that the accounts truly and
+fairly reflect the condition of the
+business, the performance and the
+cash flow of the Company during
+the period. The Board approved
+the Financial Report for 2018 and
+warranted that the annual report
+contained no false representations,
+no material omissions or
+misleading statements and
+jointly and severally accepted full
+responsibility for the authenticity,
+accuracy and completeness of the
+content.
+a. The agenda and other reference
+documents for meetings of the
+Board and Board committees
+will be distributed prior to the
+meetings to give each Director
+sufficient time to review the
+materials so that Directors can
+make informed decisions.
+B Remuneration and Appraisal Committee
+a. Remuneration and Appraisal
+Committee (Remuneration
+Committee) consists of Independent
+Non-executive Director Mr. Fan Gang,
+who serves as the Chairman, and Non-
+executive Director Mr. Li Yunpeng and
+Independent Non-executive Director
+Mr. Ng, Kar Ling Johnny, who serve
+as the members of the Remuneration
+Committee. The Remuneration
+Committee is responsible for reviewing
+the implementation of the annual
+remuneration plans for Directors,
+Supervisors and other senior
+Management as approved at the
+general meeting of the shareholders,
+and report to the Board.
+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
+2018.
+c. The members of the Remuneration
+Committee can engage independent
+professionals when performing its
+duties. Reasonable costs arising
+from such consultations are borne by
+Sinopec Corp. In the meantime, the
+Remuneration Committee has also
+appointed consultants member and
+can require such member to provide
+advices. The working expenses of the
+Remuneration Committee are included
+in the budget of Sinopec Corp.
+According to the policies of Sinopec
+Corp., the senior Management and
+relevant departments of Sinopec
+Corp. must actively cooperate with
+the Remuneration Committee.
+d. During the reporting period, the
+Remuneration Committee held one
+meeting (please refer to "Meetings
+held by the special committees of the
+Board" under the section of "Report
+of the Board of Directors" in this
+annual report).
+C Accountability and Auditing
+b. Each Director can obtain all related
+information in a comprehensive
+and timely manner. The Secretary
+to the Board is responsible
+for organising and preparing
+the materials for the Board
+meetings, including preparation
+of explanations for each proposal
+to ensure fully understanding by
+the Directors. The Management
+is responsible for providing
+the Directors with necessary
+information and materials.
+The Director may require the
+Management, or require, via
+the Management, relevant
+departments to provide necessary
+information or explanations. The
+Directors may seek advices from
+professional consultants when
+necessary.
+Corporate Governance
+Significant Events
+Corporate Governance
+110
+1,500
+Poverty alleviation through science and technology development
+✓ Others
+2. Assistance on sales of agriculture products from impoverish areas
+1. Procurement Agriculture products from impoverish areas
+III. Consumption assistance
+7. Other input
+6.2 Number of people get assistance
+6.1 Input in emergency relief
+6. Emergency relief
+areas
+5.1 Input in medical and health care resources in poverty. stricken
+5. Poverty alleviation through healthcare
+4.3 Input in education resources in poverty-stricken areas
+4.2 Number of students who received funding assistance
+4.1 Input in students funding
+4. Poverty elimination through education
+4.09
+3,149
+545
+6
+CONNECTED TRANSACTIONS
+Connected Transactions
+Significant Events
+41
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Sinopec Corp. published voluntary announcement and progress update announcements in relation to China International United Petroleum and
+Chemical Company Limited. For details, please refer to the announcements published in China Securities Journal, Shanghai Securities News
+Securities Times and the website of the Shanghai Stock Exchange on 28 December 2018, 5 January 2019 and 26 January 2019 and on the website
+of Hong Kong Stock Exchange on 27 December 2018, 4 January 2019 and 25 January 2019.
+21 OTHER EVENT
+In 2019, the Company will further strengthen poverty alleviation key-problem tackling work, continue to insist on targeted poverty alleviation
+and targeted lifting of poor people out of poverty, insist on combination of “blood transfusion” and “haematogenesis”, focus on tackling of key
+problems of poor regions, exert the advantages of the enterprise, and focus on poverty alleviation in terms of industry; attach importance to
+poverty alleviation in terms of employment, and create jobs; deepen poverty alleviation in terms of education, and strengthen support to poor
+students; strengthen cooperation with China Foundation for Poverty Alleviation, and motivate social strength to participate in poverty alleviation;
+optimize poverty alleviation in terms of medical treatment, and provide high quality medical treatment support to the people in poor regions;
+strengthen poverty alleviation in terms of consumption, cooperate with Social Participation in Poverty Alleviation and Development of China,
+promote high quality agriculture products of poor counties to the whole country and make efforts to optimize targeted poverty alleviation work.
+3.2 Input in relocation
+146
+18.25
+6,198
+8.1
+2.31
+(4) Subsequent targeted poverty alleviation plan
+Notel: The table was prepared in accordance with the 2018 requirements of the State Council Leading Group Office of Poverty Alleviation and Development.
+Note2: Fund for Poverty Alleviation Work consists of our own funds and financing from other parties introduced by the Company.
+22.33
+3.5
+1,374
+17.7
+3.1 Number of relocated people
+3. Poverty elimination through relocation
+2.2 Participants of professional skill trainings (person time)
+(2) Overview on 2018 Targeted Poverty
+Alleviations
+(1) Targeted Poverty Alleviation Plan
+The Company actively fulfilled our social
+responsibilities and strictly followed
+the fundamental principles of poverty
+alleviation and elimination. We focused
+on poverty alleviation in terms of
+industry, consumption, employment and
+education, so as to ensure to stably lift
+poor household out of poverty, increase
+income of poor household and orderly
+carry out rural revival strategy.
+20 POVERTY ALLEVIATION PROGRAM
+LAUNCHED BY THE COMPANY
+projects have obtained approvals from the
+environment authorities. Sinopec Corp.
+strictly complying with relevant national
+requirements on environment emergency
+plan management and continulysly improves
+the emergency plans for environmental
+emergencies and heavy pollution weather.
+According to the national pollution permit
+and self-monitoring technology guidelines
+in relevant industries, we modified the self-
+monitoring plan, and implemented new
+national requirements of sewage, flue
+gas and noise monitory, and disclosed
+the environmental results. For other
+subsidiaries that are not listed as major
+pollutant discharge units, the Company also
+completed relevant environmental protection
+formalities in accordance with the national
+and local requirements, and implemented
+relevant environmental protection
+measures. According to the requirements of
+national and local ecological environment
+departments, these companies do not need
+to disclose relevant information.
+In 2018, some subsidiaries of Sinopec
+Corp. which are listed as major pollutant
+discharge units have disclosed environmental
+information as required by the relevant
+authorities and local government. The details
+of such information was published on the
+local government website. Sinopec Corp.
+strictly implemented the new standards
+in refining and petrochemical industry,
+completed the treatment of sewage and
+flue gas, and actively conducted the
+comprehensive treatment of VOCs. For
+details, please refer to the Company's
+Communication on Progress for Sustainable
+Development. Pollution prevention and
+control facilities remained in effective and
+stable operation. The Company further
+regulated environmental management of
+construction projects, enhanced assessment,
+and implemented “three-simultaneity"
+management (environmental facilities
+shall be designed, constructed and put
+into operation simultaneously with the
+main construction). All of the newly-built
+DEPARTMENTS
+BY ENVIRONMENTAL PROTECTION
+19 ENVIRONMENTAL PROTECTION
+SOLUTIONS OF COMPANIES AND THEIR
+SUBSIDIARIES AS MAJOR POLLUTANT
+DISCHARGING COMPANIES RECOGNIZED
+In 2018, the Company invested nearly
+RMB 0.23 billion in Targeted Poverty
+Alleviation, including RMB 108.41
+million invested in 50 targeted poverty
+alleviation programs in Yingshang
+county, Yuexi county, Fenghuang county,
+Luxi county, Yuepuhu county and
+Dongxiang county, mainly including rural
+industry development, village tourism
+development, labor output trainings and
+education assistance. We lifted 12,250
+registered people out of poverty and
+funded the education of 206 students.
+Sinopec Corp. did not implement any share
+incentive scheme during the reporting period.
+17 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+16 APPROPRIATION OF NONOPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+The deposits of the Company at the Finance
+Company and Century Bright Company
+during the reporting period did not exceed
+the relevant caps as approved at the general
+meeting of Sinopec Corp. During daily
+operations, the Company can withdraw the
+full amount of its deposits at the Finance
+Company and Century Bright Company.
+in making payments, China Petrochemical
+Corporation will ensure that Century Bright
+Company will fulfill its repayment obligation
+through various channels.
+In order to regulate connected transactions
+between the Company and Sinopec Century
+Bright Capital Investment, Ltd. (Sinopec
+Corp.'s overseas settlement center,
+hereinafter referred at the Century Bright
+Company), Century Bright Company ensures
+the safety of the deposits of the Company at
+Century Bright Company by strengthening
+internal risk controls and obtaining support
+from China Petrochemical Corporation.
+China Petrochemical Corporation has
+formulated a number of internal rules,
+including the Rules for the Internal Control
+System, the Rules for Implementation of
+Overseas Capital Management Methods, and
+the Provisional Methods for Overseas Fund
+Platform Management, to impose strict rules
+on Century Bright Company for providing
+overseas financial services. Century Bright
+Company has also established the Rules for
+the Implementation of the Internal Control
+System, which ensures the standardisation
+and safety of its corporate deposits business.
+At the same time, as the wholly controlling
+shareholder of Century Bright Company,
+China Petrochemical Corporation entered
+into a keep-well agreement with Century
+Bright Company in 2013, in which China
+Petrochemical Corporation undertakes that
+when Century Bright Company has difficulty
+In order to regulate connected transactions
+between the Company and Sinopec Finance
+Co., Ltd. (Sinopec Corp.'s domestic
+settlement center, hereinafter referred as
+the Finance Company) and to ensure the
+safety and liquidity of the deposits of the
+Company at the Finance Company, Sinopec
+Corp. and the Finance Company formulated
+the Risk Control System on Connected
+Transactions between China Petroleum &
+Chemical Corporation and Sinopec Finance
+Co., Ltd., which covers the risk control
+system and the risk management plan of the
+Company to prevent financial risks and to
+ensure that the deposits of the Company at
+the Finance Company can be utilised at the
+Company's discretion. At the same time, as
+the controlling shareholder of the Finance
+Company, China Petrochemical Corporation
+undertakes that in case of an emergency
+when the Finance Company has difficulty
+in making payments, China Petrochemical
+Corporation will increase the capital of
+the Finance Company in accordance with
+the actual need for the purpose of making
+payment.
+15 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+SIGNIFICANT EVENTS (CONTINUED)
+18 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+BETWEEN SINOPEC CORP. AND CHINA
+PETROCHEMICAL CORPORATION
+Prior to Sinopec Corp.'s overseas listing,
+in order to ensure the smooth continuation
+of production and business conducted by
+the Company and China Petrochemical
+Corporation, the two parties entered into
+a number of agreements on continuing
+connected transactions, details of which are
+as follows:
+40
+(3) 2018 Targeted Poverty Alleviation Work Statistics
+2.1 Input in professional skill training
+2. Poverty elimination through provision of employment
+1.3 Input in poverty alleviation projects through
+industrial development
+1.2 Number of poverty alleviation programs
+228.47
+32,250
+☑ Poverty alleviation through assets income
+☑ Poverty alleviation through e-commerce
+☑ Poverty alleviation through agriculture and forestry development
+☑Poverty alleviation through tourism development
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+1. Poverty elimination through industrial development
+1.1 Categories of poverty alleviation programs through
+industrial development
+2. Number of people lifted out of poverty
+Data
+Unit: RMB million
+Funds
+1.
+I.
+Overview
+Index
+II. Input breakdowns
+46
+(1) The Company and China Petrochemical
+(2) China Petrochemical Corporation
+333
+of the year
+30,232
+1,964
+Amount
+incurred
+Funds from related parties
+Balance
+at the
+beginning
+of the year
+28,268
+Balance at
+the end
+Unit: RMB million
+30,846
+1,431
+(247)
+5,130
+25,716
+1,678
+Balance
+at the end
+of the year
+29,415
+Amount
+incurred
+5,377
+at the
+beginning
+of the year
+24,038
+Funds to related parties
+Balance
+Associates and joint ventures
+38
+28,306
+295
+2,259
+30,565
+Reason for provision of funds between related parties
+Impacts on the Company
+45
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+During the reporting period, the independent
+non-executive directors of Sinopec Corp.
+fulfilled their duties in good faith as required
+by laws and regulations and the Articles
+of Association, and actively contributed
+to the development of the Company. They
+actively attended Board meetings and
+meetings of the Board Committees (please
+refer to the section "Report of the Board of
+Directors" in this annual report for details
+of their attendance), reviewed the relevant
+documents with due care and exercised their
+profession advantages to offer advice and
+suggestions to Sinopec Corp.'s development
+strategy, operations and reform. The
+independent non-executive directors gave
+their independent opinions on matters
+such as nomination of directors, connected
+transactions, dividend distributions and
+appointments of senior management of
+the Company as required by relevant rules
+and regulations, and maintained timely and
+effective communications with management,
+external auditors and the internal auditing
+department. The independent non-executive
+directors strengthened the communications
+with the shareholders and independently and
+objectively protected the legitimate interests
+of Sinopec Corp. and the shareholders,
+especially the minority shareholders'
+interests, when performing their duties.
+Pursuant to requirements of securities
+regulatory authority of China, independent
+non-executive directors of Sinopec Corp.
+reviewed the performance of the senior
+managers of Sinopec Corp. who held
+concurrent positions as senior managers
+in China Petrochemical Corporation and
+published independent opinions as follows:
+"The President Mr. Ma Yongsheng, Senior
+Vice President Mr. Ling Yiqun and Mr. Liu
+Zhongyun, each of whom concurrently held
+position as deputy general manager of China
+Petrochemical Corporation, have obtained
+the exemptions for holding concurrent
+position from CSRC. During the reporting
+period, Mr. Ma Yongsheng, Mr. Ling Yiqun
+and Mr. Liu Zhongyun devoted sufficient
+time and energy to fulfill their duties with
+diligence and due care. They protected
+the interests of the Company and minority
+shareholders effectively and didn't harm
+the legitimate interests of Sinopec Corp.
+and minority shareholders due to holding
+concurrent position in China Petrochemical
+Corporation."
+4 PERFORMANCE OF THE INDEPENDENT
+DIRECTORS
+Save as disclosed above, during the reporting
+period, none of the directors, supervisors and
+senior management of Sinopec Corp. and
+their associates had any interests or short
+positions (including any interest or short
+position that is regarded or treated as being
+held in accordance with the SFO) in the
+shares, debentures and underlying shares of
+Sinopec Corp. or any associated corporations
+(as defined in Part XV of SFO) would fall
+to be disclosed to the Sinopec Corp. and
+the Hong Kong Stock Exchange under the
+Division 7 and 8 of Part XV of SFO or which
+was recorded in the register required to be
+kept under section 352 of SFO or otherwise
+should notified Sinopec Corp. or the Hong
+Kong Stock Exchange pursuant to the Model
+Code for Securities Transactions by Directors
+of Listed Company under the Hong Kong
+Listing Rules.
+As of 31 December 2018, apart from 13,000
+A shares of Sinopec Corp. held by Director,
+Senior Vice President Mr. Ling Yiqun, none
+of the directors, supervisors or other senior
+management of Sinopec Corp. held any
+shares of Sinopec Corp.
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+During the reporting period, Sinopec
+Corp. convened the 2017 annual general
+meeting on 15 May 2018, and 2018 first
+extraordinary general meeting on 23 October
+2018 in Beijing, China in accordance with the
+required procedures of noticing, convening
+and holding procedures pursuant to the
+relevant laws and regulations and the Articles
+of Association. For meeting details, please
+refer to the poll results announcements
+published in China Securities Journal,
+Shanghai Securities News and Securities
+Times and on the websites of Hong Kong
+Stock Exchange after the general meetings.
+affiliated companies*
+2 GENERAL MEETINGS
+During the Reporting Period, Sinopec Corp.
+was in full compliance with the Articles
+of Association as well as domestic and
+overseas laws and regulations and has not
+received any regulatory sanction imposed
+by securities regulatory authorities. Sinopec
+Corp. further improved corporate governance
+structure through completion of the re-
+election of the Board of Directors, Board of
+Supervisors, and the appointment of senior
+management, as well as the appointment of
+each Board Committee and establishment of
+the Nomination Committee under the Board.
+We amended the Articles of Association,
+Rules and Procedures of the Board
+Meetings and Internal Control Procedures,
+and formulated Terms of References of
+Nomination Committee. Pursuant to Article
+of Association and other regulations, we
+further improved the regulations in relation
+to the Party's participation in the corporate
+governance of the Company, which promoted
+the scientific decision-making procedures.
+The Company actively implemented “the
+year of party building quality" event to
+drive the high-quality development of the
+Company. The independent directors have
+played an active and good role with diligence
+in performing their duties. The investor
+relations work has been further refined, and
+the required information was disclosed in
+time, which improved the transparency of
+the Company and were positively recognised
+by the capital market. The Company's active
+performance of its social responsibilities has
+achieved good results.
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+CORPORATE GOVERNANCE
+Connected Transactions
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Loans and other accounts receivable and payable
+No material negative impact
+*. affiliated companies include subsidiaries, associates and joint ventures.
+During the reporting period, there are no
+material inconsistency between Sinopec
+Corp.'s corporate governance and the
+requirements of the PRC Company Law and
+relevant regulations of the CSRC. The Board
+of Supervisors of Sinopec Corp. agreed with
+all supervised matters. None of Sinopec
+Corp., the Board, directors, supervisors,
+senior management, controlling shareholders
+or de facto controllers of Sinopec Corp.
+were under the investigation by the CSRC or
+received any regulatory sanction or criticised
+publicly by the CSRC, the Hong Kong
+Securities and Futures Commission, the
+Securities and Exchange Commission of the
+United States, or received any public censure
+from Shanghai Stock Exchange, the Hong.
+Kong Stock Exchange, the New York Stock
+Exchange or the London Stock Exchange.
+Parent company and
+Relations
+Total
+(b) where there is no government-prescribed
+price but where there is a government-
+guidance price, the government-guidance
+price will apply;
+(a) The government-prescribed price will
+apply;
+Principle of pricing for the continuing
+connected transactions:
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+42
+3 ACTUAL CONTINUING CONNECTED
+TRANSACTIONS ENTERED INTO BY THE
+COMPANY DURING THE YEAR
+Pursuant to the above-mentioned agreements
+on continuing connected transactions,
+the aggregate amount of the continuing
+connected transactions of the Company
+during the reporting period was RMB
+417.201 billion. Among which, purchases
+expenses amounted to RMB 267.505 billion,
+representing 9.04% of the total amount of
+this type of transaction for the reporting
+period, including purchases of products
+and services (procurement, storage and
+transportation, exploration and development
+services, and production-related services) of
+RMB 251.444 billion, purchases of auxiliary
+and community services of RMB 6.664
+billion, payment of property rent of RMB
+522 million, payment of land use right of
+RMB 7.765 billion, and the interest expenses
+amounted to RMB 1.11 billion. The sales
+income amounted to RMB 149.697 billion,
+representing 4.91% of the total amount of
+this type of transaction for the reporting
+period, including RMB 148.779 billion for
+sales of products and services, RMB 69
+million for agency commission income, and
+RMB 848 million for interest income.
+The aggregated amount of the continuing
+connected transactions for 2018 of the
+Company is in compliance with the relevant
+requirements of the Hong Kong Listing
+Rules and the Shanghai Listing Rules. For
+performance details of connected transaction
+agreements, please refer to Item 3 below.
+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.
+(c) where there is neither a government-
+prescribed price nor a government-
+guidance price, the market price will
+apply; 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
+services of the Mutual Supply Agreement
+On 24 August 2018, Sinopec Corp. and
+China Petrochemical Corporation entered into
+a supplemental agreement of the continuing
+connected transactions and the Land Use
+Rights Leasing Agreement Amendment
+Memo, pursuant to which the scope of
+(7) The Company will provide franchise
+licenses for service stations to China
+Petrochemical Corporation.
+(6) China Petrochemical Corporation will
+provide shareholders' loans to the
+Company; and
+(5) China Petrochemical Corporation will
+provide comprehensive insurance to the
+Company
+(4) China Petrochemical Corporation will
+provide leasing services for lands and
+certain properties to the Company
+(3) China Petrochemical Corporation will
+provide cultural and educational, hygienic
+and community services to the Company
+(Cultural, Educational, Hygiene and
+Auxiliary Services Agreement)
+will provide trademarks, patents and
+computer software to the Company for
+use free of charge
+and the Cultural, Educational, Hygienic
+and Auxiliary Services Agreement were
+adjusted and the term of the Mutual Supply
+Agreement and the Cultural, Educational,
+Hygienic and Auxiliary Services Agreement
+was extended from 1 January 2019 to 31
+December 2021; the term of the Properties
+Leasing Agreement was extended to 31
+December 2021 and the term of Intellectual
+Property Licensing Agreements was extended
+to 31 December 2029. The area and rent
+in the Land Use Rights Leasing Agreement
+were also adjusted. The resolution relating
+to continuing connected transactions for
+the three years from 2019 to 2021 was
+approved at the first extraordinary general
+meeting of the Company for 2018 held on
+23 October 2018. For details of the above
+continuing connected transactions, please
+refer to relevant announcements published
+on 27 August 2018 in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the website of
+the Shanghai Stock Exchange and on the
+website of the Hong Kong Stock Exchange
+dated 26 August 2018. The capitalised
+terms used in this section shall have the
+same meaning as that used in the above-
+mentioned announcements.
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement)
+(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.
+Decision-making procedures:
+Other related parties
+Sinopec Group
+Related Parties
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+For details, please refer to item 5" significant
+equity investment” in section "Significant
+Events".
+OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURED THIS YEAR
+(c) The transactions were conducted
+pursuant to the terms of relevant
+agreements, and the terms were fair
+and reasonable and in the interests of
+Sinopec Corp. and its shareholders as a
+whole.
+ii terms not less favorable than those
+available from or to independent third
+parties, where there is no available
+comparison to determine whether
+such terms are on normal commercial
+terms.
+For details of the pricing principle, please
+refer to relevant announcements published
+on 27 August 2018 in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the website of
+the Shanghai Stock Exchange and on the
+website of the Hong Kong Stock Exchange on
+26 August 2018.
+(b) The transactions have been entered into
+based on either of the following terms:
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+in respect of the above-mentioned continuing
+connected transactions in accordance with
+Rule 14A.56 of the Hong Kong Listing Rules.
+Sinopec Corp. has submitted a copy of the
+auditor's letter to the Hong Kong Stock
+Exchange.
+4
+The external auditor of Sinopec Corp.
+was engaged to report on the Company's
+continuing connected transactions in
+accordance with the Hong Kong Standard on
+Assurance Engagements 3000, Assurance
+Engagement Other Than Audits or Reviews
+of Historical Financial Information, and with
+reference to Practice Note 740, Auditor's
+Letter on Continuing Connected Transactions
+under the Hong Kong Listing Rules, issued
+by the Hong Kong Institute of Certified Public
+Accountants. The auditor has issued its
+unqualified letter containing its conclusions
+The above-mentioned connected transactions
+between the Company and Sinopec Group
+in 2018 were approved at the 5th meeting
+of the seventh session of the Board and
+have complied with the requirements under
+Chapter 14A of the Hong Kong Listing Rules.
+Related party transactions with the Sinopec
+Group that occurred during the year, as set
+out in Note 37 to the financial statements
+prepared under the IFRS in this annual
+report, also fall under the definition of
+connected transactions under Chapter 14A of
+the Hong Kong Listing Rules.
+continuing connected transactions every
+three years, and will be announced and
+implemented upon the approval of the
+Board and/or independent shareholders.
+For the other connected transactions,
+Sinopec Corp., in strict compliance with
+domestic and overseas regulatory rules, will
+publish the announcement and implement
+the transactions only after submitting the
+relevant proposals of connected transactions
+to the Board and/or the general meeting of
+shareholders for consideration and approval
+according to internal control procedures.
+The continuing connected transaction
+agreements were entered into in the ordinary
+course of the Company's business and in
+accordance with normal commercial terms
+that are fair and reasonable to the Company
+and its shareholders. The Company,
+according to its internal control procedures,
+adjusts the scope and the relevant caps of
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business.
+i normal commercial terms; or
+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.
+of the Strategy Committee was held by
+written resolution on 21 March 2018,
+whereby the proposal in relation to the
+proposed 2018 investments plan was
+approved at the meeting.
+1
+0
+Independent Director
+Andrew Y. Yan
+3
+1
+2
+0
+0
+1
+0
+Independent Director
+Tang Min
+3
+1
+2
+0
+0
+1
+1
+Independent Director
+0
+0
+2
+1
+0
+Director
+Jiao Fangzheng
+3
+0
+2
+1
+0
+1
+1
+Fan Gang
+Director
+3
+0
+2
+1
+0
+1
+0
+Independent Director
+Jiang Xiaoming
+3
+Ma Yongsheng
+3
+0
+2
+Li Yunpeng
+4
+2
+2
+0
+0
+1
+0
+Director
+Yu Baocai
+Director
+1
+1
+0
+0
+0
+0
+Director
+Jiao Fangzheng
+1
+1
+0
+0
+0
+1
+0
+1
+0
+1
+0
+(2) The Directors' attendance to the seventh session of the Board Meeting and the General Meeting.
+Director Titles
+Names
+No. of
+meeting held
+Board Meetings
+Actual Attended By
+Attendance communication
+General Meetings.
+1
+Attended
+No. of
+by proxy
+meeting held
+Actual
+Attendance
+Chairman
+Dai Houliang
+4
+2
+2
+0
+Absent
+0
+0
+0
+The appointment of
+PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers as
+Sinopec Corp.'s external auditors for
+2018 and the authorisation of the Board
+to determine their remuneration were
+approved at Sinopec Corp.'s annual
+general meeting for the year 2017 on
+15 May 2018. The audit fee for 2018
+is RMB 47.58 million (including audit
+fee of internal control), which was
+approved at the 5th meeting of the
+seventh session of the Board. The annual
+financial statements have been audited
+by PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers. The
+Chinese certified accountants signing the
+report are Zhao Jianrong and Xu Xia from
+PricewaterhouseCoopers Zhong Tian LLP.
+During the reporting period, neither
+PricewaterhouseCoopers Zhong Tian LLP
+nor PricewaterhouseCoopers provided any
+non-audit service to the Company.
+(3) Other information about Sinopec Corp.'s
+corporate governance
+Except for their working relationships
+with Sinopec Corp., none of the Directors,
+Supervisors or other Senior Management
+has any financial, business or family
+relationship or any relationship in other
+material aspects with one another. For
+information about changes in share
+capital and shareholdings of substantial
+shareholders, please refer to page 6 to
+page 7; for information about meetings
+of the Board, please refer to page 52;
+for information about meeting held by
+Board Committees, please refer to page
+54; for information about tenure of
+non-executive directors, please refer to
+page 69; for information about equity
+interests of Directors, Supervisors and
+other senior Management, please refer
+to page 45; for information about the
+biographies and annual remuneration of
+Directors, Supervisors and other senior
+Management, please refer to page 64 to
+page 78.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+51
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS
+The Board is pleased to present the directors'
+report for the year ended 31 December 2018 for
+shareholders' review.
+(2) Auditors
+1
+During this reporting period, Sinopec Corp.
+held seven (7) Board meetings. The details
+are as follows:
+(1) The 16th meeting of the sixth session of
+the Board was held by written resolution
+on 8 February 2018, whereby the
+proposals in relation to the appointment
+of senior management of the Company
+and the revision of the internal control
+manual (version 2018) were approved at
+the meeting.
+(2) The 17th meeting of the sixth session
+of the Board was held by on site
+meeting and via video conference on 23
+March 2018, whereby the proposals in
+relation to the following matters were
+approved: (i) the Work Report of the
+sixth session of the Board, (ii) the Work
+Report of the sixth Session of the Senior
+Management, (iii) Financial results and
+business performance of the Company
+for the year 2017(including a. provision
+for impairment for the year 2017; b.
+The connected transactions for the year
+2017; c. Profit distribution plan for the
+year 2017; d. Audit costs for the year
+2017; e. the report of Risk Assessment
+for Capital Deposits at Finance Company
+and Century Bright Company), (iv)
+2017 Communication on Progress for
+Sustainable Development of Sinopec
+Corp., (v) Financial Statements of Sinopec
+Corp. for the year 2017, (vi) Annual
+Report and form 20F of the Company
+for the year 2017, (vii) Internal control
+assessment report of Sinopec Corp. for
+the year 2017, (viii) Re-appointment of
+external auditors of Sinopec Corp. for
+the year of 2018 and to authorise the
+Board to determine their remunerations,
+(ix) Provision of Guarantee for Zhong
+An United Coal Chemical Co., Ltd.
+by Sinopec Corp. (x) the service
+contracts between Sinopec Corp. and
+the Directors of the seventh session
+of the Board (including emolument
+provisions) and service contracts between
+Sinopec Corp. and the Supervisors
+of the seventh session of the Board
+of Supervisors(including emolument
+provisions) (xi) the establishment of
+Board committees (xii) the amendments
+to the Articles of Association of Sinopec
+Corp. (xiii) the amendments to the rules
+and procedures of the Board meetings,
+(xiv)the re-election of the Board of
+Directors, (xv) the re-election of the
+Board of Supervisors, (xvi)to authorise
+the Board to determine the interim profit
+distribution plan of Sinopec Corp. for the
+year 2018, (xvii)authorising the Board to
+determine the proposed plan for issuance
+of debt financing instrument(s) (xviii)
+granting to the Board a general mandate
+to issue new domestic shares and/or
+overseas listed foreign shares of Sinopec
+Corp., (xix)Convening the annual general
+meeting of Sinopec Corp. for the year
+2017 and to dispatch the notice of the
+annual general meeting.
+(3) The 18th meeting of the sixth session of
+the Board was held by written resolution
+on 26 April 2018, whereby the proposal
+in relation to the first quarterly results of
+the Company for the three months ended
+31 March 2018 was approved.
+(4) The 1st meeting of the seventh session
+of the Board was held by on site meeting
+on 15 May 2018, whereby the proposals
+in relation to the following matters
+were approved: (i) the election of the
+Chairman of the seventh session of the
+Board, (ii) the adjustment of members
+of the Board Committees including
+Strategy Committee, Audit Committee,
+Remuneration Committee, Nomination
+Committee and Social Responsibility
+Management Committee, (iii) the
+appointment of the President of Sinopec
+Corp., (iv) the appointment of Senior
+Vice Presidents, Chief Financial Officer
+and Vice Presidents of Sinopec Corp.,
+(v) the appointment of the Secretary to
+the Board, the authorised representative
+of Sinopec Corp. to Hong Kong Stock
+Exchange and the representative on
+securities matters. And authorise the
+Secretary to the Board to handle the
+above-mentioned matters and to sign
+relevant documents.
+(5) The 2nd meeting of the seventh session
+of the Board was held by written
+resolution on 10 July 2018, whereby the
+proposal on the proposed establishment
+of Sinopec Capital by Sinopec Corp. with
+China Petrochemical Corporation was
+approved.
+(6) The 3rd meeting of the seventh session
+of the Board was held by on site
+meeting on 24 August 2018, whereby
+the proposals in relation to the following
+matters were approved: (i) the report
+on the fulfillment of the key targets
+for the first half of the year 2018 and
+the work arrangements for the second
+MEETINGS OF THE BOARD
+half of the year 2018, (ii) Financial
+results and business performance of the
+Company for the first half of the year
+2018 (including a. the 2018 interim
+dividend distribution plan; b. the report
+of Risk Assessment for Capital Deposits
+at Finance Company and Century Bright
+Company), (iii) the financial statements
+for the first half of the year 2018, (iv)
+interim report for the six months ended
+30 June 2018, (v) Three years rolling
+development plan of Sinopec Corp. (2018.
+to 2020). (vi) to propose to the general
+meeting for election of the Directors of
+the Board. (vii) the continuing connected
+transactions for three years from
+2019 to 2021 (viii) to propose to the
+general meeting for election of the first
+extraordinary general meeting of Sinopec
+Corp. for the year 2018 and to dispatch
+the notice of the meeting.
+special organisation in charge of
+communication with shareholders and
+published relevant contact details
+to facilitate shareholders to make
+enquiries pursuant to Articles of
+Association.
+c. The eligibility for attending the general
+meeting, the rights of shareholders,
+the proposals at the meeting and the
+voting procedures are clearly stated
+in the notice of the general meeting
+of Sinopec Corp. dispatched to the
+shareholders.
+(8) The 1st meeting of the seventh session
+of the Strategy Committee was held by
+written resolution on 22 August 2018,
+whereby the proposal in relation to three
+years rolling development plan of Sinopec
+Corp. (2018-2020) was approved at the
+meeting.
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+D Delegation of power by the Board
+a. The Board and the Management
+have clear duties and responsibilities
+in written rules. The Articles of
+Association and the Rules of
+Procedure for the General Meetings
+of Shareholders and the Rules of
+Procedure of the Board Meetings
+clearly set forth the scope of duties,
+powers and delegation of power of the
+Board and Management, which are
+published on the website of Sinopec
+Corp. at http://www.sinopec.com/
+listco/.
+b. In addition to the Audit Committee,
+the Remuneration Committee and
+Nomination Committee, the Board had
+established the Strategy Committee
+and the Social Responsibility
+Management Committee. The
+Strategy Committee is responsible
+for overseeing long-term development
+strategies and significant investment
+decisions of the Company. The 7th
+session Strategy Committee consists
+of six directors, including Chairman
+of the Board Mr. Dai Houliang, who
+serves as Chairman, as well as
+Executive Director Mr. Ma Yongsheng,
+Mr. Ling Yiqun, Mr. Liu Zhongyun
+and Independent Non-executive
+Directors Mr. Fan Gang and Mr. Cai
+Hongbin, who serve as members. The
+Social Responsibility Management
+is responsible for preparing
+policies, governance, strategies
+and plans for social responsibility
+management of the Company. The
+Social Responsibility Management
+Committee consists of three Directors,
+including Chairman of the Board
+Mr. Dai Houliang, who serves as
+Chairman, Independent Non-executive
+Directors Mr. Tang Min and Mr. Fan
+Gang, who serve as members.
+c. Each Board Committee is required
+to report its decisions and
+recommendations to the Board
+and has formulated its terms of
+references. The terms of reference
+of the Audit Committee, the
+Remuneration Committee and the
+Nomination Committee are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com/listco/.
+E Investor Relations
+a. In order to further enhance corporate
+governance and satisfy business
+expansion needs of the Company,
+as approved at the annual general
+meeting of shareholders for the
+year 2017, Sinopec Corp. amends
+the Articles of Association and its
+appendix Rules and Procedures of
+Board Meetings. For more details,
+please refer to the announcement
+published in the China Securities
+Journal, the Shanghai Securities
+News and the Securities Times by
+Sinopec Corp. as well as the website
+of Shanghai Stock Exchange on 16
+May 2018 and the announcement
+published on the website of the Hong
+Kong Stock Exchange on 15 May
+2018.
+b. Sinopec Corp. pays high attention
+to investor relations. The team
+led by management conduct
+road shows every year to answer
+questions on subjects of concern to
+investors, such as introduction of
+the development strategies and the
+production and business performance
+of the Company. Sinopec Corp.
+established a department responsible
+for communicating with investors.
+In compliance with regulatory
+provisions, Sinopec Corp. enhanced
+communication with investors by
+holding meetings with institutional
+investors, setting up an investor
+hotline and communicating through
+internet platform.
+d. Sinopec Corp. established
+c. During the reporting period, separate
+resolution was proposed for each
+substantially separate issue at the
+general meetings. All resolutions were
+voted by poll to ensure the interests
+of all shareholders. Notices of the
+general meeting were dispatched
+to shareholders 45 days (excluding
+the date of the general meeting) in
+advance.
+e. According to relevant rules of Sinopec
+Corp., the Secretary to the Board
+is responsible for establishing an
+effective communication channel
+between Sinopec Corp. and its
+shareholders, for setting up special
+departments to communicate with
+the shareholders and for passing
+the opinions and proposals of the
+shareholders to the Board and
+Management in a timely manner.
+Contact details of Sinopec Corp. can
+be found on the Investor Center page
+on Sinopec Corp's website.
+a. The Hong Kong Stock Exchange
+recognized the Secretary to the Board
+as having the relevant qualifications
+as company Secretary. Nominated
+by the Chairman of the Board and
+appointed by the Board, the Secretary
+to the Board is a Senior Management
+Officer of Sinopec Corp. and
+responsible for the Company and the
+Board. The Secretary gives opinions
+on corporate governance to the Board
+and arranges orientation training
+and professional development for the
+Directors.
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+50
+50
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+G Shareholders' rights
+a. Shareholders who individually or
+collectively hold 10% of the total
+voting shares of Sinopec Corp.
+may request the Board in writing
+to convene the general meeting of
+shareholders. If the Board fails to
+approve the request to convene the
+meeting according to the Rules of
+Procedure for General Meetings
+of Shareholders, the shareholders
+may convene and hold the meeting
+at their discretion according to
+applicable laws, and reasonable
+expenses incurred will be borne by
+Sinopec Corp. These 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.
+d. The Chairman of the Board hosted
+the annual general meeting for the
+year 2017 and the first extraordinary
+general meeting for the year 2018.
+Some members of the Board and
+senior Management attended the
+meeting and communicated with the
+investors extensively.
+0
+(7) The 4th meeting of the seventh session
+of the Board was held by written
+resolution on 30 October 2018, whereby
+the proposals in relation to (i) the third
+quarterly report for three months ended
+30 September 2018, (ii) the nomination
+and appointment of the President of
+Sinopec Corp., (iii) the appointment of
+Senior Vice Presidents of Sinopec Corp.
+were approved.
+2 IMPLEMENTATION OF RESOLUTIONS
+APPROVED AT THE GENERAL MEETINGS
+OF SHAREHOLDERS BY THE BOARD
+During this reporting period, in accordance
+with relevant laws and regulations as well
+as the Articles of Association, all members
+of the Board diligently implemented the
+resolutions approved at the general meetings
+of Sinopec Corp., and have completed all
+the tasks delegated to them at the general
+meetings.
+Director
+Li Yunpeng
+3
+1
+2
+0
+0
+1
+1
+Director
+1
+Wang Zhigang
+0
+0
+0
+0
+0
+0
+Director
+Zhang Haichao
+0
+0
+0
+For details of each meeting, please refer
+to the announcements published in China
+Securities Journal, Shanghai Securities News
+and Securities Times on the next working
+day after each meeting and on the websites
+of Shanghai Stock Exchange, Hong Kong
+Stock Exchange and Sinopec Corp.
+Actual
+Attendance
+1
+52
+42
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL MEETINGS.
+(1) The Directors' attendance to the sixth session of the Board Meetings and the General Meeting.
+Director Titles
+Names
+No. of
+meeting held
+Board Meetings
+Actual Attended By
+Attendance communication
+General Meetings.
+Attended
+No. of
+by proxy
+meeting held
+Vice Chairman
+Dai Houliang
+3
+1
+2
+0
+0
+Absent
+0
+F Company Secretary
+0
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+During this reporting period, the amount
+of charity donations made by the Company
+amounted to RMB 0.18 billion.
+15 DONATIONS
+During this reporting period, the changes
+to the reserves of the Company are set out
+in the consolidated statement of changes
+in shareholders' equity in the financial
+statements prepared in accordance with
+IFRS in this annual report.
+14 RESERVES
+During this reporting period, changes to the
+fixed assets of the Company are set out in
+Note 16 to the financial statements prepared
+in accordance with IFRS in this annual
+report.
+13 FIXED ASSETS
+12 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of the Company as of 31 December 2018
+are set out in Note 29 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+During the reporting period, other than
+disclosed above, all the top five crude
+oil suppliers and the other four largest
+customers of the Company were independent
+third parties. There were no supplier,
+customer, employee or others that have a
+significant impact on the Company and on
+which the Company's success depends.
+Report of the Board of Directors
+64.95
+82.52
+46.42
+51.12
+61.618
+30.15
+60.54
+50.85
+0.249
+0.50
+0.42
+118.42
+2016
+58
+Report of the Board of Directors
+The Company enjoys a favourable positioning
+with its operations located close to the
+consumer markets. Along with the steady
+growth in the Chinese economy, sales volume
+of both oil products and chemical products
+of the Company has been increasing steadily
+over the years; through continuous and
+specialised marketing efforts, the Company's
+capability in international operations and
+market expansion has been further enhanced.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The integrated business structure of
+the Company carries strong advantages
+in synergy among its various business
+segments, enabling the Company to
+continuously tap onto potentials in attaining
+an efficient and comprehensive utilisation
+of its resources, and endowed the Company
+with strong resistance against risks, as well
+as remarkable capabilities in sustaining
+profitability.
+The Company is a large scale integrated
+energy and petrochemical company with
+upstream, mid-stream and downstream
+operations. The Company is a large scaled
+oil and gas producer in China; in respect
+of refining capacity, it ranks first in China;
+equipped with a well-developed refined oil
+products sales network, the Company is the
+largest supplier of refined oil products in
+China; and in terms of ethylene production
+capacity, the Company rank first in China,
+and has a well-established marketing network
+for chemical products.
+24 CORE COMPETITIVENESS ANALYSIS
+Our reserves estimates are guided by
+procedural manuals and technical guidance
+formulated by the company. A number of
+working divisions at the production bureau
+level, including the exploration, development
+and financial divisions are responsible
+for initial collection and compilation of
+information about reserves. Experts from
+exploration, development and economic
+divisions prepare the initial report on the
+reserves estimate which is then reviewed by
+the RMC at the subsidiary level to ensure the
+qualitative and quantitative compliance with
+technical guidance as well as its accuracy
+and reasonableness. We also engage outside
+consultants to assist in our compliance
+with the rules and regulations of the U.S.
+Securities and Exchange Commission.
+Our reserves estimation process is further
+facilitated by a specialised reserves
+database, which is improved and updated
+periodically.
+Our RMC is led by President of our Company,
+related departments of headquarter,
+Petroleum Exploration and Production
+Research Institute of Sinopec (PEPRIS) and
+senior managers of oilfield branches. Mr.
+Ma Yongsheng, the chairman of RMC is
+President of Sinopec Corp., an academician
+of the Chinese academy of Engineering with
+over 30 years of experience in oil and gas
+industry. A majority of our RMC members
+hold Ph.D. or master's degrees, and our
+members have an average of 20 years of
+technical experience in relevant professional
+fields, such as geology, engineering and
+economics.
+We manage our reserves estimation through
+a two-tier management system. Our Oil
+and Natural Gas Reserves Management
+Committee, or RMC, at the headquarters
+level oversees the overall reserves estimation
+process including organisation, coordination,
+monitoring and major decision-making,
+and reviews the reserves estimation of
+our Company. Each of our branches has
+a reserves management committee that
+manages and coordinates the reserves
+estimation, organises the estimation process
+and reviews the reserve estimation report at
+the branch level.
+23 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+As of 31 December 2018, the Company has
+not entered into any equity-linked agreement.
+58
+22 EQUITY-LINKED AGREEMENTS
+No contracts concerning management
+or administration of the whole or any
+substantial part of the business of the
+Company were entered into or existed during
+the reporting period.
+20 MANAGEMENT CONTRACTS
+19 DIRECTORS' INTERESTS IN CONTRACTS
+No director had a material interest, either
+directly or indirectly, in any contract of
+significance to the business of the Company
+to which Sinopec Corp. or any of its holding
+companies, subsidiaries or fellow subsidiaries
+was a party during the reporting period.
+For details for the positions held by the
+directors of Sinopec Corp. in the Sinopec
+Group during the reporting period, please
+refer to the section "Directors, Supervisors,
+Senior Management and Employees" of this
+annual report.
+18 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+During this reporting period, neither
+Sinopec Corp. nor any of its subsidiaries
+repurchased, sold or redeemed any listed
+shares of Sinopec Corp. or its subsidiaries.
+17 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+Pursuant to the Articles of Association
+and the laws of the PRC, the shareholders
+of Sinopec Corp. are not entitled to any
+pre-emptive rights. Therefore the existing
+shareholders cannot request Sinopec Corp.
+for the right of first refusal in proportion to
+their shareholdings.
+16 PRE-EMPTIVE RIGHTS
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+21 PERMITTED INDEMNITY PROVISIONS
+During the reporting period, Sinopec Corp.
+has purchased liability insurance for all
+directors to minimise their risks arising
+from the performance of their duties. The
+permitted indemnity provisions are stipulated
+in such directors liability insurance in
+respect of the liabilities and costs associated
+with the potential legal proceedings that may
+be brought against such directors.
+The Company owns a team of professionals
+and expertise engaged in the production
+of oil and gas, operation of refineries and
+chemical plants, as well as marketing
+activities. The Company applies outstanding
+fine management measures with its
+remarkable capabilities in management
+of operations, and enjoys a favourable
+operational cost advantage in its downstream
+businesses.
+2017
+The total sales value to the five largest
+customers of the Company in 2018 was
+RMB 231,305 million, accounted for 8%
+of the total sales value of the Company,
+of which the sales value to the connected
+party (Sinopec group) among the five
+largest customers was RMB 92,475 million,
+accounted for 3.2% of the total sales value
+for the year.
+56
+Report of the Board of Directors
+55
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+In accordance with the Enterprise Income
+Tax Law of the People's Republic of China
+which came into effect on 1 January 2008
+and its implementation regulations, Sinopec
+Corp. is required to withhold and pay
+enterprise income tax at the rate of 10%
+on behalf of the non-resident enterprise
+shareholders whose names appear on the
+register of members for H Shares of Sinopec
+Corp. when distributing cash dividends or
+issuing bonus shares by way of capitalisation
+from retained earnings. Any H Shares of
+the Sinopec Corp. which is not registered
+under the name of an individual shareholder,
+including those registered under HKSCC
+Nominees Limited, other nominees, agents
+or trustees, or other organisations or groups,
+shall be deemed as shares held by non-
+resident enterprise shareholders. Therefore,
+The dividend will be denominated and
+declared in RMB, and distributed to the
+domestic shareholders and investors
+participating in the Shanghai-Hong Kong
+Stock Connect Program in RMB and to
+the overseas shareholders in Hong Kong
+Dollar. The exchange rate for the dividend
+calculation in Hong Kong Dollar is based
+on the average benchmark exchange rate of
+RMB against Hong Kong Dollar as published
+by the People's Bank of China one week.
+preceding the date of the declaration of such
+dividend.
+The final cash dividend will be distributed
+on or before 21 June 2019 (Friday) to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on
+the record date of 10 June 2019 (Monday).
+In order to qualify for the final dividend
+for H shares, the holders of H shares must
+lodge all share certificates accompanied
+by the transfer documents with Hong
+Kong Registrars Limited located at 1712.
+1716 17th Floor Hopewell Centre, 183
+Queen's Road East, Wan Chai Hong Kong
+before 4:30 p.m. on 3 June 2019 (Monday)
+for registration. The H shares register of
+members of Sinopec Corp. will be closed
+from 4 June 2019 (Tuesday) to 10 June
+2019 (Monday) (both dates inclusive).
+At the 5th meeting of the seventh session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMB
+0.26 (tax inclusive) per share, combining
+with an interim distributed dividend of RMB
+0.16 (tax inclusive) per share, the total
+dividend for the whole year is RMB 0.42 (tax
+included) per share.
+Proposals for dividend distribution
+The profit distribution plan of Sinopec Corp.
+for the corresponding year will be carried out
+in accordance with the policy and procedures
+stipulated in the Articles of Association,
+with the advice of minority shareholders
+being heard and considered. Meanwhile, the
+independent directors will issue independent
+opinions.
+Report of the Board of Directors
+The profit distribution policy of Sinopec
+Corp. maintains consistency and steadiness,
+and considers the long-term interests
+of the Company, overall interests of all
+the shareholders and the sustainable
+development of the Company. Sinopec Corp.
+gives priority to adopting cash dividends
+for profit distribution, and is able to deliver
+an interim profit distribution. When the net
+profits and retained earnings of the Company
+are positive in current year, and in the event
+that the cash flow of Sinopec Corp. can
+satisfy the normal operation and sustainable
+development, Sinopec Corp. should adopt
+cash dividends, and the distribution profits
+in cash every year are no less than 30%
+of the net profits of the Company realised
+during the corresponding year.
+The financial results of the Company for
+the year ended 31 December 2018, which
+is prepared in accordance with IFRS and
+the financial position as at that date and
+the accompanying analysis are set out from
+page 152 to page 211 in this annual report.
+The Company's business review, discussions
+and analysis on business performance using
+financial key performance indicators and
+the material factors underlying our results
+and financial position during the reporting
+period, particulars of significant events
+affecting the Company and the prospects of
+the Company's business are disclosed in this
+annual report under the relevant sections
+of Chairman's Address, Business Review
+and Prospects, Management's Discussion
+and Analysis and Significant Events. All the
+sections above constitute parts of this Report
+of the Board of Directors.
+6 BUSINESS PERFORMANCE
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+54
+54
+5 BOARD COMMITTEES HAVE ISSUED REVIEW
+OPINIONS WITHOUT ANY OBJECTION TO
+THE BOARD WHEN PERFORMING THEIR
+DUTIES DURING THE REPORT PERIOD.
+(11) The 1st meeting of the seventh session
+of the Remuneration Committee was held
+by written resolution on 22 August 2018,
+whereby the proposal in relation to the
+election of the directors of the Board for
+general meeting's approval was approved.
+(12) The 2nd meeting of the seventh session
+of the Remuneration Committee was
+held by written resolution on 29 October
+2018, whereby the proposals in relation
+to the appointment of the President and
+Senior Vice Presidents of Sinopec Corp.
+were approved.
+(10) The 3rd meeting of the sixth session of
+the Social Responsibility Management
+Committee was held by written resolution
+on 21 March 2018, whereby the 2017
+Communication on Progress for the
+Sustainable Development of Sinopec
+Corp. was approved at the meeting.
+(9) The 3rd meeting of the sixth session
+of the Remuneration Committee was
+held by written resolution on 21 March
+2018, whereby the proposals in relation
+to implementation of the remuneration
+rules for directors, supervisors and other
+senior management for 2017 and the
+report of the remuneration for directors
+of the seventh session of the Board and
+for supervisors of the seventh session of
+the Board of Supervisors were reviewed
+and approved at the meeting.
+0
+7 DIVIDEND
+2018
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+If the individual holders of the H shares
+who are Hong Kong or Macau residents or
+residents of the countries which had an
+agreed tax rate of 10% for the cash dividends
+or bonus shares by way of capitalisation
+from retained earnings with China under
+the relevant tax agreement, Sinopec Corp.
+should withhold and pay individual income
+tax on behalf of the relevant shareholders
+at a rate of 10%. Should the individual
+holders of the H Shares are residents of the
+countries which had an agreed tax rate of
+less than 10% with China under the relevant
+tax agreement, Sinopec Corp. shall withhold
+and pay individual income tax on behalf
+of the relevant shareholders at a rate of
+10%. In that case, if the relevant individual
+11 MAJOR SUPPLIERS AND CUSTOMERS
+During this reporting period, the total value
+of the purchasing from the top five crude
+oil suppliers of the Company accounted
+for 46.6% of the total value of the crude
+oil purchasing by the Company, of which
+the total value of the purchasing from the
+largest supplier accounted for 14.8% of the
+total value of the crude oil purchasing by the
+Company.
+10 DURING THIS REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS OR
+REGULATIONS WHICH HAVE A MATERIAL
+IMPACT ON THE COMPANY
+9 DURING THIS REPORTING PERIOD, THE
+IMPLEMTATION OF ENVIRONMENTAL
+POLICIES BY THE COMPANY
+The Company did not violate any
+environmental policy during the reporting
+period. Details with regard to the Company's
+performance in relation to environmental
+and social-related policies and performances
+are provided in the Chairman's Address and
+Business Review and Prospects in this annual
+report as well as the 2018 Communication
+on Progress for the Sustainable Development
+of Sinopec Corp. Those disclosures in
+relation to the environmental policies
+constitute part of the Report of the Board of
+Directors.
+2018 Internal Control Assessment Report of
+Sinopec Corp. was reviewed and approved at
+the 5th meeting of the seventh Session of the
+Board on 22 March 2019, and all members
+of the Board warrant that the contents of
+the report are true, accurate and complete,
+and there are no false representations,
+misleading statements or material omissions
+contained in the report.
+The Board is fully responsible for establishing
+and maintaining the internal control system
+related to the financial statements as well
+as ensuring its effective implementation. In
+2018, the Board assessed and evaluated the
+internal control of Sinopec Corp. according
+to the Basic Standard for Enterprise Internal
+Control, Application Guidelines for Enterprise
+Internal Control and Assessment Guidelines
+for Enterprise Internal Control. There were
+no material defects in relation to the internal
+control system as of 31 December 2018.
+The internal control system of Sinopec Corp.
+related to the financial statements is sound
+and effective.
+INTERNAL CONTROL
+8 RESPONSIBILITIES FOR THE COMPANY'S
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2016
+to 2018 is RMB 1.169 per share, and the total
+dividend payment from 2016 to 2018 as a
+percentage of average net profit in the three
+years is 266.8%.
+Note: The final cash dividend for 2018 is subject to the approval at the 2018 annual general meeting.
+listed company in the consolidated statement (%)
+on this basis, enterprise income tax shall
+be withheld from dividends payable to such
+shareholders. If holders of H Shares intend to
+change its shareholder status, please enquire
+about the relevant procedures with your
+agents or trustees. Sinopec Corp. will strictly
+comply with the law or the requirements
+of the relevant government authority to
+withhold and pay enterprise income tax on
+behalf of the relevant shareholders based on
+the registration of members for H shares of
+Sinopec Corp. as at the record date.
+Ratio between the dividends and the net profit attributed to the shareholders of the
+Total amount of cash dividends (RMB billion, tax inclusive)
+Cash dividends (RMB/Share, tax inclusive)
+The dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as follows:
+For investors of the Hong Kong Stock
+Exchange (including enterprises and
+individuals) investing in the A Shares of
+Sinopec Corp. through Shanghai-Hong Kong
+Stock Connect Program, the Company
+will withhold and pay income taxes at the
+rate of 10% on behalf of those investors
+and will report to the tax authorities for
+the withholding. For investors who are tax
+residents of other countries, whose country
+of domicile is a country having entered into a
+tax treaty with the PRC stipulating a dividend
+tax rate of lower than 10%, the enterprises
+and individuals may, or may entrust a
+withholding agent to, apply to the competent
+tax authorities for the entitlement of the rate
+under such tax treaty. Upon approval by the
+tax authorities, the amount paid in excess
+of the tax payable based on the tax rate
+according to such tax treaty will be refunded.
+For domestic investors investing in the H
+Shares of Sinopec Corp. through Shanghai-
+Hong Kong Stock Connect Program, the
+company shall withhold and pay income tax
+at the rate of 20% on behalf of individual
+investors and securities investment funds.
+The company will not withhold or pay
+the income tax of dividends for domestic
+enterprise investors and those domestic
+enterprise investors shall report and pay the
+relevant tax by themselves.
+Shanghai Hong Kong Stock Connect (E
+港股票市場交易互聯互通機制試點有關稅收政策
+(Caishui [2014] No. 81):
+Related to the Pilot Program of the
+Pursuant to the Notice on the Tax Policies
+that the relevant shareholders submit the
+evidence required by the notice of the tax
+agreement to the share register of Sinopec
+Corp. in a timely manner. Sinopec Corp. will
+assist with the tax refund after the approval
+of the competent tax authority. Should
+the individual holders of the H Shares are
+residents of the countries which had an
+agreed tax rate of over 10% but less than
+20% with China under the tax agreement,
+Sinopec Corp. shall withhold and pay the
+individual income tax at the agreed actual
+rate in accordance with the relevant tax
+agreement. In the case that the individual
+holders of the H Shares are residents of the
+countries which had an agreed tax rate of
+20% with China, or which has not entered
+into any tax agreement with China, or
+otherwise, Sinopec Corp. shall withhold and
+pay the individual income tax at a rate of
+20%.
+holders of the H Shares wish to reclaim
+the extra amount withheld (Extra Amount)
+due to the application of 10% tax rate,
+Sinopec Corp. would apply for the relevant
+agreed preferential tax treatment provided
+Net profits attributed to the shareholders of the listed company shown in the
+consolidated statement for the dividend year (RMB billion)
+The Company has formulated a well-
+established technology system and
+mechanism, and owns competent teams
+specialised in R&D covering a wide range of
+subjects; the four platforms for technology
+advancement is taking shape, which includes
+exploration and development of oil and
+gas, refining, petrochemicals and strategic
+emerging technology. With its overall
+technologies reaching state of the art level in
+the global arena, and some of them taking
+the lead globally, the Company enjoys a
+strong technical.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+25 RISK FACTORS
+0
+Director
+Li Yong
+4
+1
+2
+1
+0
+1
+Independent Director
+1
+Tang Min
+1
+2
+1
+0
+1
+1
+Independent Director
+Independent Director
+Fan Gang
+Cai Hongbin
+4
+4
+0
+2
+Director
+The Company always attaches great
+importance to fulfilling social responsibilities,
+and carries out the green and low carbon
+development strategy to pursue a sustainable
+development. Moreover, the Company enjoys
+an outstanding "Sinopec" brand name, plays
+an important role in the national economy
+and is a renowned and reputable company in
+China.
+Ma Yongsheng
+4
+0
+2
+2
+0
+1
+0
+1
+Director
+4
+1
+2
+1
+0
+1
+Director
+Liu Zhongyun
+4
+1
+Ling Yiqun
+2
+1
+0
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+4 MEETINGS HELD BY THE BOARD
+COMMITTEES
+During the reporting period, the Audit
+Committee held six (6) meetings. Strategy
+Committee held two (2) meetings, the
+Remuneration Committee held one
+(1) meeting, the Social Responsibility
+Management Committee held one (1)
+meeting, and the Nomination Committee
+held two (2) meetings. All members of
+each committee had attended the relevant
+meetings. Details of those meetings are as
+follows:
+(1) The 11th meeting of the sixth session of
+the Audit Committee was held by written
+resolutions on 8 February 2018, whereby
+the proposal in relation to the revision
+of the internal control manual (version
+2018) was approved at the meeting.
+(2) The 12th meeting of the sixth session of
+the Audit Committee was held by on site
+meeting on 21 March 2018, whereby the
+following matters were approved at the
+meeting: (i) Financial results, business
+performance and other related matters of
+the Company for the year 2017 (including
+a. provision for impairment for the year
+2017; b. the connected transactions
+for the year 2017; c. profit distribution
+plan for the year 2017; d. audit costs
+for the year 2017; e. the report of Risk
+Assessment for Capital Deposits at
+Finance Company and Century Bright
+Company), (ii) Annual Report and 20F for
+the year 2017; (iii) Financial Statements
+of Sinopec Corp. for the year 2017;
+(iv) Internal control assessment report
+of the Company for the year 2017; (v)
+Work report on the internal auditing for
+the year 2017. Reports on the auditing
+work of the financial statements for the
+year 2017 prepared by the domestic and
+overseas auditors were also reviewed at
+the meeting.
+(3) The 13th meeting of the sixth session
+of Audit Committee was held by written
+resolution on 26 April 2018, whereby the
+first quarterly report for three months
+ended 31 March 2018 was approved at
+the meeting.
+(4) The 1st meeting of the seventh session
+of Audit Committee was held by written
+resolution on 10 July 2018, whereby the
+proposal in relation to the the proposed
+establishment of Sinopec Capital by
+Sinopec Corp. with China Petrochemical
+Corporation was approved.
+(5) The 2nd meeting of the seventh session
+of Audit Committee was held by on site
+meeting on 22 August 2018, whereby
+(i) Financial statements for the first half
+year of 2018; (ii) Interim report for the
+first half year of 2018; (iii) Business
+performance and financial results of
+the first half year of 2018; (iv) Reports
+on internal auditing work for the first
+half year of 2018;. (v) the continuing
+connected transactions for three years
+from 2019 to 2021 were approved at the
+meeting.
+Report of the Board of Directors
+(7) The 5th meeting of the sixth session
+59
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Risks with regard to the changes from
+environmental legislation requirements:
+Our production activities generate waste
+liquids, gases and solids. The Company has
+built up the supporting effluent treatment
+systems to prevent and reduce the pollution
+to the environment. However, the relevant
+government authorities may issue and
+implement much stricter environmental
+protection laws and regulations, adopt much
+stricter environment protection standards.
+Under such situations, the Company
+may increase expenses in relation to the
+environment protection accordingly.
+Risks from the macroeconomic policies
+and government regulation: Although the
+Chinese government is gradually liberalizing
+the market entry regulations on petroleum
+and petrochemicals sector, the petroleum
+and petrochemical industries in China are
+still subject to entry regulations to a certain
+degree, which include: issuing licenses in
+relation to exploration and development of
+crude oil and natural gas, issuing business
+licenses for trading crude oil and refined
+oil, setting caps for retail prices of gasoline,
+diesel and other oil products, the imposing
+of the special oil income levy, formulation
+of refined oil import and export quotas and
+procedures, formulation of safety, quality
+and environmental protection standards
+and formulation of energy conservation
+policies. In addition, the changes which have
+occurred or might occur in macroeconomic
+and industry policies such as the opening
+up of crude oil import licenses and the
+right of tenure, and further improvement in
+pricing mechanism of refined oil products,
+gas stations investment are fully opened
+overseas, reforming and improvement in
+pricing mechanism of natural gas, cost
+supervision of gas pipeline and access to
+third party, and reforming in resource tax
+and environmental tax, will cause effects
+on our business operations. Such changes
+might further intensify market competition
+and have certain effect on the operations and
+profitability of the Company.
+I can only counteract the adverse influences of
+industry cycle to some extent.
+Risks with regard to the cyclical effects
+from the industry: The majority of the
+Company's operating income comes
+from the sales of refined oil products and
+petrochemical products, and part of those
+businesses and their related products are
+cyclic and are sensitive to macro-economy,
+cyclic changes of regional and global
+economy, the changes of the production
+capacity and output, demand of consumers,
+prices and supply of the raw materials, as
+well as prices and supply of the alternative
+products etc. Although the Company is
+an integrated company with upstream,
+midstream and downstream operations, it
+2
+Risks with regard to the variations from
+macroeconomic situation: The business
+results of the Company are closely related to
+China's and global economic situation. The
+development of Chinese economy has entered
+New Normal. Although various countries have
+adopted different kinds of macroeconomic
+policies to eliminate negative effects caused
+by lower growth of global economy, the
+turnaround of economic recovery still
+remains uncertain. The Company's business
+could also be adversely affected by other
+factors such as the impact on export due to
+trade protectionism from certain countries,
+impact on import which is likely caused by
+regional trade agreements, and negative
+impact on the investment of overseas oil
+and gas exploration and development and
+refining and chemical storage projects which
+results from the uncertainty of geopolitics,
+international crude oil price and etc.
+In the course of its production and
+operations, the Company will actively take
+various measures to circumvent operational
+risks. However, in practice, it may not be
+possible to prevent the occurrence of all
+risks and uncertainties described below.
+Report of the Board of Directors
+Report of the Board of Directors
+(6) The 3rd meeting of the seventh session
+of the Audit Committee was held by
+written resolution on 29 October 2018,
+whereby the third quarterly report for
+three months ended 30 September 2018
+was approved at the meeting.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+1
+0
+0
+53
+4
+1
+2
+1
+0
+0
+Independent Director
+Ng, Kar Ling Johnny
+1
+2
+2
+4. Independent Director Mr. Jiang Xiaoming, Mr. Andrew Y. Yan have not been directors of the board since 15 May 2018.
+5. Pursuant to the Hong Kong Listing Rules, attended by proxy was not counted as attendance by the director himself.
+0
+0
+2. Mr Wang Zhigang, Mr. Zhang Haichao resigned as directors of the Board on 29 January 2018.
+3. Mr. Jiao Fangzheng resigned as director of the Board on 7 June 2018.
+1
+1. No directors were absent from two consecutive Board meetings.
+4
+0
+before tax)
+Male
+Yu Baocai
+Male
+Li Yunpeng
+2018
+Dai Houliang
+Company
+Equity interests in Sinopec Corp.
+(as at 31 December)
+Ma Yongsheng
+Tenure
+Male
+Male
+Age
+61
+the holding
+Equity interests in Sinopec Corp.
+paid by
+Name
+the holding
+Gender
+Wang Zhigang
+5230
+Male
+Male
+61
+Position in
+Sinopec Corp.
+Former Director and
+Senior Vice President
+Former Director and
+Senior Vice President
+Tenure
+(RMB 1,000,
+before tax)
+Zhang Haichao
+(RMB 1,000,
+Directors, Supervisors,
+Age
+Danagement and Employees
+Supervisors,
+Senior Management and Employees
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+People's Bank of China. Mr.
+Fan is recognised as one
+of the National Young and
+Middle-Aged Experts with
+Outstanding Contributions.
+In May 2015, he acted as
+Independent Director of
+Sinopec Corp.
+Senior
+National Economic Research
+Institution. From 2006 to
+2010, and between 2015
+and 2018, he served as a
+member of the Monetary
+Policy Committee of the
+Tang Min, aged 65,
+Independent Director of
+Sinopec Corp. Mr. Tang has
+a Ph.D. in economics. He
+presently acts as Counsellor
+of the State Council of the
+PRC and Executive Vice.
+Chairman of YouChange
+China Social Entrepreneur
+Foundation, Independent
+Director of Baoshang Bank
+Co., Ltd, and Independent
+Director of China Minmetals
+Development Co., Ltd. He
+was an economist and
+senior economist at the
+Economic Research Centre
+of the Asian Development
+Bank between 1989 and
+2000; chief economist at
+the Representative office of
+the Asian Development Bank
+in China between 2000 and
+2004; Deputy Representative
+at the Representative Office
+of the Asian Development
+Bank in China between
+2004 and 2007 and Deputy
+Secretary-General of the
+China Development Research
+Foundation between 2007
+and 2010. In May 2015,
+he acted as Independent
+Director of Sinopec Corp.
+Executive Vice President of
+China National Offshore Oil
+Corporation Limited, as well
+as Chief Director (General
+Manager) and Secretary of
+CPC Committee of China
+National Offshore Oil
+Corporation Bohai Petroleum
+Administration Bureau
+(China National Offshore Oil
+Corporation (China) Limited
+Tianjin Branch); in March
+2017, he was appointed
+as Vice President of China
+Petrochemical Corporation,
+and since July 2017, he
+concurrently served as Vice
+Chairman of the Board of
+Directors, President and
+Secretary of CPC Committee
+of Sinopec International
+Petroleum Exploration and
+Production Corporation, as
+well as Chairman of Board
+of Directors and President
+of Sinopec International
+Petroleum Exploration and
+Production Limited. In May
+2018, he was elected as
+Director of Sinopec Corp.
+Li Yong, aged 55, Director
+of Sinopec Corp. Mr. Li
+is a senior engineer with
+a master degree. In April
+2003, he was appointed as
+Deputy General Manager
+of Tianjin Branch of China
+National Offshore Oil
+Corporation (China) Limited;
+in October 2005, he was
+appointed as Executive
+Vice President of China
+Oilfield Services Limited;
+in April 2009, he was
+appointed as President
+of China Oilfield Services
+Limited; in September
+2010, he was appointed as
+Chief Executive Officer and
+President of China Oilfield
+Services Limited; in July
+2012, he was appointed as
+the Chief Executive Officer,
+President and Secretary of
+CPC Committee of China
+Oilfield Services Limited;
+in June 2016, he was
+appointed as Assistant
+President of China National
+Offshore Oil Corporation and
+Fan Gang
+in 2018
+Tang Min
+Fan Gang, aged 65,
+Independent Director of
+Sinopec Corp. Mr. Fan
+has a Ph.D. in economics.
+He presently acts as Vice
+President of China Society
+of Economic Reform,
+Head of the National
+Economic Research
+Institution of China Reform
+Foundation, President
+of China Development
+Institute (Shenzhen) and
+an economics professor
+at Peking University. He
+began to work for Chinese
+Academy of Social Sciences.
+in 1988, and subsequently
+served as Director of
+Editorial Department for
+the Economic Research
+Journal between 1992 and
+1993 and as Deputy Head
+of the Institute of Economics
+of Chinese Academy of
+Social Sciences between
+1994 and 1995. In 1996,
+he was redesignated to
+work for China Society of
+Economic Reform, and
+subsequently founded the
+Position in
+Sinopec Corp.
+Cai Hongbin
+Ng, Kar Ling Johnny
+Gender
+Name
+paid by
+Whether
+in 2018
+paid by
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Remuneration
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+68
+from the Chinese University
+of Hong Kong in 1984 and
+1999, respectively. Mr. Ng.
+joined KPMG (Hong Kong) in
+1984 and became a Partner
+in 1996. He acted as a
+Managing Partner from June
+2000 to September 2015
+and the Vice Chairman of
+KPMG (China) from October
+2015 to March 2016. Mr.
+Ng currently serves as
+Independent Non-executive
+Director and Chairman of
+the audit committee of
+China Vanke Co., Ltd. In
+May 2018, Mr. Ng acted
+as Independent Director of
+Sinopec Corp.
+Ng, Kar Ling Johnny, aged
+58, Independent Director
+of Sinopec Corp. Mr. Ng
+currently is a practicing
+certified public accountant
+in Hong Kong, a practicing
+auditor and certified public
+accountant in Macau, a
+fellow member of the Hong
+Kong Institute of Certified
+Public Accountants (FCPA),
+a fellow member of the
+Association of Chartered
+Certified Accountant
+(FCCA), and a member of
+the Institute of Chartered
+Accountants in England and
+Wales (AICAEW). Mr. Ng
+obtained a Bachelor's degree
+and a Master's degree in
+Business Administration
+of the University of Hong
+Kong. Professor Cai Hongbin
+is a member of the 12th
+National People's Congress
+and a member of Beijing
+Municipal Committee of
+Chinese People's Political
+Consultative Conference,
+serving as member of the
+eleventh Central Committee
+of China Democratic League,
+deputy Chairman of Beijing
+Municipal Committee of
+China Democratic League,
+and a special auditor of
+the National Audit Office.
+Mr. Cai once served as
+external director of China
+Petrochemical Corporation,
+independent directors of
+China Unicom and China
+Everbright Bank, etc. Mr.
+Cai currently serves as
+independent director of CCB
+International (Holdings)
+Ltd., Rightway Holdings Co.,
+Ltd. and Beijing Landsky
+Environmental Technology
+Co., Ltd., In May 2018, Mr.
+Cai acted as Independent
+Director of Sinopec Corp.
+Cai Hongbin, aged 51,
+Independent Director of
+Sinopec Corp. Mr. Cai is
+dean of Faculty of Business
+and Economics and
+Professor of Economics of
+the University of Hong Kong.
+Mr. Cai has a Ph.D. degree
+in Economics. From 1997
+to 2005, Mr. Cai taught
+at University of California,
+Los Angeles; since 2005,
+he served as a professor
+and Ph.D. supervisor
+in Applied Economics
+Department at Guanghua
+School of Management
+at Peking University, he
+once served as Director,
+Assistant to the Dean and
+Vice Dean of the Applied
+Economics Department.
+From December 2010 to
+January 2017, he served.
+as the dean of Guanghua
+School of Management at
+Peking University. In June
+2017, he joined the Faculty
+of Business and Economics
+LIST OF MEMBERS OF THE BOARD
+Whether
+Ling Yiqun
+Remuneration
+Yes
+2018.05-2021.05
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+Board Director
+55
+Male
+Li Yong
+55
+Male
+Liu Zhongyun
+56
+Male
+President
+oooo
+0
+No
+394.6
+0
+Li Yong
+Chairman
+Board Director
+Board Director
+2009.05-2021.05
+2017.06-2021.05
+467.8
+No
+0
+13,000
+2017
+Yes
+0
+Board Director,
+2018.10-2021.05
+2016.02-2021.05
+Yes
+0
+0
+13,000
+2018.05-2021.05
+Yes
+51
+Independent Director
+2018.05-2021.05
+233.3
+No
+Ng, Kar Ling Johnny
+Male
+Male
+2018.05-2021.05
+233.3
+No
+00000
+0
+[이이이이이이
+58 Independent Director
+paid by
+Cai Hongbin
+333.3
+0
+2018.05-2021.05
+Yes
+Tang Min
+Male
+65 Independent Director
+No
+2015.05-2021.05
+No
+Fan Gang
+Male
+65
+Independent Director
+2015.05-2021.05
+333.3
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+22 March 2019
+in February 2018, he was
+appointed as Senior Vice
+President of Sinopec Corp.
+In December 2018, he was
+appointed concurrently as
+the Chairman of Sinopec
+Oilfield Service Corporation.
+In May 2018, Mr. Liu was
+elected as Director of
+Sinopec Corp.
+0
+0
+No
+48.29
+2006.05-2018.01
+2017
+2018
+Company
+(as at 31 December)
+Report of the Board of Directors
+60
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Risks from the uncertainties of obtaining
+additional oil and gas resources: The future
+sustainable development of the Company
+is partly dependent to a certain extent on
+our abilities in continuously discovering
+or acquiring additional oil and natural
+gas resources. To obtain additional oil
+and natural gas resources, the Company
+faces some inherent risks associated with
+exploration and development and/or with
+acquisition activities, and the Company has
+to invest a large amount of money with no
+guarantee of certainty. If the Company fails
+to acquire additional resources through
+further exploration, development and
+acquisition to increase the reserves of crude
+oil and natural gas, the oil and natural gas
+reserves and production of the Company
+may decline over time which may adversely
+affect the Company's financial situation and
+operation performance.
+Risks with regard to the external purchase
+of crude oil: A significant amount of crude
+oil as needed by the Company is satisfied
+through external purchases. In recent years,
+especially influenced by the mismatch
+between supply and demand of crude oil,
+geopolitics, global economic growth and
+other factors, the prices of crude oil fluctuate
+sharply. Additionally, the supply of crude
+oil may even be interrupted due to some
+extreme major incidents in certain regions.
+Although the Company has taken flexible
+countermeasures, it may not fully avoid risks
+associated with any significant fluctuation
+of international crude oil prices and sudden
+disruption of supply of crude oil from certain
+regions.
+Risks with regard to the operation and
+natural disasters: The process of petroleum
+chemical production is exposed to the
+high risks of inflammation, explosion and
+environmental pollution and is vulnerable
+to extreme natural disasters. Such
+contingencies may cause serious impacts
+to the society, major financial losses to the
+Company and grievous injuries to people.
+The Company has always been paying great
+emphasis on the safety production, and has
+implemented a strict HSSE management
+system as an effort to avoid such risks as
+far as possible. Meanwhile, the main assets
+and inventories of the Company as well as
+the possibility of damage to a third party
+have been insured. However, such measures
+may not shield the Company from financial
+losses or adverse impact resulting from such
+contingencies.
+Investment risks: Petroleum and chemical
+sector is a capital intensive industry.
+Although the Company has adopted a
+prudent investment strategy, and as required
+by the new procedure and management of
+investment decision-making issued in 2017,
+conducted rigorous feasibility study on
+each investment project, which consists of
+special verifications in raw material market,
+technical scheme, profitability, safety and
+environmental protection, legal compliance,
+etc., certain investment risks will still exist
+and expected returns may not be achieved
+due to major changes in factors such as
+market environment, prices of equipment
+and raw materials, and construction period
+during the implementation of the projects.
+Risks with regard to overseas business
+development and management: The
+Company engages in oil and gas exploration,
+refining and chemical, warehouse logistics
+and international trading businesses in
+some regions outside China. The Company's
+overseas businesses and assets are subject
+to the jurisdiction of the host country's laws
+and regulations. In light of the complicated
+factors such as imbalance of global economy,
+competitiveness of industry and trade
+structure, exclusiveness of regional trading
+blocs, polarisation of benefits distribution
+in trade, and politicisation of economic and
+trade issues, including sanctions, barriers to
+entry, instability in the financial and taxation
+policies, contract defaults, tax dispute, the
+Company's risks with regard to overseas
+business development and management
+could be increased.
+Currency risks: At present, China implements
+an administered floating exchange rate
+regime based on market supply and demand
+which is regulated with reference to a basket
+of currencies in terms of the exchange rate
+of Renminbi. As the Company purchases
+a significant portion of crude oil in foreign
+currency which is based on US dollar-
+denominated prices, the realized price
+of crude oil is based on international oil
+price. Despite the fact that, the price of the
+domestic refined oil products will change as
+the exchange rate of the Renminbi changes
+according to the pricing mechanism for
+the domestic refined oil products, and
+the price of other domestic petrochemical
+products will also be influenced by the price
+of the imported products, which to a large
+extent, smooths the impact of the Renminbi
+exchange rate on the processing and sales
+of the Company's crude oil refined products.
+However, the fluctuation of the Renminbi
+exchange rate will still have an effect on the
+income of the upstream sector.
+Cyber-security risks: the Company has a
+well established network safety system,
+information infrastructure and operation
+system, and network safety information
+platform, devotes significant resources to
+protecting our digital infrastructure and
+data against cyber-attacks, if our systems
+against cyber-security risk prove to be
+ineffective, we could be adversely affected
+by, among other things, disruptions to our
+business operations, and loss of proprietary
+information, including intellectual property,
+financial information and employer and
+customer data, injury to people, property,
+environment and reputation. As cyber-
+security attacks continue to evolve, we may
+be required to expend additional resources
+to enhance our protective measures against
+cyber-security breaches.
+By Order of the Board
+Dai Houliang
+Chairman
+Beijing, China, 22 March 2019
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+61
+Report of the Board of Directors
+62
+REPORT OF THE BOARD OF SUPERVISORS
+2015.05-2018.01
+Dear Shareholders:
+Yes
+0
+Senior Management and Employees
+Directors, Supervisors,
+69
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Note 1: Mr. Dai Houliang received remuneration from the Company from January 2018 to October 2018.
+2: Mr. Ma Yongsheng receives remuneration from the Company since November 2018.
+66
+0
+No
+No
+22
+12.50
+2012.05.2018.05
+12.50
+2012.05.2018.05
+Senior Vice President
+Former Independent
+Director
+Former Independent
+Director
+61
+Male
+Yan Yan
+65
+Male
+Jiang Xiaoming
+0
+0
+Yes
+2015.05.2018.06
+Former Director and
+56
+Male
+Jiao Fangzheng
+0
+In 2018, the Board of Supervisors and
+each supervisor of Sinopec Corp. diligently
+performed their supervision responsibilities,
+actively participated in the supervision process
+of decision making, carefully reviewed and
+effectively supervised the major decisions of
+the Company, and endeavored to safeguard the
+interests of shareholders and the Company in
+accordance with the PRC Company Law and the
+Articles of Association of Sinopec Corp.
+0
+On 23 March 2018, the 13th meeting of the
+sixth session of the Board of Supervisors was
+held, and the proposals in relation to Annual
+Report of Sinopec Corp. for 2017, the Financial
+Statements of Sinopec Corp. for 2017, 2017
+Communication on Progress for Sustainable
+Development of Sinopec Corp., Internal Control
+Assessment Report of Sinopec Corp. for 2017,
+Work Report of the Board of Supervisors of
+Sinopec Corp. for 2017, Work Report of the
+Sixth Session of the Board of Supervisors of
+Sinopec Corp., were reviewed and approved at
+the meeting.
+Senior
+19
+64
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Yu Baocai
+Ma Yongsheng
+Yu Baocai, aged 53,
+Director of Sinopec Corp.
+Mr. Yu is a senior engineer
+and master in economics.
+In September 1999, Mr. Yu
+was appointed as the Deputy
+General Manager of Daqing
+Petrochemical Company;
+In December 2001, he was
+appointed as the General
+Manager and Deputy
+Secretary of CPC Committee
+of Daqing Petrochemical
+Company; In September
+2003, he was appointed as
+the General Manager and
+Secretary of CPC Committee
+of Lanzhou Petrochemical
+Company; In June 2007,
+he was appointed as the
+General Manager and Deputy
+Secretary of CPC Committee
+of Lanzhou Petrochemical
+Company and the General
+Manager of Lanzhou
+Petroleum & Chemical
+Company; He had been
+a member of the Leading
+Party Member Group
+and the Deputy General
+Manager of China National
+Petroleum Corporation since
+September 2008 and had
+been acting concurrently
+as director of Petrochina
+Company Limited since
+May 2011; Since June
+2018, he has been a
+member of the Leading
+Party Member Group and
+the Vice President of China
+Petrochemical Corporation.
+In August 2018, he was
+appointed concurrently
+as Chairman of Sinopec
+Enginnering (Group) Co.,
+Ltd. In October 2018, Mr.
+Yu was elected as Director
+of Sinopec Corp.
+Ma Yongsheng, aged 57,
+Director and President of
+Sinopec Corp. Mr. Ma is
+a professor level senior
+engineer with a Ph.D.
+degree and an academician
+of the Chinese Academy of
+Engineering. Mr. Ma is the
+member of the thirteenth
+national committee of
+CPPCC. In April 2002, he
+was appointed as Chief
+Geologist of Sinopec
+Southern Exploration and
+Production Company;
+in April 2006, he was
+appointed as Executive
+Deputy Manager (in charge
+of overall management),
+Chief Geologist of Sinopec
+Southern Exploration and
+Production Company; in
+January 2007, he was
+appointed as General
+Manager and Party
+Secretary of CPC Committee
+of Sinopec Southern
+Exploration and Production
+Company; in March 2007,
+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., General Manager
+and Deputy Secretary of
+CPC Committee of Sinopec
+Exploration Company; in
+May 2008, he was appointed
+as Deputy Director
+General of Exploration and
+Production Department of
+Sinopec Corp. (Director
+General Level) and Deputy
+Commander of Sichuan-East
+China Gas Pipeline Project
+Headquarter; in July 2010,
+he served as Deputy Chief
+Geologist of Sinopec Corp.;
+in August 2013, he was
+appointed as Chief Geologist
+of Sinopec Corp.; in
+December 2015, he served.
+as Vice President of China
+Petrochemical Corporation
+and appointed as Senior
+Vice President of Sinopec
+Corp.; in February 2016, he
+was elected as Director of
+Sinopec Corp.; in January
+2017, he was appointed as
+Member of the Leading Party
+Member Group of China
+Petrochemical Corporation;
+in October 2018, he was
+appointed as President of
+Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 65
+Directors, Supervisors,
+Senior Management and Employees
+Supervisors,
+Danagement and Employees
+Senior
+Ling Yiqun
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Liu Zhongyun
+Ling Yiqun, aged 56,
+Director and Senior Vice
+President of Sinopec Corp.
+Mr. Ling is a professor
+level senior engineer with
+a Ph.D. degree. From
+1983, he worked in the
+refinery of Beijing Yanshan
+Petrochemical Company and
+the Refining Department
+of Beijing Yanshan
+Petrochemical Company Ltd.
+In February 2000, he was
+appointed as the Deputy
+Director General of Refining
+Department of Sinopec
+Corp.; in June 2003, he
+was appointed as the
+Director General of Refining
+Department of Sinopec
+Corp.; in July 2010, he was
+appointed as Vice President
+of Sinopec Corp.; in May
+2012, he was appointed
+concurrently as Executive
+Director, President and
+Secretary of CPC Committee
+of Sinopec Refinery Product
+Sales Company Limited;
+in August 2013, he was
+appointed concurrently as
+the President of Sinopec
+Qilu Company; in December
+2016, he was elected
+concurrently as Chairman
+of Board of Directors of
+Sinopec Engineering(Group)
+Co., Ltd.; in March 2017,
+he was appointed as
+Vice President of China
+Petrochemical Corporation
+and in February 2018, he
+was appointed as Senior
+Vice President of Sinopec
+Corp. In May 2018, he
+Liu Zhongyun, aged 55,
+Director and Senior Vice
+President of Sinopec Corp.
+Mr. Liu is a professor
+level senior engineer with
+a Ph.D. in engineering. In
+December 2002, he was
+appointed as a standing
+committee member of CPC
+Committee and Director
+of the Party Organisation
+Department of Shengli
+Petroleum Administration
+Bureau; in November
+2004, he was appointed
+as Deputy Secretary of
+CPC Committee of Shengli
+Petroleum Administration
+Bureau; in December
+2005, he was appointed as
+Manager of Sinopec Shengli
+Oilfield Branch; in December
+2008, he was appointed as
+Secretary of CPC Committee
+of Sinopec International
+Petroleum Exploration and
+Production Limited; in July
+2010, he was appointed as
+General Manager of Sinopec
+Northwest Oilfield Company,
+Director General of
+Northwest Petroleum Bureau
+under China Petrochemical
+Corporation. Since August
+2014, Mr. Liu has acted
+as Assistant to President
+and Director General of
+HR Department of China
+Petrochemical Corporation,
+and in May 2015, he was
+elected as Supervisor of
+Sinopec Corp.; in March
+2017, he was appointed
+as Vice President of China
+Petrochemical Corporation;
+During this reporting period, the Board of
+Supervisors held five (5) meetings in total, and
+mainly reviewed and approved the proposals
+in relation to the Company's periodic report,
+financial statements, communication on
+progress for sustainable development, internal
+control assessment report, working report of the
+Board of Supervisors and continuing connected
+transactions etc.
+Danagement and Employees
+Supervisors,
+I was elected as Director of
+Sinopec Corp.
+of COSCO; in December
+2000, he was appointed
+as Secretary of Communist
+Youth League Committee
+of COSCO; in April 2003,
+he was appointed as
+Assistant President of
+COSCO; in April 2004, he
+served as a member of
+the Leading Party Member
+Group and Team Leader of
+the Discipline Inspection
+Group of the Leading Party
+Member Group of COSCO;
+in December 2011, he
+was appointed as Vice
+President and a member
+of the Leading Party
+Member Group of COSCO;
+in June 2013, he served as
+President and a member of
+the Leading Party Member
+Group of COSCO; in July
+2013, he served as Director
+of COSCO; and in February
+2017, Mr. Li was appointed
+as Deputy Secretary of
+the Leading Party Member
+Group and Vice President
+of China Petrochemical
+Corporation. In June 2017,
+he was elected as Director
+of Sinopec Corp.
+On 15 May 2018, the 1st meeting of the seventh
+session of the Board of Supervisors was held,
+and Mr. Zhao Dong was elected as Chairman of
+the Board of Supervisors of Sinopec Corp.
+On 30 October 2018, the 3rd meeting of the
+seventh session of the Board of Supervisors was
+held, and the Third Quarterly Report of Sinopec
+Corp. for 2018 was reviewed and approved at
+the meeting.
+In addition, the supervisors attended the
+general meetings of shareholders and attended
+meetings of the Board. The Board of Supervisors
+also organised supervisors to attend the
+trainings for directors and supervisors of listed
+companies organised by Beijing Securities
+Supervisory Bureau under CSRC, which have
+further improved the Supervisors' capabilities in
+performing supervisory duties.
+Report of the Board of Supervisors
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Through supervision and inspection on the
+production and operation management as well
+as financial management conditions, the Board
+of Supervisors and all the supervisors conclude
+that under the fluctuation of international crude
+oil prices and severe operating environment
+of excessive supply of refined oil products in
+domestic market in 2018, the Company took
+advantage of its integrated value chain to
+accelerate the Company's transformation and
+focused on improving quality and efficiency;
+made every effort to expand the market,
+reinforce its management, strictly control
+costs, promote the deepening reform, promote
+transformation and development, all contributing
+to a hard-won business result. The Board of
+Supervisors had no objection to the supervised
+issues during this reporting period.
+Firstly, the Board and the senior management
+of Sinopec Corp. performed their responsibilities
+pursuant to relevant laws and regulations, and
+implemented efficient management. The Board
+diligently fulfilled its obligations and exercised
+its rights under the PRC Company Law and
+the Articles of Association, and made informed
+decisions on major issues concerning change
+in growth mode, structure adjustment, as well
+as development and profitability. The senior
+management diligently executed the resolutions
+approved by the Board, continued to deepen the
+reform, focus on innovations and compliance
+operations, intensified refined management and
+strived to tap potentials and enhance efficiency,
+optimise business structures, committed to
+achieving the target of sustaining profit and
+growth set by the Board. During the reporting
+period, the Board of Supervisors did not
+discover any behavior of any director or senior
+management which violated laws, regulations, or
+the Articles of Association, or was detrimental
+to the interests of Sinopec Corp. or its
+shareholders.
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2018 complied
+with the relevant regulation of domestic and
+overseas securities regulators, the disclosed
+information truly, accurately, completely
+and fairly reflected Sinopec Corp.'s financial
+results and operation performance. The
+dividend distribution plan was made after
+comprehensive consideration of the long-term
+interests of Sinopec Corp. and the interests of
+the shareholders. No violation of confidential
+provisions of persons who prepared and
+reviewed the report was found.
+Thirdly, Sinopec Corp.'s internal control
+system is effective. No material defects of
+internal control were found. In the meantime,
+Sinopec Corp. actively fulfilled its social
+responsibilities and promoted the sustainable
+development of social economy. Information
+disclosed in the Communication on Progress
+for Sustainable Development was in Compliance
+with requirements made by Shanghai Stock
+Exchange for listed companies with regard to
+the publication of social responsibility report.
+Fourthly, the consideration for the equity
+investment made by Sinopec Corp. was fair and
+reasonable, neither insider trading, damage to
+shareholders' interest nor losses of corporate
+assets was discovered.
+Fifthly, all connected transactions between the
+Company and Sinopec Group were in compliance
+with the relevant rules and regulations of
+domestic and overseas listing exchanges. The
+pricing of all the connected transaction was fair
+and reasonable. No insider trading or asset loss
+which is detrimental to the interests of Sinopec
+Corp. or its shareholders was discovered.
+In 2019, the Board of Supervisors and each
+supervisor will continue to follow the principle
+of due diligence and integrity, earnestly perform
+the duties of supervision as delegated by the
+shareholders, strictly review the significant
+decisions, strengthen the process control and
+supervision, increase the strength of inspection
+and supervision on subsidiaries and protect
+Sinopec Corp.'s benefit and its shareholders'
+interests.
+Zhao Dong
+Chairman of the Board of Supervisors
+On 24 August 2018, the 2nd meeting of the
+seventh session of the Board of Supervisors was
+held, and the Interim Report of Sinopec Corp.
+for 2018, the Interim Financial Statements
+of Sinopec Corp. for 2018 and Proposal of
+Continuing Connected Transactions from 2019
+to 2021 were reviewed and approved at the
+meeting.
+63
+Li Yunpeng, aged 59,
+Director of Sinopec Corp. Mr.
+Li is a senior administration
+engineer with a master
+degree in engineering.
+In January 1998, he was
+appointed as deputy General
+Manager of Executive
+Division of China Ocean
+Shipping (Group) Company
+("COSCO"); in September
+1998, he served as Deputy
+Secretary of Discipline
+Inspection Committee,
+Director of Supervision
+Office and concurrently
+served as General Manager
+of Supervision Division
+of COSCO; in November
+1999, he was appointed as
+General Manager of Human
+Resource Division of COSCO;
+and in September 2000, he
+served as Head of the Party
+Organisation Department
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Sinopec Corp.; in November
+2005, he was appointed as
+Vice President of Sinopec
+Corp.; in May 2006, he
+served as Director, Senior
+Vice President and CFO of
+Sinopec Corp.; in June 2008,
+he served as a member
+of the Leading Party
+Member Group of China
+Petrochemical Corporation;
+in May 2009, he was elected
+as Director and appointed
+as Senior Vice President of
+Sinopec Corp.; in August
+2012, he was appointed
+concurrently as Chairman of
+Sinopec Great Wall Energy
+& Chemical Ltd.; in March
+2013, he was appointed
+concurrently as Chairman
+of Sinopec Catalyst Ltd.; in
+May 2016, he was appointed
+as the President and Deputy
+Secretary of the Leading
+Party Member Group
+of China Petrochemical
+Corporation and since
+August 2016, he was elected
+as the Vice Chairman of the
+Board; between August 2016
+and October 2018, he acted
+as President of Sinopec
+Corp.; in July 2018, he was
+appointed as the Chairman
+of the Board of Sinopec
+Petrochemical Corporation;
+in May 2018, he was
+appointed as the Chairman.
+of the Board.
+appointed as Deputy CFO of
+Dai Houliang, aged 55,
+Chairman of the Board of
+Directors of Sinopec Corp.
+Mr. Dai is a professor
+level senior engineer with
+a Ph.D. degree and an
+academician of the Chinese
+Academy of Engineering.
+Mr. Dai is the alternate
+member of the nineteenth
+Central Committee of the
+Communist Party of China.
+In December 1997, he was
+appointed as Vice President
+of Yangzi Petrochemical
+Corporation; in April 1998,
+he served as Director and
+Vice President of Yangzi
+Petrochemical Co., Ltd.;
+in July 2002, he served as
+Vice Chairman of Board
+of Directors, President of
+Yangzi Petrochemical Co.,
+Ltd. and Director of Yangzi
+Petrochemical Corporation;
+in December 2003, he
+served as Chairman of
+Board of Directors and
+President of Yangzi
+Petrochemical Co., Ltd. and
+concurrently as Chairman of
+Board of Directors of Yangzi
+Petrochemical Corporation;
+in December 2004, he
+served concurrently as
+Chairman of Board of
+Directors of BASF-YPC
+Company Limited; in
+September 2005, he was
+(1) Directors
+On 26 April 2018, the 14th meeting of the
+sixth session of the Board of Supervisors was
+held, and the proposal in relation to the First
+Quarterly Report of Sinopec Corp. for 2018 was
+reviewed and approved at the meeting.
+DIRECTORS, SUPERVISORS
+AND OTHER SENIOR
+MANAGEMENT
+Dai Houliang
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+Report of the Board of Supervisors
+Li Yunpeng
+1 INTRODUCTION OF
+Male
+Yes
+2018.05-2021.05
+Supervisor
+54
+Male
+Yang Changjiang
+Yes
+2018.05.2021.05
+Supervisor
+Zhang Baolong
+58
+Board of Supervisors
+Jiang Zhenying
+0
+0
+Yes
+2017
+2018
+(as of 31 December)
+holding
+Company
+(RMB 1,000,
+before tax)
+Tenure
+59
+Position in
+Sinopec Corp.
+Chairman of the
+Male
+2017.06-2021.05
+No
+2018.05-2021.05
+48
+1,008.6
+2017.06-2021.05
+Employee's
+56
+Male
+Supervisor
+Representative
+ooooo
+0
+0
+ooooo
+Supervisor
+No
+1,034.7
+2006.05-2021.05
+2018.05-2021.05
+Employee's
+55
+Male
+Zhou Hengyou
+Supervisor
+58
+Male
+Zou Huiping
+BBB
+Yes
+340.8
+Male
+Senior
+Age
+Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+was appointed concurrently
+as Secretary of Disciplinary
+Inspection Committee of
+China International United
+Petroleum & Chemicals
+Co., Ltd.; since March
+2006, he has served as
+General Manager and
+Secretary of CPC Committee
+of Sinopec Finance Co.,
+Ltd. In June 2018, he
+was appointed as Deputy
+Director of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation.
+In May 2018, he was elected
+as Supervisor of Sinopec
+Corp.
+Zhang Baolong, aged 59,
+Supervisor of Sinopec Corp.
+Mr. Zhang is a professor.
+level senior economist
+with a Master degree. In
+July 1995, he served as
+General Manager of Hong
+Kong Century Bright Capital
+Investment Limited; in
+August 1996, he served as
+Deputy General Manager
+of Sinopec Finance Co.,
+Ltd.; in December 2001,
+he was appointed as
+Deputy General Manager
+and Chief Accountant of
+China International United
+Petroleum & Chemicals Co.,
+Ltd.; in August 2004, he
+Southern Exploration
+Company; in December
+2016, he was appointed as
+Secretary of CPC Committee
+and Deputy Director General
+of Shengli Petroleum
+Administration Bureau, and
+Deputy General Manager of
+Shengli Oilfield Company;
+in October 2017, he was
+appointed as Secretary of
+CPC Committee and Deputy
+General Manager of Shengli
+Petroleum Administration
+Bureau Co., Ltd., and Deputy
+General Manager of Sinopec
+Shengli Oilfield Company.
+Since March 2018, he
+has served as Director
+General of Party Affairs
+and Employee Relations
+Department (Leading Party
+Member Group Office),
+Deputy Secretary of the
+CPC Committee directly
+under China Petrochemical
+Corporation, Deputy
+Director General of Working
+Committee of Trade Union,
+and Deputy Director of the
+Youth Working Committee
+of China Petrochemical
+Corporation. In May 2018,
+he was elected as Supervisor
+of Sinopec Corp.
+Yang Changjiang, aged 58,
+Supervisor of Sinopec Corp.
+Mr. Yang is a professor.
+level senior administration
+engineer with a Master's
+degree. In October 2007, he
+was appointed as a standing
+committee member of
+CPC Committee of Shengli
+Petroleum Administration
+Bureau; in April 2009, he
+was appointed as Deputy
+Secretary of CPC Committee
+and Secretary of Discipline
+Inspection Committee
+of Shengli Petroleum
+Administration Bureau,
+as well as a standing
+committee member of CPC
+Committee of Dongying
+City, Shandong Province;
+in December 2012, he was
+appointed as Secretary of
+CPC Committee and Deputy
+Director of Southwest
+Petroleum Bureau, Deputy
+General Manager of Sinopec
+Southwest Oil & Gas
+Company and a member of
+the Coordination Committee
+of Sinopec Southwest
+Petroleum Bureau, Sinopec
+Southwest Oil & Gas
+Company and Sinopec
+Zhang Baolong
+Yang Changjiang
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Management and Employees
+70
+(Sinopec International
+Co. Ltd.); in April 2010,
+he was appointed as the
+Director General (General
+Manager), Executive Director
+and Deputy Secretary
+of the CPC Committee
+of Sinopec Procurement
+Management Department
+(Sinopec International Co.
+Ltd); in November 2014,
+he was appointed as
+Director General of Safety
+Supervisory Department
+of Sinopec Corp.; in May
+2017, he was appointed as
+Deputy Director of the Office
+of Leading Party Member
+Group Inspection Work
+of China Petrochemical
+Corporation and since
+December 2010, he was
+elected as the Employee's
+Representative Supervisor
+of Sinopec Corp. Since
+December 2018, he was
+appointed as Director of
+Audit Bureau of China
+Petrochemical Corporation,
+and Director of Audit
+Department of Sinopec
+Corp. In May 2018, he was
+elected as Supervisor of
+Sinopec Corp.
+Jiang Zhenying, aged 54,
+Supervisor of Sinopec Corp.
+Mr. Jiang is a professor level
+senior economist with a
+doctor degree. In December
+1998, he was appointed
+as the Vice President of
+the China Petrochemical
+Supplies & Equipment Co.,
+Ltd.; in February 2000, he
+was appointed as the Deputy
+Director General of Sinopec
+Procurement Management
+Department; in December
+2001, he was appointed
+as the Director General
+of Sinopec Procurement
+Management Department
+and in November 2005
+he concurrently held the
+positions of Chairman
+of Board of Directors,
+President and Secretary of
+CPC Committee of China
+Petrochemical International
+Co., Ltd.; in March 2006,
+he was appointed as the
+Director General (General
+Manager), Executive
+Director and Secretary
+of the CPC Committee
+of Sinopec Procurement
+Management Department
+No
+Supervisors,
+Danagement and Employees
+Senior
+Zhao Dong
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Jiang Zhenying
+(2) Supervisors
+Zhao Dong, aged 48,
+Chairman of Board of
+Supervisors of Sinopec Corp.
+Mr. Zhao is a professor-
+level senior accountant with
+a doctor's degree. In July
+2002, he was appointed
+as chief accountant and
+general manager of financial
+assets department of
+CNPC International (Nile)
+Ltd.; in January 2005, he
+was appointed as deputy
+chief accountant and
+executive deputy director
+of financial and capital
+operation department
+of China National Oil
+and Gas Exploration and
+Development Corporation;
+in April 2005, he was
+appointed as deputy chief
+accountant and general
+manager of financial and
+capital operation department
+of China National Oil
+and Gas Exploration and
+Development Corporation;
+in June 2008, he was
+appointed as chief
+accountant of China National
+Oil and Gas Exploration and
+Development Corporation;
+in October 2009, he
+was appointed as chief
+accountant of China National
+Oil and Gas Exploration and
+Development Corporation
+and chief financial officer
+of PetroChina International
+Investment Company
+Limited; in September 2012,
+he was appointed as vice
+general manager of CNPC
+Nile Company and in August
+2013, he was appointed as
+general manager of CNPC
+Nile Company; in November
+2015, he was appointed
+as chief financial officer
+of PetroChina Company
+Limited. He has been a
+member of the Leading
+Party Member Group and
+chief accountant of China
+Petrochemical Corporation
+since November 2016; in
+June 2017, he was elected
+as Chairman of Board of
+Supervisors of Sinopec Corp.
+70
+Zhao Dong
+Zou Huiping
+Zhou Hengyou
+Gender
+Name
+Equity interests in Sinopec Corp.
+Whether
+paid by the
+in 2018
+Remuneration
+paid by
+Sinopec Corp.
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Supervisors,
+Senior Management and Employees
+Senior Management and Employees
+Directors, Supervisors,
+173
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Yu Xizhi, aged 56,
+Employee's Representative
+Supervisor of Sinopec
+Corp. Mr Yu is a professor-
+level senior engineer with
+a Ph.D. in engineering.
+In August 1997, he was
+appointed as Deputy
+General Manager of Anqing
+Petrochemical General Plant
+and concurrent General
+Manager of Fertiliser Plant;
+in September 1999, he
+became a member of the
+CPC Standing Committee
+of Anqing Petrochemical
+General Plant; in February
+2000, he was appointed as
+Deputy General Manager of
+Sinopec Anqing Company
+and in September 2000, he
+was appointed as General
+Manager of Sinopec Anqing
+Company. In January
+2005, he was appointed as
+General Manager of Anqing
+Petrochemical General
+Plant and from May 2009
+to July 2010, he served
+September 2007, he was
+appointed as the President.
+and the Vice Secretary of
+CPC committee of Sinopec
+Zhenhai Refining & Chemical
+Company; in January 2008,
+he was appointed as the
+Director General of Sinopec
+Production Management
+Department; in December
+2017, he was appointed
+as the Director General
+of Refining Department
+of Sinopec Corp.; and in
+December 2010, he was
+elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+Board Director and Deputy
+General Manager of Sinopec
+Zhenhai Refining & Chemical
+Co., Ltd.; in September
+2006, he was appointed
+as the Vice President of
+Sinopec Zhenhai Refining
+& Chemical Company; in
+Yu Renming, aged 55,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr. Yu is a professor level
+senior engineer with a
+university diploma. In June
+2000, he was appointed
+as the Deputy General
+Manager of Sinopec Zhenhai
+Refining & Chemical Co.,
+Ltd.; in June 2003, he
+was appointed as the
+Yu Xizhi
+Yu Renming
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+72
+Petroleum Exploration
+Bureau; in August 2005,
+he was appointed as
+Secretary of CPC Committee
+of Jiangsu Petroleum
+Exploration Bureau; in March
+2011, he was appointed
+as Director General and
+Secretary of CPC Committee
+of China Petrochemical
+News. In March 2015,
+he was appointed as
+Director General of the
+General Office of China
+Petrochemical Corporation,
+Director General of Policy
+Research Department of
+the General Office of China
+Petrochemical Corporation
+and Director General
+of President's office of
+Sinopec Corp. In August
+2015, he was appointed as
+Director General of Board of
+Directors Office under China
+Petrochemical Corporation;
+and in May 2015, he was
+elected as Supervisor of
+Sinopec Corp. In May
+2018, he was elected as
+Employee's Representative
+Supervisor of Sinopec Corp.
+Zhou Hengyou, aged 55,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr. Zhou is a professor
+level senior administration
+engineer and with a master
+degree. In December 1998,
+Mr. Zhou was appointed
+as a standing committee
+member of CPC Committee
+and Vice Chairman of
+Trade Union of Jiangsu
+Petroleum Exploration
+Bureau; in February 1999,
+he was appointed as a
+standing committee member
+of CPC Committee and
+Trade Union Chairman
+of Jiangsu Petroleum
+Exploration Bureau of China
+Petrochemical Corporation;
+in December 2002, he
+was appointed as Deputy
+Secretary of CPC Committee
+and Trade Union Chairman
+of Jiangsu Petroleum
+Exploration Bureau; in June
+2004, he was appointed as
+Deputy Secretary of CPC
+Committee and Secretary of
+CPC Disciplinary Inspection
+Committee of Jiangsu
+of China Petrochemical
+Corporation; in March
+2006, he was appointed as
+Director General of Finance
+& Assets Department of
+Assets Management Co.,
+Ltd. of China Petrochemical
+Corporation; in March
+2006, he was appointed as
+Director General of Auditing
+Department of Sinopec
+Corp and Director General
+of China Petrochemical
+Corporation Audit Bureau.
+In September 2018, he
+was appointed as Chief
+Representative of Sinopec
+Corp. Hong Kong Office. In
+May 2006, he was elected
+as Supervisor of Sinopec
+Corp.
+Zou Huiping, aged 58,
+Supervisor of Sinopec Corp.
+Mr. Zou is a professor
+level senior accountant
+with a university diploma.
+In November 1998, he
+was appointed as Chief
+Accountant in Guangzhou
+Petrochemical General Plant
+of China Petrochemical
+Corporation; in February
+2000, he was appointed
+as Deputy Director General
+of Finance & Assets
+Department of China
+Petrochemical Corporation;
+in December 2001, he
+was appointed as Deputy
+Director General of Finance
+& Planning Department
+a interim position at the
+Standing Committee of
+the CPC Anqing Municipal
+Committee. In July 2010,
+he became General Manager
+and Deputy Secretary of the
+CPC Committee of Maoming
+Petrochemical Company and
+General Manager of Sinopec
+Maoming Company; in July
+2016, Mr. Yu was appointed
+as head of Maoming.
+Zhanjiang Integration
+Leading Group; in December
+2016, he became Executive
+Director, General Manager
+and Deputy Secretary of the
+CPC Committee of Zhongke
+(Guangdong) Refining and
+Petrochemical Co., Ltd.
+Since April 2017, Mr. Yu
+has been Director General
+of Human Resources
+Department of Sinopec
+Corp. In June 2017, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+0
+Yu Xizhi
+0
+On 7 June 2018, Mr. Jiao
+Fangzheng resigned as director,
+member of Strategy Committee
+of the Board and the Senior
+Vice President of Sinopec
+Corp. due to change of working
+arrangement.
+On 23 October 2018, Mr. Yu
+Baocai was elected as Non-
+executive Director of the
+Seventh Session of the Board of
+Sinopec Corp.
+On 30 October 2018, Mr. Dai
+Houliang was re-designated as
+the Non-executive Director of
+Sinopec Corp.
+On 30 October 2018, Mr. Ma
+Yongsheng was appointed as
+president of Sinopec Corp.
+On 30 October 2018, Mr. Lei
+Dianwu was appointed as Senior
+Vice President of Sinopec Corp.
+On 30 October 2018, Mr. Chen
+Ge was appointed as Senior
+Vice President of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+77
+Directors, Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+3 CHANGE OF SHAREHOLDING
+OF DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+There is no change in
+shareholdings of the Company
+by Directors, Supervisors and
+other senior managements
+during the reporting period.
+4 CONTRACTRAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+As of 31 December 2018 or
+any time during the reporting
+period, there is no Director
+or Supervisor of the Company
+entered into any agreement
+with any of Sinopec Corp., its
+controlling shareholder, any
+subsidiary or related subsidiary
+which shall significantly benefit
+such Director or Supervisor.
+5 REMUNERATION OF DIRECTORS,
+SUPERVISORS, AND THE
+SENIOR MANAGEMENT
+During this reporting period,
+there is a total of 19 directors,
+supervisors and other senior
+management received
+remuneration from Sinopec
+Corp. with a total amount of
+RMB 10.9976 million.
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS:
+6 THE COMPANY'S EMPLOYEES
+As at 31 December 2018, the
+Company has a total of 423,543
+employees. There are a total of
+241,168 retired employees to
+be reimbursed by Sinopec Corp.
+Sinopec Marketing Co. Limited,
+principal subsidiary of Sinopec
+Corp., have 142,669 employees.
+Marketing and Distribution
+142,669
+34%
+R&D
+5,873
+1%
+Other Senior Management:
+Mr. Zhao Rifeng, Mr. Huang
+Wensheng and Mr. Lei Dianwu
+were elected as Vice President.
+Mr. Huang Wensheng was
+elected as Secretary to the
+Board.
+Other Segments
+2017
+0
+2018
+ooooo
+Name
+Chang Zhenyong
+Gender
+Male
+Age
+60
+Position in
+Sinopec Corp.
+Former Vice President
+Note: Mr. Chen Ge receives remuneration from the Company since November 2018.
+2 INFORMATION ON
+APPOINTMENT OR
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+On 29 January 2018, Mr. Wang
+Zhigang resigned as director,
+member of Strategy Committee
+of the Board and the Senior
+Vice President of Sinopec Corp.
+due to his age.
+On 29 January 2018, Mr. Zhang
+Haichao resigned as director,
+member of Strategy Committee
+of the Board and the Senior
+Vice President of Sinopec Corp.
+due to his age.
+On 7 February 2018, Mr. Liu
+Zhongyun resigned as the
+supervisor of Sinopec Corp.
+due to change of working
+arrangement.
+On 8 February 2018, Mr. Lin
+Yiqun was appointed as Senior
+Vice President of Sinopec Corp.
+On 8 February 2018, Mr. Liu
+Zhongyun was appointed as
+Senior Vice President of Sinopec
+Corp.
+On 8 February 2018, Mr. Zhao
+Rifeng was appointed as Vice
+President of Sinopec Corp.
+On 15 May 2018, the members
+of the Seventh Session of the
+Board of Directors and the
+Board of Supervisors (non-
+employee representative
+supervisors) were elected at
+the 2017 general meeting of
+shareholders. The 1st meeting
+of the Seventh Session of Board
+held at the same date elected
+Chairman of the Board and
+appointed senior management.
+The 1st meeting of the Seventh
+Session of the Board of
+Supervisors elected Chairman
+of the Board of Supervisors.
+The changes of the directors,
+supervisors and other senior
+management are as follows:
+Remuneration
+paid by
+Sinopec Corp.
+in 2018
+(RMB 1,000,
+before tax)
+749
+Whether
+paid by
+the holding
+Company
+No
+Board of Directors: Mr. Dai
+Houliang was elected as
+Executive Director and Chairman
+of the Board. Mr. Li Yunpeng,
+Mr. Jiao Fangzheng, Mr. Ma
+Yongsheng, Mr. Ling Yiqun,
+Mr. Liu Zhongyun and Mr. Li
+Yong were elected as Directors.
+Mr. Tang Min, Mr. Fan Gang,
+Mr. Cai Hongbin and Mr. Ng
+Kar Ling Johnny were elected
+as Independent Non-executive
+Directors. Mr. Jiang Xiaoming
+and Mr. Andrew Y. Yan were
+no longer the Independent
+Non-executive Directors of the
+Board.
+Board of Supervisors: Mr.
+Zhao Dong was elected as
+the Chairman of Board of
+Supervisors. Mr. Jiang Zhenying,
+Mr. Yang Changjiang, Mr. Zhang
+Baolong and Mr. Zou Huiping
+were elected as Supervisors. Mr.
+Zhou Hengyou, Mr. Yu Renming
+and Mr. Yu Xizhi were elected
+as Employee Representative
+Supervisors.
+Equity interests in Sinopec Corp.
+(as of 31 December)
+0
+14,574
+4%
+Exploration and Production
+Master's degree or above
+16,535
+4%
+Undergraduate
+108,165
+25%
+Junior college
+94,162
+22%
+Technical secondary school
+37,015
+9%
+7 CHANGES OF CORE
+TECHNICAL TEAM OR KEY
+TECHNICIANS
+During the reporting period,
+there are no significant changes
+of core technical team or key
+technicians.
+8 EMPLOYEE BENEFITS SCHEME
+Details of the Company's
+employee benefits scheme
+are set out in Note 38 of the
+financial statements prepared
+under IFRS of this annual
+report. As at 31 December
+2018, the Company has a total
+of 241,168 retired employees.
+All of them participated in
+the basic pension schemes
+administered by provincial
+(autonomous region or
+municipalities) governments.
+Government-administered
+pension schemes are
+responsible for the payments of
+basic pensions.
+9 REMUNERATION POLICY
+Based on a relatively united
+basic remuneration system,
+Sinopec Corp. has established
+its remuneration distribution
+system based on the value
+of positions, performance
+& contribution, with an
+aim to improve employee
+capabilities, and constantly
+improve employee performance
+evaluation and incentive &
+discipline mechanisms.
+10 TRAINNING PROGRAMS
+Centring on enterprise
+development strategy and
+key work of the year, the
+Company organised training
+programs at headquarters
+level which were attended
+by 4,471 Key employees.
+With an aim to improve the
+Corporate Governance level,
+the Company launched a
+series of training programs
+for 1,731 senior management
+personnel. The Company
+conducted seminars with the
+topic of learning the spirit of
+the 19th CPC National Congress
+for 1,083 senior managers
+and 12,000 managers. The
+Company organised training
+programs with topics of
+Innovation Development, Green
+Development, transnational
+operation, risk prevention and
+increasing the comprehensive
+capabilities of young managers
+for 644 employees. With the
+aim to advance Professional and
+technical personnel's innovation
+capability, the Company trained
+1,085 employees from all the
+business segments. With roles
+of Craftsmanship and heritage,
+the Company focused trainings
+on top talents such as first
+chief technicians and famous
+craftsmen for 221 people.
+To enhance the management
+of transnational operation,
+finance, taxation, law and
+HSSE, the company organised
+a series of training programs
+covering 1,434 overseas project
+managers.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+79
+10
+Directors, Supervisors,
+Senior Management and Employees
+lo
+40%
+167,666
+Senior high school and
+technical school degrees or below
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+139,873
+33%
+Refining
+60,492
+14%
+60,062
+14%
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+Technology
+81,778
+19%
+Finance
+9,479
+Board Secretary
+2%
+33,883
+8%
+Others
+13,356
+3%
+78
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Production
+153,867
+37%
+Sales
+131,180
+31%
+Administration
+0
+Chemicals
+No
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Remuneration
+paid by
+Sinopec Corp.
+in 2018
+(RMB 1,000,
+before tax)
+Whether
+paid by
+the holding
+Equity interests in Sinopec Corp.
+(as of 31 December)
+Company
+2018
+2017
+Yes
+0
+0
+Yes
+Yes
+0
+0
+Lei Dianwu
+Chen Ge
+(3) Other Members of Senior
+Management
+Lei Dianwu, aged 56, Senior
+Vice President of Sinopec
+Corp. Mr. Lei is a Professor
+level Senior Engineer with
+a university diploma. In
+October 1995, he was
+appointed as Vice President
+of Yangzi Petrochemical
+Corporation; in December
+1997, he was appointed as
+Director General of Planning
+& Development Department
+in China Eastern United
+Petrochemical (Group) Co.,
+Ltd. in May 1998, he was
+appointed as Vice President
+of Yangzi Petrochemical
+Corporation; in August
+1998 he was appointed as
+Vice President of Yangzi
+Petrochemical Co., Ltd.
+in March 1999, he was
+appointed temporarily
+as Deputy Director
+General of Development
+& Planning Department
+of China Petrochemical
+Corporation; in February
+2000, he was appointed as
+Deputy Director General of
+Development & Planning
+Department of Sinopec
+Corp.; in March 2001, he
+was appointed as Director
+General of Development
+& Planning Department of
+Sinopec Corp.; in March
+2009, he was appointed
+as Assistant to President
+of China Petrochemical
+Corporation; in May 2009,
+he was appointed as Vice
+President of Sinopec
+Corp.; in August 2013,
+he was appointed as the
+Chief Economist of China
+Petrochemical Corporation;
+in October 2015, he was
+appointed as Secretary
+to the Board of Directors
+of China Petrochemical
+Corporation; in June
+2018, he was appointed
+concurrently as Director
+General of International
+Cooperation Department of
+Sinopec Corp. In October
+2018, he was appointed
+as Senior Vice President of
+Sinopec Corp.
+Chen Ge, aged 56, Senior
+Vice President of Sinopec
+Corp. Mr. Chen is a senior
+economist with a master
+degree. In February 2000,
+he was appointed as
+Deputy Director General
+of the Board Secretariat
+of Sinopec Corp. In
+December 2001, he was
+appointed as Director
+General of the Board
+Secretariat of Sinopec
+Corp. In April 2003,
+he was appointed as
+Secretary to the Board
+of Directors of Sinopec
+Corp. From April 2005
+to August 2013, he was
+appointed concurrently
+as Director General of
+Corporate Reform &
+Management Dept. of
+Sinopec Corp. In July
+2010, he was appointed
+as Assistant to President
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+74
+75
+Note: Mr. Zhou Hengyou receives remuneration from the Company since May 2018.
+54
+Yu Renming
+Representative
+0
+Male
+55
+Supervisor
+Employee's
+2010.12-2021.05
+984.1
+No
+0
+lo
+Representative
+Supervisor
+Name
+Gender
+Age
+Position in
+Sinopec Corp.
+Tenure
+Liu Zhongyun
+Male
+Zhou Hengyou
+Male
+Jiang Zhenying
+Male
+555
+Former Supervisors
+Former Supervisors
+Former Employee's
+Representative
+Supervisor
+Directors, Supervisors,
+2015.05.2018.02
+2015.05.2018.05
+2010.12.2018.05
+Directors, Supervisors,
+Senior Management and Employees
+Male
+56
+Senior Vice President
+No
+0
+Chen Ge
+Male
+56
+Senior Vice President
+No
+0
+Male
+52
+CFO
+1,130.0
+No
+0
+Zhao Rifeng
+Male
+56
+Vice President
+Huang Wensheng
+Male
+Senior Management and Employees
+52
+Vice President,
+606.6
+1,130.0
+Lei Dianwu
+2018
+Wang Dehua
+Age
+Wang Dehua
+Zhao Rifeng
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Huang Wensheng
+Company
+Wang Dehua, aged 52, Chief
+Financial Officer of Sinopec
+Corp. Mr.Wang is a senior
+accountant with university
+diploma. In January 2001,
+he was appointed as
+Deputy Director General
+of Finance Department
+of Sinopec Corp.; in May
+2014, he was appointed
+as Acting Director General
+of Finance Department of
+Sinopec Corp.; in October
+2015, he was promoted
+to Director General of
+Finance Department of
+Sinopec Corp.; in November
+2015, he was appointed
+as Director General of
+Finance Department of
+China Petrochemical
+Corporation; in August
+2016, he was appointed
+as Director General of
+Finance Department of
+Sinopec Corp.. Mr. Wang
+now concurrently acts as
+Vice Chairman of Sinopec
+Finance CO., Ltd. in
+September 2016, he was
+appointed as Chief Financial
+Officer of Sinopec Corp.
+Zhao Rifeng, aged 55, Vice
+President of Sinopec Corp.
+Mr. Zhao is a Professor
+level Senior Engineer with a
+master degree. In July 2000,
+he was appointed as Deputy
+General Manager of Sinopec
+Jinling Petrochemical Co.,
+Ltd and Deputy Manager of
+Sinopec Jinling Company;
+in October 2004, he was
+appointed as General
+Manager of Sinopec Jinling
+Company; in October
+2006, he was appointed
+as Vice Chairman and
+General Manager of Sinopec
+Jinling Petrochemical Co.,
+Ltd; in November 2010,
+he was appointed as
+Chairman, General Manger,
+Deputy Secretary of CPC
+Committee of Sinopec
+Jinling Petrochemical Co.,
+Ltd; in August 2013, he
+was appointed as Director
+General of Refining
+Department of Sinopec
+Corp.; and in December
+2017, he was appointed as
+the Chairman and Secretary
+of CPC Committee of
+Sinopec Marketing Company
+Limited. In February 2018,
+he was appointed as Vice
+President of Sinopec Corp.
+76
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+2017
+Position in
+Huang Wensheng, aged 52,
+Vice President of Sinopec
+Corp., Secretary to the Board
+of Directors. Mr. Huang
+is a professor level senior
+economist with a university
+diploma. In March 2003, he
+was appointed as Deputy
+Director General of the
+Board Secretariat of Sinopec
+Corp.; in May 2006, he was
+appointed as Representative
+on Securities Matters of
+Sinopec Corp.; since August
+2009, He has served as the
+Deputy Director General
+of President's office of
+Sinopec Corp. In September
+2009, he was appointed
+as Director General of the
+Board Secretariat of Sinopec
+Corp.; In May 2012, he
+was appointed as Secretary
+to the Board of Directors
+of Sinopec Corp.; In June
+2018, he was appointed
+concurrently as Director
+General of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation.
+In July 2018, he was
+appointed concurrently as
+Chairman, President and
+Secretary of CPC Committee
+of Sinopec Capital Co., Ltd.;
+and in May 2014, he was
+appointed as Vice President
+of Sinopec Corp.
+Whether
+Equity interests in Sinopec Corp.
+Sinopec Corp.
+Gender
+22222
+paid by
+the holding
+(as of 31 December)
+Name
+1,155.6
+129.7
+in 2018
+(RMB 1,000,
+before tax)
+Sinopec Corp.
+paid by
+Remuneration
+petroleum products
+Sinopec Shanghai SECCO Petrochemical
+7,801
+65
+6,270
+3,099
+21,839
+17,908
+Production and sale of petrochemical products
+Company Limited
+Sinopec-SK(Wuhan) Petrochemical
+Marketing and distribution of refined
+67.6
+21,995
+21,239
+391,923
+products and petroleum products
+15,363
+Sinopec Hainan Refining and
+Chemical Company Limited
+3,986
+75
+208,071
+10,329
+Manufacturing of intermediate petrochemical
+Chemical Company Limited
+products and petroleum products
+Sinopec Marketing Co., Limited
+28,403
+70.42
+2,619
+13,029
+14,372
+Production, sale, research and development of
+7,453
+5,445
+1,029
+2,642
+9,796
+10,614
+39,537
+6,766
+2,777
+44
+28,336
+1,784
+38,058
+Manufacturing of intermediate petrochemical
+(20)
+12
+42
+1,879
+36,169
+3,078
+Company Limited
+Sinopec Kantons Holdings Limited
+HKD 248
+60.33
+14,104
+10,250
+2,670
+1,065
+Sinopec Shanghai Gaoqiao Petroleum and
+10,000
+55
+31,710
+15,225
+158,480
+million
+3,564
+3,640
+20,174
+3,248
+1,279
+China International United Petroleum and
+3,000
+100
+176,748
+17,773
+22,749
+Sinopec Overseas Investment
+USD 1,662
+100
+26,832
+12,802
+245
+Chemical Company Limited
+Holding Limited
+100
+Sinopec Chemical Sales Company Limited
+179
+3,374
+100
+9,247
+3,926
+382
+1,000
+Production and sale of refined petroleum
+Sinopec Qingdao Petrochemical
+1,595
+100
+549
+319
+Company Limited
+products, lubricant base oil,
+12,066
+million
+1,500
+712
+Trading of petrochemical products
+Company Limited
+Sinopec Beihai Refining and Chemical
+5,294
+98.98
+4,104
+17,173
+2,433
+Limited Liability Company
+Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+Sinopec Qingdao Refining and
+5,000
+85
+11,657
+Sinopec Catalyst Company Limited
+14,533
+petrochemical products
+Overseas investment holding
+100
+China Petrochemical International
+1,400
+100
+88
+9,694
+Production and sale of catalyst products
+4,712
+and petrochemical materials
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Marketing and distribution of
+petrochemical products
+(4,024) Trading of crude oil and
+683
+(887)
+(13,700)
+29,738
+Sub-total of cash inflows
+190
+Other cash received relating to financing activities
+524,843
+746,655
+946
+1,886
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+946
+1,886
+Cash received from capital contributions
+Cash flows from financing activities:
+(145,323)
+(66,422)
+Net cash flow from investing activities
+(212,255)
+(231,061)
+66,932
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+(103,014)
+(70,948)
+Cash paid for acquisition of investments
+(39,666)
+748,731
+(57,627)
+(85,193)
+(82,392)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(3,188)
+(1,288)
+Sub-total of cash outflows
+Other cash paid relating to investing activities
+525,789
+Cash repayments of borrowings
+(772,072)
+518
+(56,509)
+(353)
+50(b)
+(1,296)
+(11,250)
+(111,260)
+Dai Houliang
+(Legal representative)
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Chairman
+164,639
+(582,298)
+(7,539)
+(155)
+(536,380)
+Cash paid for dividends, profits distribution or interest
+(87,483)
+(45,763)
+Including: Subsidiaries' cash payments for distribution of
+dividends or profits to minority shareholders
+(859,991)
+Other cash paid relating to financing activities
+Net cash flow from financing activities
+Effects of changes in foreign exchange rate
+Net decrease in cash and cash equivalents
+These financial statements have been approved by the board of directors on 22 March 2019.
+Sinopec Lubricant Company Limited
+(436)
+Sub-total of cash outflows
+80
+11
+52,304
+(67)
+39,276
+30,348
+CONSOLIDATED CASH FLOW STATEMENT
+for the year ended 31 December 2018
+Note
+(681)
+2018
+RMB million
+Cash received from sale of goods and rendering of services
+Refund of taxes and levies
+Other cash received relating to operating activities
+3,189,004
+1,681
+2017
+RMB million
+2,644,126
+2,158
+Cash flows from operating activities:
+90.625
+(120)
+53
+(64)
+599
+474
+1,687
+725
+42,917
+29,487
+(617)
+2,960
+39,957
+30,415
+39,957
+30,415
+Wang Dehua
+Chief Financial Officer
+(928)
+44,005
+57,287
+Sub-total of cash inflows
+(133,615)
+(74,095)
+(3,105,442)
+(2,512,636)
+50(a)
+175,868
+(328,304)
+190,935
+4,729
+10,720
+8,506
+9,666
+1,313
+87,696
+56,546
+Net cash received from disposal of subsidiaries and other business entities
+(329,387)
+(77,048)
+Cash paid for goods and services
+Cash paid to and for employees
+Payments of taxes and levies
+Other cash paid relating to operating activities
+Sub-total of cash outflows
+Net cash flow from operating activities
+(68,260)
+Cash flows from investing activities:
+Cash received from returns on investments
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+3,281,310
+2,703,571
+(2,565,392)
+(2,041,977)
+Cash received from disposal of investments
+polyester fibres
+39
+Production and sale of polyester chips and
+(1,518)
+101,474
+86,965
+46
+47
+69
+2,070
+1,317
+3,042
+1,709
+100,502
+86,573
+48
+20,213
+16,279
+80,289
+70,294
+(53)
+34
+0.422
+0.521
+60
+0.422
+(742)
+0.521
+19,175
+17,200
+51,119
+63,089
+70,294
+80,289
+60
+(13)
+2,656
+4,356
+19,060
+Diluted earnings per share
+Basic earnings per share
+Minority interests
+Equity shareholders of the Company
+Classification by ownership:
+Termination of net profit
+Other comprehensive income
+Continuous operating net profit
+Net profit
+Less: Income tax expense
+Less: Non-operating expenses
+Profit before taxation
+Add: Non-operating income
+Operating profit
+Asset disposal expense
+Classification by going concern:
+(229)
+Items that may not be reclassified subsequently to profit or loss
+Items that may be reclassified subsequently to profit or loss
+11,428
+6,694
+345
+45
+44
+These financial statements have been approved by the board of directors on 22 March 2019.
+Changes in fair value of other equity instrument investments
+Minority interests
+Attributable to:
+Total comprehensive income
+Total other comprehensive income
+Foreign currency translation differences
+Cash flow hedges
+Other comprehensive income that can be converted into profit or loss under the equity method
+Changes in fair value of available-for-sale financial assets
+Equity shareholders of the Company
+1,053
+(57)
+(9,741)
+Dai Houliang
+These financial statements have been approved by the board of directors on 22 March 2019.
+Total comprehensive income
+Total other comprehensive income
+Other comprehensive loss that can be converted into profit or loss under the equity method
+Cash flow hedges
+Items that may be reclassified subsequently to profit or loss
+Chairman
+Other comprehensive income
+Continuous operating net profit
+Classification by going concern:
+Less: Income tax expense
+Net profit
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Termination of net profit
+Operating profit
+(Legal representative)
+The accompanying notes form part of these financial statements.
+89
+168,905
+633,114
+812,355
+36
+857,478
+Ma Yongsheng
+President
+1,058,493
+RMB million
+RMB million
+2017
+2018
+Note
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+36
+Gains/(losses) from changes in fair value
+(Losses)/gains from changes in fair value
+Asset disposal income/(expense)
+Add: Other income
+(Legal representative)
+Chairman
+Dai Houliang
+18,280
+18,194
+47,638
+Ma Yongsheng
+President
+55,471
+73,665
+(4,376)
+(6,624)
+(3,792)
+3,399
+(1,580)
+65,918
+Investment income
+The accompanying notes form part of these financial statements.
+Chief Financial Officer
+Credit impairment losses
+Exploration expenses, including dry holes
+Impairment losses
+Financial expenses
+Selling and distribution expenses
+General and administrative expenses
+Research and development expenses
+Taxes and surcharges
+Less: Operating costs
+Wang Dehua
+Operating income
+INCOME STATEMENT
+Financial Statements (PRC)
+88
+Financial Statements (PRC)
+87
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+for the year ended 31 December 2018
+Investment income
+43
+Add: Other income
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+Registered
+Capital
+Percentage of
+shares held by
+Sinopec Corp.
+On 31 December, 2018, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+Name of Company
+Principal Activities
+Principal Wholly-Owned
+and Controlled Subsidiaries
+Total Assets
+RMB million
+(%)
+RMB million
+Sinopec International Petroleum
+8,000
+100
+Net Assets
+54,751
+80
+2,591
+(485)
+68,769
+68,789
+68,795
+121,071
+121,071
+4,332
+121,071
+435,226
+394,407
+127,327
+117,663
+105,530
+2,607
+408,149
+196
+RMB million
+23,218
+Exploration and Production Limited
+2,685
+Company Limited
+Investment in exploration, production and
+sale of petroleum and natural gas
+(1,574) Coal chemical industry investment
+management, production and
+sale of coal chemical products
+Manufacturing of intermediate etrochemical
+products and petroleum products
+22,648
+Pipeline storage and transportation
+Sinopec Yizheng Chemical Fibre
+4,000
+100
+8,041
+5,459
+101
+of crude oil
+Net Profit/
+(Net Loss)
+RMB million
+3,272
+39,182
+12,000
+Sinopec Great Wall Energy & Chemical
+22,761
+100
+32,972
+14,997
+Company Limited
+100
+Sinopec Yangzi Petrochemical
+100
+30,453
+18,919
+3,692
+Company Limited
+Sinopec Pipeline Storage & Transportation
+15,651
+Limited Liability Company
+263
+482
+72,505
+73,390
+General and administrative expenses
+56,055
+59,396
+39
+Research and development expenses
+Selling and distribution expenses
+246,498
+37
+1,890,398
+2,401,012
+2,360,193
+2,891,179
+235,292
+36
+36/39
+39/40
+6,423
+141
+Credit impairment losses
+21,791
+11,605
+42
+Impairment losses
+7,956
+11,089
+39/41
+Exploration expenses, including dry holes
+1,560
+(1,001)
+38
+Financial expenses
+10,744
+989
+Taxes and surcharges
+Operating income
+Total shareholders' equity
+977,725
+1,002,495
+931,603
+569,576
+567,269
+Total liabilities and shareholders' equity
+537,196
+177,049
+143,148
+196,640
+199,682
+203,678
+393
+182,440
+Less: Operating costs
+These financial statements have been approved by the board of directors on 22 March 2019.
+Chairman
+RMB million
+RMB million
+2017
+2018
+Notes
+for the year ended 31 December 2018
+Dai Houliang
+CONSOLIDATED INCOME STATEMENT
+Wang Dehua
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+86
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+(Legal representative)
+Chief Financial Officer
+Financial Statements (PRC)
+505
+88
+20,087
+20,422
+504,120
+529,049
+412,261
+Available-for-sale financial assets
+1,676
+11,408
+Long-term equity investments
+12
+[N]
+N
+145,721
+131,087
+116,812
+Other equity instrument investments
+1,450
+Fixed assets
+13
+617,812
+650,920
+690,594
+Construction in progress
+14
+136,963
+118,645
+129,581
+22,774
+156,511
+186,693
+184,584
+Assets
+Current assets
+Cash at bank and on hand
+Inventories
+Total current assets
+Non-current assets
+Financial assets held for trading
+Derivative financial assets
+Bills receivable and accounts receivable
+Prepayments
+Other receivables
+Other current assets
+5698901
+Intangible assets
+167,015
+25,732
+7,887
+165,004
+51,196
+526
+142,497
+64,879
+84,701
+762
+63,486
+5,937
+4,901
+3,749
+25,312
+15,941
+24,834
+11
+7
+Goodwill
+Long-term deferred expenses
+Deferred tax assets
+Derivative financial liabilties
+Bills payable and accounts payable
+Advances from customers
+Contract liabilities
+Employee benefits payable
+Taxes payable
+Other payables
+27222222
+21
+44,692
+54,701
+30,374
+13,571
+Short-term loans
+192,757
+2,665
+206,535
+120,734
+4,472
+180,129
+95,928
+23
+124,793
+24
+7,312
+7,162
+1,618
+25
+87,060
+71,940
+52,886
+26
+3(26)
+At 1 January
+2017
+RMB million
+Current liabilities
+Total assets
+15
+103,855
+97,126
+85,023
+16
+8,676
+8,634
+6,353
+17
+15,659
+14,720
+13,537
+18
+Liabilities and shareholders' equity
+21,694
+29,767
+7,214
+19
+36,358
+28,516
+1,088,188
+1,066,455
+25,826
+1,086,348
+1,592,308
+1,595,504
+1,498,609
+Other non-current assets
+Total non-current assets
+15,131
+77,463
+RMB million
+At 31 December
+2017
+In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company's financial position of
+Sinopec Corp. as at 31 December 2018, and their financial performance and cash flows for the year then ended in accordance with the requirements of
+Accounting Standards for Business Enterprises ("CASS").
+BASIS FOR OPINION
+We conducted our audit in accordance with China Standards on Auditing ("CSAS"). Our responsibilities under those standards are further described in
+the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is
+sufficient and appropriate to provide a basis for our opinion.
+We are independent of Sinopec Corp. in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public
+Accountants ("CICPA Code"), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current
+period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
+not provide a separate opinion on these matters.
+PricewaterhouseCoopers Zhongtian LLP
+11/F PricewaterhouseCoopers Center, Link Square 2, 202 Hu Bin Road, Huangpu District, Shanghai 200021, PRC
+Tel: +86 (21) 2323 8888, Fax: +86 (21) 2323 8800, www.pwccn.com
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+81
+Financial Statements (PRC)
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Key audit matters identified in our audit are summarised as follows:
+Recoverability of the carrying amount of fixed assets relating to oil and gas producing activities
+• Net realisable value (NRV) of crude oil, finished goods and work in progress of refined oil products
+Key Audit Matter
+Recoverability of the carrying amount of fixed assets relating to oil
+and gas producing activities
+Refer to Note 13 "Fixed assets", Note 42 “Impairment losses", and Note
+53 "Principal accounting estimates and judgements" to the consolidated
+financial statements.
+Decrease in prices of international crude oil in the fourth quarter of the
+year ended 31 December 2018 gave rise to possible indication that
+the carrying amount of fixed assets relating to oil and gas producing
+activities as at 31 December 2018 might be impaired. The Group
+has adopted discounted future cash flow to determine the respective
+recoverable amounts of fixed assets relating to oil and gas producing
+activities, which involved key estimations or assumptions including:
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Discount rates.
+Because of the significance of the carrying amount of fixed assets
+relating to oil and gas producing activities as at 31 December 2018,
+together with the use of significant estimations or assumptions in
+determining their respective discounted cash flow, we had placed our
+audit emphasis on this matter.
+How our audit addressed the Key Audit Matter
+In auditing the respective discounted cash flow of fixed assets relating to oil
+and gas producing activities, we performed the following key procedures on
+the relevant discounted cash flow projections prepared by management:
+Evaluated and tested the key controls in respect of the preparation of
+the discounted cash flow projections of fixed assets relating to oil and
+gas producing activities.
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+• Compared estimates of future crude oil prices adopted by the Group
+against a range of reputable published crude oil price forecasts.
+• Compared the future production profiles against the oil and gas
+reserve estimation report approved by the management. Evaluated
+the competence, capability and objectivity of the management's
+experts engaged in estimating the oil and gas reserves. Assessed key
+estimations or assumptions used in the reserve estimation, by reference
+to historical data, management plans and/or reputable external data.
+Compared the future cost profiles against historical costs and relevant
+budgets of the Group.
+Tested selected other key data inputs, such as natural gas prices and
+production profiles in the projections by reference to historical data
+and/or relevant budgets of the Group.
+Our opinion
+We have audited the accompanying financial statements of China Petroleum & Chemical Corporation (hereinafter "Sinopec Corp."), which comprise the
+consolidated and company balance sheets as at 31 December 2018, the consolidated and company income statements for the year then ended, the
+consolidated and company cash flow statements for the year then ended, the consolidated and company statements of changes in shareholders' equity
+for the year then ended, and notes to the financial statements.
+What we have audited
+OPINION
+Oil jetty and nature gas pipeline
+transportation service
+Manufacturing of intermediate petrochemical
+Chemical Limited
+products and petroleum products
+Sinopec Shanghai Petrochemical
+10,824
+50.44
+44,540
+30,487
+5,277
+Manufacturing of synthetic fibres, resin
+Company Limited
+• Independently estimated a range of relevant discount rates, and found
+that the discount rates adopted by management were within the range.
+Fujian Petrochemical Company Limited
+50
+12,260
+11,523
+1,595
+and plastics, intermediate petrochemical
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and
+petroleum products
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by PricewaterhouseCoopers Zhong Tian LLP or PricewaterhouseCoopers in 2018.
+KPMG Huazhen LLP served the exception.
+2: The above indicated total assets and net profit has been prepared in accordance with CASS. Except for Sinopec Kantons Holdings Limited and Sinopec Overseas
+Investment Holdings Ltd, which are incorporated in Bermuda and Hong Kong SAR, respectively, all of the above wholly-owned and non-wholly-owned subsidiaries
+are incorporated in the PRC. All of the above wholly-owned and controlling subsidiaries are limited liability companies except for Sinopec Shanghai Petrochemical
+Company Limited, Sinopec Marketing Co., Limited and Sinopec Kantons Holdings Limited. The Board of Directors considered that it would be redundant to disclose
+the particulars of all subsidiaries and, therefore, only those which have material impact on the results or assets of Sinopec Corp. are set out above.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR
+pwc
+普华永道
+PwC ZT Shen Zi (2019) No. 10001
+To the Shareholders of China Petroleum & Chemical Corporation,
+8,140
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we obtained.
+82
+As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
+procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
+detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal control.
+•
+•
+•
+⋅
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists relating to events or conditions that may cast significant doubt on Sinopec Corp.'s ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in
+these financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
+up to the date of our auditor's report. However, future events or conditions may cause Sinopec Corp. to cease to continue as a going concern.
+Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements
+represent the underlying transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Sinopec Corp. to
+express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our audit opinion.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
+findings, including any significant deficiencies in internal control that we identify during our audit.
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
+and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
+related safeguards.
+Our objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from material misstatement, whether
+due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
+guarantee that an audit conducted in accordance with CSAS will always detect a material misstatement when it exists. Misstatements can arise from
+fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
+users taken on the basis of these financial statements.
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of
+the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law
+or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
+communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+PricewaterhouseCoopers Zhong Tian LLP
+Shanghai, the People's Republic of China
+22 March 2019
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Signing CPA
+Zhao Jianrong
+(Engagement Partner)
+Signing CPA
+Xu Xia
+(A)
+FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+as at 31 December 2018
+Notes
+At 31 December
+2018
+Financial Statements (PRC)
+RMB million
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+84
+Financial Statements (PRC)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Key Audit Matter
+Net realisable value (NRV) of crude oil, finished goods and work in
+progress of refined oil products
+Refer to Note 3(4) "Inventories", Note 11 "Inventories" and Note 53
+"Principal accounting estimates and judgements" to the consolidated
+financial statements.
+Decrease in prices of international crude oil along with its highly-
+correlated products, such as refined oil products in the fourth quarter
+of the year ended 31 December 2018 gave rise to the risk that net
+realisable values of crude oil, finished goods and work in progress of
+refined oil products were lower than their respective book values as at
+31 December 2018.
+Management has determined the NRVs of crude oil, finished goods
+and work in progress of refined oil products based on the respective
+estimated selling prices less the estimated costs to completion, other
+necessary costs of sales and the related taxes, which involved key
+estimations or assumptions including:
+Estimated selling prices;
+Estimated costs to completion, other necessary costs of sales and
+related taxes.
+Because of the significance of the book value of crude oil, finished
+goods and work in progress of refined oil products as at 31 December
+2018, together with the use of significant estimations or assumptions in
+determining their respective NRVs, we had placed our audit emphasis
+on this matter.
+OTHER INFORMATION
+How our audit addressed the Key Audit Matter
+REPORT OF THE PRC AUDITOR (CONTINUED)
+In auditing the NRVs of crude oil, finished goods and work in progress of
+refined oil products, we performed the following key procedures on the
+inventory NRV models prepared by the management.
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the NRV models.
+On a sampling basis, compared the estimated selling prices of
+inventories used in the NRV models against the recently realised selling
+prices, and the prices available on domestic and international markets.
+• On a sampling basis, compared the costs to completion, other necessary
+costs of sales and related taxes against historical data of the Group.
+Based on the work, we found that the key assumptions and data adopted in
+the NRV models were supported by the evidence we obtained.
+Management of Sinopec Corp. is responsible for the other information. The other information comprises all of the information included in 2018 annual
+report of Sinopec Corp. other than the financial statements and our auditor's report thereon.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
+other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+Management of Sinopec Corp. is responsible for the preparation and fair presentation of these financial statements in accordance with the CASS,
+and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material
+misstatement, whether due to fraud or error.
+In preparing these financial statements, management is responsible for assessing Sinopec Corp.'s ability to continue as a going concern, disclosing, as
+applicable, matters relating to going concern and using the going concern basis of accounting unless management either intend to liquidate Sinopec
+Corp. or to cease operations, or have no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing Sinopec Corp.'s financial reporting process.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+83
+Financial Statements (PRC)
+• Evaluated and tested the key controls, relating to the preparation of the
+NRV models of crude oil, finished goods and work in progress of refined
+oil products.
+89,028
+75,164
+Short-term debentures payable
+14
+34
+395
+302,082
+329,814
+373,020
+51,598
+50,046
+49,277
+Intangible assets
+8,571
+8,340
+7,913
+Long-term deferred expenses
+2,480
+1,958
+1,980
+Deferred tax assets
+11,021
+6,834
+Other non-current assets
+9,145
+10,690
+10,952
+674,499
+683,634
+711,890
+931,603
+Construction in progress
+13
+Fixed assets
+Other equity instrument investments
+37,766
+38,803
+9
+2,488
+4,429
+3,454
+10
+57,432
+63,820
+45,643
+45,825
+44,933
+46,942
+1,002,495
+15,835
+32,743
+Total current assets
+257,104
+318,861
+265,835
+Non-current assets
+Available-for-sale financial assets
+Long-term equity investments
+12
+289,207
+395
+275,557
+297
+268,451
+27,189
+977,725
+Total non-current assets
+Total assets
+86,604
+78,548
+3(26)
+3,413
+2,360
+4,230
+4,294
+4,854
+54,764
+42,549
+312
+32,423
+119,514
+143,274
+84,418
+113,841
+16,729
+288,877
+19,539
+317,563
+38,082
+280,822
+48,104
+63,667
+58,448
+20,000
+20,000
+36,000
+33,094
+31,405
+6,000
+30,145
+967
+17,330
+Liabilities and shareholders' equity
+Current liabilities
+Short-term loans
+Derivative financial liabilties
+Bills payable and accounts payable
+Advances from customers
+Contract liabilities
+Employee benefits payable
+Taxes payable
+Other payables
+Short-term debentures payable
+Non-current liabilities due within one year
+Total current liabilities
+Non-current liabilities
+9,256
+Long-term loans
+Provisions
+Deferred tax liabilities
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+Surplus reserves
+Retained earnings
+3,961
+Debentures payable
+816
+48,179
+22,500
+39,298
+18
+5,948
+6,466
+7,661
+31
+27,276
+16,440
+16,136
+169,551
+161,988
+180,541
+734,649
+39,958
+741,434
+Other comprehensive income
+Specific reserve
+Surplus reserves
+Retained earnings
+Minority interests
+Total shareholders' equity
+Total liabilities and shareholders' equity
+333
+32
+33
+34
+234
+121,071
+666,084
+121,071
+42,800
+54,985
+6,000
+Non-current liabilities due within one year
+27
+17,450
+26,681
+38,972
+Total current liabilities
+565,098
+579,446
+485,543
+Non-current liabilities
+Long-term loans
+28
+30
+61,576
+62,461
+Debentures payable
+Provisions
+Deferred tax liabilities
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+29
+31,951
+31,370
+67,754
+ethylene and downstream by-products
+121,071
+119,557
+The accompanying notes form part of these financial statements.
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+85
+Financial Statements (PRC)
+Financial Statements (PRC)
+BALANCE SHEET
+as at 31 December 2018
+Notes At 31 December
+2018
+RMB million
+At 31 December
+2017
+Ma Yongsheng
+President
+RMB million
+RMB million
+Assets
+Current assets
+Cash at bank and on hand
+Financial assets held for trading
+Bills receivable and accounts receivable
+Prepayments
+Other receivables
+Inventories
+Other current assets
+82,879
+92,545
+98,250
+At 1 January
+2017
+119,192
+(Legal representative)
+Dai Houliang
+119,525
+(6,774)
+(4,413)
+(932)
+1,706
+888
+765
+35
+203,678
+199,682
+196,640
+279,482
+290,459
+Chairman
+275,163
+718,355
+727,244
+712,232
+139,304
+126,826
+120,293
+857,659
+854,070
+832,525
+1,592,308
+1,595,504
+1,498,609
+These financial statements have been approved by the board of directors on 22 March 2019.
+Total equity attributable to shareholders of the Company
+3,282
+Sub-total of cash inflows
+85,012
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+3
+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
+Chairman's Address
+9
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+25 March 2022
+Ma Yongsheng
+Chairman
+When the path ahead is tortuous, the only way
+forward is trailblazing. I cherish the strong
+belief that under the leadership of the Board of
+Directors and through the combined efforts of
+the management and staff, as well as the strong
+support of our shareholders and the community,
+Sinopec Corp. will be able to take full advantage
+of its strengths in the industry, its technologies,
+and its talents to forge a distinctive path to high.
+quality growth, creating greater value for our
+shareholders and society at large and providing
+cleaner energy for a better life.
+In 2022, the Company will continue to adhere
+to the principle of pursuing progress while
+maintaining stability. In complete, accurate
+and comprehensive implementation of China's
+new development philosophy, the Company
+will integrate the new development philosophy
+with its existing businesses by high quality
+to further enhance its corporate governance,
+production and operations, transformation
+and development, technological innovation,
+management reform, risk control, and Party
+building, making every effort to achieve its goal
+of becoming a world-leading company. In its
+upstream businesses, the Company will make
+greater efforts to increase reserves with higher
+efficiency, upgrade production in an economical
+way, and reduce costs and fees, while expanding
+its resource channels and improving its energy
+supply capacity. In refining, the Company will
+strive to adjust its structure to reduce costs
+and improve supply capacity. In the chemicals
+business, the Company will accelerate advanced
+capacity construction to extend its high-
+end industrial chain and develop new growth
+engines. In the marketing and distribution
+segment, it will further take advantage of its
+marketing network to provide customers with
+comprehensive, high-quality services. Moreover,
+the Company will actively and steadily deploy
+new energy businesses such as hydrogen
+energy and photovoltaic stations to strengthen
+its green and low-carbon competitiveness.
+Capital expenditures will be RMB198 billion
+in 2022, mainly for investments in high-
+quality exploration and production; natural gas
+systems including production, supply, storage,
+and sales; adjustments in the structure of the
+refining business; construction of refining and
+chemical production clusters; high-end materials
+projects; and integrated energy service stations
+for gasoline, natural gas, hydrogen, power, and
+services, as well as new energy businesses.
+The Company will endeavor to consolidate and
+enhance its business competitiveness to achieve
+a healthier and more sustainable growth.
+uncertainties. The international environment
+faced by the Company has grown more complex.
+Nevertheless, China's economy is expected to
+maintain steady growth, with strong resilience,
+great potential, and risk resistance capabilities.
+Domestic economic fundamentals will remain
+strong in the long term. The stable and healthy
+domestic economic environment will create
+great opportunities for the Company's future
+development.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+8
+With the challenges of the ongoing global
+pandemic, geopolitical tensions, and high
+spot prices of commodity, the recovery of the
+world economy is still subject to significant
+Focus on boosting green and low-
+carbon competitiveness. By coordinating
+its environmental goals with production
+development, the Company will base its emission
+reduction targets on scientifically achievable
+approaches, and continue to optimize its
+industrial and energy structure. It will enhance
+its energy efficiency with the aim of establishing
+an industry benchmark. The Company will
+establish its green and low-carbon initiatives and
+help advance the circular development system,
+thereby promoting resource utilization that is
+efficient, intensive, and recyclable. It will also
+accelerate research and innovation in green and
+low-carbon technologies such as carbon capture,
+utilization, and storage to take the initiative in
+innovative development.
+Focus on 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 improving energy supply capacity. The
+Company will redouble its efforts in exploration,
+especially in shale oil and shale gas. It will
+continue to implement integrated development
+of natural gas production, supply, storage, and
+sales. It will continue to develop its hydrogen
+energy business at a reliable pace, while building
+out photovoltaic power stations according to
+local conditions, thereby expanding the scope
+of its energy and resources. In addition, the
+Company will strengthen its international trade
+capability, coordinate the allocation of global
+resources, and further explore the build-out of a
+successful multi-energy supply system.
+Focus on implementing an innovation-driven
+strategy. The Company will strive to nurture a
+wellspring of self-developed new technologies,
+promote research and development of advanced
+oil and gas exploration technologies, and
+enhance innovation and breakthroughs in
+high-end chemicals, new materials, modern
+coal chemical technology, and new energy
+products, as well as in key, generic and
+advanced technologies. The Company will
+turn those technological achievements into its
+competitive business advantages to support its
+transformation and upgrading.
+Focus on promoting corporate governance.
+Through further improvements in its corporate
+governance system and enhancements to
+governance efficiency, the Company will
+ensure that it can achieve superior operating
+standards. To fulfill the goals of strengthening
+internal controls, reducing risk, and promoting
+compliance, we will work on the integration of
+risk control, internal control, and compliance
+management, and we will minimize risk in all
+aspects of our operations, including safety
+in production, environmental protection, and
+operations management. We will deepen our
+corporate reform to maintain the vitality of
+operating systems and mechanisms. In addition,
+the Company will elevate corporate management
+performance to new levels by benchmarking
+world-class management practices. The
+Company will further improve its Party-building
+efforts to promote high-quality development.
+Looking ahead, in light of the country's carbon
+peak and carbon neutrality goals, resource
+and environmental constraints will have a
+profound impact on the development of the
+energy and chemical industries. The energy
+industry has entered a phase of transition
+requiring qualitative changes and a deepening
+structural adjustment, which will pose serious
+challenges to the Company's high-quality
+development. Considering the current stage
+of its development, as well as the existing
+opportunities and challenges, the Company
+will continue to optimize its 14th Five-Year
+Plan and Vision 2035, and will set out a clear
+path towards sustainable development through
+actionable goals and principles:
+percentage
+points
+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.
+50.10
+2.62
+1.384
+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
+2019
+2019
+After
+Before
+Change
+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
+49.98
+1.392
+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
+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.
+774,182
+127,510
+139,922
+138,359
+141,377
+140,892
+163,387
+170,803
+303,014
+328,199
+332,901
+52,466
+63,514
+133,166
+67,335
+83,256
+2017
+1,074,985
+1,097,045
+1,318,258
+2018
+As of 31 December
+2020
+2019
+1,283,236
+1,331,231
+2021
+Adjusted net assets per share (RMB)
+Total equity attributable to shareholders of the Company
+Net assets per share (RMB)
+Non-controlling interests
+Non-current liabilities
+746,325
+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.
+743,719
+731,622
+CHAIRMAN'S ADDRESS (CONTINUED)
+Chairman's Address
+Chairman's Address
+7
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The Company has steadily improved the overall
+quality of its development. We have strengthened
+scientific and technological innovation, optimized
+production and operations, accelerated
+transformation and development, and upgraded
+the quality and efficiency of the industrial
+chain. In upstream, we accelerated our efforts
+in oil and gas exploration, and we achieved
+major breakthroughs in continental facies shale
+oilfields exploration. The domestic oil and gas
+reserve replacement rate reached 154%, while
+natural gas production grew by 11.9% over
+the previous year, thereby increasing reserves,
+stabilizing oil production, increasing gas output,
+and improving efficiency. In refining, throughput
+and major products have seen significant growth
+as a result of the Company's ongoing structural
+adjustment, including initiatives to shift from oil
+products to chemicals and specialty products,
+as well as efforts to construct world-class
+refining and chemical production clusters. In
+the chemicals segment, we optimized our raw
+material and product mix, achieving ongoing
+increases in production of high-value-added
+products. In the marketing and distribution
+segment, we strove to integrate and coordinate
+Research and development initiatives achieved
+fruitful results. We have vigorously implemented
+an innovation-driven strategy, deepened
+reform of our R&D mechanisms, built new
+R&D institutions and technology incubators,
+and accelerated the deployment of cutting.
+edge technologies in key areas, including oil
+& gas exploration and production, chemical
+new materials, new energy, and green and low-
+carbon development. As a result, a number of
+our major R&D projects achieved breakthroughs,
+and the Company's comprehensive patent
+advantages continued to rank at the forefront of
+domestic enterprises, providing vital support for
+quality development of the Company.
+By deepening reforms and strengthening
+management, the Company put the SOE Reform
+3-year action plan into effect and implemented
+the benchmarking programme of improving
+management, enhanced the effectiveness of its
+internal controls, and upgraded its corporate
+management performance. Taking advantage
+of its Party-building activities, the Company
+further enhanced its supervision mechanisms,
+motivating staff to increase productivity and
+pursue career development. In addition, we
+placed great emphasis on shareholder returns,
+improved communications with stakeholders,
+and strengthened environmental, social, and
+governance measures and disclosures in
+an effort to consistently increase corporate
+transparency. Continuing connected transactions
+of the Company for the next three years gained
+support and approval by shareholders, ensuring
+greater production and operational stability.
+for its compliance management system.
+Corporate governance has continued to evolve.
+During the year, the Company elected new
+members to the Board of Directors and the
+Board of Supervisors and made appointments
+to senior management, enhancing diversity
+on the board level. All independent directors
+fulfilled their duties with diligence and offered
+strategic advice for reform and development.
+The Company optimized a number of corporate
+governance practices and laid a solid foundation
+reduced costs and expenses, resulting in a
+substantial increase in operating performance.
+In accordance with International Financial
+Reporting Standards, our revenue increased
+by 30.2% from the previous year to RMB2.74
+trillion, operating profit increased by 592.3%
+to RMB94.628 billion, and profits attributable
+to shareholders of the Company increased
+by 115.2% to RMB71.975 billion. Net cash
+flow from operating activities amounted to
+RMB225.174 billion, reaching a historical high.
+The ratio of liabilities to assets at the end of the
+year was 51.56%, representing a solid financial
+position. In view of the Company's profitability,
+shareholder return, and future development
+needs, the Board of Directors recommended
+the payment of a final dividend of RMBO.31 per
+share. Taking into account the interim dividend
+of RMBO.16 per share, the total dividend for the
+year was RMB0.47 per share, with a dividend
+payout ratio of 80%.
+Operating results for 2021 achieved a 10-year
+record high. Over the past year, the Company
+has taken full advantage of its integrated
+businesses, made every effort to optimize
+operations, expanded sales and markets, and
+In 2021, confronted with the impacts of the
+Covid-19 pandemic as well as the complex
+and challenging macroeconomic environment,
+the Board of Directors fully evaluated market
+conditions both domestically and internationally,
+adhered to the goal of pursuing progress while
+maintaining stability, dedicated the Company
+to vigorously implementing its world-leading
+development strategy, and focused on promoting
+high-quality development. At the same time,
+the management led the entire staff with great
+dedication in order to accomplish all of the
+Company's targets and tasks, getting off to a
+good start of the 14th Five-Year Plan.
+First, I would like to express my sincere
+gratitude to our shareholders and directors for
+their valued trust and support in nominating me
+as Chairman of the Company. I am honored to
+take on this mission and the responsibilities of
+the role. Together with the Board, we will fulfill
+our duties with diligence, promote high-quality
+development of the Company, and continuously
+improve our corporate value.
+Dear Shareholders and Friends:
+CHAIRMAN'S ADDRESS
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS PLEASE REFER TO PAGE 216 OF
+THE REPORT.
+5.913
+6.043
+5.787
+5.993
+5.954
+5.970
+6.143
+6.164
+6.394
+6.225
+722,806
+1.860
+Net cash flow from operating activities per share
+points
+After
+2020
+Before
+2019
+2019
+After
+2021
+RMB million
+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
+14.5
+775,102
+747,294
+742,463
+2020
+3.7
+For the year ended 31 December
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+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
+576,559
+684,214
+18,160
+21,266
+740,918
+20,603
+739,193
+2,740,884
+11,179
+71,208
+Net cash flow from operating activities
+17,674
+(15,188)
+20,746
+20,300
+13,500
+72,220
+63,535
+68,397
+108,430
+225,174
+Items
+Total assets
+Total liabilities
+(2) Principal financial indicators
+257
+882,554
+1,760,286
+0.272
+113.8
+0.476
+0.476
+Basic earnings per share (excluding extraordinary gains and losses)
+0.597
+(0.013)
+(0.013)
+0.448
+0.448
+Weighted average return on net assets (%)
+9.35
+4.46
+4.44
+4.89
+7.85
+7.90
+percentage
+points
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+9.49
+(0.21)
+(0.21)
+9.70
+7.39
+7.44
+percentage
+0.275
+0.588
+Diluted earnings per share
+0.476
+881,912
+121,071,210
+121,071,210
+121,071,210
+744,738
+121,071,210
+739,965
+121,071,210
+For the year ended 31 December
+2020
+After
+2021
+adjustment
+2020
+Before
+adjustment
+Change
+2019
+After
+adjustment
+Net current liabilities
+2019
+Before
+Items
+RMB Yuan
+RMB Yuan
+RMB Yuan
+(%)
+RMB Yuan
+RMB Yuan
+Basic earnings per share
+0.588
+0.275
+0.272
+113.8
+0.476
+adjustment
+Non-current assets
+Items
+Unit: RMB million
+30.2 A result of sharp increase in the price and sales volume of
+refining products
+636,160
+2,104,724
+(%) Reasons for change
+RMB million
+RMB million
+Amount Percentage
+2020
+2021
+RMB million
+2,740,884
+Operating income
+Items
+Increase/(decrease)
+As of 31 December
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+(5) Significant changes of items in the financial statements
+(4,084)
+(2,796)
+3,891
+5,939
+21,854
+17,963
+8,735
+99
+(1)
+1
+(14,873)
+10,690
+6,253
+13,798
+7,545
+Operating costs
+1,193
+2,216,551
+530,877
+85,030
+Net profit
+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
+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
+16,974
+6,344
+23,318
+Income tax expense
+59,907
+48,441
+108,348
+Profit before taxation
+61,611
+50,803
+112,414
+Operating profit
+4,594
+12,922
+(26,087)
+(13,165)
+Impairment losses
+(1,253)
+3,341
+Gains/(Losses) from changes in fair value
+(41,454)
+47,486
+6,032
+Investment income
+1,685,674
+1,350
+(758)
+of the year
+209
+(6,857)
+(8,605)
+(3,085)
+1,318
+(973)
+301
+165
+(665)
+RMB million
+2019
+2020
+RMB million
+RMB million
+2021
+For the year ended 31 December
+(Income)/expenses
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Total
+Financial assets held for trading
+Receivables financing
+Cash flow hedging
+Derivative financial instruments
+Other equity instruments
+Items
+(4) Items measured by fair values
+Minority interests
+Attributable to: Equity shareholders of the Company
+Total
+Tax effect
+Subtotal
+Net (loss)/profit acquired through business combination under common control
+during the reporting period
+(259)
+(37,520)
+(410)
+4,720
+Changes
+on the profit
+End
+of the year
+767
+1,525
+157
+of the year
+Beginning
+Influence
+Unit: RMB million
+(125)
+(2,705)
+(107)
+(3,363)
+(34,836)
+42,097
+1,012
+(37,541)
+905
+1,757
+6,736
+(72)
+(5,245)
+(44,277)
+977
+(139)
+(472)
+101
+634
+2,992
+(3,488)
+RMB million
+42,933
+Cash flow hedges
+61,920
+57,517
+33,443
+71,975
+Profit attributable to shareholders of the Company
+87,544
+99,658
+90,161
+48,615
+109,169
+Profit before taxation
+72,396
+82,884
+86,516
+13,669
+94,628
+2,347,726
+2017
+2018
+2,879,192
+For the year ended 31 December
+2020
+2019
+2,104,724 2,957,868
+2,740,884
+2021
+Operating profit
+Items
+Revenue
+Unit: RMB million
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+51,821
+Principal Financial Data and Indicators
+Basic earnings per share (RMB)
+0.276
+1.579
+1.455
+1.275
+1.392
+1.860
+Net cash generated from operating activities per share (RMB)
+7.08
+8.57
+7.73
+4.48
+9.30
+Return on net assets (%)
+8.27
+9.21
+8.94
+6.22
+11.29
+Return on capital employed (%)
+0.428
+0.511
+0.475
+0.276
+0.594
+Diluted earnings per share (RMB)
+0.428
+0.511
+0.475
+0.594
+6
+Principal Financial Data and Indicators
+5
+6,610
+20,756
+27,366
+Short-term loans
+(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
+55,242
+152,191
+207,433
+Inventories
+(2,796)
+8,735
+5,939
+Receivables financing
+(33.2)
+(1,603)
+4,826
+3,223
+Derivative financial liabilities
+-Unrealised profit increased from crude oil hedging
+168.9 Increase in effective portion of cash flow hedges
+46.6
+5,843
+12,528
+18,371
+Derivative financial assets
+11,945
+7,073
+19,018
+31.8
+Increase in loan of holding subsidiaries.
+Accounts payable
+Other payables
+LO
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+54.5 Increase in actual cash dividend paid for 2021
+41.4 Mainly because of the cash consideration received from the restruction
+of PipeChina in 2020
+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
+34.9 Increase in derivative commodity margins
+Increase in procurement cost due to increase in the price of crude oil
+and refined oil
+(20,432)
+(37,510)
+(57,942)
+Net cash flow from financing activities
+56,654
+(44,664)
+(42,548)
+(102,650)
+102.0 Increase in operating profit
+(145,198)
+subsidiaries and other business entities
+49,869
+5,205
+168,520
+225,174
+29,689
+Government grants
+114,701
+34.6
+52,405
+151,514
+203,919
+Net cash flow from operating activities
+Net cash received from disposal of
+Net cash flow from investing activities
+Total
+Quarter
+Fourth
+Documents for Inspection
+224
+Corporate Information
+223
+Financial Statements
+83
+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.
+Controlled Subsidiaries
+Bond General Information
+of Principal Shareholders
+82
+79
+77 Changes in Share Capital and Shareholdings
+Report of the Board of Supervisors
+Principal Wholly-owned and
+27
+2
+COMPANY PROFILE
+Century Bright: Sinopec Century Bright Capital Investment, Ltd.
+Sinopec Finance Co.: Sinopec Finance Co., Ltd.
+RMC: Oil and Natural Gas Reserves Management Committee of the Company
+NDRC: China National Development and Reform Commission
+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
+Company Profile
+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
+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.
+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.
+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.
+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.
+DEFINITIONS:
+75
+65 Report of the Board of Directors
+Connected Transactions
+ANNUAL REPORT
+2021
+H2
+【便利店
+A SUT66
+为美好生活加油
+AND ACCOUNTS
+Official Partner of the Olympic Winter Games Beijing 2022
+SINOPEC
+中国石化
+BEIJING 2022
+OPEC
+中国産化
+Other non-operating expenses, net
+000
+中国石油化工股份有限公司
+SINOPEC CORP.
+CONTENTS
+Significant Events
+Environment and Social Responsibilities
+Corporate Governance
+Management's Discussion and Analysis
+Business Review and Prospects
+Chairman's Address
+Principal Financial Data and Indicators
+Company Profile
+62
+55
+53
+31
+19
+11
+237
+CSRC: China Securities Regulatory Commission.
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+Gain on holding and disposal of various investments
+CONVERSION:
+114.0
+32,924
+33,271
+71,208
+Net profit attributable to equity shareholders of the Company
+90,111
+57,643
+90,250
+47,969
+48,441
+108,348
+Profit before taxation
+90,134
+90,273
+123.7
+57,619
+Net profit/(loss) attributable to equity shareholders of the Company excluding
+extraordinary gains and losses
+72,220
+Hong Kong Listing Rules: Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
+Third
+Quarter
+Second
+Quarter
+First
+Quarter
+RMB million
+2021
+153,619
+154,380
+33.6
+167,518
+168,520
+225,174
+Net cash flow from operating activities
+54,280
+54,280
+(1,565)
+121.3
+50,331
+(1,565)
+112,414
+2020
+2020
+After
+adjustment
+RMB million
+2021
+RMB million
+Operating profit
+Operating income
+For the year ended 31 December
+2019
+(1) Principal financial data
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+50,803
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+For overseas production of crude oil: 1 tonne = 7.22 barrels in 2021, 1 tonne = 7.20 barrels in 2020, 1 tonne = 7.21 barrels in 2019;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+2019
+Items
+After
+2,957,868
+30.2
+Before
+2,959,799
+2,105,984
+2,104,724
+RMB million
+adjustment
+2,740,884
+(%)
+RMB million
+adjustment
+Change
+adjustment
+Before
+RMB million
+Where the accounting policies and accounting period adopted by the subsidiaries are different from those adopted by the Company,
+adjustments are made to the subsidiaries' financial statements according to the Company's accounting policies and accounting period.
+Intra-group balances and transactions, and any unrealised profit or loss arising from intra-group transactions, are eliminated in preparing
+the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised
+gains but only to the extent that there is no evidence of impairment.
+The assets and liabilities of foreign operation are translated into Renminbi at the spot exchange rates at the balance sheet date. The equity
+items, excluding "Retained earnings", are translated into Renminbi at the spot exchange rates at the transaction dates. The income and
+expenses of foreign operation are translated into Renminbi at the spot exchange rates or an exchange rate that approximates the spot exchange
+rates on the transaction dates. The resulting exchange differences are separately presented as other comprehensive income in the balance sheet
+within equity. Upon disposal of a foreign operation, the cumulative amount of the exchange differences recognised in which relate to that foreign
+operation is transferred to profit or loss in the year in which the disposal occurs.
+The 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 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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(4) Inventories
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(3) Cash and cash equivalents
+Cash and cash equivalents comprise cash on hand, demand deposits, short-term and highly liquid investments which are readily convertible into
+known amounts of cash and are subject to an insignificant risk of change in value.
+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.
+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.
+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.
+NOTES TO THE 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.
+(c) Method for preparation of consolidated financial statements
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+Inventories include raw materials, work in progress, semi-finished goods, finished goods and reusable materials. Reusable materials include
+low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets.
+Reusable materials are amortised in full when received for use. The amounts of the amortisation are included in the cost of the related assets or
+profit or loss.
+(a) Business combination involving entities under common control
+A business combination involving entities or businesses under common control is a business combination in which all of the combining
+entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that
+control is not transitory. The assets and liabilities that the acquirer receives in the acquisition are accounted for at the acquiree's carrying
+amount on the acquisition date. The difference between the carrying amount of the acquired net assets and the carrying amount of the
+consideration paid for the acquisition (or the total nominal value of shares issued) is recognised in the share premium of capital reserve, or
+the retained earnings in case of any shortfall in the share premium of capital reserve. Any costs directly attributable to the combination shall
+be recognised in profit or loss for the current period when occurred. The expense incurred for equity securities and debt securities issued as
+the consideration of the combination is recognised in the initial cost of the securities. The combination date is the date on which the acquirer
+effectively obtains control of the acquiree.
+(b) Business combination involving entities not under common control
+A business combination involving entities or businesses not under common control is a business combination in which all of the combining
+entities or businesses are not ultimately controlled by the same party or parties both before and after the business combination. Difference
+between the consideration paid by the Group as the acquirer, comprises of the aggregate of the fair value at the acquisition date of assets
+given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree, and the Group's
+interest in the fair value of the identifiable net assets of the acquiree, is recognised as goodwill (Note 3(10)) if it is an excess, otherwise in
+the profit or loss. The expense incurred for equity securities and debt securities issued as the consideration of the combination is recognised
+in the initial cost of the securities. Any other expense directly attributable to the business combination is recognised in the profit or loss
+for the year. The difference between the fair value and the book value of the assets given is recognised in profit or loss. The acquiree's
+identifiable assets, liabilities and contingent liabilities, if satisfying the recognition criteria, are recognised by the Group at their fair value at
+the acquisition date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
+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.
+(c) Method for preparation of consolidated financial statements (Continued)
+Where the Company acquired a minority interest from a subsidiary's minority shareholders, the difference between the investment cost and
+the newly acquired interest into the subsidiary's identifiable net assets at the acquisition date is adjusted to the capital reserve (capital
+surplus) in the consolidated balance sheet. Where the Company partially disposed an investment of a subsidiary that do not result in a loss
+of control, the difference between the proceeds and the corresponding share of the interest into the subsidiary is adjusted to the capital
+reserve (capital surplus) in the consolidated balance sheet. If the credit balance of capital reserve (capital surplus) is insufficient, any excess
+is adjusted to retained profits.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+95
+Financial Statements (PRC)
+96
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+Inventories are recorded by perpetual method.
+The Group recognises a right-of-use asset at the commencement date, and recognises the lease liability at the present value of the lease
+payments that are not paid at that date. The lease payments include fixed payments, the exercise price of a purchase option if the Group is
+reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease term reflects the Group exercising
+that option, etc. Variable payments that are based on a percentage of sales are not included in the lease payments, and should be recognised
+in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from balance sheet date is presented in
+non-current liabilities due within one year.
+(a) Investment in subsidiaries
+(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
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(6) Leases
+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.
+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
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset is less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+Payments associated with short-term leases with lease terms within 12 months and leases for which the underlying assets are individually
+of low value when it is new are recognised on a straight-line basis over the lease term as an expense in profit or loss or as cost of relevant
+assets, instead of recognising right-of-use assets and lease liabilities.
+(b) As Lessor
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+(7) Fixed assets and construction in progress
+Fixed assets represent the tangible assets held by the Group using in the production of goods, rendering of services and for operation and
+administrative purposes with useful life over one year.
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(12)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(12)).
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+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.
+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.
+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.
+In the Company's separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method.
+Except for cash dividends or profits distributions declared but not yet distributed that have been included in the price or consideration paid
+in obtaining the investments, the Company recognises its share of the cash dividends or profit distributions declared by the investee as
+investment income irrespective of whether these represent the net profit realised by the investee before or after the investment. Investments
+in subsidiaries are stated at cost less impairment losses (see Note 3(12)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+The initial investment cost of a long-term equity investment obtained through a business combination involving entities under common
+control is the Company's share of the carrying amount of the subsidiary's equity at the combination date. The difference between the initial
+investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the
+share premium is insufficient, any excess is adjusted to retained earnings.
+For a long-term equity investment obtained through a business combination not involving enterprises under common control, the initial
+investment cost comprises the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity securities issued
+by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not
+involving enterprises under common control, if it is achieved in stages, the initial cost comprises the carrying value of previously-held equity
+investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
+An investment in a subsidiary acquired otherwise than through a business combination is initially recognised at actual purchase cost if the
+Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity
+securities, or at the value stipulated in the investment contract or agreement if an investment is contributed by investors.
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+97
+Financial Statements (PRC)
+98
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(5) Long-term equity investments (Continued)
+(b) Investment in joint ventures and associates
+A joint venture is an incorporated entity over which the Group, based on legal form, contractual terms and other facts and circumstances,
+has joint control with the other parties to the joint venture and rights to the net assets of the joint venture. Joint control is the contractually
+agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of
+the Group and the parties sharing control.
+An associate is the investee that the Group has significant influence on their financial and operating policies. Significant influence represents
+the right to participate in the financial and operating policy decisions of the investee but is not control or joint control over the establishment
+of these policies. The Group generally considers the following circumstances in determining whether it can exercise significant influence
+over the investee: whether there is representative appointed to the board of directors or equivalent governing body of the investee; whether
+to participate in the investee's policy-making process; whether there are significant transactions with the investees; whether there is
+management personnel sent to the investee; whether to provide critical technical information to the investee.
+An investment in a joint ventures or an associate is accounted for using the equity method, unless the investment is classified as held for
+sale.
+The initial cost of investment in joint ventures and associates is stated at the consideration paid except for cash dividends or profits
+distributions declared but unpaid at the time of acquisition and therefore included in the consideration paid should be deducted if the
+investment is made in cash. Under the circumstances that the long-term investment is obtained through non-monetary asset exchange, the
+initial cost of the investment is stated at the fair value of the assets exchanged if the transaction has commercial substance, the difference
+between the fair value of the assets exchanged and its carrying amount is charged to profit or loss; or stated at the carrying amount of the
+assets exchanged if the transaction lacks commercial substance.
+The Group's accounting treatments when adopting the equity method include:
+(5) Long-term equity investments
+Principal accounting estimates and judgements of the Group are set out in Note 58.
+Financial Statements (PRC)
+3 SIGNIFICANT ACCOUNTING POLICIES
+(35,110)
+(35,110)
+3,944
+(39,054)
+(35,110)
+4. Net increase in specific reserve for the year
+469
+469
+(3,944)
+5. Others
+121,071
+(1,079)
+67,897
+201
+(878)
+6,024
+1,658
+213,224
+116,440
+Balance at 31 December 2021
+3,944
+(13,498)
+53,056
+(32)
+103
+5,910
+1,189
+209,280
+115,849
+522,275
+5,910
+1,189
+209,280
+115,849
+522,275
+39,444
+39,444
+13,612
+13,612
+(13,498)
+13,612
+39,444
+526,314
+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.
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Chairman
+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))
+Details of the Company's principal subsidiaries are set out in Note 59.
+-
+Derivative financial instruments (see Note 3(11))
+Receivables financing (see Note 3(11))
+(4) Functional currency and presentation currency
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Company and its subsidiaries determine their
+functional currency according to the main economic environment in where they operate. The Group's consolidated financial statements are
+presented in Renminbi. Some of subsidiaries use other currency as the functional currency. The Company translates the financial statements of
+subsidiaries from their respective functional currencies into Renminbi (see Note 3(2)) if the subsidiaries' functional currencies are not Renminbi.
+94
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Other equity instrument investments (see Note 3(11))
+(3) the production and sale of chemical.
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(1) the exploration, development and production of crude oil and natural gas;
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+93
+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.
+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").
+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.
+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:
+Ma Yongsheng
+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.
+reserve
+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.
+(6,796)
+(1,396)
+(1,396)
+1,973
+1,973
+(35,110)
+(35,110)
+(35,110)
+(8,192)
+(3,944)
+121,071
+(19,950)
+(648)
+(19,302)
+102,537
+13,755
+88,782
+71,208
+3,944
+17,507
+(8,982)
+(6,124)
+120,188
+394
+159
+235
+(84)
+319
+775
+52
+(8,982)
+723
+(56,435)
+(13,805)
+(42,630)
+(39,054)
+3,944
+(7,520)
+(6,124)
+(6,124)
+723
+(67)
+17,574
+(19,302)
+121,071
+(2.073)
+(2,400)
+327
+(535)
+862
+237
+37
+127,389
+200
+(35,005)
+(2,416)
+(32,589)
+(33,336)
+1,857
+(1,110)
+972
+(972)
+200
+1,038
+1,941
+209,280
+17,574
+17.574
+85,030
+13,822
+71,208
+71,208
+888,720
+141,426
+747,294
+286,575
+209,280
+1,941
+1,038
+127,389
+121,071
+888,720
+141,426
+747,294
+286,575
+(690)
+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.
+2,664
+318,645
+4,766
+18,572
+18,572
+530,110
+130.645
+207,423
+equity
+RMB million
+earnings
+RMB million
+4,766
+reserves
+RMB million
+1,181
+income
+RMB million
+reserve
+RMB million
+68.841
+121,071
+RMB million
+capital
+shareholders'
+Retained
+RMB million
+949
+Surplus
+(37)
+18,572
+The Group terminates the recognition of an item of fixed asset when it is in a state of disposal or it is estimated that it is unable to generate
+any economic benefits through use or disposal. Gains or losses arising from the retirement or disposal of an item of fixed asset are determined
+as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of
+retirement or disposal.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+99
+Financial Statements (PRC)
+(31,479)
+(33,336)
+1.857
+(31,479)
+4,766
+(31,479)
+1,857
+68,976
+36
+68,976
+121,071
+121,071
+135
+(37)
+23,338
+(1,857)
+Specific
+Capital comprehensive
+Share
+2. Other comprehensive income
+Change for the year
+Balance at 1 January 2020
+For the year ended 31 December 2021
+STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+Shou Donghua
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Total comprehensive income
+92
+Yu Baocai
+President
+(Legal representative)
+Chairman
+Ma Yongsheng
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+916,041
+140,939
+775,102
+The accompanying notes form part of these financial statements.
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+Total
+Other
+Total transactions with owners, recorded directly in shareholders' equity
+-Distributions to shareholders (Note 55)
+-Appropriations for surplus reserves (Note 39)
+3. Appropriations of profits:
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Balance at 1 January 2021
+Balance at 31 December 2020
+5. Others
+4. Net increase in specific reserve for the year
+Total transactions with owners, recorded directly in shareholders' equity
+-Distributions to shareholders (Note 55)
+-Appropriations for surplus reserves
+213,224
+1. Net profit
+(243,774)
+(972)
+Other cash received relating to investing activities
+49,869
+5,205
+56(d)
+2,656
+1,478
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Net cash received from disposal of subsidiaries and other business entities
+11,510
+10,134
+Cash received from returns on investments
+11,651
+9,812
+Cash received from disposal of investments
+38,208
+(2,343,048)
+168,520
+56(a)
+(2,918,434)
+(225,304)
+(179,679)
+(85,481)
+(282,390)
+(325,348)
+(95,778)
+Cash flows from investing activities:
+Net cash flow from operating activities
+Sub-total of cash outflows
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+225,174
+(1,749,873)
+58,669
+64,837
+Sub-total of cash inflows
+133
+Other cash received relating to financing activities
+4,219
+4,219
+558,680
+356,459
+1,001
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+1,001
+Cash received from capital contributions
+Cash flows from financing activities:
+(102,650)
+(145,198)
+Net cash flow from investing activities
+Sub-total of cash inflows
+(237,005)
+Sub-total of cash outflows
+(92,289)
+(50,923)
+Other cash paid relating to investing activities
+(340)
+(1,106)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(12,740)
+(13,085)
+(131,636)
+(144,921)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+134,355
+(210,035)
+357,593
+(2,317,629)
+RMB million
+(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
+91
+Financial Statements (PRC)
+Financial Statements (PRC)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2021
+Total
+shareholders'
+equity
+attributable
+Other
+Chairman
+Share
+comprehensive
+Specific
+Surplus
+Retained
+to equity
+shareholders of
+Minority
+Total
+shareholders'
+capital
+reserve
+income
+reserve
+reserves
+earnings
+Capital
+2,295,665
+2,985
+212,918
+2,511,568
+Ma Yongsheng
+28,081
+3,143,608
+158,049
+2,980,918
+4,641
+Cash paid for goods and services
+Other cash received relating to operating activities
+Refund of taxes and levies
+Sub-total of cash inflows
+Cash received from sale of goods and rendering of services
+Cash flows from operating activities:
+2020
+2021
+RMB million
+Notes
+For the year ended 31 December 2021
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+CONSOLIDATED CASH FLOW STATEMENT
+90
+22,512
+Effects of changes in foreign exchange rate
+8
+(5)
+Net increase in cash and cash equivalents
+6,494
+12,097
+Add: Cash and cash equivalents at the beginning of the year
+28,081
+15,984
+Cash and cash equivalents at the end of the period
+34,575
+Financial Statements (PRC)
+the Company
+700
+563,599
+(338,232)
+(52,212)
+Cash paid for acquisition of investments
+(59,216)
+(70,578)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+116,292
+191,798
+Sub-total of cash inflows
+78,751
+136,276
+6,579
+72
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+(41,066)
+18,805
+Cash received from returns on investments
+12,157
+32,738
+39,988
+92,075
+(834,308)
+(1,080,268)
+(19,239)
+(25,895)
+(164,635)
+(181,187)
+(44,139)
+(49,784)
+22,712
+(606,295)
+Other cash paid relating to investing activities
+Net cash flow from investing activities
+(479,222)
+(7,074)
+(284,979)
+(36,973)
+(42,933)
+(199,727)
+(151,310)
+266,286
+458,634
+70,516
+298,755
+195,770
+159,879
+Sub-total of cash outflows
+(50,398)
+(166,690)
+(256,799)
+(66,408)
+(134,009)
+Net cash flow from financing activities
+Sub-total of cash outflows
+Other cash paid relating to financing activities
+Cash paid for dividends or interest
+Cash repayments of borrowings
+Sub-total of cash inflows
+Other cash received relating to financing activities
+Cash received from borrowings
+Cash flows from financing activities:
+(65,001)
+Cash repayments of borrowings
+-------
+862,093
+2,796
+9,407
+60,438
+87,559
+27,121
+21,031
+56(b)
+(1,239)
+(1,003)
+Cash and cash equivalents at the end of the period
+Add: Cash and cash equivalents at the beginning of the year
+Net increase in cash and cash equivalents
+Effects of changes in foreign exchange rate
+(37,510)
+(57,942)
+108,590
+(601,109)
+Net cash flow from financing activities
+Sub-total of cash outflows
+(17,282)
+(28,276)
+56(e)
+Other cash paid relating to financing activities
+(4,821)
+(8,068)
+Including: Subsidiaries' cash payments for distribution of dividends or profits to
+minority shareholders
+(43,812)
+(49,027)
+Cash paid for dividends, profits distribution or interest
+(540,015)
+(415,535)
+874,296
+87,559
+Ma Yongsheng
+Chairman
+RMB million
+13,868
+1,172,343
+(823,402)
+1,155,516
+2,959
+Cash received from disposal of investments
+Cash flows from investing activities:
+Net cash flow from operating activities
+Sub-total of cash outflows
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+Cash paid for goods and services
+Sub-total of cash inflows
+Refund of taxes and levies
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Cash received from sale of goods and rendering of services
+Cash flows from operating activities:
+2020
+2021
+RMB million
+Notes
+For the year ended 31 December 2021
+CASH FLOW STATEMENT
+Chief Financial Officer
+Shou Donghua
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+President
+Yu Baocai
+(Legal representative)
+Other cash received relating to operating activities
+(20,588)
+240
+RMB million
+127,637
+(321)
+207,423
+287,187
+744,738
+138,410
+883,148
+Change for the year
+1. Net profit
+33,271
+33,271
+8,826
+42.097
+2. Other comprehensive income (Note 38)
+1,406
+1,406
+(47)
+(12)
+1,394
+(1,079)
+315
+33,259
+34,665
+121,071
+Balance at 1 January 2020
+4,774
+1
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+interests
+RMB million
+equity
+RMB million
+Balance at 31 December 2019
+121,071
+7,747
+122,864
+1,741
+207,423
+287,187
+739,965
+138,409
+878,374
+240
+Adjustment for business combination of entities under
+common control (Note 60)
+4,773
+4,773
+(321)
+42,412
+1,741
+48
+4.
+Contributions to subsidiaries from minority interests
+5. Transaction with minority interests
+6. Distributions to minority interests
+7. Adjustment for business combination of entities under
+common control (Note 60)
+Total transactions with owners, recorded directly in shareholders' equity
+8.
+Net increase in specific reserve for the year
+9. Others
+Balance at 31 December 2021
+- Distributions to shareholders (Note 55)
+1,857
+(31,479)
+(31,479)
+(31,479)
+3,325
+3,325
+(138)
+(47)
+13
+(125)
+(6,726)
+(6,726)
+(1,857)
+- Appropriations for surplus reserves (Note 39)
+(138)
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+3. Appropriations of profits:
+4.
+- Appropriations for surplus reserves
+- Distributions to shareholders (Note 55)
+Contributions to subsidiaries from minority interests
+5. Transaction with minority interests
+6. Distributions to minority interests
+7. Adjustment for business combination of entities under
+common control
+Transactions with owners, recorded directly in shareholders' equity:
+8. Net increase in specific reserve for the year
+Total transactions with owners, recorded directly in shareholders' equity
+Total comprehensive income
+2. Other comprehensive income (Note 38)
+Net profit
+1.
+---------
+Change for the year
+Balance at 1 January 2021
+Balance at 31 December 2020
+9. Others
+Based on the actual paid VAT and consumption tax.
+3%
+2%
+Tax basis and method
+Based on taxable value added amount. Tax payable is
+calculated using the taxable sales amount multiplied by the
+applicable tax rate less current period's deductible VAT input.
+Based on the revenue from sales of crude oil and natural gas.
+Based on quantities
+Based on taxable income.
+Based on the sales of domestic crude oil at prices higher
+than a specific level.
+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%
+1%, 5% or 7%
+Renminbi
+Cash on hand
+Renminbi
+Cash at bank
+US Dollar
+Hong Kong Dollar
+EUR
+Others
+Renminbi
+The Group
+Deposits at related parities
+Based on the actual paid VAT and consumption tax.
+Based on the actual paid VAT and consumption tax.
+CASH AT BANK AND ON HAND
+Tax rate of products is presented as below:
+Education surcharges
+US Dollar
+EUR
+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.
+(b) Caikuai [2021] No.9
+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.
+Financial Statements (PRC)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+5
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+4 TAXATION
+Major types of tax applicable to the Group are value-added tax, resources tax, consumption tax, income tax, crude oil special gain levy, city
+construction tax, education surcharge and local education surcharge.
+Type of taxes
+Tax rate
+Value Added Tax (the "VAT")
+13%, 9%, 6%
+Resource Tax
+Consumption Tax
+6%
+Corporate Income Tax
+Crude Oil Special Gain Levy
+City Maintenance and
+Construction Tax
+Local Education surcharges
+Others
+they relate to income taxes levied by the same tax authority on either:
+At 31 December 2021
+8.0250
+8
+160,307
+2,403
+130,995
+15,758
+23,737
+6,943
+67
+6.3757
+7.2197
+44,266
+483
+1,175
+61,682
+221,989
+4,443
+49
+6.5249
+8.0250
+28,993
+394
+293
+53,417
+184,412
+Deposits at related parties represent deposits placed at Sinopec Finance Company Limited and Sinopec Century Bright Capital Investment Limited.
+Deposits interest is calculated based on market rate.
+At 31 December 2021, time deposits with financial institutions of the Group amounted to RMB113,399 million (2020: RMB96,853 million).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+109
+Financial Statements (PRC)
+(i) "Public-private partnership" (PPP) arrangements
+1
+Total
+20
+180
+3
+Original
+currency
+million
+At 31 December 2020
+Exchange
+rates
+RMB
+million
+Original
+currency
+million
+1
+Exchange
+rates
+RMB
+million
+8
+2,027
+3,533
+6.3757
+144,294
+12,924
+120,542
+0.8176
+2,888
+1,054
+1,377
+6.5249
+6,875
+0.8416
+1,159
+7.2197
+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)
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market
+price and exposes the Group to risk of variability in cash flows, etc.
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in the cash flows of the hedged
+item.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+(1) There is an economic relationship between the hedged item and the hedging instrument, which share a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+(2) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually
+hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that
+designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+-
+Cash flow hedges
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a
+component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable
+forecast transaction, and could affect profit or loss. As long as a cash flow hedge meets the qualifying criteria for hedge accounting,
+the hedging relationship shall be accounted for as follows:
+The cumulative gain or loss on the hedging instrument from inception of the hedge;
+The cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged.
+forecast transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge
+accounting is applied, the entity shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost
+or other carrying amount of the asset or the liability. This is not a reclassification adjustment and hence it does not affect other
+comprehensive income.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+103
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments (Continued)
+(d) Derivative financial instruments and hedge accounting (Continued)
+(3) (Continued)
+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
+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.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+For accounts receivable and receivables financing related to revenue, the Group measures the loss allowance at an amount equal to
+lifetime expected credit losses.
+The Group recognises the loss allowance accrued or written back in profit or loss.
+(iii)Derecognition
+The Group derecognises a financial asset when a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial assets have
+been transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but
+the Group has not retained control.
+On derecognition of other equity instrument investments, the difference between the carrying amounts and the sum of the consideration
+received and any cumulative gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While
+on derecognition of other financial assets, this difference is recognised in profit or loss.
+(b) Financial liabilities
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or
+financial liabilities at fair value through profit or loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable, accounts payable, other
+payables, loans and debentures payable, etc. These financial liabilities are initially measured at the amount of their fair value after deducting
+transaction costs and use the effective interest rate method for subsequent measurement.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities
+or discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or
+loss.
+-
+Financial guarantee liabilities
+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 Statements (PRC)
+102
+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
+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.
+Cash flow hedges (Continued)
+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.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that
+loss will not be recovered in one or more future periods, the Group immediately reclassify the amount that is not expected to be
+recovered into profit or loss.
+The Group classifies post-employment benefits into either Defined Contribution Plan (DC plan) or Defined Benefit Plan (DB plan). DC
+plan means the Group only contributes a fixed amount to an independent fund and no longer bears other payment obligation; DB plan is
+post-employment benefits other than DC plan. In this reporting period, the post-employment benefits of the Group primarily comprise basic
+pension insurance and unemployment insurance and both of them are DC plans.
+Basic pension insurance
+Employees of the Group participate in the social insurance system established and managed by local labor and social security department.
+The Group makes basic pension insurance to the local social insurance agencies every month, at the applicable benchmarks and rates
+stipulated by the government for the benefits of its employees. After the employees retire, the local labor and social security department has
+obligations to pay them the basic pension. When an employee has rendered service to the Group during an accounting period, the Group
+shall recognise the accrued amount according to the above social security provisions as a liability and charge to the cost of an asset or to
+profit or loss in the same period.
+(c) Termination benefits
+When the Group terminates the employment relationship with employees before the employment contracts expire, or provides compensation
+as an offer to encourage employees to accept voluntary redundancy, a provision for the termination benefits provided is recognised in profit
+or loss under the conditions of both the Group has a formal plan for the termination of employment or has made an offer to employees for
+voluntary redundancy, which will be implemented shortly; and the Group is not allowed to withdraw from termination plan or redundancy
+offer unilaterally.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+105
+Financial Statements (PRC)
+106
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(b) Post-employment benefits
+For the year ended 31 December 2021
+(15) Income tax
+Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to business combinations and items recognised
+directly in equity (including other comprehensive income).
+Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year, plus any adjustment to tax payable
+in respect of previous years.
+At the balance sheet date, current tax assets and liabilities are offset if the Group has a legally enforceable right to set them off and also intends
+either to settle on a net basis or to realise the asset and settle the liability simultaneously.
+Deferred tax assets and liabilities are recognised based on deductible temporary differences and taxable temporary differences respectively.
+Temporary difference is the difference between the carrying amounts of assets and liabilities and their tax bases. Unused tax losses and unused
+tax credits able to be utilised in subsequent years are treated as temporary differences. Deferred tax assets are recognised to the extent that it
+is probable that future taxable income will be available to offset the deductible temporary differences.
+Temporary differences arise in a transaction, which is not a business combination, and at the time of transaction, does not affect accounting
+profit or taxable profit (or unused tax losses), will not result in deferred tax. Temporary differences arising from the initial recognition of goodwill
+will not result in deferred tax.
+At the balance sheet date, the amounts of deferred tax recognised is measured based on the expected manner of recovery or settlement of the
+carrying amount of the assets and liabilities, using tax rates that are expected to be applied in the period when the asset is recovered or the
+liability is settled in accordance with tax laws.
+The carrying amount of deferred tax assets is reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset
+against the benefit of deferred tax asset, the carrying amount of the deferred tax assets is written down. Any such write-down should be
+subsequently reversed where it becomes probable that sufficient taxable income will be available.
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in
+credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+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.
+Employee benefits are all forms of considerations and compensation given in exchange for services rendered by employees, including short-term
+compensation, post-employment benefits, termination benefits and other long term employee benefits.
+When the 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
+(a) Short-term compensation
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(12) Impairment of other non-financial long-term assets (Continued)
+The recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows generated by the
+asset (or asset unit, set of asset units).
+Fair value less costs to sell of an asset is based on its selling price in an arm's length transaction less any direct costs attributable to the
+disposal. Present value of expected future cash flows is the estimation of future cash flows to be generated from the use of and upon disposal of
+the asset, discounted at an appropriate pre-tax discount rate over the asset's remaining useful life.
+If the recoverable amount of an asset is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The amount
+by which the carrying amount is reduced is recognised as an impairment loss in profit or loss. A provision for impairment loss of the asset
+is recognised accordingly. Impairment losses related to an asset unit or a set of asset units first reduce the carrying amount of any goodwill
+allocated to the asset unit or set of asset units, and then reduce the carrying amount of the other assets in the asset unit or set of asset units on
+a pro rata basis. However, the carrying amount of an impaired asset will not be reduced below the highest of its individual fair value less costs
+to sell (if determinable), the present value of expected future cash flows (if determinable) and zero.
+Once an impairment loss is recognised, it is not reversed in a subsequent period.
+(13) Long-term deferred expenses
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods
+(14) Employee benefits
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(ii) Impairment (Continued)
+(a) Financial assets (Continued)
+(11) Financial Instruments (Continued)
+(20) Repairs and maintenance expenses
+Except for the above, other borrowing costs are recognised as financial expenses in the income statement when incurred.
+Borrowing costs incurred on borrowings for the acquisition, construction or production of qualified assets are capitalised into the cost of the
+related assets in the capitalisable period.
+(19) Borrowing costs
+Government grants received in relation to assets are recorded as deferred income, and recognised evenly in profit or loss over the assets'
+useful lives. Government grants received in relation to revenue are recorded as deferred income, and recognised as income in future periods as
+compensation when the associated future expenses or losses arise; or directly recognised as income in the current period as compensation for
+past expenses or losses.
+Government grants are recognised when there is reasonable assurance that the grants will be received and the Group is able to comply with
+the conditions attaching to them. Government grants in the form of monetary assets are recorded based on the amount received or receivable,
+whereas non-monetary assets are measured at fair value.
+Government grants are the gratuitous monetary assets or non-monetary assets that the Group receives from the government, excluding capital
+injection by the government as an investor. Special funds such as investment grants allocated by the government, if clearly defined in official
+documents as part of "capital reserve" are dealt with as capital contributions, and not regarded as government grants.
+(18) Government grants
+Sales are recognised when control of the goods have transferred, being when the products are delivered to the customer. Advance from
+customers but goods not yet delivered is recorded as contract liabilities and is recognised as revenues when a customer obtains control over the
+relevant goods.
+Sales of goods
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+(17) Revenue recognition
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+costs, is reflected as an adjustment to the provision of oil and gas properties.
+Provisions are recognised when the Group has a present obligation as a result of a contingent event, it is probable that an outflow of economic
+benefits will be required to settle the obligations and a reliable estimate can be made. Where the effect of time value of money is material,
+provisions are determined by discounting the expected future cash flows.
+(16) Provisions
+Financial Statements (PRC)
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(21) Environmental expenditures
+(22) Research and development costs
+CAS Bulletin No.14 (Caikuai [2021] No.1) ("Bulletin No. 14")
+In 2021, the Group has adopted the following newly revised accounting standards and implementation guidance and illustrative examples issued
+by the MOF, mainly include:
+(26) Changes in significant accounting policies
+Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment
+accounting policies are consistent with those for the consolidated financial statements.
+for which financial information regarding financial position, results of operations and cash flows are available.
+whose operating results are regularly reviewed by the Group's management to make decisions about resource to be allocated to the segment
+and assess its performance; and
+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.
+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.
+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.
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+(23) Dividends
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+(24) Related parties
+the same taxable entity; or
+For the year ended 31 December 2021
+(7) Fixed assets and construction in progress (Continued)
+(a) Financial assets
+(i) Classification and measurement
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: (1) financial assets measured at amortised cost, (2) financial assets measured at
+fair value through other comprehensive income, (3) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does
+not affect the classification of the financial asset.
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, accounts receivable arising from sales of goods or rendering services, without significant financing component, are
+initially recognised based on the transaction price expected to be entitled by the Group.
+Debt instruments
+The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the
+issuer, and are measured in the following ways:
+Measured at amortised cost:
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The contractual
+cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on the
+principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method. The
+financial assets include cash at bank and on hand and receivables.
+Measured at fair value through other comprehensive income:
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows and for
+selling the financial assets, the contractual cash flow characteristics of such financial assets are consistent with the basic lending
+arrangements. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of
+impairment gains or losses, foreign exchange gains and losses and interest income calculated using the effective interest rate method,
+which are recognised in profit or loss. The financial assets include receivables financing.
+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.
+Equity instruments
+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.
+(ii) Impairment
+The Group recognises a loss allowance for expected credit losses on financial assets measured at amortised cost and receivables
+financing measured at fair value through other comprehensive income.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss
+allowance at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial
+recognition of a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance
+at an amount equal to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial
+instrument, on third stage, the Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 101
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments
+For the year ended 31 December 2021
+Other than oil and gas properties, the cost of fixed assets less residual value and accumulated impairment losses is depreciated using the
+straight-line method over their estimated useful lives, unless the fixed asset is classified as held for sale. The estimated useful lives and the
+estimated rate of residual values adopted for respective classes of fixed assets are as follows:
+Plants and buildings
+Equipment, machinery and others
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+(8) Oil and gas properties
+Estimated
+useful life
+12-50 years
+4-30 years
+Estimated rate
+of residual value
+3%
+3%
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+(9) Intangible assets
+Intangible assets, where the estimated useful life is finite, are stated in the balance sheet at cost less accumulated amortisation and provision
+for impairment losses (see Note 3(12)). For an intangible asset with finite useful life, its cost less estimated residual value and accumulated
+impairment losses is amortised on a straight-line basis over the expected useful lives, unless the intangible assets are classified as held for sale.
+An intangible asset is regarded as having an indefinite useful life and is not amortised when there is no foreseeable limit to the year over which
+the asset is expected to generate economic benefits for the Group.
+Useful lives and amortisation methods are reviewed at least each year end.
+(10) Goodwill
+The initial cost of goodwill represents the excess of cost of acquisition over the acquirer's interest in the fair value of the identifiable net assets
+of the acquiree under the business combination involving entities not under common control.
+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.
+100
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+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.
+Amount
+119
+2328
+0276
+0.2
+2.3
+7.2
+Total
+37,254
+100.0
+1,590
+76.8
+35,255
+1,531
+The Company
+At 31 December 2021
+At 31 December 2020
+Percentage
+Percentage
+of allowance
+of allowance
+Percentage
+100.0
+1,200
+4.4
+1,563
+68.1
+51
+1.6
+112
+18.8
+8,513
+24.2
+196
+Between two and three years
+7,661
+20.6
+165
+2.2
+1,169
+3.3
+84
+Over three years
+2,417
+6.5
+1,278
+52.9
+to total other
+24,010
+Amount
+Allowance
+0.1
+2,123
+5.5
+1
+Between two and three years
+1,414
+3.0
+2
+0.1
+2
+1,618
+5
+0.3
+Over three years
+14,497
+30.3
+894
+6.2
+13,716
+35.3
+4.2
+7.8
+3,740
+Between one and two years
+to other
+receivables
+balance
+Percentage
+to total other
+to other
+receivables
+Amount
+receivables
+Allowance
+RMB million
+%
+RMB million
+%
+RMB million
+%
+RMB million
+balance
+%
+Within one year
+28,176
+58.9
+21,378
+55.0
+receivables
+0.1
+35
+71.3
+3.9
+2,637
+100.0
+60596
+7
+4.4
+4
+3.9
+11
+102
+Total amount (RMB million)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December
+At 31 December
+2021
+2,939
+2020
+1,131
+31.4%
+22.9%
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Percentage to the total balance of prepayments
+3.3
+1.5
+39
+Total
+123
+4,556
+2.7
+100.0
+Over three years
+At 31 December 2021 and 31 December 2020, the total amounts of the top five prepayments of the Group are set out below:
+4
+16
+21513
+003
+%
+Amount
+RMB million
+to total
+prepayments
+prepayments
+%
+Allowance
+RMB million
+balance
+%
+0.5
+2,337
+159
+88.6
+6.0
+For the year ended 31 December 2021
+10 OTHER RECEIVABLES
+Other receivables
+Less: Allowance for doubtful accounts
+Amount
+receivables
+Allowance
+balance
+Amount
+receivables
+Allowance
+At 31 December 2020
+Percentage
+of allowance
+to other
+receivables
+balance
+RMB million
+%
+RMB million
+%
+RMB million
+%
+RMB million
+%
+Within one year
+Between one and two years
+26,579
+597
+Percentage
+to total other
+891
+to other
+receivables
+Percentage
+Total
+Ageing analysis of other receivables is as follows:
+The Group
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+37,254
+1,590
+35,664
+35,255
+1,531
+33,724
+The Company
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+47,827
+38,835
+898
+46,929
+897
+37,938
+At 31 December 2021
+The Group
+Percentage
+of allowance
+to total other
+10.1
+6.5
+47,827
+(3,069)
+199
+Movement of provision for impairment
+Balance at 31 December 2021
+277,310
+17,609
+73,854
+(41)
+(7,926)
+(41)
+(8)
+199
+360,847
+Details of the Company's principal subsidiaries are set out in Note 59.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+Principal joint ventures and associates of the Group are as follows:
+(a) Principal joint ventures and associates
+Percentage of
+equity/voting right
+directly or
+indirectly held
+For the year ended 31 December 2021, the Group and the Company had no individually significant long-term investment impairment.
+Other movement
+173
+(2,406)
+12
+Investments in
+subsidiaries
+RMB million
+266,939
+12,646
+Investments in
+joint ventures
+RMB million
+Investments in
+associates
+RMB million
+Provision for
+impairment
+14,762
+812
+4,190
+69,540
+1,014
+losses
+RMB million
+(7,885)
+Total
+RMB million
+343,356
+3,961
+12
+Other equity movements under the equity method
+Dividends declared
+Disposals for the year
+(2,275)
+18
+(1,387)
+(786)
+155
+(1,019)
+14,472
+8,151
+Name of investees
+Change of other comprehensive loss under the equity method
+Principal place
+of business
+Legal
+representative
+ΝΑ
+Yanbu Aramco Sinopec Refining Company
+Saudi Arabia
+Saudi Arabia
+ΝΑ
+Crude oil and natural gas extraction
+Petroleum refining and processing
+25,000 USD
+49.00%
+1,560 million USD
+Cyprus
+37.50%
+Sinopec SABIC Tianjin Petrochemical
+PRC
+PRC
+Company Limited ("Sinopec SABIC Tianjin")
+AHMED AL-SHAIKH Manufacturing and distribution of
+petrochemical products
+10,520
+50.00%
+2. Associates
+China Oil & Gas Pipeline Network Corporation PRC
+Ltd. ("YASREF")
+Russia
+Taihu Limited ("Taihu")
+petrochemical products
+Registered Capital
+Principal activities
+RMB million
+by the Company
+1. Joint ventures
+Fujian Refining & Petrochemical Company
+PRC
+PRC
+Gu Yuefeng
+Manufacturing refining oil products
+14,758
+50.00%
+Limited ("FREP")
+BASF-YPC Company Limited
+PRC
+PRC
+Gu Yuefeng
+Manufacturing and distribution of
+12,704
+40.00%
+("BASF-YPC")
+Register
+location
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2021
+Raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+109,940
+The Group
+60,379
+13,066
+84,174
+78,481
+2,515
+3,372
+212,330
+4,897
+207,433
+155,298
+Less: Provision for diminution in value of inventories
+Total
+15,701
+11 INVENTORIES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+100.0
+898
+38,835
+100.0
+897
+At 31 December 2021 and at 31 December 2020, the total amounts of the top five other receivables of the Group are set out below:
+Total amount (RMB million)
+Ageing
+Percentage to the total balance of other receivables
+Allowance for doubtful accounts
+At 31 December
+2021
+19,056
+At 31 December
+2020
+22,581
+Within one year,
+Within one year,
+one to two years, one to two years,
+two to three years
+two to three years
+and over three years and over three years
+64.1%
+51.2%
+74.0
+During the year ended 31 December 2021 and 2020, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+During the year ended 31 December 2021 and 2020, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided for in prior years.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+113
+Financial Statements (PRC)
+Financial Statements (PRC)
+114
+3,107
+152,191
+At 31 December 2021, the provision for diminution in value of inventories of the Group was primarily due to the costs of finished goods were higher
+than net realisable value.
+12 LONG-TERM EQUITY INVESTMENTS
+23,253
+155
+286
+441
+24
+675
+699
+(3,872)
+(7,120)
+(10,992)
+(1,176)
+(97)
+(368)
+127
+(315)
+42
+100
+(1,273)
+(641)
+227
+63,384
+149,500
+(199)
+(3,705)
+(199)
+209,179
+9,322
+Total
+188,342
+losses
+RMB million
+(3,548)
+The Group
+Balance at 1 January 2021
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive loss under the equity method
+Other equity movements under the equity method
+Dividends declared
+Disposals for the year
+Foreign currency translation differences
+Other movements
+Movement of provision for impairment
+Balance at 31 December 2021
+The Company
+Investments in
+joint ventures
+RMB million
+55,018
+4,110
+9,366
+Investments
+in associates
+RMB million
+136,872
+5,212
+13,887
+Provision for
+impairment
+Total
+RMB million
+PRC
+10
+99
+% RMB million
+%
+20,196
+95.1
+9
+946
+4.5
+6
+20
+to accounts
+receivable
+balance
+0.1
+77
+21,239
+0.3
+76
+8500
+0.1
+21,647
+99.0
+0.6
+76
+2
+Allowance
+accounts
+receivable
+Amount
+RMB million
+The Company
+At 31 December 2021
+Percentage
+Percentage
+of allowance
+At 31 December 2020
+Percentage
+Percentage
+of allowance
+to total
+accounts
+Amount
+receivable
+Allowance
+to accounts
+receivable
+balance
+to total
+RMB million
+%
+RMB million
+%
+0.3
+3,860
+10.0
+0.2
+15,628
+26.9%
+2,062
+39.8%
+2,057
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+China Petrochemical Corporation ("Sinopec Group Company") and fellow subsidiaries are repayable under the same terms.
+Accounts receivable (net of allowance for doubtful accounts) primarily represent receivables that are neither past due nor impaired. These
+receivables relate to a wide range of customers for whom there is no recent history of default. Information about the impairment of accounts
+receivable and the Group exposure to credit risk can be found in Note 64.
+During 2021 and 2020, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+During 2021 and 2020, the Group and the Company had no individually significant write-off or recovery of doubtful debts which had been fully or
+substantially provided for in prior years.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+10,444
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+7 ACCOUNTS RECEIVABLE (Continued)
+Ageing started from the overdue date of accounts receivable. The Group always measured the provision for impairment of accounts receivable
+based on the amount equivalent to the expected credit loss during the entire duration. The ECLs were calculated based on historical actual credit
+loss experience. The rates were considered the differences between economic conditions during the period over which the historical data has been
+collected, current conditions and the Group's view of economic conditions over the expected lives of the receivables. The Group performed the
+calculation of ECL rates by the operating segment and geographical location.
+Impairment provision on
+individual basis
+Impairment provision
+on provision matrix basis
+Weighted-
+31 December 2021
+Current and within 1 year past due
+1 to 2 years past due
+2 to 3 years past due
+For the year ended 31 December 2021
+2020
+2021
+At 31 December
+98.7
+99
+0.5
+100.0
+93
+21,871
+100.0
+03250
+1
+13
+87
+1737
+9.2
+26.5
+87.9
+1250
+108
+At 31 December 2021 and 31 December 2020, the total amounts of the top five accounts receivable of the Group are set out below:
+Total amount (RMB million)
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+At 31 December
+49
+100.0
+39,299
+4,033
+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
+RMB million
+Within one year
+Over three years
+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
+Total
+RMB million
+38,894
+4,033
+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
+At 31 December
+2021
+RMB million
+21,239
+93
+21,146
+39,299
+3,860
+35,439
+34,861
+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
+29.0
+4,062
+10.3
+3,131
+77.1
+3,190
+93.5
+149
+0.4
+85
+57.0
+597
+1.5
+579
+97.0
+610
+1.6
+527
+86.4
+38,894
+100.0
+181
+Over 3 years past due
+Total
+0.3
+87.7
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+110
+Financial Statements (PRC)
+Allowance
+receivable
+balance
+RMB million
+% RMB million
+%
+RMB million
+%
+RMB million
+%
+34,263
+623
+88.1
+1.6
+3,411
+8.8
+161
+83
+0.2
+34,478
+117
+2.2
+31 December 2020
+RMB million
+to total
+prepayments
+prepayments
+Allowance
+%
+RMB million
+balance
+%
+Within one year
+8,541
+91.3
+Amount
+RMB million
+4,435
+Between one and two years
+444
+4.8
+7
+1.6
+267
+Between two and three years
+166
+1.8
+89.9
+%
+RMB million
+%
+At 31 December
+2020
+RMB million
+4,934
+77
+4,857
+4,556
+16
+4,540
+2,637
+11
+2,626
+The Group
+At 31 December 2021
+Percentage
+Percentage of
+allowance to
+At 31 December 2020
+Percentage
+Percentage of
+allowance to
+Amount
+to total
+prepayments
+prepayments
+Allowance
+balance
+RMB million
+25
+At 31 December
+2021
+RMB million
+15.1
+Over three years
+Total
+At 31 December 2020
+Percentage of
+allowance to
+Percentage
+Percentage of
+allowance to
+Amount
+to total
+prepayments
+Allowance
+prepayments
+balance
+Percentage
+RMB million
+RMB million
+Within one year
+3.965
+87.0
+Between one and two years
+369
+8.1
+2
+Between two and three years
+%
+At 31 December 2021
+The Company
+77
+199
+2.1
+51
+25.8
+9,350
+100.0
+83
+90
+4,934
+100.0
+25218
+94966
+5.4
+20
+7.5
+2.9
+8
+5.6
+1.8
+49
+54.4
+1564
+142
+The Company
+At 31 December
+2020
+RMB million
+The Group
+597
+38,894
+208
+8,312
+190
+100.0%
+389
+579
+3,499
+534
+3,190
+4,033
+Current and within 1 year past due
+RMB million
+1 to 2 years past due
+2 to 3 years past due
+Over 3 years past due
+Total
+8 RECEIVABLES FINANCING
+Gross
+carrying
+amount
+RMB million
+Impairment provision
+44
+50.6%
+3,146
+RMB million
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+average
+loss rate
+Impairment
+provision
+Loss
+allowance
+%
+RMB million
+RMB million
+34,263
+623
+4,280
+26
+0.2%
+57
+83
+500
+137
+35.8%
+44
+181
+3,411
+3,324
+Impairment provision on
+individual basis
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+on provision matrix basis
+Weighted.
+345
+527
+3,341
+519
+3,860
+Receivables financing represents mainly the bills of acceptance issued by banks for sales of goods and products and certain trade accounts
+receivable. The business model of financial assets is achieved both by collecting contractual cash flows and selling of these assets.
+At 31 December 2021, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB36,400 million (2020:
+RMB25,740 million).
+At 31 December 2021, the Group considers that its bills of acceptance issued by banks do not pose a significant credit risk and will not cause any
+significant loss due to the default of drawers.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+111
+Financial Statements (PRC)
+112
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+9 PREPAYMENTS
+Prepayments
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of prepayments is as follows:
+At 31 December
+2021
+RMB million
+9,350
+83
+9,267
+88.0%
+Gross
+carrying
+amount
+182
+67
+average
+loss rate
+%
+Impairment
+provision
+RMB million
+Loss
+allowance
+RMB million
+34,478
+5,023
+117
+0.0%
+117
+4,062
+3,637
+3,024
+25.2%
+107
+3,131
+149
+610
+39,299
+27
+218
+8,905
+18
+54.9%
+85
+Zhang Wei
+("PipeChina") (i)
+Operation of oil and natural gas pipelines
+and auxiliary facilities
+1,655
+990
+1,278
+4,184
+551
+464
+(127)
+Dividends declared by associates
+Share of profit from associates
+Share of other comprehensive
+income from associates (ii)
+442
+2,194
+490
+284
+1,152
+2,517
+3,205
+709
+1,062
+993
+485
+626
+86
+6,444
+29,778
+(308)
+2
+16,959
+11,707
+1,826
+1,252
+Profit for the year
+29,776
+6,444
+2,168
+2,027
+990
+1,278
+4,184
+551
+461
+181
+Other comprehensive income
+Total comprehensive income
+2
+26
+(372)
+3
+1,621
+2
+214
+91
+RMB million
+593,615
+38
+593,653
+Plants and
+buildings
+RMB million
+Oil and gas
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+Cost:
+2020
+Balance at 1 January 2021
+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
+Additions for the year
+At 31 December
+598,932
+598,925
+7
+13
+(182)
+2
+(154)
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB7,283 million (2020: RMB3,444 million) and RMB271 million (2020: loss of RMB1,101 million)
+respectively. As at 31 December 2021, the carrying amount of all individually immaterial associates accounted for using equity method in
+aggregate was RMB44,176 million (2020: RMB36,222 million).
+Notes:
+(i) Sinopec is able to exercise significant influence in PipeChina since Sinopec has a member in PipeChina's Board of Directors and has a member in PipeChina's
+Management Board.
+(ii) Including foreign currency translation differences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 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
+Fixed assets (a)
+Fixed assets pending for disposal
+Total
+(a) Fixed assets
+At 31 December
+2021
+RMB million
+231
+4,742
+5,177
+22,766
+29,761
+12,538
+11,548
+24,070
+20,108
+480
+2,320
+Net assets attributable to
+shareholders of the Company
+30,955
+526,241
+30,955
+29,761
+12,538
+11,548
+24,070
+20,108
+receivable
+2,320
+Net assets attributable to
+505,336
+570,282
+615,103
+Net assets
+903
+(136,150)
+(55,562)
+(217,987)
+(197,872)
+(28)
+(18)
+(8,577)
+(8,315)
+(822)
+(699)
+Non-current liabilities
+(103,243) (104,150)
+(602)
+(514)
+(676)
+(411)
+(22,216)
+(28,422)
+(144)
+(286)
+minority interests
+88,862
+64,946
+Share of net assets from associates
+2020
+Sinopec Finance
+2021
+Sinopec Capital
+ZTHC Energy
+CIR
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+RMB million
+RMB million RMB million RMB million RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Turnover
+101,572
+PipeChina
+2021
+40,357
+31 December 2021
+Summarised income statement
+73,674
+70,747
+15,168
+14,583
+6,144
+5,659
+9,327
+7,792
+240
+1,160
+Carrying Amounts
+73,674
+70,747
+15,168
+14,583
+6,144
+5,659
+9,327
+7,792
+240
+1,160
+For the year ended
+870
+996,702
+5,177
+65,182
+7,878
+111,026
+1,212,138
+Accumulated depreciation:
+Balance at 1 January 2021
+Additions for the year
+Reclassifications
+25,189
+468,718
+309,841
+2,604
+514,422
+31,534
+803,748
+61,611
+98
+(412)
+314
+Transferred from subsidiaries
+1
+1
+Transferred to subsidiaries
+(91)
+27,473
+646,020
+51,696
+Balance at 31 December 2021
+618,483
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+1,152,190
+14,498
+58,180
+484,351
+10,850
+27,752
+360
+(620)
+260
+33
+33
+(422)
+(286)
+(667)
+(1,375)
+Decreases for the year
+(624)
+(2,607)
+(8,157)
+(11,388)
+(383)
+Oil and gas
+properties
+RMB million
+Decreases for the year
+(7)
+(21)
+(571)
+(592)
+2,228
+43,307
+24,327
+69,862
+22,096
+Balance at 31 December 2020
+(29)
+22,250
+159,642
+153,082
+284,618
+283,691
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2021 included RMB2, 163 million (2020:
+RMB1,563 million) and RMB1,525 million (2019: RMB1,256 million), respectively of the estimated dismantlement costs for site restoration.
+In 2021, the impairment loss on fixed assets was mainly due to the impairment loss of the chemical segment of RMB5,184 million (2020:
+RMB2,680 million), and the impairment loss of the exploration and development segment of RMB2,467 million (2020: RMB8,435 million).
+RMB894 million (2020: RMB226 million), impairment loss of the refining segment and RMB873 million (2020: RMB442 million) of the marketing
+and distribution segment. The impairment losses in the exploration and development segment were mainly impairment losses on fixed assets
+related to oil and gas production activities. Among them, oil and gas properties and other fixed assets provided impairment losses of RMB1,904
+billion and RMB563 million respectively, which were mainly related to the decline in oil and gas reserves of individual oilfields. The Exploration
+and Development segment allocates fixed assets related to oil and gas production activities into individually identifiable groups of assets and
+estimates their recoverable amounts. The recoverable amount is determined based on the discounted value of the reserves of the relevant asset
+group and estimated future cash flows, and the pre-tax discount rate adopted is 10.47% (2020: 10.47%). If the Group's estimate of future oil
+prices is lowered, further impairment losses may be incurred and the aggregate amount of impairment losses may be significant. With other
+conditions remaining constant and a 5% drop in oil prices, the Group's impairment loss on fixed assets related to oil and gas production
+activities will increase by approximately RMB3,628 million (2020: RMB4,548 million); Other conditions remain unchanged and operating
+costs increase by 5%, the Group's impairment loss on fixed assets related to oil and gas production activities will increase by approximately
+RMB2,400 million (2020: RMB2,836 million); With other conditions remaining unchanged and the discount rate increasing by 5%, the Group's
+impairment loss on fixed assets related to oil and gas production activities will increase by approximately RMB180 million (2020: RMB287
+million). Impairment losses recognised in the chemical segment and refining segment relate to certain refinery and chemical production facilities
+and are not individually significant. The primary factors resulting in the impairment losses were due to the suspension of operations of certain
+production facilities, and evidence that indicate the economic performance of certain production facilities was lower than the expectation, thus
+the carrying amounts of these facilities were written down to their recoverable amounts, which were determined based on the present values of
+expected future cash flows of the assets using a pre-tax discount rates ranging from 10.50% to 13.9% (2020: 9.87% to 11.60%).
+At 31 December 2021 and 31 December 2020, the Group and the Company had no individually significant fixed assets which were pledged.
+At 31 December 2021 and 31 December 2020, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal.
+At 31 December 2021 and 31 December 2020, the Group and the Company had no individually significant fully depreciated fixed assets which
+were still in use.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+102,880
+108,359
+(2)
+(27)
+Balance at 31 December 2021
+(6,793)
+(474)
+(7,228)
+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
+Transferred to subsidiaries
+Decreases for the year
+Balance at 31 December 2021
+Net book value:
+(428)
+RMB million
+Plants and
+buildings
+29,458
+48,568
+225
+(12,987)
+1,209,822
+92,824
+Exchange adjustments
+(29)
+(844)
+Balance at 31 December 2021
+63,479
+611,012
+(56)
+613,498
+(7)
+(13,728)
+(929)
+1,287,989
+Balance at 1 January 2021
+4,069
+48,117
+37,221
+89,407
+Additions for the year
+742
+1,904
+6,774
+Less: Provision for impairment losses:
+(734)
+Decreases for the year
+(410)
+646
+(617)
+(1,970)
+(5,539)
+(57)
+(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
+9,420
+Decreases for the year
+(124)
+(135)
+At 31 December
+2021
+RMB million
+284,618
+4
+284,622
+At 31 December
+2020
+RMB million
+283,691
+4
+283,695
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+13 FIXED ASSETS (Continued)
+(a) Fixed assets (Continued)
+The Company (Continued)
+Cost:
+Balance at 1 January 2021
+Additions for the year
+Transferred from construction in progress
+Reclassifications
+Transferred from subsidiaries
+Transferred to subsidiaries
+49,356
+2,056
+1,592
+970
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+1,892,844
+Fixed assets pending for disposal
+Total
+The Company
+(984)
+(1,243)
+Exchange adjustments
+(60)
+(1)
+(61)
+Balance at 31 December 2021
+4,687
+49,826
+43,010
+97,523
+Net book value:
+Balance at 31 December 2021
+74,999
+132,207
+391,719
+Balance at 31 December 2020
+75,010
+136,872
+381,733
+598,925
+593,615
+Fixed assets (a)
+53,124
+51,331
+106
+(2,190)
+(1,931)
+(1,043)
+(15,844)
+(8,644)
+(3,547)
+(3,052)
+Total current liabilities
+(6,185)
+(2,546)
+(6,350)
+(2,646)
+(1,963)
+(1,081)
+(25,393)
+(18,164)
+(4,144)
+(4,050)
+Non-current liabilities
+Non-current financial liabilities
+(2,623)
+(5,147)
+(5,008)
+Other current liabilities
+15,237
+9,336
+9,993
+14,032
+12,531
+41,947
+45,413
+18,835
+18,258
+Current liabilities
+Current financial liabilities
+(1,177)
+(1,203)
+(77)
+(456)
+(32)
+(38)
+(9,549)
+(9,520)
+(597)
+(998)
+(6,857)
+13,744
+(8,761)
+(85)
+(7,151)
+Net assets
+16,239
+14,831
+18,949
+13,920
+13,991
+11,851
+1,773
+(7,981)
+4,515
+14,981
+Net assets attributable to
+shareholders of the company
+16,239
+14,831
+18,949
+13,920
+13,523
+11,439
+14,967
+(31,658)
+(32,626)
+(2,102)
+(30,903)
+(29,650)
+(7,599)
+(6,773)
+Other non-current liabilities
+(242)
+(235)
+(92)
+(42)
+(1,439)
+(2,017)
+(1,723)
+(2,008)
+(382)
+(378)
+Total non-current liabilities
+(7,099)
+(8,996)
+(92)
+(42)
+(1,524)
+(85)
+Non-current assets
+7,924
+8,257
+17,516
+38.75%
+Caspian Investments Resources Ltd.
+("CIR")
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+ΝΑ
+Crude oil and natural gas extraction
+10,002 USD
+Mining coal and manufacturing of coal-
+chemical products
+50.00%
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+115
+Financial Statements (PRC)
+116
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(b) Major financial information of principal joint ventures
+Joint ventures and associates above are limited companies.
+("Zhongtian Synergetic Energy")
+Peng Yi
+PRC
+500,000
+14.00%
+Sinopec Finance Company Limited
+PRC
+PRC
+Jiang Yongfu
+Provision of non-banking financial
+18,000
+49.00%
+("Sinopec Finance")
+services
+Sinopec Capital Co.,Ltd. ("Sinopec Capital")
+PRC
+PRC
+Sun Mingrong
+Project management, equity
+10,000
+49.00%
+management, investment consulting,
+self-owned equity management
+Zhongtian Synergetic Energy Company Limited PRC
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+FREP
+At 31
+December
+At 31
+December
+2021
+5,259
+Other current assets
+9,217
+7,492
+6,953
+4,777
+2,188
+1,223
+12,404
+7,516
+3,437
+2,665
+Total current assets
+15,779
+14,940
+12,328
+6,615
+3,446
+2,503
+17,845
+8,924
+4,820
+1,773
+1,408
+1,280
+RMB million
+BASF-YPC
+At 31
+December
+2020
+2021
+RMB million RMB million
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+At 31
+December
+2020
+At 31
+December
+2021
+RMB million RMB million
+At 31
+December
+At 31
+December
+2020
+2021
+RMB million RMB million
+At 31
+December
+2020
+RMB million RMB million
+At 31
+December
+2021
+At 31
+December
+2020
+RMB million
+Current assets
+Cash and cash equivalents
+6,562
+7,448
+5,375
+1,838
+1,258
+5,441
+4,515
+14,967
+14,981
+128
+300
+454
+691
+500
+Share of net profit/(loss) from
+joint ventures
+832
+217
+Dividends from joint ventures
+2,466
+1,081
+911
+(2,301)
+493
+359
+Share of other comprehensive loss
+from joint ventures (ii)
+(60)
+(1,593)
+456
+718
+986
+(6,720)
+6,164
+1,139
+2,263
+1,926
+(2,536)
+(6,136)
+986
+718
+Other comprehensive loss
+(123)
+(3,368)
+(206)
+(584)
+Total comprehensive income/(loss)
+1,664
+433
+6,164
+1,139
+2,140
+(1,442)
+(2,742)
+(219)
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB4,494 million (2020: RMB993 million) and RMB215 million (2020: 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).
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+Non-current assets
+Current liabilities
+86,335
+74,012
+194,458
+175,139
+13,140
+11,871
+3,532
+3,721
+576
+2,402
+768,161
+655,982
+55,086
+53,008
+102
+RMB million
+433
+RMB million
+2021
+For the year ended 31 December 2021
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(c) Major financial information of principal associates
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+PipeChina
+At 31
+December
+At 31
+December
+2021
+RMB million
+2020
+RMB million
+Sinopec Finance
+At 31
+December
+2021
+RMB million
+At 31
+December
+2020
+RMB million
+Sinopec Capital
+At 31
+December
+2021
+At 31
+December
+2020
+Zhongtian Synergetic Energy
+At 31
+December
+2021
+CIR
+At 31
+December
+At 31
+December
+At 31
+December
+2020
+2020
+Financial Statements (PRC)
+1,664
+(236)
+31 December 2021
+FREP
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+2021
+2020
+2021
+For the year ended
+2020
+2020
+RMB million
+RMB million
+RMB million RMB million
+RMB million
+RMB million
+2021
+2020
+RMB million RMB million
+2021
+2020
+RMB million RMB million
+Turnover
+2021
+Summarised income statement
+7,491
+7,484
+Net assets attributable to
+minority interests
+468
+412
+Share of net assets from
+joint ventures
+8,120
+7,416
+7,580
+5,568
+6,626
+5,605
+Carrying Amounts
+8,120
+7,416
+7,580
+5,568
+6,626
+5,605
+7,484
+7,491
+Interest income
+47,224
+38,691
+27,499
+Profit/(loss) before taxation
+2,261
+520
+8,218
+1,518
+2,864
+2,304
+(2,868)
+(7,193)
+1,393
+954
+Tax expense
+(597)
+(87)
+(2,054)
+(379)
+(601)
+(378)
+332
+1,057
+(407)
+(131)
+Profit/(loss) for the year
+(89)
+(945)
+15,701
+15,190
+9,528
+147
+118
+52
+27
+451
+291
+68,548
+6
+37,337
+17
+24,631
+209
+14,881
+183
+Interest expense
+(411)
+(535)
+(5)
+(16)
+(107)
+(20)
+(1,136)
+480
+Provision for impairment losses:
+Goodwill
+2,047
+97,523
+(163)
+(1,141)
+9,420
+89,407
+144
+3,705
+(7)
+206
+3,548
+4,897
+(40)
+(1,300)
+(42)
+(33)
+(28)
+2,130
+(2,547)
+(211)
+15,687
+112,385
+49
+43
+7,861
+7,861
+6
+Total
+Others
+1,272
+93
+(24)
+262
+941
+(18)
+3,148
+3,107
+123467
+Other non-current assets
+1,590
+(12)
+(12)
+83
+1,531
+10
+Other receivables
+83
+46
+(54)
+14
+77
+9
+Prepayments
+1,931
+(238)
+2
+5,468
+17
+Intangible assets
+14
+Construction in progress
+13
+Fixed assets
+12
+Long-term equity investments
+11
+Inventories
+7,639
+(58)
+(42)
+(193)
+2,464
+1,933
+4,033
+125,076
+22 SHORT-TERM LOANS
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+23 BILLS PAYABLE
+At 31 December 2021 and 31 December 2020, the Group had no significant overdue short-term loans.
+At 31 December 2021, the Group's interest rates on short-term loans were from interest 0.53% to 4.20% (At 31 December 2020: 0.63% to 4.55%)
+per annum. The majority of the above loans are by credit.
+20,756
+27,366
+At 31 December 2021 and 31 December 2020, the Group had no overdue unpaid bills.
+172
+21
+153
+7.2197
+21
+31
+0.8416
+8.0250
+24 ACCOUNTS PAYABLE
+At 31 December 2021 and 31 December 2020, the Group had no individually significant accounts payable aged over one year.
+25 CONTRACT LIABILITIES
+Medical insurance
+Social insurance
+Staff welfare
+Salaries, bonuses, allowances
+of the year
+Balance at the
+beginning
+(2) Short-term employee benefits
+Short-term employee benefits
+Post-employment benefits
+defined contribution plans
+Total
+(1) Employee benefits payable:
+26 EMPLOYEE BENEFITS PAYABLE
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+124
+As at 31 December 2021 and 31 December 2020, the Group's contract liabilities primarily represent advances from customers. Related performance
+obligations are satisfied and revenue is recognised within one year.
+37
+3,298
+6.5249
+505
+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:
+Exchange
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+currency
+million
+934
+6.3757
+146
+1,141
+1,320
+4,642
+2,407
+3
+3
+16,111
+24,959
+16,111
+24,959
+RMB
+million
+Exchange
+rates
+rates RMB million
+Work-related injury insurance
+(106)
+(127)
+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
+19 DEFERRED TAX ASSETS AND LIABILITIES
+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.
+8,620
+8,594
+1,032
+1,006
+Other units without individual significant goodwill
+Total
+1,004
+Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The recoverable amounts of the
+above cash generating units are determined based on value in use calculations. These calculations use cash flow projections based on financial
+budgets approved by management covering a one-year period and pre-tax discount rates primarily ranging from 11.4% to 11.7% (2020: 11.4% to
+13.4%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+Deferred tax assets
+At 31 December
+2021
+2,411
+3,763
+Tax value of losses carried forward
+Fixed assets
+Cash flow hedges
+Payables
+Receivables and inventories
+RMB million
+2020
+RMB million
+2021
+At 31 December At 31 December
+Deferred tax liabilities
+At 31 December
+2020
+RMB million
+RMB million
+1,004
+Manufacturing of intermediate petrochemical products
+and petroleum products
+2,541
+2,541
+29,714
+31,856
+2,089
+1,210
+1,144
+1,110
+Balance at 31 December 2020
+Balance at 31 December 2021
+Net book value:
+1,272
+17
+407
+130
+482
+236
+Balance at 31 December 2021
+(24)
+3,708
+2,858
+119,210
+114,280
+Production and sale of petrochemical products
+4,043
+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
+Name of investees
+At 31 December
+Goodwill is allocated to the following Group's cash-generating units:
+17 GOODWILL
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2021 is RMB6,363 million (2020: RMB5,907 million).
+2,231
+(30)
+1,286
+1,790
+Note
+At 31 December 2021, impairment losses of the Group are analysed as follows:
+21 DETAILS OF IMPAIRMENT LOSSES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Balance at
+1 January
+2021
+RMB million
+Financial Statements (PRC)
+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
+123
+Other
+Balance at
+Provision for
+the year
+RMB million
+436
+3,860
+7
+Included: Accounts receivable
+Allowance for doubtful accounts
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+31 December
+increase
+(decrease)
+for the year
+Written off
+Written back
+for the year
+At 31 December
+2020
+RMB million
+2021
+RMB million
+19,389
+7,910
+At 31 December
+Deferred tax assets
+Deferred tax liabilities.
+(492)
+869
+1,008
+(11)
+(9)
+127
+127
+Other equity instrument investments
+Intangible assets
+13,322
+4,749
+(4,420)
+(13,415)
+(15,037)
+15,793
+16,777
+(2,709)
+(517)
+258
+Others
+371
+10,915
+10,915
+RMB million
+At 31 December
+2020
+2021
+RMB million
+11,207
+11,207
+At 31 December
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+Deferred tax liabilities
+Deferred tax assets
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(19,039)
+(676)
+(870)
+(19,117)
+35,969
+30,596
+Deferred tax assets/(liabilities)
+1,056
+(23)
+Maternity insurance
+Labour union fee, staff and workers' education fee
+213
+1,168
+6.3757
+183
+Interest rates at 1.65% per annum at
+31 December 2021 (2020:1.60%) with
+maturities in 2027
+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
+6.5249
+11,013
+12,988
+35,651
+(3,293)
+- US Dollar loans
+- Renminbi loans
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+(4,637)
+33,681
+1,387
+Less: Portion with one year (note 29)
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Total
+RMB million
+At 31 December
+2020
+At 31 December
+2021
+11,778
+45,459
+(622)
+13,690
+49,341
+(466)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+126
+Long-term loans are carried at amortised costs.
+Total
+After five years
+Between two and five years
+Between one and two years
+The maturity analysis of the Group's long-term loans is as follows:
+Less: Portion with one year
+Long-term bank loans
+92
+6.5249
+14
+22,494
+1,942
+15,293
+5,259
+622
+The Group's long-term loans represent:
+31 LONG-TERM LOANS
+At 31 December 2021 and 31 December 2020, other current liabilities mainly represent output VAT to be transferred.
+30 OTHER CURRENT LIABILITIES
+At 31 December 2021 and 31 December 2020, the Group had no significant overdue long-term loans.
+Non-current liabilities due within one year
+28,651
+2,719
+15,173
+7,000
+At 31 December 2021
+RMB million
+Original
+Interest rate and final maturity
+64
+6.3757
+10
+Interest rates at 1.55% per annum at
+31 December 2020 (2020: 1.55%) with
+maturities through 2038
+- US Dollar loans
+38,226
+38,880
+Interest rates ranging from interest 1.08%
+to 4.00% per annum at 31 December 2021
+(2020: 1.08% to 5.23%) with maturities
+through 2039
+- Renminbi loans
+Long-term bank loans
+RMB
+million
+currency Exchange
+million
+rates
+RMB
+million
+Exchange
+rates
+currency
+million
+At 31 December 2020
+Original
+3,759
+18,373
+26,633
+43,713
+RMB million
+The Group
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+35 OTHER NON-CURRENT LIABILITIES
+Balance at 31 December 2021
+2,163
+Exchange adjustments
+Accretion expenses
+Provision for the year
+Balance at 1 January 2021
+Provisions primarily represent provision for future dismantlement costs of oil and gas properties. The Group has established certain standardised
+measures for the dismantlement of its retired oil and gas properties by making reference to the industry practices and is thereafter constructively
+obligated to take dismantlement measures of its retired oil and gas properties. Movement of provision of the Group's obligations for the
+dismantlement of its retired oil and gas properties is as follows:
+34 PROVISIONS
+171,740
+Decrease for the year
+1,135
+(6,435)
+(81)
+40,495
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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
+187,033
+15,293
+RMB million
+2020
+At 31 December
+At 31 December
+2021
+RMB million
+Note:
+Total
+Less: Portion with one year (Note 29)
+Corporate Bonds (i)
+Debentures payable:
+The Group
+32 DEBENTURES PAYABLE
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+45,459
+49,341
+2,435
+4,335
+39,504
+At 31 December
+3,520
+2020
+49,649
+170,233
+185,406
+15,173
+RMB million
+At 31 December
+2021
+Deduct: Portion of lease liabilities with one year (Note 29)
+Total
+Lease liabilities
+The Group
+33 LEASE LIABILITY
+The Company issued corporate bonds with a maturity of three years on 27 December 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2.55 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.50% per annum and the interest is paid once a year.
+These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB11,127 million, and RMB denominated corporate bonds of
+RMB38,521 million (2020: USD denominated corporate bonds of RMB11,379 million, and RMB denominated corporate bonds of RMB26,977 million).
+The Company issued corporate bonds with a maturity of two years on 6 August 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.80% per annum and the interest is paid once a year.
+The Company issued corporate bonds with a maturity of three years on 5 August 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.59% per annum and the interest is paid once a year.
+(i) The Company issued corporate bonds with a maturity of five years on 26 July 2021 at par value of RMB100. The total issued amount of the corporate bonds is RMB5
+billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 3.20% per annum and the interest is paid once a year.
+38,356
+7,000
+42,649
+38,356
+RMB million
+Housing fund
+466
+6.5249
+(150)
+151
+5
+6
+(380)
+381
+6
+5
+(5,382)
+5,423
+224
+277
+(5,912)
+5,955
+265
+47
+6,244
+(6,243)
+Accrued
+during the year
+of the year
+51
+Balance at
+the beginning
+13,967
+(90,472)
+97,396
+47
+(2,620)
+2,637
+30
+7,043
+279
+(2,203)
+2,246
+236
+48
+234
+2,586
+(7,684)
+7,610
+7,129
+12
+(90,472)
+97,396
+7,043
+74
+Decreased
+during the year
+Accrued
+during the year
+The Group
+27 TAXES PAYABLE
+Total
+Unemployment insurance
+Annuity
+Basic pension insurance
+(3) Post-employment benefits - defined contribution plans
+Total
+Other short-term employee benefits
+12,241
+91
+109,728
+Decreased
+during the year
+(12,246)
+(91)
+(102,809)
+the end
+2,660
+10,730
+(65,810)
+72,704
+3,836
+of the year
+Balance at
+the end
+Decreased
+during the year
+Accrued
+during the year
+Balance at
+the beginning
+of the year
+14,048
+12
+69
+13,967
+of the year
+Balance at
+4,613
+24
+Balance at
+the end
+8,147
+Long-term loans due within one year
+- Renminbi loans
+fellow subsidiaries
+Long-term loans from Sinopec Group Company and
+- US Dollar loans
+- Renminbi loans
+Debentures payable due within one year
+Long-term bank loans
+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
+The Group's non-current liabilities due within one year represent:
+- Renminbi debentures.
+Lease liabilities due within one year
+Others
+4
+12
+6.3757
+2
+3,281
+RMB million
+rates
+Exchange
+currency
+million
+rates RMB million
+Exchange
+Original
+Original
+currency
+million
+At 31 December 2020
+At 31 December 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
+At 31 December
+2021
+69
+11
+8
+(12,246)
+(3,793)
+(305)
+12,241
+74
+3,789
+15
+305
+8
+50
+(8,148)
+At 31 December
+of the year
+2020
+Consumption tax payable
+11,548
+132
+8
+6,586
+4,809
+5,089
+56,762
+56,084
+8,818
+RMB million
+RMB million
+28 OTHER PAYABLES
+Total
+Other taxes
+Mineral resources compensation fee payable
+Income tax payable
+Value-added tax payable
+(1)
+83,434
+76,994
+355
+2,128
+5%
+Self-financing
+120
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+15 RIGHT-OF-USE ASSETS
+The Group
+Cost:
+1,800
+Balance at 1 January 2021
+Additions for the year
+Balance at 31 December 2021
+Accumulated depreciation:
+Balance at 1 January 2021
+Additions for the year
+Decreases for the year
+Balance at 31 December 2021
+Net book value:
+Balance at 31 December 2021
+Balance at 31 December 2020
+The Company
+Land
+RMB million
+Decreases for the year
+328
+41,639
+High-end Synthetic New Material Project
+11,177
+48%
+Bank loans & self-financing
+305
+Caprolactam Industry Chain Relocation and
+Upgrading Transformation Development Project
+13.950
+1,000
+2,700
+3,700
+27%
+Bank loans & self-financing
+32
+Tianjin Nangang Ethylene and Downstream High-end
+New Material Industry Cluster Project
+Zhenhai Refining and Chemical Refining and
+29,052
+2,999
+2,999
+10%
+Bank loans & self-financing
+13
+171,392
+Others
+RMB million
+Total
+RMB million
+40,698
+158,801
+30,217
+189,018
+Land
+RMB million
+Others
+RMB million
+Total
+RMB million
+Net book value:
+Cost:
+Balance at 1 January 2021
+Additions for the year
+Decreases for the year
+Balance at 31 December 2021
+Accumulated depreciation:
+Balance at 1 January 2021
+Additions for the year
+Decreases for the year
+Balance at 31 December 2021
+Balance at 31 December 2021
+115,047
+2,272
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+All A shares and H shares rank pari passu in all material aspects.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of 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.
+184,974
+2,022
+31,774
+34,051
+212,090
+2,389
+9,653
+12,042
+(1,677)
+(3,430)
+(5,107)
+172,104
+46,921
+219,025
+12,591
+10,481
+23,072
+6,495
+6,863
+13,358
+(182)
+(2,197)
+(2,379)
+18,904
+15,147
+153,200
+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.
+9,155
+63
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+14 CONSTRUCTION IN PROGRESS
+Cost:
+Balance at 1 January 2021
+Additions for the year
+Disposals for the year
+Dry hole costs written off
+Transferred to fixed assets
+Reclassification to other assets
+Financial Statements (PRC)
+Exchange adjustments
+Balance at 1 January 2021
+Additions for the year
+Decreases for the year
+Exchange adjustments
+Balance at 31 December 2021
+Net book value:
+Balance at 31 December 2021
+Balance at 31 December 2020
+At 31 December 2021, major construction projects of the Group are as follows:
+Balance at 31 December 2021
+Provision for impairment losses:
+For the year ended 31 December 2021
+36 SHARE CAPITAL (Continued)
+The Group (Continued)
+Financial Statements (PRC)
+129
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Capital reserve represents mainly: (a) the difference between the total amount of the par value of shares issued and the amount of the net assets
+transferred from Sinopec Group Company in connection with the Reorganisation; (b) share premiums derived from issuances of H shares and
+A shares by the Company and excess of cash paid by investors over their proportionate shares in share capital, the proportionate shares of
+unexercised portion of the Bond with Warrants at the expiration date, and the amount transferred from the proportionate liability component and
+the derivative component of the converted portion of the 2011 Convertible Bonds; (c) difference between consideration paid for the combination of
+entities under common control and the transactions with minority interests over the carrying amount of the net assets acquired.
+120,188
+Balance at 31 December 2021
+319
+(1,396)
+(6,124)
+127,389
+RMB million
+Others
+Transaction with minority interests
+Adjustment for business combination of entities under common control
+Balance at 1 January 2021
+The movements in capital reserve of the Group are as follows:
+37 CAPITAL RESERVE
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 31,32 and 61, respectively.
+Management optimises the structure of the Group's capital, which comprises of equity and debts and bonds. In order to maintain or adjust the
+capital structure of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce
+debt, or adjust the proportion of short-term and long-term loans and bonds. Management monitors capital on the basis of the debt-to-capital ratio,
+which is calculated by dividing long-term loans (excluding current portion) and debentures payable, by the total of equity attributable to shareholders
+of the Company and long-term loans (excluding current portion) and debentures payable, and liability-to-asset ratio, which is calculated by dividing
+total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and investment needs
+and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a range considered
+reasonable. As at 31 December 2021, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 10.6% (2020: 10.1%) and 51.5%
+(2020: 48.9%), respectively.
+Capital management
+The Group
+The Company
+RMB million
+127,572
+159,729
+Net change
+for the year
+RMB million
+RMB million
+RMB million
+2021
+RMB million
+Balance at
+31 December
+Percentage
+of project
+investment
+Decreases for the year
+Accumulated
+interest
+capitalised at
+31 December
+Source of funding
+2021
+RMB million
+Hainan Refining and Chemical Ethylene and
+Refining Reconstruction and Expansion Project
+Zhenhai Refinery Expansion Ethylene Project
+28,565
+5,002
+10,600
+15,602
+55%
+Bank loans & self-financing
+2021
+23,055
+Balance at
+1 January
+Project name
+RMB million
+60,182
+72,196
+(146)
+(90)
+(7,702)
+(111,026)
+(10,302)
+(6,733)
+(58,180)
+(927)
+(56)
+158,069
+66,448
+2,047
+302
+144
+(39)
+(22)
+2,130
+302
+155,939
+125,525
+66,146
+59,880
+Budgeted
+amount
+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.
+to budgeted
+amount
+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.
+Cost:
+Balance at 1 January 2021
+102,177
+5,383
+5,593
+53,567
+6,179
+172,899
+Additions for the year
+RMB million
+10,690
+379
+912
+15,262
+Decreases for the year
+(1,003)
+(9)
+(832)
+(688)
+(84)
+1,159
+RMB million
+RMB million
+RMB million
+104,285
+1,427
+105,712
+Balance at 31 December 2020
+107,553
+1,184
+108,737
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+121
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+16 INTANGIBLE ASSETS
+The Group
+Non-patent
+Land use rights
+RMB million
+Patents
+RMB million
+technology Operation rights
+Others
+Total
+(2,616)
+12,733
+Balance at 31 December 2021
+6,533
+(538)
+Balance at 31 December 2021
+28,194
+4,907
+3,800
+23,670
+4,492
+65,063
+Balance at 1 January 2021
+(43)
+226
+27
+189
+17
+941
+Additions for the year
+11
+103
+241
+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.
+482
+(310)
+(9)
+(7)
+5,140
+53,791
+8,217
+185,545
+Accumulated amortisation:
+Balance at 1 January 2021
+24,957
+3,791
+3,477
+21,522
+3,931
+57,678
+Additions for the year
+3,406
+1,123
+332
+2,458
+604
+7,923
+Decreases for the year
+(169)
+111,864
+1,529
+2,122
+(491)
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB1.00 each at RMB4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB1.00 each, representing 12,521,864,000 H shares
+and 25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD1.59 per H share and USD20.645 per
+ADS, respectively, by way of a global initial public offering to Hong Kong SAR and overseas investors. As part of the global initial public offering,
+1,678,049,000 state-owned ordinary shares of RMB1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong
+Kong SAR and overseas investors.
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of
+RMB1.00 each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note
+1).
+121,071
+121,071
+25,513
+11.204
+95,558
+95,558
+117,319
+653
+1,619
+25,513
+(211)
+(441)
+(1,146)
+115,489
+2,956
+7,494
+1,088
+8,582
+3,760
+118,445
+4,642
+(50)
+2,272
+(935)
+882
+5,928
+7,702
+9,125
+9,884
+85,494
+92,824
+12,842
+2,311
+12,972
+2,066
+3,062
+26,087
+(398)
+(47,486)
+1,253
+9,286
+10,395
+(6,032)
+13,165
+5,456
+(10,143)
+802
+(58,372)
+775
+2,270
+22,407
+(8,177)
+237
+(17,610)
+(3,341)
+42,097
+85,030
+RMB million
+amount
+Tax
+effect
+Net-of-tax
+RMB million
+RMB million
+amount
+RMB million
+Cash flow hedges:
+Effective portion of changes in fair value of hedging instruments
+Before-tax
+recognised during the year
+Subtotal
+Cost of hedging reserve
+15,659
+(3,881)
+11,778
+(8,858)
+24,517
+1,618
+(5,499)
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+57,827
+2021
+The Group
+2020
+RMB million
+2021
+Total
+Others
+Repayments of lease liabilities
+(e) Other cash paid relating to financing activities :
+Total
+(a) The changes of other comprehensive income in consolidated income statement
+Others
+(d) Net cash received from disposal of subsidiaries and other business entities:
+Cash at the end of the year
+- Demand deposits
+- Cash on hand
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+38 OTHER COMPREHENSIVE INCOME
+Cash received from disposal of equity interests in the relevant companies, oil and gas pipeline
+and ancillary facilities
+23,956
+108,590
+168,520
+15,327
+8,864
+(7,240)
+28,276
+1,955
+17,282
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+135
+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
+(1) Related parties having the ability to exercise control over the Group
+The name of the company
+:
+China Petrochemical Corporation
+RMB million
+Unified social credit identifier
+RMB million
+19,412
+2021
+60,438
+21,031
+2021
+RMB million
+1
+108,589
+108,590
+27,121
+2020
+RMB million
+8
+87,551
+87,559
+2021
+RMB million
+2020
+RMB million
+4,225
+980
+5,205
+49,832
+37
+49,869
+2020
+225,174
+:
+Registered address
+31,039
+1,045,000
+808,540
+2020
+RMB million
+743,188
+27,133
+770,321
+584,315
+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.
+87,559
+87,559
+The detailed information about the Group's operating income is as follows:
+RMB million
+RMB million
+2020
+2021
+1,013,961
+9111000010169286X1
+The Company
+2021
+RMB million
+2,104,724
+Principal activities
+:
+Relationship with the Group
+(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.
+40 OPERATING INCOME AND OPERATING COSTS
+Income from principal operations
+Income from other operations
+Total
+Operating costs
+The Group
+2021
+RMB million
+2,679,500
+2020
+RMB million
+2,048,654
+61,384
+56,070
+2,740,884
+2,216,551
+1,685,674
+19,018
+fair value of
+(220)
+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
+surplus reserve
+RMB million
+130
+(4,005)
+(3,315)
+(690)
+(2,092)
+7,214
+(2,443)
+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).
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+Total
+RMB million
+Total other
+comprehensive
+income
+RMB million
+(4,088)
+Income from principal operations
+213,224
+3,944
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+117,000
+96,224
+Balance at 31 December 2021
+92,280
+3,944
+Appropriation
+Balance at 1 January 2021
+209,280
+(715)
+(1,728)
+(1,353)
+(591)
+328
+(1,031)
+1,359
+(3,485)
+6,768
+81
+(4)
+(2,001)
+(1,890)
+(1,569)
+(321)
+2,746
+1,037
+(16)
+(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;
+(6,089)
+Minority
+interests
+RMB million
+(20)
+7,805
+(110)
+(29)
+2
+(18)
+324
+(5,765)
+(1,562)
+(2,600)
+1,038
+(739)
+7,805
+81
+(20)
+(6,089)
+(1,562)
+(2,600)
+1,038
+(739)
+81
+(220)
+RMB million
+Subtotal
+RMB million
+RMB million
+RMB million
+Cash flow hedges:
+Effective portion of changes in fair value of hedging instruments recognised
+during the year
+9,207
+amount
+(2,295)
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+(198)
+37
+(161)
+Subtotal
+9,405
+6,912
+Net-of-tax
+Tax
+effect
+Before-tax
+amount
+Changes in fair value of other equity instrument investments
+(6)
+2
+(4)
+Other comprehensive loss that can be converted into profit or loss under the
+equity method
+441
+441
+Foreign currency translation differences
+Other comprehensive income
+(1,728)
+(1,728)
+23,004
+(5,497)
+17,507
+2020
+(2,332)
+7,073
+Cost of hedging reserve
+162
+31 December 2021
+Equity Attributable to shareholders of the company
+Other
+comprehensive
+income that can
+be converted
+into profit or
+loss under
+the equity
+method
+Changes in
+Foreign
+other equity
+instrument
+investments
+currency
+RMB million
+RMB million
+fair value
+hedges
+RMB million
+Cash flow
+hedges
+RMB million
+translation
+differences
+Changes in 2021
+RMB million
+1 January 2021
+1 January 2020
+Changes in 2020
+162
+Changes in fair value of other equity instrument investments
+(18)
+(4)
+(22)
+Other comprehensive loss that can be converted into profit or loss under the
+equity method
+(2,441)
+Foreign currency translation differences
+(4,457)
+(2,441)
+(4,457)
+Other comprehensive income
+2,651
+(2,336)
+315
+(b) The change of each item in other comprehensive income
+31 December 2020
+Gasoline
+85
+Crude oil
+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
+2,370
+2021
+RMB million
+2020
+RMB million
+54 INCOME TAX EXPENSE
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+134
+Financial Statements (PRC)
+133
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+1,955
+4,732
+2,719
+3,470
+1,669
+3,727
+301
+165
+43
+220
+7,582
+The Group
+206
+3,130
+51 IMPAIRMENT LOSSES
+(1,253)
+3,341
+Total
+(5)
+Others
+576
+428
+(1,824)
+2,913
+Net fair value gains on financial assets and financial liabilities at fair value through profit or loss
+Unrealised gains from ineffective portion cash flow hedges, net
+2020
+RMB million
+RMB million
+2021
+43,356
+257
+1,203
+30,881
+The Group
+Prepayments
+Inventories
+Long-term equity investment
+2020
+RMB million
+RMB million
+(40)
+2021
+Total
+Others
+Asset scrap, damage loss
+Fines, penalties and compensation
+Donations
+The Group
+97
+11,361
+53 NON-OPERATING EXPENSES
+Government grants
+Others
+The Group
+52 NON-OPERATING INCOME
+Total
+Others
+Construction in progress
+Intangible assets
+Fixed assets
+Total
+2021
+2020
+RMB million
+56 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Pursuant to the shareholders' approval at the Annual General Meeting on 25 May 2021, a final dividend of RMBO.13 per share totaling
+RMB15,739 million according to total shares on 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.
+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.
+(b) Dividends of ordinary shares declared during the year
+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.
+(a) Dividends of ordinary shares declared after the balance sheet date
+55 DIVIDENDS
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate
+of 15% through the year 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.
+Note:
+6,344
+23,318
+(117)
+(462)
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+The Group
+(a) Reconciliation of net profit to cash flows from operating activities:
+Net profit
+Add: Impairment losses on assets
+Net increase of cash
+Less: Cash at the beginning of the year
+Cash balance at the end of the year
+(b) Net change in cash:
+Increase in operating receivables
+Increase in operating payables
+Net cash flow from operating activities
+Safety fund reserve
+(Increase)/decrease in inventories
+Increase in deferred tax liabilities
+75
+Decrease/(increase) in deferred tax assets
+Financial expenses
+Fair value (gain)/loss
+Net loss/(gain) on disposal of non-current assets
+Dry hole costs written off
+Amortisation of intangible assets and long-term deferred expenses
+Depreciation of fixed assets
+Depreciation of right-of-use assets
+Credit impairment losses
+Investment income
+934
+Write-down of deferred tax assets
+1,087
+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
+Profit before taxation
+(117)
+Under-provision for income tax in respect of preceding year
+(7,873)
+6,258
+Deferred taxation
+14,334
+17,522
+Provision for income tax for the year
+RMB million
+(462)
+(69)
+47,486
+108,348
+Expected income tax expense at a tax rate of 25%
+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)
+48,441
+(2,766)
+(8,345)
+(8,085)
+Tax effect of non-taxable income
+3,340
+6,142
+Tax effect of non-deductible expenses
+12,110
+27,087
+Tax effect of preferential tax rate (i)
+Diesel
+84
+6,032
+409
+213,894
+2020
+RMB million
+RMB million
+2021
+The Group
+42 FINANCIAL EXPENSES
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+Total
+Others
+City construction tax
+Education surcharge
+Resources tax
+Consumption tax
+The Group
+41 TAXES AND SURCHARGES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+131
+197,542
+18,044
+15,710
+13,409
+Net foreign exchange gains
+Interest income
+Accretion expenses (Note 34)
+Net interest expenses
+Add: Interest expense on lease liabilities
+Less: Capitalised interest expenses
+Interest expenses incurred
+RMB million
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+RMB million
+2021
+235,018
+259,032
+5,516
+7,253
+4,572
+6,432
+11,678
+2020
+5,679
+996
+2,104,724
+1,084
+557,605
+726,057
+2020
+RMB million
+2,048,654
+2,679,500
+2021
+RMB million
+(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.
+Note:
+Total
+Rental income
+Sale of materials and others
+Income from other operations
+Others (i)
+Synthetic fiber monomers and polymers
+Natural gas
+Kerosene
+Synthetic resin
+Basic chemical feedstock
+542,260
+422,566
+429,038
+351,707
+1,394
+54,986
+59,990
+56,070
+61,384
+276,139
+363,979
+42,388
+2,740,884
+45,464
+68,443
+72,385
+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
+112,519
+122,368
+149,208
+155,397
+242,532
+48,099
+6,517
+2,011
+9,200
+82
+3,637
+19,296
+21,416
+8,151
+6,712
+23,253
+RMB million
+RMB million
+RMB million
+2020
+2021
+2020
+The Company
+The Group
+2021
+49 INVESTMENT INCOME
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+37,525
+56
+34
+156
+(1,013)
+(376)
+687
+2,475
+(17,687)
+266
+The Group
+RMB million
+50 INCOME FROM CHANGES IN FAIR VALUE
+Total
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Others
+through profit or loss
+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
+equity investments
+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
+16
+21,079
+S[8
+22
+Gain from ineffective portion of cash flow hedges
+132
+Other income are mainly the government grants related to the business activities.
+48 OTHER INCOME
+Depreciation, depletion and amortisation
+Personnel expenses
+Purchased crude oil, products and operating supplies and expenses
+The operating costs, selling and distribution expenses, general and administrative expenses, research and development expenses and exploration
+expenses (including dry holes) in consolidated income statement classified by nature are as follows:
+43 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2021 by the Group ranged from 1.84%
+to 4.35% (2020: 2.60% to 4.66%).
+9,510
+9,010
+Exploration expenses (including dry holes)
+Total
+(276)
+(4,803)
+(5,732)
+1,343
+1,135
+13,855
+13,883
+9,349
+(885)
+84
+Other expenses
+Total
+2021
+RMB million
+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
+44 SELLING AND DISTRIBUTION EXPENSES
+2,360,840
+52,621
+9,716
+12,382
+107,461
+115,680
+87,525
+2020
+RMB million
+1,589,821
+2,076,665
+103,492
+42,531
+State-owned
+(c) The analysis of cash held by the Group is as follows:
+Registered capital
+The amounts set out in the table above in respect of the year ended 31 December 2021 and 2020 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+30,305
+Net funds obtained from/(repaid to) related parties
+Net deposits placed with related parties
+(31,144)
+(x)
+(17,585)
+(8,265)
+(viii)
+919
+385
+(ix)
+704
+715
+(viii)
+160
+194
+(vii)
+2,952
+1,730
+(vi)
+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.
+31,915
+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).
+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).
+•
+(a) The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months' notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2021.
+The terms of these agreements are summarised as follows:
+(x) The Group obtained loans, discounted bills and issued the acceptance bills from Sinopec Group Company and fellow subsidiaries.
+(ix) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(viii) Interest income represents interest received from deposits placed with Sinopec Finance and Sinopec Century Bright Capital Investment Limited, finance companies
+controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate.
+Notes: (Continued)
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows: (Continued)
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+137
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(vii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens and property maintenance.
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management and
+environmental protection, and management services.
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Notes:
+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).
+the government-prescribed price;
+44,405
+31,444
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+136
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+FREP
+BASF-YPC
+Joint ventures of the Group:
+Zhongtian Synergetic Energy
+CIR
+Sinopec Capital
+Sinopec Finance
+PipeChina
+Associates of the Group:
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Century Bright Capital Investment Limited
+Sinopec Engineering Incorporation
+Sinopec Assets Management Corporation
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Shengli Petroleum Administration Bureau
+(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:
+(v)
+Sales of goods
+Transportation and storage
+33,930
+(iv)
+8,734
+19,443
+(iii)
+151,300
+191,888
+(ii)
+228,307
+297,381
+(i)
+2020
+RMB million
+RMB million
+The Group
+2021
+Note
+Interest expense
+Interest income
+Agency commission income
+Ancillary and social services
+Production related services
+Types of legal entity
+Purchases
+.
+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
+2,407
+3,010
+2,779
+12,078
+50,564
+681
+5,896
+4,627
+41
+50
+18,990
+10,139
+123
+228
+3,671
+3,798
+8
+5
+6.435
+3,116
+1,231
+4,642
+577
+14,156
+72,176
+Cash at bank and on hand
+Financial Statements (PRC)
+139
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The significant
+accounting policies are set forth in Note 3. The Group believes the following critical accounting policies involve the most significant judgements and
+estimates used in the preparation of the financial statements.
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the financial statements. The Group bases the assumptions and estimates on historical experience and on various other assumptions
+that it believes to be reasonable and which form the basis for making judgements about matters that are not readily apparent from other sources.
+On an on-going basis, management evaluates its estimates. Actual results may differ from those estimates as facts, circumstances and conditions
+change.
+6,095
+342
+RMB thousand
+5,753
+RMB thousand
+4,612
+379
+4,991
+2020
+2021
+58 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+Short-term employee benefits
+Retirement scheme contributions
+Total
+Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
+Group, directly or indirectly, including directors and supervisors of the Group. The key management personnel compensations are as follows:
+(5) Key management personnel emoluments
+As at and for the year ended 31 December 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.
+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.
+87,870
+86,585
+74,178
+12,400
+18,062
+13,941
+760
+Bills payable
+Other non-current assets
+Prepayments and other current assets
+Other receivables
+Receivables financing
+Accounts receivable
+Cash at bank and on hand
+Other related companies
+The balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures at 31 December 2021 and 31 December 2020
+are as follows:
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+138
+(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.
+(e) The Company has entered into a service station franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+(d) The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+(c) The Company has entered into a number of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+(b) The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as agreed to in the above
+Mutual Provision Agreement.
+where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+•
+Accounts payable
+Contract liabilities
+Other payables and other current liabilities
+Other non-current liabilities
+186
+16,735
+8,625
+2127
+19
+122
+-
+42
+30
+53,417
+Sinopec Finance (Note)
+61,682
+RMB million
+2021
+At 31 December
+At 31 December
+At 31 December
+2020
+RMB million
+2021
+RMB million
+The ultimate holding company
+At 31 December
+Lease liabilities (including current portion)
+Long-term loans (including current portion)
+Short-term loans
+2020
+RMB million
+Related parties under common control of a parent company with the Company:
+Exploration and development services
+(2) Related parties not having the ability to exercise control over the Group
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 68.77%
+shareholding of the Company.
+Authorised representative
+RMB326,547 million
+:
+Ma Yongsheng
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+RMB million
+RMB million
+RMB million
+2021
+At 31 December
+2020
+RMB million
+2021
+RMB million
+2021
+2020
+Sinopec-SK
+Shanghai SECCO
+Sinopec Kantons
+Fujian Petrochemical
+2021
+2020
+Shanghai Petrochemical
+2021
+2020
+2020
+2020
+RMB million
+RMB million
+2,132
+2.817
+2,047
+871
+243
+951
+639
+2,004
+1.160
+1,429
+22,415
+18,582
+Profit/(loss) for the year
+RMB million
+28,702
+21,626
+29,723
+1,064
+528
+4,871
+5,549
+74,705
+89,280
+2,017
+2,166
+1,099,680
+1,408,523
+Turnover
+50,208
+2021
+2020
+SIPL
+22,187
+20,650
+12,177
+11,402
+9,106
+8,195
+12.568
+13,208
+27,444
+26,106
+8,951
+8,954
+323,571
+Non-current liabilities
+326,437
+(2,738)
+(1,331)
+7,648
+632
+3,449
+4,565
+1,124
+1,322
+2,073
+5,136
+22,145
+21,329
+(29,326)
+Non-current assets
+1,606
+(59,604) (59,554)
+(18,270)
+Marketing Company
+2021
+Year ended 31 December
+Summarised consolidated statement of comprehensive income and cash flow
+13,678
+13.138
+10,624
+9,984
+8,936
+8,025
+11.875
+12,508
+27,282
+25,259
+(17,823)
+(9,319)
+266,833 264,017
+(liabilities)
+Net non-current assets/
+(8,509)
+(7,512)
+(1,553)
+(1,418)
+(170)
+(170)
+(693)
+(700)
+(162)
+(847)
+(8,869)
+(920)
+21,149
+18,439
+Beihai petrochemical
+Income of the
+acquiree from
+1 January 2021
+Basis of
+Determination on
+the acquisition date
+Date of
+acquisition
+The basis for the
+business combination
+Share of under the common
+acquired equity control
+acquiree
+Net cash flow
+20,932
+Net profits/
+(1) The relevant financial information disclosed for changes in the scope of consolidation are as follows:
+Business combination under common control in 2021 (Continued)
+Business combination under common control (Continued)
+60 CHANGE IN THE SCOPE OF CONSOLIDATION (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 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.
+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.
+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.
+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.
+Business combination under common control in 2021
+Business combination under common control
+60 CHANGE IN THE SCOPE OF CONSOLIDATION
+(363)
+5.476
+3.119
+98.98% The acquiree and the
+3,447
+1 July 2021
+According to the
+agreement
+43
+19
+RMB Million
+2021 to the
+acquisition date
+from 1 January
+of the acquiree
+2021 to the
+1 January
+acquiree from
+2020 to
+acquisition date
+RMB Million
+RMB Million
+RMB Million
+39
+5
+31 December
+2020
+2020
+31 December
+1 January
+1 January
+2020 to
+Net cash flow
+activities of the
+acquiree from
+from operating
+(losses) of the
+Income of the
+acquiree from
+Net profits/
+(losses) of the
+acquiree from
+1 January 2021
+to the
+acquisition date
+RMB Million
+to the
+acquisition date
+RMB Million
+13
+business
+586
+133
+(244)
+707
+268
+121
+23
+476
+317
+1,065
+(287)
+579
+7.205
+6.822
+interests
+attributable to minority
+Comprehensive income
+(920)
+1,606
+2,132
+2,817
+1,814
+677
+243
+951
+628
+2,145
+(720)
+1,045
+(33,716)
+00
+2,390
+691
+659
+(292)
+1,751
+4,060
+281
+690
+54,139
+(used in) operating activities 28,923
+Net cash generated from/
+61
+767
+1,028
+15
+175
+Total comprehensive income
+164
+150
+64
+69
+649
+60
+541
+316
+90
+2,766
+7,064
+interests
+Dividends paid to minority
+(377)
+1500
+Net current (liabilities)/assets
+(6,377)
+(8,122)
+5,130
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company Limited
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB9,606
+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
+RMB4,804
+55.00
+8,197
+Crude oil processing and petroleum products manufacturing
+RMB3,000
+RMB3,000
+55.00
+2,272
+*
+Production and sale of petrochemical products
+59.00
+RMB7,193
+RMB7,193
+Production, sale, research and development of ethylene and
+downstream byproducts
+RMB1,000
+RMB1,165
+100.00
+124
+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
+RMB500
+RMB5,294
+98.98
+137
+RMB6,397
+RMB5,776
+90.30
+2,288
+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")
+RMB5,240
+RMB500
+67.59
+3,441
+2020
+2021
+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
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+RMB million
+RMB million
+RMB million
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+159,599
+172,352
+22,759
+RMB million
+Marketing and distribution of petrochemical products
+2020
+At
+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.
+2021
+Summarised consolidated balance sheet
+At
+At 31
+SIPL
+At
+At
+Shanghai Petrochemical
+At
+At
+Fujian Petrochemical
+At
+At
+Sinopec Kantons
+At
+At
+Shanghai SECCO
+At
+At
+Sinopec-SK
+At
+Marketing Company
+100.00
+USD3,009
+USD3,009
+(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
+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).
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+(e) Allowance for diminution in value of inventories
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised.
+Net realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the
+estimated costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of
+the finished goods and raw materials, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were
+to be higher than estimated, the actual allowance for diminution in value of inventories would be higher than estimated.
+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:
+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.
+Percentage of
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum and Chemical
+Company Limited
+Sinopec Catalyst Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+Sinopec Lubricant Company Limited
+Sinopec Yizheng Chemical Fibre Limited Liability Company
+Marketing Company
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical”) (i)
+(b) Subsidiaries established by the Group:
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Trading of petrochemical products
+Full name of enterprise
+Trading of crude oil and petrochemical products
+(b) Impairment for assets
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with industry practices in the similar geographic area, including estimation
+of economic life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are
+capitalised as oil and gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+(2,783)
+(5,434)
+(924)
+(196)
+(458)
+(142)
+(15,232)
+(15,796)
+(475)
+(1,430)
+(201,678)
+(193,315)
+Current liabilities
+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.
+3,639
+10,431
+6.066
+4,373
+4,761
+1,582
+1,464
+17,305
+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.
+6,791
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+Production and sale of catalyst products
+Registered
+capital/paid-
+up capital
+million
+RMB4,000
+RMB6,713
+100.00
+RMB28,403
+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
+88
+RMB5,820
+15,132
+Manufacturing of plastics, intermediate petrochemical products
+and petroleum products
+RMB10,492
+RMB5,246
+50.00
+6,915
+Investment in exploration, production and sale of petroleum and
+RMB8,250
+RMB8,250
+100.00
+6,119
+natural gas
+Investment holding of overseas business
+50.44
+Principal activities
+100.00
+RMB3,374
+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
+RMB3,374
+11
+RMB6,585
+100.00
+5,259
+RMB1,500
+RMB2,424
+100.00
+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
+RMB5,000
+At 31 December
+2021
+RMB million
+9,117
+Oriental Petrochemical
+Business
+Cangzhou Branch
+business
+13,837
+547
+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
+3,023
+4,499
+105,536
+4,417
+2,048,654
+6,674
+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
+147
+2021
+RMB million
+RMB million
+613
+(20,570)
+65,360
+(6,526)
+23,102
+19,634
+11,361
+9,592
+9,521
+(2,048)
+(4,421)
+2020
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+377,499
+373,430
+222,803
+194,434
+133,961
+118,458
+1,410,148
+1,311,112
+221,989
+184,412
+209,179
+188,342
+19,389
+270,766
+25,054
+29,976
+1,889,255
+1,738,896
+159,358
+157,430
+129,103
+135,157
+210,215
+213,455
+65,103
+47,992
+197,447
+117,684
+28,550
+2,679,500
+304,785
+371,100
+For the year ended 31 December 2021
+63 SEGMENT REPORTING (Continued)
+(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
+354,024
+Long-term equity investments
+Other unallocated assets
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+2021
+RMB million
+At 31 December
+2020
+RMB million
+Deferred tax assets
+Total segment liabilities
+(1,371,215)
+888,227
+(iv) Chemicals - which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external
+customers.
+(v) Corporate and others - which largely comprise the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and corporate and others businesses separately. The reportable segments are each managed separately because they manufacture and/
+or distribute distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for cash at bank and on hand, long-term equity investments, deferred tax assets and other
+unallocated assets. Segment liabilities exclude short-term loans, non-current liabilities due within one year, long-term loans, debentures payable,
+deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+146
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+63 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Reportable information on the Group's operating segments is as follows:
+Income from principal operations
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+(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.
+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.
+(ii) Refining
+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.
+6,390
+5,746
+8,450
+14,863
+14,840
+Total
+Notes:
+(i) The Group provided a guarantee in respect to standby credit facilities granted to Zhongan United Coal Chemical Co., Ltd. ("Zhongan United") by banks amount to
+RMB7,100 million. As at 31 December 2021, the amount withdrawn (The portion corresponding to the shareholding ratio of the Group) by Zhongan United from
+banks and guaranteed by the Group was RMB5,680 million (31 December 2020: RMB6,390 million). The Group provided a guarantee in respect to standby credit
+facilities granted to Amur Gas Chemical Complex Limited Liability Company ("Amur Gas") by banks amount to RMB23,208 million. As at 31 December 2021,
+the amount withdrawn (The portion corresponding to the shareholding ratio of the Group) by Amur Gas from banks and guaranteed by the Group was RMB3,264
+million (31 December 2020: Nil).
+The Group provided a guarantee in respect to payment obligation under the raw material supply agreements of Amur Gas amount to RMB15,493 million. As at 31
+December 2021, Amur Gas has not yet incurred the relevant payment obligations and therefore the Group has no guarantee amount (31 December 2020: Nil).
+The Group provided a guarantee in respect engineering services agreement of Amur Gas amount to RMB3,012 million. As at 31 December 2021, the relevant
+payables for constructions of Amur Gas (The portion corresponding to the shareholding ratio of the Group) and guaranteed by the Group was RMB173 million (31
+December 2020: Nil).
+(ii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB17,050 million. As at 31
+December 2021, the amount withdrawn (The portion corresponding to the shareholding ratio of the Group) by Zhongtian Synergetic Energy and guaranteed by the
+Group was RMB5,746 million (2020: RMB8,450 million).
+Management monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
+guarantees are determined to be higher than the carrying amount in respect of the guarantees. At 31 December 2021 and 2020, the Group
+estimates that there is no material liability has been accrued for ECLS related to the Group's obligation under these guarantee arrangements.
+Environmental contingencies
+External sales
+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.
+Legal contingencies
+The Group is defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business. Management
+has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any resulting
+liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+145
+Financial Statements (PRC)
+Financial Statements (PRC)
+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
+-
+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).
+Inter-segment sales
+Elimination of inter-segment sales
+Consolidated income from principal operations
+2020
+RMB million
+RMB million
+156,026
+104,524
+87,298
+57,513
+243.324
+162,037
+167,948
+113,214
+1,212,455
+826,219
+2021
+1,380,403
+1,367,605
+7,075
+1,374,680
+1,062,447
+4,854
+1,067,301
+424,774
+70,242
+322,169
+40,702
+495,016
+362,871
+563,147
+458,154
+732,356
+430,073
+1,295,503
+939,433
+(2,109,426)
+Profit before taxation
+Add: Non-operating income
+Income from other operations
+Exploration and production
+Refining
+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
+Less: Non-operating expenses
+Corporate and others
+Total segment operating profit
+Investment income
+Exploration and production
+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
+Elimination
+761,226
+671,718
+Short-term loans
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB3,648 million (2020: RMB13,172 million).
+Note:
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+205,594
+33,997
+171,597
+RMB million
+2020
+At 31 December
+274,657
+184,430
+90,227
+At 31 December
+2021
+RMB million
+Authorised and contracted for (i)
+Authorised but not contracted for
+Total
+At 31 December 2021 and 31 December 2020, capital commitments of the Group are as follows:
+Capital commitments
+61 COMMITMENTS
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+143
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The principal subsidiaries included in the scope of consolidation this year are disclosed in Note 59.
+4,844
+4,155
+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:
+62 CONTINGENT LIABILITIES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+144
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+1,498
+1,535
+824
+846
+56
+64
+63
+Total shareholders' equity
+102
+110
+99
+112
+390
+301
+Total
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Between one and two years
+Within one year
+RMB million
+RMB million
+At 31 December
+2020
+At 31 December
+2021
+66
+1,031
+2,557
+Total liabilities
+62
+162
+42
+242
+7.177
+(376)
+7,723
+1 December 2021 According to the
+agreement
+60
+560
+ET
+(15)
+246
+(6)
+According to the
+agreement
+87
+1,223
+84
+20
+620
+According to the
+agreement
+1 July 2021
+100% The acquiree and the
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+100% The acquiree and the
+Group Yanshan
+Business
+Asset company
+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
+1 July 2021
+(a) The Company has been advised by its PRC lawyers that, except for liabilities constituting or arising out of or relating to the business assumed
+by the Company in the Reorganisation, no other liabilities were assumed by the Company, and the Company is not jointly and severally liable for
+other debts and obligations incurred by Sinopec Group Company prior to the Reorganisation.
+20
+1 December 2021 According to the
+1,020
+2,540
+Total current liabilities
+5,875
+6,712
+Total assets
+480
+974
+Total current assets
+RMB Million
+Book value at
+December 31 2020
+Book value at
+the Acquisition Date
+RMB Million
+6,124
+385
+1,002
+12,233
+(200)
+11,688
+(3) Details of the assets and liabilities acquired are as follows:
+Cost of acquisition(RMB Million)
+(2) Cost of acquisition :
+Total
+agreement
+392
+5
+3,234
+102
+3,086
+347
+(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)
+Financial Statements (PRC)
+Depreciation, depletion and amortisation
+Exploration and production
+68,148
+56,416
+22,469
+24,756
+21,897
+25,403
+51,648
+28,217
+3,786
+2,312
+167,948
+Corporate and others
+137,104
+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
+52,880
+115,680
+Marketing and distribution
+Chemicals
+Exploration and production
+27,366
+20,756
+Non-current liabilities due within one year
+28,651
+22,494
+Long-term loans
+49,341
+45,459
+Debentures payable
+42,649
+38,356
+Deferred tax liabilities
+7,910
+Refining
+8,124
+18,276
+17,950
+Other unallocated liabilities
+Total liabilities
+37,795
+25,319
+973,214
+850,176
+2021
+2020
+RMB million
+RMB million
+Capital expenditure
+Other non-current liabilities
+100% The acquiree and the
+107,461
+Exploration and production
+At 31 December
+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
+2,166,040
+278,024
+296,820
+2,740,884
+64 FINANCIAL INSTRUMENTS
+Financial assets of the Group include cash at bank and on hand, financial assets held for trading, derivative financial assets, accounts receivable,
+receivables financing, other receivables and other equity instrument investments. Financial liabilities of the Group include short-term loans, derivative
+financial liabilities, bills payable, accounts payable, employee benefits payable, other payables, long-term loans, debentures payable and lease
+liabilities.
+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
+Overview
+Impairment losses on long-lived assets
+1,720,695
+RMB million
+2,467
+8,495
+Refining
+860
+1,923
+Marketing and distribution
+1,211
+536
+Chemicals
+5,332
+3,675
+Corporate and others
+165
+2020
+RMB million
+10,035
+148
+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
+14,629
+22,620
+150
+1,240
+- Derivative financial liabilities
+Derivative financial liabilities:
+Liabilities
+Other Investments
+Other equity instrument investments:
+- Receivables financing
+Level 1
+RMB million
+Receivables financing:
+Derivative financial assets:
+Equity investments, listed and at quoted market price
+Financial assets held for trading:
+Assets
+The Group
+At 31 December 2020
+- Derivative financial assets
+Level 2
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+Level 1
+RMB million
+3,223
+3,223
+2,419
+2,419
+804
+804
+767
+25,077
+588
+6,527
+12,488
+6,062
+179
+5,939
+5,939
+18,371
+12,488
+5,883
+- Derivative financial liabilities
+Level 2
+RMB million
+Derivative financial liabilities:
+- Other Investments
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+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.
+For the year ended 31 December 2021
+At 31 December 2021, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. At 31 December 2021, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB18,359 million (2020: RMB12,353 million) and derivative financial liabilities of RMB3,214 million (2020:
+RMB4,808 million).
+(c) Commodity price risk
+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.
+The Group's interest rate risk exposure arises primarily from its short-term and long-term loans. Loans carrying interest at variable interest rates
+and at fixed interest rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates and
+terms of repayment of short-term and long-term loans of the Group are disclosed in Note 22 and Note 31, respectively.
+(b) Interest rate risk
+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
+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.
+64 FINANCIAL INSTRUMENTS (Continued)
+Fair values
+(i) Financial instruments carried at fair value
+Other equity instrument investments:
+- Receivables financing
+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.
+Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which
+all significant inputs are directly or indirectly based on observable market data.
+•
+.
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+•
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy. With the fair value of each financial instrument categorised in its entirely based on the lowest level of input that is
+significant to that fair value measurement. The levels are defined as follows:
+Liabilities
+Level 3
+RMB million
+Total
+RMB million
+1
+Financial Statements (PRC)
+153
+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.
+(ii) Diluted earnings per share
+121,071
+Financial Statements (PRC)
+121,071
+121,071
+2021
+0.275
+121,071
+33,271
+2020
+2020
+121,071
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+66 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+9.35
+earnings
+per share
+per share
+(RMB/Share) (RMB/Share)
+earnings
+(%)
+Diluted
+Basic
+Weighted
+average
+return on
+net assets
+Basic
+Diluted
+earnings earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+Weighted
+average
+return on
+net assets
+2020
+2021
+67 EXTRAORDINARY GAINS AND LOSSES
+Net profit/(loss) deducted extraordinary gains and
+losses attributable to the Company's ordinary
+equity shareholders
+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:
+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:
+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)
+4,826
+4,826
+2,355
+2,355
+2,471
+2,471
+22,789
+10,111
+2,900
+1,525
+1,376
+149
+9,778
+8,735
+8,735
+12,528
+2,900
+9,628
+During the year ended 31 December 2021 and 2020, there was no transfer between instruments in Level 1 and Level 2.
+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.
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Basic earnings per share is calculated by the net profit attributable to equity shareholders of the Company and the weighted average number of
+outstanding ordinary shares of the Company:
+(i) Basic earnings per share
+65 BASIC AND DILUTED EARNINGS PER SHARE
+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.
+At 31 December
+2020
+RMB million
+76,674
+74,282
+88,593
+85,610
+At 31 December
+2021
+RMB million
+Carrying amount
+Fair value
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially
+the same characteristic and maturities range from 0.30% to 4.65% (2020: from 0.77% to 4.65%). The following table presents the carrying
+amount and fair value of the Group's long-term indebtedness other than loans from Sinopec Group Company and fellow subsidiaries at 31
+December 2021 and 31 December 2020:
+(ii) Fair values of financial instruments carried at other than fair value
+Fair values (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+152
+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
+Long-term loans
+29,554
+29,554
+28,651
+Non-current liabilities due within one year
+128,749
+49,341
+128,749
+Other payables and employee benefits payable
+203,919
+203,919
+203,919
+Accounts payable
+11,721
+128,749
+53,704
+1,230
+19,350
+233,210
+35,412
+12,030
+280,652
+170,233
+Lease liabilities
+5,270
+10,443
+30,645
+1,195
+47,553
+42,649
+Debentures payable
+5,338
+27,786
+11,721
+11,721
+Bills payable
+3,223
+Liquidity risk
+The Group's other receivables are considered to have low credit risk (Note 10), and the loss allowance recognised during the year was therefore
+limited to 12 months expected credit losses. The Group considers "low credit risk" for other receivables when they have a low risk of default and
+the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+The detailed analysis of accounts receivable and receivables financing is listed in note 7 and note 8.
+The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2021 or 31 December
+2020, respectively, and the corresponding historical credit losses experienced within this period and calculate expected credit losses for the
+above financial assets using an allowance matrix The historical loss rates are adjusted to reflect current and forward-looking information on
+macroeconomic factors affecting the ability of the customers to settle the accounts receivable and receivables financing.
+To measure the expected credit losses, accounts receivable and receivables financing have been grouped based on shared credit risk
+characteristics and the days past due.
+For accounts receivable and receivables financing, the Group applies the "No.22 Accounting Standards for Business Enterprises Financial
+instruments: recognition and measurement" simplified approach to measuring expected credit losses which uses a lifetime expected loss
+allowance for all accounts receivable and receivables financing.
+-
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+The Group's primary type of financial assets that are subject to the expected credit loss model is accounts receivable, receivables financing and
+other receivables.
+(ii) Impairment of financial assets
+Credit risk (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+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.
+Total
+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.
+Total
+27,787
+27,787
+3,223
+27,366
+3,223
+Derivative financial liabilities
+Short-term loans
+RMB million
+five years
+five years
+RMB million
+RMB million RMB million
+More than
+At 31 December 2021
+More than More than
+one year but two years but
+less than less than
+two years
+Within one
+year or on
+demand
+Carrying undiscounted
+amount cash flow
+RMB million RMB million
+contractual
+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:
+0.588
+665,852
+407,378
+936
+49,074
+45,459
+3,024
+3,024
+3,018
+4,638
+Debentures payable due within one year
+Long-term loans
+23,880
+22.494
+Non-current liabilities due within one year
+92,141
+92,141
+92,141
+23,880
+41,009
+2,491
+Debentures payable
+114,036
+253,575
+43,513
+15,456
+28,138
+308,905
+713,138
+560,698
+312,544
+171,740
+Lease liabilities
+Total
+5,993
+29,514
+8,044
+44,791
+38,356
+Other payables and employee benefits payable
+151,514
+151,514
+151,514
+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
+amount
+Carrying undiscounted
+contractual
+Total
+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
+73,641
+62,025
+Within one
+786,862
+year or on
+five years
+RMB million
+Accounts payable
+10,394
+10,394
+10,394
+Bills payable
+4,826
+20,950
+20,950
+4,826
+4,826
+Derivative financial liabilities
+20,756
+Short-term loans
+RMB million
+five years
+demand
+RMB million
+More than
+0.588
+1
+0.275
+Interest income
+Foreign currency exchange gains, net
+Net finance costs
+(15,018)
+5,732
+276
+(9,010)
+Investment income
+10
+298
+Share of profits less losses from associates and joint ventures
+21,22
+23,253
+(15,198)
+4,803
+885
+(9,510)
+37,744
+6,712
+Profit before taxation
+109,169
+48,615
+Income tax expense
+11
+(23,318)
+(6,344)
+Profit for the year
+85,851
+42,271
+Attributable to:
+Shareholders of the Company
+71,975
+33,443
+Non-controlling interests
+13,876
+9
+13,669
+94,628
+(2,091,055)
+(1,589,821)
+Selling, general and administrative expenses
+5
+(54,978)
+(53,668)
+Depreciation, depletion and amortisation
+(115,680)
+(107,461)
+Exploration expenses, including dry holes.
+(12,382)
+(9,716)
+Personnel expenses
+Taxes other than income tax
+Impairment losses on trade and other receivables
+8,828
+Other operating income/(expenses), net
+Operating profit
+Finance costs
+Interest expense
+6
+(103,492)
+(87,525)
+7
+(259,032)
+(235,018)
+(2,311)
+(2,066)
+8
+(21,716)
+(2,646,256)
+(5,780)
+Total operating expenses
+Profit for the year
+85,851
+42,271
+85,851
+42,271
+15
+(4)
+(4)
++བ
+(22)
+(22)
+(220)
+441
+162
+(2,441)
+19,018
+7,073
+(1,728)
+RMB
+(4,457)
+337
+17,507
+315
+103,358
+42,586
+89,549
+34,837
+13,809
+7,749
+103,358
+42,586
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+159
+Financial Statements (International)
+17,511
+(2,076,665)
+RMB
+2021
+Earnings per share:
+Basic
+Diluted
+16
+16
+66
+0.594
+0.276
+0.594
+0.276
+158
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2021
+2020
+(Amounts in million)
+Other comprehensive income:
+Items that may not be reclassified subsequently to profit or loss
+Equity investments at fair value through other comprehensive income
+4.46
+Share of other comprehensive income of associates and joint ventures
+Cash flow hedges
+Foreign currency translation differences
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Total comprehensive income for the year
+Attributable to:
+Shareholders of the Company
+Non-controlling interests
+Total comprehensive income for the year
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+Note
+Year ended 31 December
+Profit for the year
+Purchased crude oil, products and operating supplies and expenses
+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
+56,070
+2,104,724
+1,012
+(34,836)
+Minority interests
+(107)
+(2,705)
+154
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE INTERNATIONAL AUDITOR
+KPMG
+Independent auditor's report
+To the shareholders of China Petroleum & Chemical Corporation
+(established in the People's Republic of China with limited liability)
+OPINION
+KPMG
+8th Floor, Prince's Building
+Equity shareholders of the Company
+Central, Hong Kong
+Telephone +852 2522 6022
+Fax +852 2845 2588
+Internet kpmg.com/cn
+���馬威會計師事務所
+香港中環太子大廈8樓
+香港郵政總局信箱50號
++852 2522 6022
++852 2845 2588
+kpmg.com/cn
+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.
+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.
+BASIS FOR OPINION
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the Hong Kong Institute of Certified Public
+Accountants ("HKICPA"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the
+consolidated financial statements section of our report. We 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.
+KEY AUDIT MATTER
+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.
+Assessment of impairment of property, plant and equipment relating to oil and gas producing activities
+Refer to notes 2(g), 2(n), 8, 17 and 44 to the consolidated financial statements
+The Key Audit Matter
+G P 0 Box 50, Hong Kong
+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.
+Attributable to:
+905
+Operating expenses
+0.275
+9.49
+0.597
+0.597
+(0.21)
+(0.013)
+(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
+(37,541)
+Donations
+Government grants
+Gain on holding and disposal of business and various investments
+(3,085)
+(259)
+Other non-operating losses, net
+4,720
+(973)
+301
+(8,605)
+(37,520)
+2,992
+Net (loss)/profit acquired through business combination under common control during the reporting period
+101
+977
+(44,277)
+Tax effect
+(72)
+6,736
+Total
+(665)
+165
+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.
+(472)
+How the matter was addressed in our audit
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+KPMG
+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.
+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.
+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
+Certified Public Accountants
+8th Floor, Prince's Building
+10 Chater Road
+Central, Hong Kong
+25 March 2022
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+157
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+for the year ended 31 December 2021
+(Amounts in million, except per share data)
+Note
+Year ended 31 December
+2021
+RMB
+2020
+RMB
+Revenue
+Revenue from primary business
+3
+Other operating revenues
+4
+2,679,500
+61,384
+2,740,884
+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.
+2,048,654
+Financial Statements (International)
+Financial Statements (International)
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+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.
+The following are the primary procedures we performed to address this
+key audit matter:
+we evaluated the design and tested the operating effectiveness
+of certain internal controls related to the process for impairment
+assessment of property, plant and equipment relating to oil and
+gas producing activities;
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
+opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+we assessed the competence, capabilities and objectivity of the
+Company's reserves specialists and evaluated the methodology
+adopted by them in estimating the oil and gas reserves against
+the recognised industry standards;
+we compared future selling prices for crude oil and natural gas
+used in the discounted cash flow forecasts with the Company's
+business plans and forecasts by external analysts;
+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 involved valuation professionals with specialised skills and
+knowledge, who assisted in assessing the discount rates applied
+in the discounted cash flow forecasts against a discount rate
+range that was independently developed using publicly available
+market data for comparable companies in the same industry.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Financial Statements (International)
+156
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+KPMG
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
+The directors are responsible for the other information. The other information comprises all the information included in the annual report, other than
+the consolidated financial statements and our auditor's report thereon.
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+155
+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.
+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.
+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.
+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:
+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.
+Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a
+material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
+could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
+The directors 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.
+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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
+directors.
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+54,950
+3,372
+Investment and dividend income received
+2,305
+10,134
+11,510
+Increase in time deposits with maturities over three months
+Decrease in time deposits with maturities over three months
+Interest received
+Proceeds from/(payments of) other investing activities
+Contributions to subsidiaries from non-controlling interests
+Financing activities
+Repayments of lease liabilities
+Proceeds from bank and other loans
+Repayments of bank and other loans
+Dividends paid by the Company
+Distributions by subsidiaries to non-controlling interests
+Payments made to acquire non-controlling interests
+34,298
+Interest paid
+Net cash used in investing activities
+(84,689)
+Payment for financial assets at fair value through profit or loss
+2,656
+(127,965)
+(118,321)
+Proceeds from other financing activities
+168,520
+(16,956)
+(13,315)
+(4,935)
+(6,040)
+(8,150)
+(6,700)
+Proceeds from settlement of financial assets at fair value through profit or loss
+Payment for acquisition of subsidiary, net of cash acquired
+Proceeds from disposal of investments
+8,248
+10,000
+(1,106)
+(340)
+6,769
+51,520
+Proceeds from disposal of property, plant, equipment and other non-current assets
+1,478
+(50,844)
+Repayments of other financing activities
+(1,003)
+Cash and cash equivalents at 1 January
+(37,510)
+22,034
+28,360
+87,559
+60,438
+(1,239)
+108,590
+87,559
+(57,942)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2021
+(Amounts in million)
+225,174
+Year ended 31 December
+2021
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+163
+(834)
+700
+133
+(666)
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+459
+(145,198)
+356,459
+(338,232)
+(6,186)
+(102,650)
+558,680
+(540,015)
+1,001
+4,219
+(35,110)
+(31,479)
+(8,068)
+(4,821)
+(5,849)
+(7,512)
+(8,198)
+(1,121)
+(19,412)
+(15,327)
+Net cash used in financing activities
+Net increase in cash and cash equivalents
+(a)
+17,574
+Exploratory wells expenditure
+85,851
+13,876
+71,975
+71,975
+887,702
+141,377
+746,325
+1,973
+17,574
+1,973
+(6,124)
+(6,124)
+(6,124)
+3,944
+(39,054)
+(41,234)
+(7,009)
+(48,243)
+(6,124)
+(67)
+17,507
+17,574
+(8,982)
+2020
+(8,982)
+(3,944)
+(19,371)
+(19,371)
+(19,371)
+(15,739)
+(15,739)
+(15,739)
+3,944
+(19,950)
+(648)
+(19,302)
+(19,302)
+103,358
+13,809
+89,549
+71.975
+(1,396)
+(1.396)
+(6,796)
+(8,192)
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+(c) As at 31 December 2021, the amount of retained earnings available for distribution was RMB116,440 million (2020: RMB115,849 million), being the amount determined in
+accordance with CASS. According to the Articles of Association of the Company, the amount of retained earnings available for distribution to shareholders of the Company
+is lower of the amount determined in accordance with the accounting policies complying with CASS and the amount determined in accordance with the accounting policies
+complying with International Financial Reporting Standards ("IFRS").
+(d) The capital reserve represents (i) the difference between the total amount of the par value of shares issued and the amount of the net assets transferred from Sinopec
+Group Company in connection with the Reorganisation (Note 1); and (ii) the difference between the considerations paid over or received the amount of the net assets of
+entities and related operations acquired from or sold to Sinopec Group Company and non-controlling interests.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+162
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2021
+(Amounts in million)
+Note
+Year ended 31 December
+2021
+2020
+RMB
+RMB
+Net cash generated from operating activities
+Investing activities
+Capital expenditure
+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.
+Purchase of investments
+(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.
+140,892
+(7,520)
+3,944
+(39,054)
+(42,630)
+(13,805)
+(56,435)
+121,071
+319
+27,062
+723
+(802)
+240
+159
+399
+55,850
+96,224
+117,000
+2,495
+354,480
+774,182
+915,074
+RMB
+(i) Goodwill
+Operating activities
+(b) Translation of foreign currencies
+The presentation currency of the Group is Renminbi. Foreign currency transactions during the year are translated into Renminbi at the applicable
+rates of exchange quoted by the People's Bank of China ("PBOC") prevailing on the transaction dates. Foreign currency monetary assets and
+liabilities are translated into Renminbi at the PBOC's rates at the date of the statement of financial position.
+Exchange differences, other than those capitalised as construction in progress, are recognised as income or expense in the "finance costs"
+section of the consolidated income statement.
+The results of foreign operations are translated into Renminbi at the applicable rates quoted by the PBOC prevailing on the transaction dates.
+The statement of financial position items, including goodwill arising on consolidation of foreign operations are translated into Renminbi at the
+closing foreign exchange rates at the date of the statement of financial position. The income and expenses of foreign operation are translated
+into Renminbi at the spot exchange rates or an exchange rate that approximates the spot exchange rates on the transaction dates. The resulting
+exchange differences are recognised in other comprehensive income and accumulated in equity in the other reserves.
+On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from
+equity to the consolidated income statement when the profit or loss on disposal is recognised.
+(c) Cash and cash equivalents
+Cash equivalents consist of time deposits with financial institutions with an initial term of less than three months when purchased. Cash
+equivalents are stated at cost, which approximates fair value.
+(d) Trade, bills and other receivables
+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.
+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.
+Inventories are stated at the lower of cost and net realisable value. Cost mainly includes the cost of purchase computed using the weighted
+average method and, in the case of work in progress and finished goods, direct labour and an appropriate proportion of production overheads.
+Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated
+costs necessary to make the sale.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 167
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(f) Property, plant and equipment
+An item of property, plant and equipment is initially recorded at cost, less accumulated depreciation and impairment losses (Note 2(n)). The cost
+of an asset comprises its purchase price, any directly attributable costs of bringing the asset to working condition and location for its intended
+use. The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when
+that cost is incurred, when it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the
+item can be measured reliably. All other expenditure is recognised as an expense in the consolidated income statement in the year in which it is
+incurred.
+(e) Inventories
+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.
+The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common
+control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the
+control of the controlling party. The net assets of the combining entities or businesses are combined using the existing book values from the
+controlling parties' perspective. No amount is recognised as consideration for goodwill or excess of acquirers' interest in the net fair value of
+acquiree's identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the
+continuation of the controlling party's interest.
+(iv) Merger accounting for common control combination
+If a business combination involving entities not under common control is achieved in stages, the acquisition date carrying value of the
+acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from
+such remeasurement are recognised in the consolidated income statement.
+When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain
+or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair
+value and this amount is regarded as the fair value on initial recognition of a financial asset (Note 2(j)) or, when appropriate, the cost on
+initial recognition of an investment in an associate or joint venture (Note 2(a)(ii)).
+In the Company's statement of financial position, investments in subsidiaries are stated at cost less impairment losses (Note 2(n)).
+The particulars of the Group's principal subsidiaries are set out in Note 42.
+(ii) Associates and joint ventures
+An associate is an entity, not being a subsidiary, in which the Group exercises significant influence over its management. Significant influence
+is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
+The investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
+obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the
+parties that have joint control of the arrangement have rights to the net assets of the arrangement.
+Investments in associates and joint ventures are accounted for in the consolidated and separate financial statements using the equity method
+from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. Under the
+equity method, the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group's share of the
+investee's net assets and any impairment loss relating to the investment (Notes 2(i) and (n)).
+The Group's share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in the
+consolidated income statement, whereas the Group's share of the post-acquisition, post-tax items of the investees' other comprehensive
+income is recognised in the consolidated statement of comprehensive income.
+When the Group's share of losses exceeds its interest in the associate or the joint venture, the Group's interest is reduced to nil and
+recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made
+payments on behalf of the investee. For this purpose, the Group's interest is the carrying amount of the investment under the equity method,
+together with any other long-term interests that in substance form part of the Group's net investment in the associate or the joint venture,
+after applying the expected credit losses ("ECLS") model to such other long-term interests where applicable.
+When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as a disposal of
+the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee
+at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the fair value on initial
+recognition of a financial asset (see Note 2(j)) or, when appropriate, the cost on initial recognition of an investment in an associate.
+Financial Statements (International)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(a) Basis of consolidation (Continued)
+(iii)Transactions eliminated on consolidation
+Inter-company balances and transactions and any unrealised gains arising from inter-company transactions are eliminated on consolidation.
+Unrealised gains arising from transactions with associates and joint ventures are eliminated to the extent of the Group's interest in the entity.
+Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
+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.
+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.
+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:
+Equipment, machinery and others
+(i) Classification and measurement
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: a) financial assets measured at amortised cost, b) financial assets measured at fair
+value through other comprehensive income ("FVOCI"), c) financial assets measured at fair value through profit or loss. A contractual cash
+flow characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does
+not affect the classification of the financial asset.
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, trade accounts receivable and bills receivable arising from sale of goods or rendering services, without significant financing
+component, are initially recognised based on the transaction price expected to be entitled by the Group.
+Debt instruments
+Debt instruments held by the Group mainly includes cash and cash equivalents, time deposits with financial institutions, receivables. These
+financial assets are measured at amortised cost and FVOCI.
+Amortised cost: The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The
+contractual cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on
+the principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method.
+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.
+(j) Financial assets
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at FVOCI, are presented in
+financial assets at FVOCI. The relevant dividends of these financial assets are recognised in profit or loss. When derecognised, the cumulative
+gain or loss previously recognised in other comprehensive income is transferred to retained earnings.
+The Group recognises a loss allowance for ECLs on a financial asset that is measured at amortised cost and a debt instrument that is
+measured at FVOCI.
+The Group measures and recognises ECLs, considering reasonable and supportable information about the relevant past events, current
+conditions and forecasts of future economic conditions.
+The Group measures the ECLs of financial instruments on different stages at each the date of the statement of financial position. For
+financial instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the
+loss allowance at an amount equal to 12-month ECLs. If there has been a significant increase in credit risk since the initial recognition of a
+financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance at an amount equal to
+lifetime ECLs. If credit impairment has occurred since the initial recognition of a financial instrument, on third stage, the Group recognises a
+loss allowance at an amount equal to lifetime ECLs.
+For financial instruments that have low credit risk at the date of the statement of financial position, the Group assumes that there is no
+significant increase in credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month ECLs.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the third
+stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment allowance and
+effective interest rate.
+For trade accounts receivable and bills receivable and financial assets at FVOCI related to revenue, the Group measures the loss allowance at
+an amount equal to lifetime ECLs.
+The Group recognises the loss allowance accrued or written back in profit or loss.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(ii) Impairment
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Estimated usage
+period
+12 to 50 years
+4 to 30 years
+Estimated
+residuals rate
+3%
+3%
+Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis
+between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reassessed annually.
+(g) Oil and gas properties
+The Group uses the successful efforts method of accounting for its oil and gas producing activities. Under this method, costs of development
+wells, the related supporting equipment and proved mineral interests in properties are capitalised. The cost of exploratory wells is initially
+capitalised as construction in progress pending determination of whether the well has found proved reserves. The impairment of exploratory well
+costs occurs upon the determination that the well has not found proved reserves. The exploratory well costs are usually not carried as an asset
+for more than one year following completion of drilling, unless (i) the well has found a sufficient quantity of reserves to justify its completion as
+a producing well if the required capital expenditure is made; (ii) drilling of the additional exploratory wells is under way or firmly planned for the
+near future; or (iii) other activities are being undertaken to sufficiently progress the assessing of the reserves and the economic and operating
+viability of the project. All other exploration costs, including geological and geophysical costs, other dry hole costs and annual lease rentals to
+explore for or use oil and natural gas, are expensed as incurred. Capitalised costs of proved oil and gas properties are amortised on a unit-of-
+production method based on volumes produced and reserves.
+Management estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into
+consideration the anticipated method of dismantlement required in accordance with the industry practices and the future cash flows are adjusted
+to reflect such risks specific to the liability, as appropriate. These estimated future dismantlement costs are discounted at pre-tax risk-free rate
+and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs of the oil and gas properties.
+(h) Construction in progress
+Construction in progress represents buildings, oil and gas properties, various plant and equipment under construction and pending installation,
+and is stated at cost less impairment losses (Note 2(n)). Cost comprises direct costs of construction as well as interest charges, and foreign
+exchange differences on related borrowed funds to the extent that they are regarded as an adjustment to interest charges, during the periods of
+construction.
+Construction in progress is transferred to property, plant and equipment when the asset is substantially ready for its intended use.
+322,361
+No depreciation is provided in respect of construction in progress.
+Goodwill represents amounts arising on acquisition of subsidiaries, associates or joint ventures. Goodwill represents the difference between the
+cost of acquisition and the fair value of the net identifiable assets acquired.
+Prior to 1 January 2008, the acquisition of the non-controlling interests of a consolidated subsidiary was accounted for using the acquisition
+method whereby the difference between the cost of acquisition and the fair value of the net identifiable assets acquired (on a proportionate
+share) was recognised as goodwill. From 1 January 2008, any difference between the amount by which the non-controlling interest is adjusted
+(such as through an acquisition of the non-controlling interests) and the cash or other considerations paid is recognised in equity.
+Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating
+unit, or groups of cash-generating units, that is expected to benefit the synergies of the combination and is tested annually for impairment
+(Note 2(n)). In respect of associates or joint ventures, the carrying amount of goodwill is included in the carrying amount of the interest in the
+associate or joint venture and the investment as a whole is tested for impairment whenever there is objective evidence of impairment (Note 2(n)).
+Financial Statements (International)
+168
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Buildings
+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.
+(3,723)
+2,003
+Loss/(gain) on disposal of property, plant, equipment and other non-current assets, net
+Impairment losses on assets
+3,062
+(398)
+13,165
+26,087
+Impairment losses on trade and other receivables
+(Gain)/loss on foreign currency exchange rate changes and derivative financial instruments
+2,311
+233,101
+157,701
+Net changes from:
+Accounts receivable and other current assets
+Inventories
+Accounts payable and other current liabilities
+Income tax paid
+Net cash generated from operating activities
+2,066
+15,198
+15,018
+(4,803)
+Profit before taxation
+Adjustments for:
+Depreciation, depletion and amortisation
+Dry hole costs written off
+Share of profits from associates and joint ventures
+Investment income
+Interest income
+Interest expense
+109,169
+48,615
+115,680
+107,461
+7,702
+5,928
+(23,253)
+(6,712)
+(298)
+(37,744)
+(5,732)
+(8,177)
+(17,610)
+(58,372)
+22,407
+Amendment to IFRS 16, COVID-19-related rent concessions
+•
+Amendment to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, Interest rate benchmark reform - phase 2
+None of these developments have had a material effect on how the Group's results and financial position for the current or prior periods have
+been prepared or presented. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting
+period.
+(b) New and amended standards and interpretations not yet adopted by the Group
+Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and
+have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future
+reporting periods and on foreseeable future transactions.
+The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and
+assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosure of contingent assets and
+liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The
+estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under
+the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not
+readily apparent from other sources. Actual results could differ from those estimates.
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
+which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
+current and future periods.
+Key assumptions and estimation made by management in the application of IFRS that have significant effect on the consolidated financial
+statements and the major sources of estimation uncertainty are disclosed in Note 44.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+165
+Financial Statements (International)
+166
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES
+(a) Basis of consolidation
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+(i) Subsidiaries and non-controlling interests
+•
+RMB
+The IASB has issued the following amendments to IFRSS that are first effective for the current accounting period of 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.
+82,408
+15,169
+248,960
+177,667
+(23,786)
+(9,147)
+225,174
+168,520
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+164 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2021
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+Principal activities
+China Petroleum & Chemical Corporation (the "Company") is an energy and chemical company incorporated in the People's Republic of China (the
+"PRC") that, through its subsidiaries (hereinafter collectively referred to as the "Group"), engages in oil and gas and chemical operations. Oil and
+gas operations consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil and natural gas by pipelines;
+refining crude oil into finished petroleum products; and marketing crude oil, natural gas and refined petroleum products. Chemical operations
+include the manufacture and marketing of a wide range of chemicals for industrial uses.
+Organisation
+The Company was established in the PRC on 25 February 2000 as a joint stock limited company as part of the reorganisation (the "Reorganisation")
+of China Petrochemical Corporation ("Sinopec Group Company"), the ultimate holding company of the Group and a ministry-level enterprise under
+the direct supervision of the State Council of the PRC. Prior to the incorporation of the Company, the oil and gas and chemical operations of the
+Group were carried on by oil administration bureaux, petrochemical and refining production enterprises and sales and marketing companies of
+Sinopec Group Company.
+As part of the Reorganisation, certain of Sinopec Group Company's core oil and gas and chemical operations and businesses together with the
+related assets and liabilities were transferred to the Company. On 25 February 2000, in consideration for Sinopec Group Company transferring such
+oil and gas and chemical operations and businesses and the related assets and liabilities to the Company, the Company issued 68.8 billion domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Sinopec Group Company. The shares issued to Sinopec Group Company on 25
+February 2000 represented the entire registered and issued share capital of the Company on that date. The oil and gas and chemical operations and
+businesses transferred to the Company were related to (i) the exploration, development and production of crude oil and natural gas, (ii) the refining,
+transportation, storage and marketing of crude oil and petroleum products, and (iii) the production and sales of chemicals.
+Basis of preparation
+The accompanying consolidated financial statements have been prepared in accordance with all applicable IFRS as issued by the International
+Accounting Standards Board ("IASB"). IFRS includes International Accounting Standards ("IAS") and related interpretations ("IFRIC"). These
+consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock
+Exchange of Hong Kong Limited. A summary of the significant accounting policies adopted by the Group are set out in Note 2.
+(a) New and amended standards and interpretations adopted by the Group
+169
+3,500
+92,280
+13,690
+11,778
+Lease liabilities
+31
+170,233
+171,740
+Deferred tax liabilities.
+29
+7,910
+8,124
+Provisions
+35
+43,525
+45,552
+Other long-term liabilities
+19,243
+18,968
+Total non-current liabilities
+Equity
+30
+Loans from Sinopec Group Company and fellow subsidiaries
+72,037
+78,300
+32
+215,640
+161,908
+33
+124,622
+126,241
+34
+239,688
+179,108
+332,901
+4,809
+641,280
+Net current liabilities
+Total assets less current liabilities
+83,256
+1,247,975
+522,995
+67,335
+1,215,901
+Non-current liabilities
+Long-term debts
+30
+6,586
+4,826
+328,199
+887,702
+Shou Donghua
+Chief Financial Officer
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2020
+(Amounts in million)
+Total equity
+attributable to
+Share
+capital
+Capital
+Share
+surplus
+Statutory Discretionary
+surplus
+shareholders
+Other
+Retained
+of the
+Non-
+controlling
+Total
+reserve
+premium
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+160
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+Yu Baocai
+President
+Share capital
+Reserves
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+Total equity
+36
+121,071
+121,071
+653,111
+915,074
+625,254
+746,325
+140,892
+141,377
+915,074
+887,702
+Approved and authorised for issue by the board of directors on 25 March 2022.
+Ma Yongsheng
+Chairman
+(Legal representative)
+774,182
+3,223
+24
+15,293
+26
+29
+Long-term prepayments and other assets
+23
+782222222
+598,925
+593,615
+18
+155,939
+125,525
+268,408
+266,012
+8,594
+148,729
+8,620
+136,163
+60,450
+767
+52,179
+1,525
+Total non-current assets
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+Interest in joint ventures
+21
+Interest in associates
+117,000
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As at 31 December 2021
+(Amounts in million)
+Note
+31 December
+31 December
+2021
+Current assets
+2020
+RMB
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Right-of-use assets
+17
+19
+Goodwill
+20
+RMB
+Cash and cash equivalents
+Time deposits with financial institutions
+Financial assets at fair value through profit or loss
+1
+22222
+18,371
+12,528
+34,861
+35,439
+5,939
+207,433
+8,735
+152,191
+100,498
+69,431
+558,024
+455,660
+30
+35,252
+23,769
+30
+2,873
+5,264
+31
+15,173
+58,709
+reserve
+113,399
+108,590
+Derivative financial assets
+Trade accounts receivable
+Financial assets at fair value through other comprehensive income
+Inventories
+Prepaid expenses and other current assets
+Total current assets
+-----------
+Current liabilities
+Short-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+87,559
+Lease liabilities
+Trade accounts payable and bills payable
+Contract liabilities
+Other payables
+Income tax payable
+Total current liabilities
+19,389
+70,030
+1,331,231
+25,054
+74,543
+1,283,236
+Derivative financial liabilities
+reserve
+Financial Statements (International)
+RMB
+746,325
+141,377
+887,702
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+161
+Financial Statements (International)
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+for the year ended 31 December 2021
+(Amounts in million)
+Balance at 1 January 2021
+Profit for the year
+Other comprehensive income (Note 15)
+Total comprehensive income for the year
+Amounts transferred to initial carrying amount of
+hedged items
+Transactions with owners, recorded directly in equity:
+Contributions by and distributions to owners:
+322,361
+3,500
+117,000
+92,280
+(34,880)
+(138)
+(138)
+13
+(125)
+(1,110)
+1,857
+(33,336)
+(32,589)
+Final dividend for 2020 (Note 14)
+(2,416)
+870
+200
+(665)
+405
+(2,363)
+(1,958)
+121,071
+34,263
+55,850
+(35,005)
+(2,429)
+Interim dividend for 2021 (Note 14)
+Distributions to non-controlling interests
+reserve
+reserves
+earnings
+of the
+Company
+Non-
+controlling
+Total
+interests
+equity
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+121,071
+34,263
+55,850
+reserves
+reserve
+premium
+RMB
+RMB
+RMB
+Contributions to subsidiaries from
+non-controlling interests
+Distribution to sellers in the business
+combination of entities under common
+control (Note 38)
+Total contributions by and distributions to owners
+Transaction with non-controlling interests
+Total transactions with owners
+Others
+Appropriation (Note (a))
+Balance at 31 December 2021
+Total equity
+attributable to
+Share
+capital
+Capital
+Share
+surplus
+Statutory Discretionary
+surplus
+Other
+Retained
+reserve
+Notes:
+(32,451)
+shareholders
+1,857
+1
+4,774
+Balance at 1 January 2020
+121,071
+34,503
+55,850
+90,423
+117,000
+1,941
+322,931
+743,719
+138,359
+882,078
+Profit for the year
+33,443
+33,443
+8,828
+42,271
+Other comprehensive income (Note 15)
+4,773
+4,773
+under common control (Note 38)
+Adjustment for business combination of entities
+RMB
+RMB
+(33,336)
+RMB
+RMB
+RMB
+earnings
+RMB
+Company
+RMB
+interests
+RMB
+1,406
+equity
+121,071
+29,730
+55,850
+90,423
+1,941
+322,931
+738,946
+138,358
+RMB
+877,304
+Balance at 31 December 2019
+(12)
+117,000
+(1,079)
+Transaction with non-controlling interests
+Total transactions with owners
+Others
+Balance at 31 December 2020
+(23,004)
+(23,004)
+(23,004)
+(8,475)
+(8,475)
+Total contributions by and distributions to owners
+(8,475)
+(6,726)
+(6,726)
+3,325
+3,325
+(972)
+1,394
+(972)
+972
+(972)
+(1,857)
+Baling Branch of SAMC
+1,857
+non-controlling interests
+33,431
+1,406
+Total comprehensive income for the year
+Distribution to SAMC in the Acquisition of
+315
+34,837
+7,749
+42,586
+hedged items
+(47)
+(47)
+Amounts transferred to initial carrying amount of
+1
+Transactions with owners, recorded directly in equity:
+Contributions to subsidiaries from
+Contributions by and distributions to owners:
+Final dividend for 2019 (Note 14)
+Distributions to non-controlling interests
+48
+Interim dividend for 2020 (Note 14)
+Appropriation (Note (a))
+Yu Baocai
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+(a) Directors' and supervisors' emoluments
+Li Yonglin (ii)
+Name
+Directors
+Ma Yongsheng
+Zhao Dong (i)
+Ling Yiqun
+for the year ended 31 December 2021
+The emoluments of every director and supervisor is set out below:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(117)
+6,344
+Financial Statements (International)
+1,391
+1,087
+Liu Hongbin
+Write-down of deferred tax assets
+934
+75
+Financial Statements (International)
+(462)
+Adjustment of prior years
+Actual income tax expense
+Notes:
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+177
+23,318
+Zhang Yuzhuo (iii)
+Total
+Cai Hongbin
+417
+(65)
+417
+417
+442
+715
+9
+409
+24
+102
+322
+291
+RMB'000
+Supervisors' fee
+RMB'000
+Directors'/
+2021
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+Johnny Karling Ng
+Shi Dan (iv)
+Bi Mingjian (iv)
+Tang Min (v)
+Supervisors
+Zhang Shaofeng (vi)
+Independent non-executive directors
+Jiang Zhenying
+Emoluments paid or receivable in respect of
+director's other services in connection with
+the management of the affairs of the Company
+or its subsidiary undertaking
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+Salaries,
+allowances and
+benefits in kind
+RMB'000
+Zhang Zhiguo (vii)
+(701)
+34
+(730)
+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
+37,525
+82
+RMB million
+RMB million
+2020
+2021
+2.60% to 4.66%
+1.84% to 4.35%
+15,198
+417
+2020
+RMB million
+5,679
+RMB million
+6,517
+(996)
+Income tax expense in the consolidated income statement represents:
+(2,011)
+4,506
+9,200
+9,349
+1,135
+1,343
+15,018
+4,683
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised and temporary differences
+2021
+RMB million
+Current tax
+(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
+3,281
+5,948
+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
+- Provision for the year
+- Adjustment of prior years
+Deferred taxation (Note 29)
+17,522
+(462)
+14,334
+(117)
+2020
+RMB million
+6,258
+23,318
+6,344
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+2021
+2020
+Profit before taxation
+(7,873)
+300
+611
+300
+60
+59
+83
+856
+3,269
+1,434
+Notes:
+Total
+Zhang Baolong (xvi)
+Yang Changjiang (xvi)
+2021
+125
+613
+125
+22
+Zhou Hengyou (xv)
+Li Defang
+Yu Renming (x)
+160
+247
+Sun Huanquan (x)
+555
+272
+Zou Huiping (ix)
+Jiang Zhenying
+710
+366
+Zhao Dong (i)
+Supervisors
+Fan Gang (xiv)
+Yu Xizhi (xv)
+23
+23
+33
+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
+342
+הההה
+1,013
+350
+350
+350
+Cai Hongbin
+350
+350
+1,050
+1,159
+886
+467
+761
+350
+94
+620
+299
+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
+300
+117
+117
+Yin Zhaolin (vii)
+Guo Hongjin (vii)
+202
+1,551
+140
+Li Defang
+154
+100
+44
+Lv Dapeng (viii)
+216
+61
+300
+4,991
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+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
+Johnny Karling Ng
+Tang Min (v)
+Independent non-executive directors
+Li Yong (xiii)
+Li Yunpeng (xii)
+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)
+The emoluments of every director and supervisor is set out below: (Continued)
+Name
+178
+Directors
+Ma Yongsheng
+Yu Baocai
+Liu Hongbin
+Ling Yiqun
+Zhang Shaofeng (vi)
+Dai Houliang (xi)
+Zhang Yuzhuo (iii)
+Investment income from disposal of business and long-term equity investments (i)
+Dividend income from holding of other equity instrument investments
+Others
+2021
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+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)
+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).
+(w) Research and development expense
+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.
+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.
+(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
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+(r) Revenue recognition
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+(ii) As lessor
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+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
+Gasoline
+Revenue from primary business mainly represents revenue from the sales of refined petroleum products, chemical products, crude oil and natural
+gas, which are recognised at a point in time.
+3 REVENUE FROM PRIMARY BUSINESS
+Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial
+information provided regularly to the Group's chief operating decision maker for the purposes of allocating resources to, and assessing the
+performance of the Group's various lines of business.
+(bb) Segment reporting
+(y) Employee benefits
+The contributions payable under the Group's retirement plans are recognised as an expense in the consolidated income statement as incurred
+and according to the contribution determined by the plans. Further information is set out in Note 40.
+Termination benefits, such as employee reduction expenses, are recognised when, and only when, the Group demonstrably commits itself to
+terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic
+possibility of withdrawal.
+(z) Income tax
+Income tax comprises current and deferred tax. Current tax is calculated on taxable income by applying the applicable tax rates. Deferred tax
+is provided using the statement of financial position liability method on all temporary differences between the carrying amounts of assets and
+liabilities for financial reporting purposes and the amounts used for taxation purposes only to the extent that it is probable that future taxable
+income will be available against which the assets can be utilised. Deferred tax is calculated on the basis of the enacted tax rates or substantially
+enacted tax rates that are expected to apply in the period when the asset is realised or the liability is settled. The effect on deferred tax of any
+changes in tax rates is charged or credited to the consolidated income statement, except for the effect of a change in tax rate on the carrying
+amount of deferred tax assets and liabilities which were previously charged or credited to other comprehensive income or directly in equity.
+The tax value of losses expected to be available for utilisation against future taxable income is set off against the deferred tax liability within the
+same legal tax unit and jurisdiction to the extent appropriate, and is not available for set off against the taxable profit of another legal tax unit.
+The carrying amount of a deferred tax asset is reviewed at each date of statement of financial position and is reduced to the extent that it is no
+longer probable that the related tax benefit will be realised.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial Statements (International)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(aa) Dividends
+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.
+174
+Sale of materials and others
+Rental income
+for the year ended 31 December 2021
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(ii) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(i) There is an economic relationship between the hedged item and the hedging instrument, which shares a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in cash flows of the hedged item.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market price
+and exposes the Group to risk of variability in cash flows, etc.
+Hedge accounting is a method which recognises the offsetting effects on profit or loss (or other comprehensive income) of changes in the fair
+values of the hedging instrument and the hedged item in the same accounting period, to represent the effect of risk management activities.
+Derivative financial instruments are recognised initially at fair value. At each date of the statement of financial position, the fair value is
+remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss, except where the derivatives qualify for
+hedge accounting.
+(m)Derivative financial instruments and hedge accounting
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+170
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities or
+discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or loss.
+(I) Determination of fair value for financial instruments
+(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.
+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.
+(k) Financial liabilities
+The Group monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
+guarantees are determined to be higher than the carrying amount in respect of the guarantees (i.e. the amount initially recognised, less
+accumulated amortisation).
+Subsequent to initial recognition, the amount initially recognised as deferred income is amortised in profit or loss over the term of the
+guarantee as income from financial guarantees issued.
+Financial guarantees issued are initially recognised at fair value, which is determined by reference to fees charged in an arm's length
+transaction for similar services, when such information is obtainable, or to interest rate differentials, by comparing the actual rates charged
+by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees not been
+available, where reliable estimates of such information can be made. Where consideration is received or receivable for the issuance of the
+guarantee, the consideration is recognised in accordance with the Group's policies applicable to that category of asset. Where no such
+consideration is received or receivable, an immediate expense is recognised in profit or loss.
+Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of
+the guarantee (the "holder") for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the
+terms of a debt instrument.
+(iv) Financial guarantees issued
+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)
+Financial Statements (International)
+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.
+Cash flow hedges
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component
+of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable forecast transaction,
+and could affect profit or loss. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
+effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
+As long as a cash flow hedge meets the qualifying criteria for hedge accounting, the separate component of equity associated with the hedged
+item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts):
+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
+Management assesses at each date of the statement of financial position whether there is any indication that an impairment loss recognised
+for an asset, except in the case of goodwill, in prior years may no longer exist. An impairment loss is reversed if there has been a favourable
+change in the estimates used to determine the recoverable amount. A subsequent increase in the recoverable amount of an asset, when the
+circumstances and events that led to the write-down or write-off cease to exist, is recognised as an income. The reversal is reduced by the
+amount that would have been recognised as depreciation had the write-down or write-off not occurred. An impairment loss in respect of goodwill
+is not reversed.
+The amount of the reduction is recognised as an expense in the consolidated income statement. Impairment losses recognised in respect of
+cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to reduce
+the carrying amount of the other assets in the unit on a pro rata basis, except that the carrying value of an asset will not be reduced below its
+individual fair value less costs to disposal, or value in use, if determinable.
+The recoverable amount is the greater of the fair value less costs to disposal and the value in use. In determining the value in use, expected
+future cash flows generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market
+assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent
+of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e.
+a cash-generating unit).
+The carrying amounts of assets, including property, plant and equipment, construction in progress, right-of-use assets and other assets, are
+reviewed at each date of the statement of financial position to identify indicators that the assets may be impaired. These assets are tested for
+impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a
+decline has occurred, the carrying amount is reduced to the recoverable amount. For goodwill, the recoverable amount is estimated at each date
+of the statement of financial position.
+(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.
+(i) The cumulative gain or loss on the hedging instrument from inception of the hedge; and
+(ii) The cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged
+expected future cash flows) from inception of the hedge.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast
+transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the
+entity removes that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or
+the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+For cash flow hedges, other than those covered by the preceding policy statements, that amount is reclassified from the cash flow hedge reserve
+to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit
+or loss.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss will not
+be recovered in one or more future periods, the Group immediately reclassifies the amount that is not expected to be recovered into profit or
+loss.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(m)Derivative financial instruments and hedge accounting (Continued)
+Fair value hedges
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 171
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+The following items are included in selling, general and administrative expenses:
+Variable lease payments, low-value and short-term lease payment
+(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
+Donations
+Fuel oil
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+235,018
+259,032
+5,516
+7,253
+4,572
+6,432
+11,678
+13,409
+15,710
+18,044
+Lubricant oil
+Others
+Notes:
+2021
+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)
+RMB million
+2020
+RMB million
+6,706
+8,776
+694
+3,052
+197,542
+(14,873)
+(10,035)
+(14,629)
+(3,062)
+398
+(220)
+(43)
+(1,252)
+2020
+RMB million
+RMB million
+213,894
+2021
+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
+351,707
+429,038
+422,566
+Auditor's remuneration:
+- Audit services
+- Others
+6
+PERSONNEL EXPENSES
+Salaries, wages and other benefits
+RMB million
+Contributions to retirement schemes (Note 40)
+2020
+RMB million
+RMB million
+726,057
+557,605
+542,260
+2021
+10 INVESTMENT INCOME
+2020
+RMB million
+61,384
+Products
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Notes:
+Others
+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
+54,986
+1,084
+56,070
+2021
+RMB million
+2,393
+2020
+RMB million
+2,683
+59
+59,990
+1,394
+73
+8
+2020
+RMB million
+RMB million
+91,560
+78,542
+8
+Financial Statements (International)
+Financial Statements (International)
+31
+December
+2021
+RMB million
+9,653
+14,370
+34,188
+248,775
+Balance at 31 December 2020
+Decreases
+Additions
+Balance at 1 January 2020
+Cost
+Total
+RMB million
+RMB million
+RMB million
+Others
+Land
+19 RIGHT-OF-USE ASSETS
+282,963
+24,023
+(9,790)
+(3,140)
+(12,930)
+Balance at 31 December 2021
+(6,292)
+(3,430)
+(2,862)
+Decreases
+22,913
+9,650
+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).
+13,263
+294,056
+40,701
+253,355
+Balance at 1 January 2021
+294,056
+40,701
+253,355
+Additions
+125,525
+155,939
+(53)
+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
+Exchange adjustments
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+At 31 December 2021 and 31 December 2020, the Group had no individual significant property, plant and equipment which were temporarily idle
+or pending for disposal.
+At 31 December 2021 and 31 December 2020, the Group had no individual significant property, plant and equipment which had been pledged.
+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.
+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).
+598,925
+391,719
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+263,756
+Balance at 31 December
+2020
+(34)
+(21,798)
+(107)
+(844)
+(144)
+(11,464)
+(10,302)
+2021
+(141,606)
+(5,928)
+(7,702)
+131,099
+159,729
+176,119
+RMB million
+RMB million
+125,525
+(111,026)
+46,921
+310,677
+Accumulated depreciation
+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
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+183
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+268,408
+31,774
+236,634
+Balance at 31 December 2021
+Financial Statements (International)
+266,012
+Sinopec Beijing Yanshan Petrochemical Branch
+Principal activities
+RMB million
+RMB million
+2021
+31 December
+31 December
+2020
+(7,861)
+8,620
+(7,861)
+8,594
+Other units without individually significant goodwill
+16,481
+RMB million
+2020
+31 December
+RMB million
+31 December
+2021
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+16,455
+132,207
+30,220
+Balance at 31 December 2020
+Balance at 1 January 2021
+28,044
+10,481
+17,563
+Balance at 31 December 2020
+(2,471)
+(1,575)
+17,563
+(896)
+15,712
+6,354
+9,358
+14,803
+5,702
+9,101
+Balance at 1 January 2020
+Additions
+Decreases
+235,792
+10,481
+Additions
+268,160
+28,486
+239,674
+Balance at 1 January 2020
+Net book value
+42,269
+15,147
+28,044
+27,122
+(2,604)
+(2,197)
+(407)
+Decreases
+16,829
+6,863
+9,966
+Balance at 31 December 2021
+4,043
+74,999
+593,615
+(5,517)
+(940)
+(57)
+Exchange adjustments
+(1,297)
+Disposals
+(1,714)
+(22)
+(665)
+Reclassification to other long-term assets
+(196)
+(188)
+(8)
+Invest into the joint ventures and associated companies
+(29)
+(617)
+Balance at 31 December 2021
+143,165
+793,045
+(17,495)
+(95)
+1,048,227
+684
+Impairment losses for the year
+85,494
+48,760
+32,054
+4,680
+Depreciation for the year
+646
+1,256,883
+587,192
+61,069
+Balance at 1 January 2020
+Accumulated depreciation and impairment losses:
+1,984,437
+(1,092)
+(24,309)
+608,622
+Reclassifications
+111,026
+65,182
+(141)
+Balance at 1 January 2021
+Exchange adjustments
+(138,703)
+(131,501)
+(806)
+(6,396)
+(2,806)
+Disposals
+(1,052)
+(38)
+Reclassification to other long-term assets
+(115)
+(115)
+Invest into the joint ventures and associated companies
+(1,318)
+(1,090)
+4,739
+(226)
+Balance at 31 December 2020
+40,357
+5,487
+Transferred from construction in progress
+7,878
+5,177
+2,192
+509
+(3,173)
+Additions
+996,702
+757,592
+138,550
+1,892,844
+996,702
+757,592
+138,550
+1,892,844
+6,360
+11,783
+Reclassifications
+(14,574)
+(13,668)
+(135)
+(771)
+Written back on disposals
+(259)
+(170)
+Exchange adjustments
+(7)
+Reclassification to other long-term assets
+(138)
+(133)
+(5)
+Invest into the joint ventures and associated companies
+225
+(410)
+(82)
+185
+(29)
+(57)
+381,733
+136,872
+75,010
+Balance at 31 December 2020
+630,320
+418,702
+140,360
+(904)
+71,258
+Net book value:
+1,385,512
+656,508
+660,838
+68,166
+Balance at 31 December 2021
+(990)
+Balance at 1 January 2020
+Balance at 31 December 2021
+Reclassifications
+6,774
+(48,125)
+(464)
+(2,703)
+(49)
+Exchange adjustments
+(3,229)
+Written back on disposals
+(169)
+(51,818)
+(161)
+Reclassification to other long-term assets
+(54)
+(54)
+Invest into the joint ventures and associated companies
+(295)
+(98)
+393
+(8)
+92,824
+9,420
+(138)
+Balance at 31 December 2020
+1,904
+742
+Impairment losses for the year
+48,568
+39,670
+4,586
+Depreciation for the year
+(2,890)
+1,299,229
+620,720
+63,540
+Balance at 1 January 2021
+1,299,229
+614,969
+620,720
+63,540
+614,969
+4,043
+2,541
+2,541
+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
+Revenue
+RMB million
+RMB million
+9,327
+5,659
+6,144
+14,583
+15,168
+70,747
+73,674
+7,792
+Carrying Amounts
+240
+7,792
+9,327
+5,659
+6,144
+14,583
+15,168
+1,160
+Summarised statement of financial position and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+240
+Summarised statement of comprehensive income
+2020
+2021
+2020
+RMB million
+CIR
+Zhongtian Synergetic Energy
+2021
+RMB million
+2020
+RMB million
+RMB million
+1,160
+2021
+Sinopec Capital
+Sinopec Finance
+2021
+RMB million
+2020
+RMB million
+RMB million
+2021
+PipeChina (ii)
+Year ended 31 December
+2020
+RMB million
+2021
+2020
+2021
+RMB million RMB million RMB million
+income from associates (iii)
+13
+(182)
+2
+(154)
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB7,283 million (2020: RMB3,444 million) and RMB271 million (2020: loss of RMB1,101 million)
+respectively. As at 31 December 2021, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate
+was RMB44,176 million (2020: RMB36,222 million).
+Notes:
+Share of other comprehensive
+(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.
+(iii) Including foreign currency translation differences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+185
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+(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.
+22 INTEREST IN JOINT VENTURES
+91
+214
+464
+(127)
+Dividends declared by
+associates
+Share of profit from associates
+442
+3,205
+490
+86
+231
+284
+2,517
+709
+1,062
+993
+485
+626
+1,621
+1,152
+70,747
+The Group's principal interests in joint ventures are as follows:
+Name of entity
+49.00
+Yanbu Aramco Sinopec Refining
+37.50
+of petrochemical products
+Crude oil and natural gas extraction
+Petroleum refining and processing
+Equity method
+Equity method
+Cyprus
+Saudi Arabia
+Taihu Limited ("Taihu")
+Russia
+Saudi Arabia
+Sinopec SABIC Tianjin Petrochemical
+50.00
+Company Limited ("Sinopec SABIC
+Tianjin")
+business
+Manufacturing and distribution of
+petrochemical products
+Equity method
+PRC
+PRC
+Company Ltd. ("YASREF")
+% of
+ownership
+PRC
+Equity method
+Fujian Refining & Petrochemical
+interests
+Principal activities
+Measurement
+method
+Country of
+incorporation
+Principal place
+of business
+PRC
+50.00
+Equity method | PRC
+PRC
+Company Limited ("FREP")
+BASF-YPC Company Limited
+("BASF-YPC")
+40.00
+Manufacturing and distribution
+Manufacturing refining oil products
+73,674
+associates
+Share of net assets from
+184
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+("CIR")
+Equity method
+Crude oil and natural gas extraction
+50.00
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+of coal-chemical products
+PRC
+PRC
+Equity method
+Mining coal and manufacturing
+38.75
+Zhongtian Synergetic Energy Company
+management
+Limited ("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+consulting, self-owned equity
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+21 INTEREST IN ASSOCIATES (Continued)
+194,458
+55,086
+655,982
+768,161
+74,012
+86,335
+Current assets
+Non-current assets
+December
+2020
+RMB million
+for the year ended 31 December 2021
+31
+31
+December
+2020
+RMB million
+RMB million
+2021
+December
+Sinopec Finance
+PipeChina
+31
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+BASF-YPC
+175,139
+investment management, investment
+PRC
+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.
+Principal place
+of business
+21 INTEREST IN ASSOCIATES
+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
+1,032
+1,006
+1,004
+1,004
+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.
+("Sinopec Capital")
+PipeChina (i)
+Operation of oil and natural gas
+PRC
+Equity method
+Project and equity investment,
+49.00
+Sinopec Capital Company Limited
+services
+("Sinopec Finance")
+14.00
+PRC
+Equity method
+pipeline and auxiliary facilities
+Provision of non-banking financial
+49.00
+Sinopec Finance Company Limited
+PRC
+PRC
+Equity method
+PRC
+(125)
+Sinopec Capital
+31
+December
+2021
+RMB million
+13,140
+CIR
+11,548
+12,538
+29,761
+30,955
+570,282
+615,103
+Net assets
+24,070
+(286)
+(28,422)
+(22,216)
+(411)
+(676)
+(514)
+(602)
+(104,150)
+(144)
+(103,243)
+20,108
+2,320
+64,946
+88,862
+non-controlling interests
+Net assets attributable to
+2,320
+480
+20,108
+480
+24,070
+12,538
+29,761
+30,955
+505,336
+526,241
+owners of the Company
+Net assets attributable to
+11,548
+Zhongtian Synergetic Energy
+Non-current liabilities
+(822)
+11,871
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+3,532
+2021
+31
+31
+December
+31
+December
+2020
+31
+December
+2021
+2020
+December
+31
+December
+(699)
+3,721
+2,402
+(8,315)
+(8,577)
+(18)
+(28)
+(197,872)
+(217,987)
+(55,562)
+576
+(136,150)
+903
+870
+53,124
+51,331
+106
+102
+53,008
+Current liabilities
+1,443
+(1,027)
+141,606
+(206)
+(584)
+1,664
+433
+6,164
+1,139
+2,140
+(1,442)
+(2,742) (6,720)
+986
+718
+Dividends declared by joint ventures
+128
+300
+454
+(3,368)
+691
+(123)
+986
+(2,054)
+(379)
+(601)
+(378)
+332
+1,057
+(407)
+(236)
+1,664
+433
+6,164
+1,139
+2,263
+1,926
+(2,536) (6,136)
+718
+500
+Share of net profit/(loss) from joint ventures
+832
+Operating rights of service stations
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+31 December
+2021
+RMB million
+29,714
+31 December
+2020
+RMB million
+31,856
+1,520
+2,801
+7,470
+5,861
+31,326
+34,025
+70,030
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+217
+2,466
+456
+1,081
+911
+(2,301)
+493
+(87)
+359
+(60)
+(1,593)
+(219)
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB4,494 million (2020: RMB993 million) and RMB215 million (2020: RMB808 million) respectively.
+As at 31 December 2021, the carrying amount of all individually immaterial joint ventures accounted for using equity method in aggregate was
+RMB30,640 million (2020: RMB26,099 million).
+Note:
+(i) Including foreign currency translation differences.
+186
+Share of other comprehensive loss from joint ventures (i)
+(597)
+Other comprehensive income
+Total comprehensive income
+Tax expense
+Profit/(loss) for the year
+Revenue
+Depreciation, depletion and amortisation
+47,224
+(2,789)
+38,691
+27,499
+15,701
+15,190
+9,528
+68,548
+37,337
+24,631
+14,881
+(2,222)
+(1,467)
+(1,244)
+RMB million RMB million
+RMB million
+RMB million
+RMB million RMB million
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+2021
+2020
+2021
+(667)
+2020
+2020
+2021
+2020
+2021
+2020
+RMB million RMB million
+RMB million RMB million
+2021
+74,543
+(541)
+(3,140)
+(945)
+(1,136)
+(89)
+(131)
+Profit/(loss) before taxation
+2,261
+520
+8,218
+1,518
+2,864
+2,304
+(2,868)
+(7,193)
+1,393
+954
+(20)
+Reclassifications
+(16)
+(5)
+(1,164)
+(1,085)
+Interest income
+147
+118
+52
+27
+(3,224)
+451
+6
+17
+209
+183
+Interest expense
+(411)
+(535)
+291
+Note:
+(i) Others mainly comprise time deposits with terms of three years, catalyst expenditures and improvement expenditures of property, plant and equipment.
+The cost of operating rights of service stations is charged to expense on a straight-line basis over the respective periods of the rights. The movement
+of operating rights of service stations is as follows:
+2021
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+Sinopec Group Company and fellow subsidiaries are repayable under the same terms.
+These receivables relate to a wide range of customers for whom there is no recent history of default.
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 43.
+188
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+26 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
+Non-current assets
+Unlisted equity instruments
+Listed equity instruments
+Current assets
+Trade accounts receivable and bills receivable (i)
+31 December
+2021
+31 December
+3,860
+4,033
+(70)
+(106)
+64
+18
+83
+34,861
+35,439
+2021
+RMB million
+2020
+2020
+RMB million
+1,848
+436
+2,173
+(127)
+(68)
+(30)
+(23)
+3,860
+221
+RMB million
+588
+15,701
+13,066
+84,174
+78,481
+2,515
+3,372
+212,330
+155,298
+(4,897)
+(3,107)
+207,433
+152,191
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB2,177,141 million for the year ended 31
+December 2021 (2020: RMB1,657,227 million). It includes the write-down of inventories of RMB3, 148 million mainly related to finished goods (2020:
+RMB11,689 million mainly related to finished goods).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+189
+60,379
+109,940
+2020
+RMB million
+RMB million
+179
+1,376
+149
+5,939
+8,735
+6,706
+10,260
+Note:
+RMB million
+(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.
+Crude oil and other raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+Less: Allowance for diminution in value of inventories
+31 December
+2021
+31 December
+27 INVENTORIES
+FREP
+931
+34,361
+53,567
+21,711
+19,536
+2,699
+2,365
+(333)
+(190)
+24,077
+21,711
+29,714
+31,856
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 43.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+187
+Financial Statements (International)
+53,791
+(475)
+(688)
+53,549
+493
+RMB million
+2020
+RMB million
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+Financial Statements (International)
+Balance at 31 December
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Net book value at 31 December
+24 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+53,567
+912
+Accumulated amortisation:
+442
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+25 TRADE ACCOUNTS RECEIVABLE
+The ageing analysis of trade accounts receivable (net of loss allowance for expected credit losses) is as follows:
+31 December
+2021
+RMB million
+31 December
+2020
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Loss allowance for expected credit losses are analysed as follows:
+Balance at 1 January
+Provision for the year
+Written back for the year
+Written off for the year
+Others
+Balance at 31 December
+RMB million
+34,180
+35,439
+(3,860)
+(4,033)
+34,861
+39,299
+Amounts due from third parties
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+Less: Loss allowance for expected credit losses
+31 December
+2021
+31 December
+2020
+for the year ended 31 December 2021
+RMB million
+30,159
+22,473
+2,199
+12,045
+6,536
+4,781
+38,894
+RMB million
+Year ended 31 December
+(107)
+7,491
+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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+180
+Pursuant to the shareholders' approval at the Annual General Meeting on 19 May 2020, a final dividend of RMBO.19 per share totaling RMB23,004
+million according to total shares on 9 June 2020 was approved. All dividends have been paid in the year ended 31 December 2020.
+Pursuant to the shareholders' approval at the Annual General Meeting on 25 May 2021, a final dividend of RMBO.13 per share totaling RMB15,739
+million according to total shares on 16 June 2021 was approved. All dividends have been paid in the year ended 31 December 2021.
+23,004
+Before tax
+amount
+RMB million
+15,739
+Tax
+effect
+RMB million
+(37)
+198
+7,240
+(1,618)
+8,858
+transferred to the consolidated income statement
+Reclassification adjustments for amounts
+6,912
+(2,295)
+9,207
+11,778
+(3,881)
+15,659
+instruments recognised during the year
+Summarised statement of comprehensive income
+Net of tax
+RMB million
+RMB million
+2020
+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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Taihu
+YASREF
+FREP
+Sinopec SABIC Tianjin
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2020
+2021
+2020
+2021
+RMB million RMB million RMB million RMB million
+2020
+2021
+RMB million RMB million
+3
+2
+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.
+14 DIVIDENDS
+2021
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMBO.13 per share (2020: RMBO.19 per share)
+Dividends payable to shareholders of the Company attributable to the previous financial year, approved during the year represent:
+Pursuant to a resolution passed at the director's meeting on 25 March 2022, final dividends in respect of the year ended 31 December 2021 of
+RMBO.31 (2020: RMBO.13) per share totaling RMB37,532 million (2020: RMB15,739 million) were proposed for shareholders' approval at the
+Annual General Meeting. Final cash dividend proposed after the date of the statement of financial position has not been recognised as a liability at
+the date of the statement of financial position.
+Pursuant to the shareholders' approval at the General Meeting on 27 August 2021, the interim dividends for the year ended 31 December 2021 of
+RMBO.16 (2020: RMB0.07) per share totaling RMB19,371 million (2020: RMB8,475 million) were approved. Dividends were paid on 17 September
+2021.
+24,214
+56,903
+161
+8,475
+15,739
+RMB million
+RMB million
+2020
+2021
+Dividends declared after the date of the statement of financial position of RMBO.31 per share (2020: RMBO.13 per share)
+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:
+19,371
+37,532
+Net movement during the year recognised
+in other comprehensive income (i)
+24,517
+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.
+16 BASIC AND DILUTED EARNINGS PER SHARE
+(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
+(2,336)
+2,651
+17,507
+(5,497)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+17 PROPERTY, PLANT AND EQUIPMENT
+Plants and
+buildings
+RMB million
+98,427
+32,214
+10,965
+Transferred from construction in progress
+1,887,203
+7,116
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+(4,457)
+5,163
+727,552
+1,563
+132,327
+390
+Additions
+Balance at 1 January 2020
+Cost:
+properties
+RMB million
+Oil and gas,
+1,027,324
+2020
+(2,441)
+(1,728)
+(12)
+(12)
+(10)
+(4)
+(6)
+(4)
+2
+(6)
+fair value through other comprehensive income
+Transfer of loss on disposal of equity investments at
+fair value through other comprehensive income to
+retained earnings
+Changes in the fair value of instruments at
+7,073
+(2,332)
+9,405
+19,018
+(5,499)
+Net movement during the year recognised
+in other comprehensive income
+(6)
+2
+(1,728)
+23,004
+Other comprehensive income
+Foreign currency translation differences
+441
+441
+and joint ventures
+Share of other comprehensive income of associates
+(2,441)
+(4,457)
+162
+(220)
+(220)
+Cost of hedging reserve
+(22)
+(4)
+(18)
+(4)
+162
+RMB million
+amount
+RMB million
+Cash and cash equivalents
+(378)
+Total non-current liabilities
+(7,099)
+(8,996)
+(92)
+(42)
+(1,524)
+(2,102)
+(32,626)
+(31,658)
+(7,981)
+(7,151)
+Net assets
+16,239
+14,831
+(382)
+18,949
+(2,008)
+(2,017)
+Non-current financial liabilities
+(6,857)
+(8,761)
+(85)
+(85)
+(30,903)
+(29,650)
+(7,599)
+(6,773)
+Other non-current liabilities
+(242)
+(235)
+(92)
+(42)
+(1,439)
+(1,723)
+13.920
+13,991
+11,851
+7,416
+7,580
+5,568
+6,626
+5,605
+7,484
+7,491
+Carrying Amounts
+8,120
+7,416
+7,580
+5,568
+6,626
+5,605
+7,484
+8.120
+Current assets
+412
+468
+1,773
+4,515
+14,967
+14,981
+Net assets attributable to owners of the company
+16,239
+14,831
+Non-current liabilities
+18,949
+13,523
+11,439
+1,773
+4,515
+14,967
+14,981
+Net assets attributable to non-controlling interests
+13,920
+(4,050)
+Share of net assets from joint ventures
+(18,164)
+2,665
+Total current assets
+15,779
+14,940
+12,328
+6,615
+3,446
+2,503
+17,845
+8,924
+8,257
+7,924
+Non-current assets
+13,744
+15,237
+3,437
+7,516
+12,404
+1,223
+(4,144)
+6,562
+7,448
+5,375
+1,838
+1,258
+1,280
+9,336
+5,441
+5,259
+Other current assets
+9,217
+7,492
+6,953
+4,777
+2,188
+1,408
+9,993
+4,820
+12,531
+(2,546)
+(2,190)
+(1,931)
+(1,043)
+(15,844)
+(8,644)
+(3,547)
+(5,147)
+(3,052)
+(6,185)
+(2,623)
+(2,646)
+(1,963)
+(1,081)
+14,032
+(25,393)
+Total current liabilities
+(5,008)
+(6,350)
+(998)
+Other current liabilities
+41,947
+18,835
+18,258
+45,413
+Current financial liabilities
+(1,177)
+(1,203)
+Current liabilities
+(456)
+(32)
+(38)
+(9,549)
+(9,520)
+(77)
+(597)
+1,130
+Proved developed reserves
+Consolidated companies
+1,749
+1,542
+1,291
+1,389
+1,130
+Shengli
+1,291
+1,578
+Proved reserves
+1,047.78
+31 December 2020
+31 December 2021
+Items
+Crude oil reserves (mmbbls)
+11.9
+(1.8)
+34.79
+30.70
+1,072.33
+1,199.44
+30.16
+961
+0.0
+249.43
+China
+821
+263
+Overseas
+86
+249.52
+108
+16
+17
+102
+125
+102
+125
+153
+171
+244
+15
+24
+259
+287
+309
+330
+Consolidated companies
+Overseas
+Others
+Shengli
+Consolidated companies
+China
+Proved undeveloped reserves
+Equity accounted entities
+Consolidated companies
+Others
+249.60
+Jul-21
+284.22
+(1) Crude Oil & Natural Gas Market
+1 MARKET REVIEW
+Jan-22
+Oct-21
+Apr-21
+Jan-21
+Oct-20
+Apr-20 Jul-20
+0
+Jan-20
+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
+46
+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.
+(0.2)
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+280.22
+279.76
+4.5
+458.92
+459.02
+479.74
+2020 to 2021(%)
+2019
+2020
+2021
+Change from
+Summary of Reserves of Crude Oil and Natural Gas
+Natural gas production (bcf)
+Overseas
+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
+(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.
+51
+and Analysis
+5
+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
+9,201
+9,057
+2021
+10,029
+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
+Note: Includes 100% of the production of domestic joint ventures.
+(%)
+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
+Change from
+2020 to 2021
+Ethylene
+Synthetic resin
+Synthetic rubber
+Synthetic fiber monomer and polymer
+Synthetic fiber
+(5) Research and Development
+30,702
+30,696
+1.6
+1,313
+Exploration and production segment:
+The Company will enhance risk
+exploration and trap pre-exploration
+efforts, strengthen profitable
+development, and speed up the
+construction of natural gas production,
+supply, storage and marketing system,
+so as to achieve better results in oil
+production stabilization, gas production
+increase, cost reduction and efficiency
+improvement. In terms of crude oil
+development, the Company will scale
+up the production in Shunbei and Tahe
+oilfields, accelerate the construction
+of the national demonstration zone of
+continental facies shale oilfields in Jiyang,
+and refine the development of mature
+oilfields, so as to achieve steady crude
+oil production growth and a significant
+decrease in the break-even point. In
+terms of natural gas development, the
+Company will accelerate the capacity
+building of Dongsheng and Western
+Sichuan gas fields, further expand and
+tap the potential of Puguang, Yuanba
+gas fields, and deepen the development
+adjustment of Fuling gas field. At the
+same time, more efforts will be made in
+taking a diversified approach to expand
+resource channels, cultivate high-quality
+and efficient end-user markets, and
+maintain the good momentum of natural
+gas development. The planned annual
+production of crude oil is 281.20 million
+barrels, of which 31.28 million barrels
+will come from overseas and that of
+natural gas is 1,256.7 billion cubic feet.
+16
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refining segment: The Company will
+prioritize structural adjustment and cost
+reduction, speed up the construction of
+world-class refining and chemical bases,
+and promote the systemic improvement
+of the refining value chain. Oriented by
+profitability, the Company will make
+appropriate arrangement for facilities
+utilization and production scheduling,
+flexibly adjust the yield of refined oil
+products and diesel-gasoline ratio;
+dynamically optimize the allocation
+of crude oil resources to reduce
+procurement costs; accelerate the shift
+from refined oil products to chemicals,
+increase the production of chemical raw
+materials, improve the self-sufficient rate
+of chemical feedstocks; speed up the
+shift from refined oil products to special
+products, expand the market of special
+products such as low-sulfur bunker
+fuel, lubricating grease, base oil, needle
+coke, etc., and improve profitability. The
+annual plan for crude oil throughput is
+258 million tonnes and that for refined
+oil products production is 147 million
+tonnes.
+Marketing segment: Giving full play to
+integrated advantages, the Company will
+make every effort to expand the market,
+improve efficiency, and consolidate its
+position in the market. The Company
+plans to improve the market monitoring
+system, implement well-targeted
+marketing strategies, increase both
+retailing sales volume and efficiency;
+implement network development
+strategies by different regions and levels,
+continue to optimize network layout,
+enhance network integrity, stability
+and competitiveness; strengthen the
+development of Sinopec-brand products,
+improve the quality and profitability
+of non-fuel business; promote gas and
+hydrogen refueling, power charging
+and battery swapping, build integrated
+energy stations covering gasoline, diesel,
+gas, hydrogen, electricity and non-fuel
+services; and accelerate the construction
+of carbon-neutral gas stations. The
+annual domestic sales volume of refined
+oil products is planned to be 174 million.
+tonnes.
+Chemicals segment: Adhering to "basic
++high-end", the Company will promote
+the building of advanced capacity, speed
+up the deployment of large-scale ethylene
+plants, promote the upgrading and
+appropriate extension of the aromatics
+industry chain, continuously enhance
+market competitiveness; diversify raw
+materials, enhance the cost advantage;
+dynamically optimize and adjust the
+utilization, continue to promote facilities'
+operation efficiency; stay market-oriented,
+vigorously develop new materials and
+applications with high added value and
+advanced technology. Meanwhile, we will
+optimize the mechanism to respond to
+market need rapidly, strengthen refined
+management, and improve service quality
+and efficiency. The planned annual
+ethylene production is 15.25 million
+tonnes.
+Technological development: Following
+the innovation-driven strategy, the
+Company aims to make breakthroughs
+in core technologies, promote the
+mechanism reform of the technological
+system, accelerate the intelligent
+application and digital transformation
+to build a technology-leading company.
+Specific focuses include technological
+breakthroughs in oil and gas exploration
+and production with the emphases on oil
+production stabilization, gas production
+increase, cost reduction, and efficiency
+improvement, oil and gas reserves
+and production increase; coordinated
+development of integration of refining
+and chemical technologies, refined oil
+products structure optimization, clean,
+efficient and low-carbon utilization
+of resources; key raw materials and
+high-end new materials development,
+coordination of the development and
+application of technologies such as safety
+and environmental protection; energy
+conservation and emission reduction,
+and intelligent optimization; forward-
+looking and basic research on such areas
+as green and low-carbon, new energy,
+and new materials to support industrial
+transition and upgrading.
+Capital expenditures: In 2022, the
+Company's planned capital expenditures
+are RMB198 billion, of which, RMB81.5
+billion will be for the exploration and
+production segment, including the
+construction of crude oil production
+capacity in Shunbei and Tahe oilfields,
+and natural gas production capacity
+in Western Sichuan, Dongsheng and
+Zhongjiang and construction of storage
+and transmission facilities such as
+Longkou LNG. Capital expenditures for
+the refining segment will be RMB20.4
+billion, mainly for the construction
+of Anqing, Yangzi refinery structural
+adjustment projects and Zhenhai refinery
+Phase II. Capital expenditures for the
+marketing and distribution segment
+will be RMB23.7 billion, mainly used
+for the construction of service stations,
+integrated energy stations and logistics
+facilities. The capital expenditures of
+the chemicals segment will be RMB66.1
+billion, which will be mainly used for
+Hainan and Tianjin Nangang ethylene
+projects, Jiujiang Aromatics project,
+Shanghai large-tow carbon fiber project,
+Yizheng PTA project, Guizhou PGA
+project, Zhenhai Refinery Phase II. Capital
+expenditures for corporate and others
+are planned to be RMB6.3 billion, which
+will be mainly used for R&D facilities and
+information technology projects.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+17
+Business Review and Prospects
+天然
+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
+and risk prevention and control to march
+toward its targets firmly. The following
+are specific measures:
+1,357
+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,
+(2) Production & Operation
+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.
+In 2022, guided by the development
+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.
+30,713
+the end of the
+reporting period
+63.21
+66.06
+(5.3)
+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
+59.85
+(0.51) percentage points
+(0.12) percentage points
+12.6
+57.91
+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
+62.77
+30,725
+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,
+14
+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
+0.9
+Change from
+the end of the
+previous year to
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+31 December
+31 December
+2021
+2020
+31 December
+2019
+1.0
+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.
+122.54
+114.30
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Summary of Operations for the Marketing and Distribution Segment
+Change from
+2021
+2020
+2019 2020 to 2021 (%)
+Total sales volume of oil products (million tonnes)*
+220.79
+217.91
+254.95
+1.3
+Total domestic sales volume of oil products (million tonnes)
+171.31
+167.99
+184.45
+2.0
+Retail sales (million tonnes)
+113.19
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+2021
+Revenue
+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
+6,300
+36,683
+7,731
+86,193
+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
+7,162
+(1.4)
+3,636
+17.9
+Synthetic rubber
+1,286
+1,361
+(5.5)
+11,099
+7,982
+39.1
+Chemical fertiliser
+976
+1,177
+(17.1)
+2,807
+1,955
+43.6
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+19
+6,381
+5,486
+7,521
+1,402
+50.9
+Monomer and polymer for synthetic fibre
+6,955
+9,691
+(28.2)
+6,537
+4,297
+52.1
+Synthetic resin
+17,923
+17,112
+4.7
+8,325
+7,148
+16.5
+Synthetic fibre
+1,457
+3.9
+Crude oil
+2021
+Year ended 31 December
+(53,668)
+2.4
+Depreciation, depletion and amortisation
+(115,680)
+(107,461)
+7.6
+Exploration expenses, including dry holes
+(12,382)
+(9,716)
+27.4
+Personnel expenses
+(103,492)
+(87,525)
+18.2
+Taxes other than income tax
+(259,032)
+(235,018)
+(54,978)
+10.2
+30.6
+26.6
+RMB million
+2,740,884
+Year ended 31 December
+2020
+RMB million
+Change (%)
+2,104,724
+30.2
+Revenue from primary business
+Other operating revenues
+Operating expenses
+Purchased crude oil, products and operating supplies and expenses
+Selling, general and administrative expenses
+2,679,500
+61,384
+(2,646,256)
+(2,076,665)
+2,048,654
+30.8
+56,070
+9.5
+(2,091,055)
+(1,589,821)
+Other operating expenses, net
+(21,716)
+(5,780)
+85,851
+42,271
+103.1
+Attributable to:
+Shareholders of the Company
+71,975
+33,443
+115.2
+Non-controlling interests
+13,876
+8,828
+57.2
+(1) Revenue
+In 2021, the Company's revenue from primary business was RMB2,679.5 billion, representing an increase of 30.8% over 2020. This was mainly
+due to the price and sales volume increase in refined oil products and chemical products.
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2021 and 2020:
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters)
+Year ended 31 December
+Sales volume (thousand tonnes)
+Profit for the year
+267.6
+(6,344)
+(23,318)
+275.7
+Operating profit
+94,628
+13,669
+592.3
+Net finance costs
+(9,010)
+(9,510)
+Light product yield (%)
+(5.3)
+23,551
+44,456
+(47.0)
+Profit before taxation
+109,169
+48,615
+124.6
+Income tax expense
+Investment income and share of profits less losses from associates and joint ventures
+Light chemical feedstock production
+Kerosene
+Diesel
+72
+935
+1
+Overseas
+2
+1
+114
+0
+2
+0
+100
+0
+Consolidated companies
+0
+0
+2
+0
+179
+0
+2
+71
+1,828
+4
+383
+136
+2,015
+3
+Shengli
+170
+58
+944
+2
+204
+64
+1,080
+2
+Others
+193
+884
+129
+0
+0
+Gross
+Net
+Gross
+Net
+Exploratory Development Exploratory Development Exploratory Development
+Exploratory Development
+China
+108
+201
+108
+201
+Consolidated companies
+108
+201
+108
+201
+Shengli
+2020
+4
+2021
+3
+Equity accounted entities
+2
+1
+112
+0
+2
+0
+96
+0
+Total
+365
+130
+1,942
+4
+385
+136
+2,115
+Wells drilling (as of 31 December)
+363
+Consolidated companies
+Dry
+3
+Exploration and Production Activities
+Natural gas reserves (bcf)
+31 December 2021 31 December 2020
+Wells drilled (as of 31 December)
+8,456
+8,191
+6,740
+6,365
+6,734
+6,357
+6,734
+6,357
+1,582
+1,675
+1,529
+1,491
+3,623
+Equity accounted entities
+3,191
+Consolidated companies
+Others
+Equity accounted entities
+46
+46
+12
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Items
+Proved reserves
+Proved developed reserves
+China
+Consolidated companies
+Puguang
+Fuling
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+Proved undeveloped reserves
+China
+Consolidated companies
+Fuling
+Overseas
+6
+8
+0
+Development
+Exploratory
+Development
+Productive
+Dry
+Productive
+Dry
+Productive
+Dry Productive
+China
+363
+129
+1,828
+4
+383
+136
+2,015
+Exploratory
+2020
+2021
+2
+0
+6
+8
+1,716
+1,826
+1,715
+1,824
+1,715
+33
+1,824
+119
+1,616
+1,705
+1
+2
+0
+0
+1
+99
+0
+55
+55
+Region
+China
+Gross
+Net
+Gross
+Net
+7,539
+7,489
+6,976
+6,928
+Consolidated companies
+7,539
+7,489
+6,976
+6,928
+Puguang
+79
+79
+2020
+67
+2021
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+18,668
+18,668
+5,534
+2,372
+7,055
+2,752
+30
+11
+28
+5,504
+59,385
+2,361
+56,223
+7,027
+60,295
+10
+2,742
+55,992
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+13
+Business Review and Prospects
+Business Review and Prospects
+Natural gas productive wells (as of 31 December)
+18,860
+67
+779
+2021
+390,023
+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
+Refinery throughput
+Gasoline, diesel and kerosene production
+Gasoline
+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
+Fuling
+Summary of Operations for the Refining Segment
+(2) Refining
+779
+632
+632
+Others
+Total
+6,681
+7,539
+6,631
+6,277
+6,229
+7,489
+6,976
+6,928
+Unit: Square kilometers
+Area under license (as of 31 December)
+Acreage with exploration licenses
+China
+Acreage with development licenses
+China
+Overseas
+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
+18,860
+34,572
+34,572
+2
+Consolidated companies
+0
+3
+0
+1
+0
+Equity accounted entities
+0
+120
+0
+61
+Total
+108
+324
+108
+263
+62
+༠།ལ། |
+0
+0
+Others
+75
+146
+75
+146
+2226
+92
+212
+92
+212
+29
+52
+63
+160
+BRENT ICE
+Overseas
+Management's Discussion
+123
+2
+94
+212
+Total
+Oil productive wells (as of 31 December)
+2021
+2020
+Gross
+Net
+Gross
+Net
+53,851
+53,851
+53,240
+53,240
+53,851
+53,851
+53,240
+53,240
+34,991
+34,991
+Equity accounted entities
+Consolidated companies
+Overseas
+Others
+22200002
+92
+92
+29
+63
+94
+22232021
+212
+33
+212
+160
+0
+0
+0
+212
+China
+Consolidated companies
+Shengli
+52
+DUBAI
+31 December
+2020
+RMB million
+199
+RMB denominated
+Corporate bonds (i)
+Interest rates at 1.55% per annum
+per annum at 31 December 2021
+with maturities through 2039
+Interest rates ranging from 1.08% to 4.00%
+USD denominated
+RMB denominated
+Third parties' debts
+Long-term bank loans
+Interest rate and final maturity
+USD denominated
+Long-term debts represent:
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 191
+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.
+29,033
+38,125
+5,264
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+2,873
+at 31 December 2021 with maturities
+through 2038
+RMB million
+USD denominated
+RMB denominated
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Less: Current portion
+Total third parties' long-term debts
+4.25% per annum at 31 December 2021
+with maturities through 2043
+11,379
+11,127
+Fixed interest rates ranging from 3.13% to
+31 December
+2021
+4.90% per annum at 31 December 2021
+with maturities through 2026
+38,522
+Fixed interest rates ranging from 2.20% to
+38,318
+38,944
+92
+64
+38,226
+31 December
+2020
+RMB million
+38,880
+26,977
+622
+466
+622
+3
+16,111
+16,111
+24,959
+24,959
+European Dollar ("EUR") denominated
+Hong Kong Dollar ("HKD") denominated
+USD denominated
+RMB denominated
+Short-term loans
+3
+Loans from Sinopec Group Company and fellow subsidiaries
+Corporate bonds
+RMB denominated
+Current portion of long-term corporate bonds
+USD denominated
+RMB denominated
+Current portion of long-term bank loans
+RMB denominated
+Short-term other loans
+RMB denominated
+RMB denominated
+3,293
+4,637
+3,281
+466
+RMB denominated
+Current portion of long-term loans
+172
+153
+31
+3,298
+934
+1,141
+1,320
+4,642
+2,407
+23,769
+35,252
+3,018
+3,018
+7,000
+7,000
+24
+12
+4,613
+Less: Current portion
+Third parties' debts
+Short-term bank loans
+49,649
+88,593
+51,619
+9,793
+25,280
+146,415
+138,741
+RMB million
+Between 1 month and 6 months
+Over 6 months
+Within 1 month or on demand
+31 December
+2020
+5,700
+RMB million
+203,919
+11,721
+215,640
+10,394
+161,908
+151,514
+7,746
+6,145
+4,227
+132,256
+11,512
+RMB million
+2020
+31 December
+2021
+31 December
+215,640
+33 CONTRACT LIABILITIES
+179,108
+239,688
+70,262
+76,458
+59,023
+93,764
+42,027
+54,596
+667
+161,908
+822
+31 December
+2020
+RMB million
+31 December
+2021
+RMB million
+14,048
+Taxes other than income tax
+Other payables
+Payables for constructions
+Interest payable
+Salaries and welfare payable
+34 OTHER PAYABLES
+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.
+7,129
+193,547
+RMB million
+31 December
+2021
+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.
+83,815
+91,990
+11,778
+13,690
+(622)
+(466)
+1,387
+1,168
+Notes:
+Interest rates at 1.65% per annum at 31 December 2021
+with maturities in 2027
+5.23% per annum at 31 December 2021
+Interest rates ranging from 1.08% to
+11,013
+12,988
+72,037
+78,300
+(4,637)
+(10,293)
+76,674
+with maturities through 2037
+(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 ageing analysis of trade accounts payable and bills payable is as follows:
+Trade accounts payable and bills payable measured at amortised cost
+Bills payable
+Amounts due to associates and joint ventures
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to third parties
+32 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+187,033
+185,406
+15,293
+171,740
+15,173
+170,233
+31 December
+2020
+RMB million
+31 December
+2021
+RMB million
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+192
+Lease liabilities
+Current
+Non-current
+31 LEASE LIABILITIES
+These corporate bonds are carried at amortised cost.
+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.
+38,356
+35 PROVISIONS
+31 December
+2020
+RMB million
+31 December
+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
+Payables
+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)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+190
+Periodically, management performed assessment on the probability that future taxable profit will be available over the period which the deferred tax
+assets can be realised or utilised. In assessing the probability, both positive and negative evidence was considered, including whether it is probable
+that the operations will have sufficient future taxable profits over the periods which the deferred tax assets are deductible or utilised and whether
+the tax losses result from identifiable causes which are unlikely to recur.
+As at 31 December 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.
+25,054
+8,124
+Receivables and inventories
+31 December
+2020
+RMB million
+Cash flow hedges
+Tax losses carried forward
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+31 December
+from
+reserve
+Others
+income
+Property, plant and equipment
+Balance at
+Recognised
+in other
+comprehensive
+income
+statement
+Recognised in
+consolidated
+Balance at
+1 January
+2020
+Net deferred tax assets/(liabilities)
+Others
+Intangible assets
+other comprehensive income
+Financial assets at fair value through
+Transferred
+2021
+RMB million
+19,389
+7,910
+31 December
+Deferred tax liabilities
+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)
+15,793
+16,777
+127
+Property, plant and equipment
+1,790
+258
+Cash flow hedges
+1,286
+2,858
+Payables
+2,411
+3,763
+Receivables and inventories
+(2,709)
+(9)
+(11)
+1,008
+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)
+(870)
+(19,117)
+35,969
+30,596
+371
+1,056
+Others
+(517)
+(492)
+869
+RMB million
+2021
+RMB million
+RMB million
+1,142
+41
+(1,004)
+2,378
+(2,451)
+5,881
+(5,499)
+(203)
+(2,630)
+2,858
+325
+1,572
+3,763
+RMB million
+2021
+from 31 December
+reserve
+RMB million
+Others
+RMB million
+income
+RMB million
+(26)
+1,378
+2,411
+RMB million
+1,286
+RMB million
+1,740
+(8,554)
+Short-term debts represent:
+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)
+13,322
+490
+(6,258)
+516
+101
+63
+352
+118
+2
+116
+4,749
+(19)
+(305)
+16,930
+statement
+income comprehensive
+1 January
+2021
+13,322
+(148)
+(84)
+9,960
+3,594
+2,378
+349
+127
+(2,244)
+124
+4,146
+(4)
+(2,316)
+(42)
+(268)
+1,286
+2,411
+(1)
+(12)
+(122)
+144
+(2,630)
+(4)
+87
+19
+Balance at
+Transferred
+in other
+Recognised
+Recognised in
+consolidated
+Balance at
+16,930
+(4)
+519
+(2,265)
+7,873
+(305)
+73
+24
+352
+246
+116
+(4)
+702
+162
+(564)
+10,807
+2,546
+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
+2021
+Note
+Interest income
+Agency commission income
+Ancillary and social services
+Production related services
+Exploration and development services
+Transportation and storage
+Purchases
+RMB million
+Sales of goods
+The Group is part of a larger group of companies under Sinopec Group Company, which is controlled by the PRC government, and has significant
+transactions and relationships with Sinopec Group Company and fellow subsidiaries. Because of these relationships, it is possible that the terms
+of these transactions are not the same as those that would result from transactions among wholly unrelated parties.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control or jointly control the party or exercise
+significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to
+control or common control. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their
+close family members) or other entities and include entities which are under the significant influence of related parties of the Group where those
+parties are individuals, and post-employment benefit plans which are for the benefit of employees of the Group or of any entity that is a related
+party of the Group.
+39 RELATED PARTY TRANSACTIONS
+28,360
+(37,510)
+(102,650)
+168,520
+(555)
+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:
+(36,955)
+28,360
+2020
+RMB million
+297,381
+715
+(viii)
+160
+194
+(vii)
+2,952
+1,730
+(vi)
+31,915
+(i)
+44,405
+31,444
+33,930
+(iv)
+8,734
+19,443
+(iii)
+228,307
+151,300
+191,888
+(ii)
+(v)
+(447)
+(102,203)
+1,002
+1,738,896
+(784)
+5,875
+1,733,805
+Total assets
+455,660
+(215)
+480
+455,395
+Current liabilities
+Current assets
+Summarised consolidated statement of financial position
+0.276
+0.003
+0.273
+Diluted earnings per share (RMB)
+0.276
+0.003
+0.273
+Basic earnings per share (RMB)
+as at 31 December 2020:
+522,190
+1,020
+(215)
+167,518
+Net increase in cash and cash equivalents
+Net cash used in financing activities
+Net cash used in investing activities
+Net cash generated from operating activities
+for the year ended 31 December 2020:
+Summarised consolidated statement of cash flows
+141,377
+13
+141,364
+Non-controlling interests
+746,325
+4,831
+741,494
+Total equity attributable to shareholders of the Company
+851,194
+(784)
+1,031
+850,947
+Total liabilities
+522,995
+704
+8,828
+(ix)
+(viii)
+26,494
+Total
+6,435
+3,116
+Long-term prepayments and other assets
+760
+19,422
+14,537
+Prepaid expenses and other current assets
+16,777
+43,394
+RMB million
+Financial assets at fair value through other comprehensive income
+Trade accounts receivable
+31 December
+2020
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Sixth Supplementary Agreement on 27 August 2021, which took effect on 1 January 2022 and made adjustment to "Mutual
+Supply Agreement" and "Buildings Leasing Contract", etc.
+The Company has entered into a service stations franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+The Company has entered into a series of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as described in the above
+Mutual Provision Agreement.
+31 December
+2021
+RMB million
+8,655
+186
+(4) where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+Trade accounts payable and bills payable
+22,792
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+223,588
+247,599
+Total
+162,048
+158,761
+11,778
+13,690
+5,264
+14,170
+2,873
+3,010
+2,779
+Other long-term liabilities
+12,759
+50,649
+Other payables
+5,937
+4,677
+Contract liabilities
+Short-term loans and current portion of long-term loans from Sinopec Group Company and fellow subsidiaries
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Lease liabilities (including to be paid within one year)
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(2) where there is no government-prescribed price, the government-guidance price;
+(1) the government-prescribed price;
+For the year ended 31 December 2021, no individually significant right-of-use assets were leased from Sinopec Group Company and fellow
+subsidiaries, associates and joint ventures by the Group. The interest expense recognised for the year ended 31 December 2021 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB7,863 million
+(2020: RMB8,160 million).
+Included in the transactions disclosed above, for the year ended 31 December 2021 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB173,718 million (2020: RMB149,560 million) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB160,048 million
+(2020: RMB133,827 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB1,730 million
+(2020: RMB2,952 million), lease charges for land, buildings and others paid by the Group of RMB10,831 million, RMB565 million and RMB159
+million (2020: RMB11,086 million, RMB565 million and RMB211 million), respectively and interest expenses of RMB385 million (2020: RMB919
+million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB54,453 million (2020: RMB69,470
+million), comprising RMB53,671 million (2020: RMB68,683 million) for sales of goods, RMB715 million (2020: RMB704 million) for interest
+income and RMB67 million (2020: RMB83 million) for agency commission income.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+39 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+198
+Financial Statements (International)
+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).
+197
+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
+Net deposits placed with related parties
+Interest expense
+30,305
+(x)
+919
+(17,585)
+(8,265)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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:
+The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+•
+•
+•
+•
+•
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2021.
+The terms of these agreements are summarised as follows:
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+39 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(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. The balance of deposits at
+31 December 2021 was RMB61,682 million (2020: RMB53,417 million).
+(vii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(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.
+Deferred tax liabilities
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+385
+8,828
+Profit attributable to non-controlling interests
+33,443
+2021
+RMB million
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+205,594
+274,657
+33,997
+RMB million
+171,597
+2020
+31 December
+31 December
+184,430
+90,227
+RMB million
+31 December
+2021
+At 31 December 2021 and 2020, capital commitments of the Group are as follows:
+Capital commitments
+37 COMMITMENTS AND CONTINGENT LIABILITIES
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+194
+Authorised and contracted for (i)
+Authorised but not contracted for
+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.
+31 December
+2020
+RMB million
+2021
+Advances to suppliers
+Value-added input tax to be deducted
+Prepaid income tax
+29 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets and liabilities before offset are attributable to the items detailed in the table below:
+31 December
+2021
+RMB million
+35,918
+9,267
+19,137
+RMB million
+5,109
+69,431
+2020
+RMB million
+35,096
+4,857
+18,625
+131
+58,709
+Deferred tax assets
+31 December
+31 December
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 37, respectively.
+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.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+36 SHARE CAPITAL
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+193
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+43,713
+(141)
+Registered, issued and fully paid
+(81)
+40,495
+(6,435)
+1,343
+1,563
+42,438
+2020
+RMB million
+RMB million
+43,713
+2,163
+1,135
+2021
+Decrease for the year
+Exchange adjustments
+Balance at 31 December
+Accretion expenses
+(1,490)
+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
+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.
+In June 2013, the Company issued 21,011,962,225 listed A shares and 5,887,716,600 listed H shares as a result of bonus issues of 2 shares
+converted from the retained earnings, and 1 share transferred from the share premium for every 10 existing shares.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB1.00 each at the Placing Price
+of HKD8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD23,970,100,618.00.
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+In 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 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.
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB1.00
+each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+121,071
+121,071
+25,513
+25,513
+95,558
+95,558
+RMB million
+RMB million
+2020
+Receivables
+28 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The consideration of the transaction amount to RMB6,124 million.
+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.
+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.
+38 BUSINESS COMBINATION
+The Group is defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business. Management
+has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any resulting
+liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+Legal contingencies
+The Group paid normal routine pollutant discharge fees of approximately RMB10,968 million in the consolidated financial statements for the year
+ended 31 December 2021 (2020: RMB11,368 million).
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect management's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature
+and extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development
+areas, whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv)
+changes in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is
+indeterminable due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective
+actions that may be required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot
+reasonably be estimated at present, and could be material.
+Environmental contingencies
+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.
+(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).
+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).
+(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).
+Notes:
+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.
+Contingent liabilities (Continued)
+37 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+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).
+The transactions under the after-mentioned agreements will further improve the integrated operation level of the Group, optimise the allocation of
+resources, reduce connected transactions on the whole, so as to enhance the comprehensive competitiveness of the Group in its business locations.
+Financial Statements (International)
+196
+347
+33,096
+2,104,724
+(13,493)
+12,233
+2,105,984
+Profit attributable to shareholders of the Company
+for the year ended 31 December 2020:
+Revenue
+Summarised consolidated income statement
+The Group,
+as restated
+RMB million
+Adjustment
+RMB million
+Elimination and
+Acquired assets
+and liabilities
+of Sinopec
+Group Company
+RMB million
+RMB million
+previously
+reported
+The Group, as
+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:
+38 BUSINESS COMBINATION (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+195
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+14,863
+301
+RMB million
+RMB million
+31 December
+2020
+31 December
+2021
+Contingent liabilities
+Between four and five years
+Thereafter
+Between three and four years
+Between two and three years
+390
+Between one and two years
+Estimated future annual payments are as follows:
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB181 million for the year ended 31 December 2021 (2020: RMB231 million).
+Exploration licenses for exploration activities are registered with the Ministry of Natural Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual minimum exploration investment relating to the exploration blocks in respect of which the license
+is issued. The Ministry of Natural Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+Exploration and production licenses
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB3,648 million (2020: RMB13,172 million).
+Note:
+Financial Statements (International)
+Within one year
+112
+99
+110
+8,450
+5,746
+Associates (iii)
+6,390
+9,117
+Joint ventures (ii)
+RMB million
+RMB million
+2020
+31 December
+31 December
+2021
+At 31 December 2021 and 2020, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+1,498
+1,535
+824
+846
+56
+64
+63
+102
+66
+14,840
+(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.
+Deferred tax assets/(liabilities)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2020
+Current assets
+Current liabilities
+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
+At
+RMB million
+Sinopec-SK
+At
+Shanghai SECCO
+At
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+205
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+42 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material non-controlling interests
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary that has non-
+controlling interests that are material to the Group.
+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
+At
+50.00
+RMB million
+RMB million
+3,449
+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
+9,106
+11,402
+12,177
+20,650
+22,187
+Non-current liabilities
+4,565
+RMB million
+1.124
+2,073
+RMB million
+RMB million
+1,582
+4,761
+4,373
+6,066
+10,431
+6,791
+3,639
+(458)
+(196)
+(924)
+(5,434)
+(2,783)
+(8,122)
+(6,377)
+Net current
+(liabilities)/assets
+(33,716) (29,326) 21,329
+22,145
+5,136
+1,322
+50.00
+RMB10,492
+49.56
+ZhongKe (Guangdong) Refinery & Petrochemical
+RMB6,397
+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
+Production and sale of refined petroleum
+products, lubricant base oil, and
+petrochemical materials
+Trading of crude oil and petrochemical
+products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Liability Company
+Production and sale of catalyst products
+1.02
+RMB5,294
+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
+98.98
+Trading of petrochemical products
+Marketing and distribution of petrochemical
+products
+("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
+59.00
+41.00
+55.00
+45.00
+55.00
+45.00
+50.44
+RMB3,000
+Sinopec Baling Petrochemical Co.Ltd.
+RMB10,000
+Gaoqiao Petrochemical Company Limited
+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
+70.42
+29.58
+Marketing and distribution of refined
+(59,604)
+petroleum products
+RMB500
+67.59
+32.41
+Production and sale of petrochemical
+products
+Sinopec Kantons Holdings Limited
+HKD248
+("Sinopec Kantons")
+Sinopec-SK (Wuhan) Petrochemical Company
+Limited ("Sinopec-SK")
+RMB7,193
+Shanghai SECCO
+100.00
+(59,554)
+(18,270)
+2,047
+2,817
+2,132
+1,606
+(920)
+Total comprehensive
+income
+18,439
+21,149
+1,045
+(720)
+2,218
+45
+645
+951
+23
+243
+40
+677
+1,814
+2,817
+871
+2,132
+243
+656
+RMB million
+Revenue
+1,408,523 1,099,680
+2,166
+2,017
+89,198
+74,624
+5,549
+4,871
+528
+1,064
+29,723
+21,626
+50,208
+28,702
+Profit/(loss) for the year
+18,582
+22,415
+1,429
+1,160
+2,077
+951
+RMB million
+1,606
+Comprehensive income
+707
+2,390
+691
+659
+(377)
+64
+150
+164
+175
+1,028
+767
+Summarised statement of cash flows
+Year ended 31 December
+Marketing Company
+2021
+SIPL*
+Shanghai Petrochemical
+2020
+2021
+2020
+2020
+Fujian Petrochemical
+2021
+268
+(920)
+121
+64
+attributable to non-
+controlling interests
+6,822
+7,205
+579
+(287)
+1,101
+325
+476
+16
+10
+Dividends paid to non-
+controlling interests
+7,064
+2,766
+98
+316
+541
+69
+649
+14
+15
+RMB million
+RMB million
+RMB million RMB million
+Net assets
+233,117
+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
+of the Company
+157,557
+159,205
+6,341
+5,876
+13,678
+15,254
+13,138
+9,984
+(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
+8,025
+8,936
+10,624
+14,727
+6.915
+6,499
+Shanghai Petrochemical
+Fujian Petrochemical
+2020
+2021
+2020
+2021
+2020
+RMB million RMB million RMB million
+RMB million
+RMB million RMB million
+2021
+RMB million
+2020
+Sinopec Kantons
+2021
+Shanghai SECCO
+Sinopec-SK
+2020
+2021
+2020
+2021
+2020
+RMB million
+SIPL*
+Marketing Company
+2021
+Year ended 31 December
+Summarised consolidated statement of comprehensive income
+7,579
+7,454
+7.175
+12,352
+6.966
+6,455
+Attributable to
+non-controlling interests
+75,560
+75,486
+(17,823)
+6,119
+15,123
+14,608
+6,915
+6,500
+5,011
+4,931
+3,441
+5,920
+4,841
+4,485
+6,950
+RMB3,374
+Sinopec Lubricant Company Limited
+Liability Company
+61,384
+2,740,884
+56,070
+2,104,724
+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)
+2021
+RMB million
+2020
+RMB million
+Result
+Operating profit/(loss)
+By segment
+- Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+4,685
+(16,476)
+65,279
+(5,525)
+2,056
+21,204
+2,198
+10,487
+322,169
+70,242
+40,702
+495,016
+362,871
+563,147
+458,154
+732,356
+430,073
+1,295,503
+888,227
+(2,109,426)
+(1,371,215)
+2,679,500
+2,048,654
+6,674
+5,718
+5,161
+4,633
+36,864
+34,905
+8,758
+424,774
+20,828
+10,818
+Aggregate
+share of profits from associates and joint ventures
+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
+3
+8,980
+(54)
+(61)
+304
+3,188
+11,106
+4,754
+11,323
+- Corporate and others
+(3,225)
+(393)
+- Elimination
+Total seperating profit
+(4,421)
+4,417
+94,628
+13,669
+Share of /(loss) from associates and joint ventures
+– Exploration and production
+2,783
+2,117
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+662
+(2,516)
+3,731
+2,200
+1,723
+1,067,301
+4,854
+7,075
+1,374,680
+⋅
+uses of public utilities.
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+state-controlled.
+40 EMPLOYEE BENEFITS PLAN
+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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+41 SEGMENT REPORTING
+Segment information is presented in respect of the Group's business segments. The format is based on the Group's management and internal
+reporting structure.
+In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker for the purposes of
+resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been
+aggregated to form the following reportable segments.
+(i) Exploration and production, which explores and develops oil fields, produces crude oil and natural gas and sells such products to the refining
+segment of the Group and external customers.
+(ii) Refining, which processes and purifies crude oil, that is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(iii) Marketing and distribution, which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(iv) Chemicals, which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products mainly to
+external customers.
+(v) Corporate and others, which largely comprises the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and corporate and others businesses separately. The reportable segments are each managed separately because they manufacture and/
+or distribute distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+• depositing and borrowing money; and
+201
+• lease of assets;
+sales and purchases of goods and ancillary materials;
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+39 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 30.
+As at and for the year ended 31 December 2021, and as at and for the year ended 31 December 2020, no individually significant loss allowance
+for expected credit losses were recognised in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates and joint
+ventures.
+(b) Key management personnel emoluments
+Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
+Group, directly or indirectly, including directors and supervisors of the Group. The key management personnel compensation is as follows:
+Short-term employee benefits
+Retirement scheme contributions
+2021
+RMB'000
+2020
+4,612
+379
+4,991
+RMB'000
+5,753
+342
+6,095
+(c) Contributions to defined contribution retirement plans
+The Group participates in various defined contribution retirement plans organised by municipal and provincial governments for its staff. The
+details of the Group's employee benefits plan are disclosed in Note 40. As at 31 December 2021 and 2020, the accrual for the contribution to
+post-employment benefit plans was not material.
+(d) Transactions with other state-controlled entities in the PRC
+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:
+•
+• rendering and receiving services;
+Financial Statements (International)
+Financial Statements (International)
+for the year ended 31 December 2021
+Other operating revenues
+Revenue
+202
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+2021
+RMB million
+2020
+RMB million
+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
+1,062,447
+Corporate and others
+Marketing and distribution
+Chemicals
+Exploration and production
+Refining
+Other operating revenues
+41 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for interest in associates and joint ventures, investments, deferred tax assets, cash and cash
+equivalents, time deposits with financial institutions and other unallocated assets. Segment liabilities exclude short-term debts, income tax
+payable, long-term debts, loans from Sinopec Group Company and fellow subsidiaries, deferred tax liabilities and other unallocated liabilities.
+Information of the Group's reportable segments is as follows:
+Revenue from primary business
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+766
+Inter-segment sales
+External sales
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+External sales
+Inter-segment sales
+Elimination of Inter-segment sales
+Revenue from primary business
+Marketing and distribution
+298
+37,744
+(9,010)
+109,169
+46,273
+20,743
+20,090
+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
+52,880
+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.
+137,104
+2,312
+Chemicals
+Corporate and others
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+2021
+RMB million
+2020
+RMB million
+68,148
+56,416
+22,469
+24,756
+21,897
+25,403
+51,648
+28,217
+3,786
+167,948
+External sales
+Mainland China
+Singapore
+Particulars of
+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
+RMB8,250
+100.00
+Production Limited ("SIPL")
+Sinopec Yizheng Chemical Fibre Limited
+RMB4,000
+100.00
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Name of company
+As at 31 December 2021, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+42 PRINCIPAL SUBSIDIARIES
+Others
+Non-current assets
+Mainland China
+Others
+204
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+2021
+RMB million
+2020
+RMB million
+2,166,040
+278,024
+Marketing and distribution
+296,820
+2,740,884
+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
+1,720,695
+215,846
+168,183
+2,104,724
+2020
+Refining
+Depreciation, depletion and amortisation
+Interest in associates and joint ventures
+209,179
+188,342
+Financial assets at fair value through other comprehensive income
+767
+1,525
+Deferred tax assets
+19,389
+25,054
+Cash and cash equivalents, time deposits with financial institutions
+Other unallocated assets
+221,989
+188,057
+27,783
+28,451
+1,889,255
+1,738,896
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+- Refining
+1,307,467
+- Marketing and distribution
+1,410,148
+118,458
+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
+Total segment assets
+- Chemicals
+- Corporate and others.
+166,486
+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)
+Capital expenditure
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+7,910
+Deferred tax liabilities
+17,042
+16,563
+163,588
+146,763
+136,980
+228,826
+234,309
+69,977
+49,625
+198,828
+119,215
+Total segment liabilities
+Exploration and production
+810,880
+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
+703,717
+RMB million RMB million RMB million RMB million
+11,875
+Sinopec-SK
+2021
+2021
+2020
+RMB million RMB million RMB million RMB million
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+208
+debts.
+As at 31 December 2021, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB441,559
+million (2020: RMB443,966 million) on an unsecured basis, at a weighted average interest rate of 2.81% per annum (2020: 2.85%). As at 31
+December 2021, the Group's outstanding borrowings under these facilities were RMB11,700 million (2020: RMB4,041 million) and were included in
+Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing
+liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
+conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Management prepares monthly cash flow budget
+to ensure that the Group will always have sufficient liquidity to meet its financial obligations as they fall due. The Group arranges and negotiates
+financing with financial institutions and maintains a certain level of standby credit facilities to reduce the Group's liquidity risk.
+Liquidity risk
+All of the entity's other receivables are considered to have low credit risk, and the loss allowance recognised during the period was therefore
+limited to 12 months expected losses. The Group considers there was no significant increase in credit risk for other receivables by taking into
+account of their past history of making payments when due and current ability to pay, and thus the impairment provision recognised during the
+period was limited to 12 months expected losses.
+3,860
+527
+85
+3,131
+519
+345
+67
+107
+3,341
+Liquidity risk (Continued)
+54.9%
+88.0%
+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:
+Total
+49,390
+2,169
+85,718
+78,300
+Long-term debts
+35,871
+35,871
+35,252
+Short-term debts
+More than
+5 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+RMB million
+than 2 years
+More than 1
+year but less
+Within
+1 year or
+on demand
+RMB million
+cash flow
+RMB million
+RMB million
+contractual
+undiscounted
+Carrying
+amount
+31 December 2021
+27,518
+182
+18
+average
+Weighted.
+Impairment
+provision on
+individual
+basis
+Carrying
+amount
+RMB million
+RMB million
+31 December 2020
+amount
+carrying
+Gross
+Impairment provision on
+provision matrix basis
+individual basis
+Impairment provision on
+4,033
+534
+3,499
+579
+389
+100.0%
+190
+loss rate
+218
+8,905
+Impairment
+provision
+RMB million
+27
+117
+0.0%
+25.2%
+3,024
+3,637
+117
+5,023
+610
+39,299
+149
+4,062
+34,478
+Total
+Over 3 years past due
+2 to 3 years past due
+1 to 2 years past due
+Current and within 1 year past due
+RMB million
+RMB million
+%
+Loss
+allowance
+6,641
+Loans from Sinopec Group Company and
+fellow subsidiaries
+16,563
+253,575
+1,428
+10,109
+43,513
+15,456
+15,957
+328,501
+187,033
+Lease liabilities
+929
+5,512
+17,978
+17,042
+and fellow subsidiaries
+Loans from Sinopec Group Company
+7,056
+60,414
+11,753
+RMB million
+More than
+5 years
+Derivative financial liabilities
+More than 2
+years but less
+than 5 years
+RMB million
+4,826
+4,826
+2021
+RMB million RMB million RMB million RMB million RMB million RMB million
+Financial Statements (International)
+209
+Annual Report 2021
+CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+114,036
+28,138
+308,905
+713,138
+94,083
+94,083
+94,083
+560,698
+Other payables
+161,908
+161,908
+161,908
+Trade accounts payable and bills payable
+4,826
+than 2 years
+RMB million
+year but less
+25,280
+1,339
+131,468
+Other payables
+215,640
+215,640
+215,640
+Trade accounts payable and bills payable
+3,223
+3,223
+3,223
+Derivative financial liabilities
+3,967
+233,210
+10,712
+35,411
+12,031
+15,833
+296,485
+185,406
+604
+3,174
+18,457
+131,468
+131,468
+665,852
+786,862
+1 year or
+on demand
+RMB million
+80,562
+72,037
+Long-term debts
+25,280
+23,769
+Short-term debts
+cash flow
+RMB million
+RMB million
+208
+8,312
+More than 1
+undiscounted
+contractual
+Carrying
+amount
+31 December 2020
+Total
+243,818
+73,641
+62,025
+407,378
+Within
+38,894
+Lease liabilities
+Over 3 years past due
+Total
+(2,847)
+3,182
+343
+(11)
+(14)
+(526)
+(1,802)
+(695)
+(467)
+1,727
+262
+cash and cash equivalents
+Net increase/(decrease) in
+2.176
+(653)
+(2,879)
+(7,828)
+(1,250)
+882 (1,066)
+(4,095)
+(142)
+3,034
+Cash and cash equivalents
+at 1 January
+(164)
+14
+95
+Effect of foreign currency
+exchange rate changes
+Cash and cash equivalents
+1,593
+1,066
+9,278
+5,181
+117
+3,182
+79
+68
+88
+7,450
+6,916
+8,833
+7.699
+6,901
+8,642
+(527)
+(439)
+1,682
+(1,172)
+3.119
+3,447
+586
+133
+(244)
+(292)
+1,680
+3,950
+281
+690
+54.139
+28,923
+activities
+(used in) operating
+Net cash generated from/
+2020
+Shanghai SECCO
+597
+Sinopec Kantons
+2021
+2020
+5,476
+1,683
+(363)
+(used in) investing
+(12,402)
+(31,081)
+from financing activities
+Net cash (used in)/generated
+(2,340)
+(1,789)
+(4,335)
+1,534
+3,846
+(649) 1,276
+20
+420
+(3,888)
+(2,359)
+(2,659)
+15
+(40,010)
+2,420
+activities
+Net cash generated from/
+(2)
+(3,393)
+(93)
+Loss
+allowance
+Impairment
+provision
+average
+loss rate
+Weighted-
+Impairment
+provision on
+individual
+basis
+Carrying
+amount
+RMB million
+RMB million
+31 December 2021
+Gross
+carrying
+amount
+Impairment provision on
+provision matrix basis
+individual basis
+Impairment provision on
+The following table provides information about the exposure to credit risk and ECLs for accounts receivable as at December 31, 2021 and 2020.
+(ii) Impairment of financial assets (Continued)
+Credit risk (Continued)
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+%
+Financial Statements (International)
+RMB million
+Current and within 1 year past due
+3,190
+(8)
+44
+50.6%
+3,146
+3,324
+3,411
+2 to 3 years past due
+181
+44
+35.8%
+137
+83
+57
+0.2%
+26
+4,280
+500
+34,263
+623
+1 to 2 years past due
+RMB million
+207
+RMB million
+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.
+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.
+*
+1,066
+4,100
+5,181
+2,333
+3,182
+68
+54
+206
+6,916
+7,699
+7,068
+8,642
+8,999
+at 31 December
+(2)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(1)
+(117)
+5,112
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+3,432
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+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.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivable, financial assets at
+FVOCI and other receivables.
+(ii) Impairment of financial assets
+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
+Credit risk
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management controls and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+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.
+⚫ market risk.
+liquidity risk; and
+credit risk;
+The Group has exposure to the following risks from its uses of financial instruments:
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through profit
+or loss, derivative financial assets, trade accounts receivable, amounts due from Sinopec Group Company and fellow subsidiaries, amounts due from
+associates and joint ventures, financial assets at FVOCI and other receivables. Financial liabilities of the Group include short-term debts, loans from
+Sinopec Group Company and fellow subsidiaries, derivative financial liabilities, trade accounts payable and bills payable, amounts due to Sinopec
+Group Company and fellow subsidiaries, amounts due to associates and joint ventures, other payables, long-term debts and lease liabilities.
+Overview
+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.
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+for the year ended 31 December 2021
+Level 2
+RMB million
+Level 1
+RMB million
+Equity instruments
+3,223
+3,223
+804
+2,419
+Level 3
+RMB million
+804
+2,419
+Total
+RMB million
+2,900
+- Equity investments, listed and at quoted market price
+1
+1
+Derivative financial assets:
+- Derivative financial assets
+9,628
+Financial assets at fair value through other comprehensive income:
+12,528
+767
+5,939
+25,077
+Financial assets at fair value through profit or loss:
+6,527
+Liabilities
+6,062
+- Equity instruments
+149
+Financial assets at fair value through other comprehensive income:
+- Trade accounts receivable and bills receivable
+Derivative financial liabilities:
+- Derivative financial liabilities
+At 31 December 2020
+Assets
+Level 1
+Level 2
+Level 3
+RMB million
+RMB million
+RMB million
+Total
+RMB million
+5,883
+12,488
+18,371
+179
+588
+5,939
+12,488
+1,376
+Oil and gas properties and reserves
+- Trade accounts receivable and bills receivable
+Carrying amount
+Fair value
+31 December
+2021
+RMB million
+88,593
+85.610
+31 December
+2020
+RMB million
+76,674
+74,282
+The Group has not developed an internal valuation model necessary to estimate the fair values of loans from Sinopec Group Company and
+fellow subsidiaries as it is not considered practicable to estimate their fair values because the cost of obtaining discount and borrowing rates for
+comparable borrowings would be excessive based on the Reorganisation of the Group, the Group's existing capital structure and the terms of the
+borrowings.
+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.
+Financial Statements (International)
+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.
+The accounting for the exploration and production's oil and gas activities is subject to accounting rules that are unique to the oil and gas industry.
+There are two methods to account for oil and gas business activities, the successful efforts method and the full cost method. The Group has elected
+to use the successful efforts method. The successful efforts method reflects the volatility that is inherent in exploring for mineral resources in that
+costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include dry hole costs, seismic costs
+and other exploratory costs. Under the full cost method, these costs are capitalised and written-off or depreciated over time.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated at least
+annually and take into account recent production and technical information about each field. In addition, as prices and cost levels change from
+year to year, the estimates of proved and proved developed reserves also change. This change is considered a change in estimate for accounting
+purposes and is reflected on a prospective basis in relation to depreciation rates. Oil and gas reserves have a direct impact on the assessment of
+the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves estimates are revised
+downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration the
+anticipated method of dismantlement required in accordance with industry practices in similar geographic area, including estimation of economic
+life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are capitalised as oil and
+gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+- Derivative financial assets
+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.
+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:
+1,525
+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.
+Fair values (Continued)
+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
+211
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+(ii) Fair values of financial instruments carried at other than fair value
+Derivative financial assets:
+8,181
+At 31 December 2021
+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
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+400,312
+116,919
+117,550
+404,391
+(240)
+(469)
+204
+(1,857)
+(3,944)
+(31,479)
+(35,110)
+1,824
+18,821
+1,824
+Proved undeveloped reserves
+Production
+212
+(1,108)
+(1,108)
+(1,069)
+(1,069)
+End of year
+8,449
+8,449
+8,181
+Proved developed reserves
+Beginning of year
+6,357
+6,357
+6,026
+6,026
+End of year
+6,734
+6,734
+6,357
+6,357
+Beginning of year
+Assets
+39,950
+116,919
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts and loans from Sinopec Group Company and
+fellow subsidiaries. Debts bearing interest at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value
+interest rate risk respectively. The interest rates and terms of repayment of short-term and long-term debts, and loans from Sinopec Group
+Company and fellow subsidiaries of the Group are disclosed in Note 30.
+As at 31 December 2021, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other
+variables held constant, would decrease/increase the Group's profit for the year by approximately RMB254 million (2020: decrease/increase
+by approximately RMB245 million). This sensitivity analysis has been determined assuming that the change of interest rates was applied to
+the Group's debts outstanding at the date of the statement of financial position with exposure to cash flow interest rate risk. The analysis is
+performed on the same basis for 2020.
+(c) Commodity price risk
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products
+and chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the
+Group. The Group uses derivative financial instruments, including commodity futures and swaps contracts, to manage a portion of this risk.
+Based on the dynamic study and judging of the market, combined with the resource demand and production and operation plan, the Group
+evaluate and monitor the market risk exposure caused by transaction positions, and continuously manage and hedge the risk of commodity price
+fluctuation caused by market changes.
+As at 31 December 2021, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. As at 31 December 2021, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB18,359 million (2020: RMB12,353 million) and derivative financial liabilities of RMB3,214 million (2020:
+RMB4,808 million).
+As at 31 December 2021, it is estimated that a general increase/decrease of USD10 per barrel in basic price of derivative financial instruments,
+with all other variables held constant, would impact the fair value of derivative financial instruments, which would decrease/increase the Group's
+profit for the year by approximately RMB2,996 million (2020: increase/decrease RMB3,592 million), and decrease/increase the Group's other
+reserves by approximately RMB1,160 million (2020: increase/decrease RMB10,379 million). This sensitivity analysis has been determined
+assuming that the change in prices had occurred at the date of the statement of financial position and the change was applied to the Group's
+derivative financial instruments at that date with exposure to commodity price risk. The analysis is performed on the same basis for 2020.
+210
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values
+(i) Financial instruments carried at fair value
+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.
+(b) Interest rate risk
+131,674
+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.
+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.
+8,881
+9,464
+240
+469
+4,911
+102
+(182)
+12
+3,912
+8,881
+117,000
+117,000
+117,000
+117,000
+92,280
+96,224
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Market risk
+(a) Currency risk
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Others
+for the year ended 31 December 2021
+725,025
+56,765
+49,311
+9,015
+8,079
+104,426
+105,691
+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
+734,894
+521,383
+121,838
+344,918
+Contract liabilities
+Other payables
+Total current liabilities
+Net current liabilities
+Total assets less current liabilities
+Non-current liabilities
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+Provisions
+Other long-term liabilities
+Total non-current liabilities
+Equity
+Share capital
+Reserves
+Total equity
+7,505
+5,840
+280,560
+234,844
+412,890
+137,785
+71,840
+214
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Profit for the year
+Distribution to owners (Note 14)
+Appropriation
+Special reserve
+1,171
+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
+Balance at 1 January
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Retained earnings
+Special reserve
+for the year ended 31 December 2021
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+(a) RESERVES MOVEMENT OF THE COMPANY
+The reconciliation between the opening and closing balances of each component of the Group's consolidated reserves is set out in the
+consolidated statement of changes in equity. Details of the change in the Company's individual component of reserves between the beginning
+and the end of the year are as follows:
+Capital reserve
+Balance at 1 January
+Others
+Balance at 31 December
+Share premium
+Balance at 1 January
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+Balance at 31 December
+Discretionary surplus reserve
+Balance at 1 January
+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
+Balance at 31 December
+91,365
+Trade accounts payable and bills payable
+362
+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 associates
+Interest in joint ventures
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+Long-term prepayments and other assets
+269,456
+259,087
+73,782
+69,508
+RMB
+17,609
+2020
+31 December
+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)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Amounts in million)
+Note
+31 December
+2021
+14,761
+201
+428
+Inventories
+63,661
+39,034
+Prepaid expenses and other current assets
+73,906
+53,816
+Total current assets
+275,105
+223,080
+Current liabilities
+Short-term debts
+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
+796
+971
+Dividends receivable
+707
+8,715
+12,661
+38,848
+30,855
+Total non-current assets
+Current assets
+872,679
+846,863
+Cash and cash equivalents
+34,575
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+28,081
+76,116
+71,107
+Derivative financial assets
+4,503
+7,776
+Trade accounts receivable
+21,146
+21,763
+Financial assets at fair value through other comprehensive income
+227
+Time deposits with financial institutions
+1,171
+(7,379)
+678
+21,762
+21,762
+16,752
+16,752
+Development
+46,147
+45,590
+557
+38,241
+37,636
+605
+Total costs incurred
+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
+Exploration
+442
+The Group
+China
+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
+243,323
+235,914
+7,409
+Table II: Costs incurred in oil and gas exploration and development
+2021
+2020
+RMB million
+RMB million
+Total
+China
+Other
+countries
+Total
+Other
+countries
+Share of net capitalised costs of associates and
+joint ventures
+100
+Total of the Group's and its equity method investments'
+exploration and development costs
+72,953
+72,953
+52,354
+52,354
+Transfers
+86,650
+84,484
+2,166
+58,069
+56,052
+2,017
+159,603
+157,437
+2,166
+110,423
+108,406
+2,017
+Production costs excluding taxes
+(49,649)
+(48,674)
+(975)
+Other
+countries
+100
+China
+2020
+RMB million
+68,351
+67,352
+999
+55,093
+54,388
+705
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+217
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+218
+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
+Total
+China
+2021
+RMB million
+Other
+countries
+Total
+(44,595)
+Equity method investments
+235,914
+Effects of major differences between the net profit under CASS and the profit for the year under IFRS are analysed as follows:
+Note
+2021
+Net profit under CASS
+RMB million
+85,030
+2020
+RMB million
+42,097
+Adjustments:
+Government grants
+Safety production fund
+Others
+(i)
+(ii)
+51
+52
+775
+237
+Profit for the year under IFRS*
+(5)
+85,851
+(115)
+42,271
+*
+The figures are extracted from the consolidated financial statements prepared in accordance with the accounting policies complying with IFRS during the year ended
+31 December 2020 and 2021 which have been audited by PricewaterhouseCoopers and KPMG, respectively.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+(1,018)
+887,702
+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.
+915,074
+(967)
+3,944
+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
+Shareholders' equity under CASS
+Adjustments:
+888,720
+Government grants
+(i)
+Total equity under IFRS*
+1,566
+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.
+2021
+RMB million
+17
+37,439
+6
+Total capitalised costs
+1,025,160
+984,330
+40,830
+979,675
+938,743
+40,932
+Accumulated depreciation, depletion, amortisation
+and impairment losses
+(787,623)
+(748,705)
+Net capitalised costs
+237,537
+235,625
+(38,918)
+1,912
+(742,195)
+237,480
+(702,829)
+(39,366)
+40,909
+Table I: Capitalised costs related to oil and gas producing activities
+716,683
+184,621
+113
+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
+Supporting equipments and facilities
+188,766
+188,742
+24
+Uncompleted wells, equipments and facilities
+43,349
+43,236
+757,592
+184,638
+37,445
+(43,487)
+(1,108)
+Exploration expenses
+101
+101
+111
+111
+Production
+(248)
+(243)
+(5)
+(257)
+(250)
+(7)
+End of year
+1,440
+1,416
+24
+1,252
+1,232
+20
+Non-controlling interest in proved developed and
+undeveloped reserves at the end of year
+8
+Extensions and discoveries
+8
+109
+141
+countries
+Total
+The Group
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+Beginning of year
+1,252
+1,232
+20
+1,450
+1,433
+17
+Revisions of previous estimates
+194
+185
+9
+(161)
+(171)
+10
+Improved recovery
+141
+109
+China
+5
+Proved developed reserves
+102
+5
+Proved developed and undeveloped reserves (gas)
+(billion cubic feet)
+Beginning of year
+8,181
+8,181
+7,216
+7,216
+Revisions of previous estimates
+32
+32
+171
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+171
+Improved recovery
+666
+666
+692
+692
+Extensions and discoveries
+107
+5
+125
+End of year
+Beginning of year
+1,145
+1,130
+15
+1,343
+1,326
+17
+End of year
+1,315
+1,291
+24
+1,145
+1,130
+15
+Proved undeveloped reserves
+Beginning of year
+107
+102
+5
+107
+107
+125
+678
+Total
+Other
+countries
+(7,872)
+(353)
+188
+188
+Results of operation from producing activities
+23,994
+23,616
+378
+(3,687)
+(3,930)
+243
+Equity method investments
+Revenues
+Sales
+8,812
+8,812
+Production costs excluding taxes
+Exploration expenses
+(2,246)
+8,812
+4,913
+8,812
+(8,225)
+4,913
+Income tax expense
+(3,930)
+(12,382)
+(12,382)
+(9,716)
+(9,716)
+Depreciation, depletion, amortisation and
+impairment losses
+(54,104)
+(53,644)
+(460)
+(52,608)
+(51,754)
+(854)
+Taxes other than income tax
+(11,249)
+(11,249)
+(7,379)
+Profit before taxation
+32,219
+31,488
+731
+(3,875)
+55
+Other
+(2,246)
+4,913
+(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.
+2021
+2020
+China
+(303)
+(355)
+(355)
+1,045
+4,913
+(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
+(998)
+Total of the Group's and its equity method investments'
+results of operations for producing activities
+(533)
+(940)
+(940)
+(4,391)
+(4,391)
+(1,930)
+(1,930)
+1,642
+1,642
+1,045
+(533)
+1,857
+People's Republic of China:
+London E14 5LB, U.K.
+www.sinopec.com
+(101,328)
+68,446
+19,375
+(72,118)
+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
+(2,174)
+Equity method investments
+(1,984)
+(5,190)
+CHINESE ABBREVIATION
+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)
+4,967
+Net changes for the year
+Net changes in income taxes
+Previously estimated development costs incurred during the year
+Accretion of discount
+(4,828)
+(4,828)
+(10,201)
+(10,201)
+10,757
+10,757
+20,350
+20,350
+(1,740)
+(1,740)
+(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
+(1,284)
+10,149
+5,929
+251,644
+240,370
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Net changes in estimated future development cost
+Net changes in prices and production costs
+Sales and transfers of oil and gas produced, net of production costs
+The Group
+2020 (Revised)
+RMB million
+RMB million
+2021
+Table VI: Changes in the standardised measure of discounted cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+中国石化
+Financial Statements
+Supplemental Information on Oil and
+Financial Statements
+221
+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
+10,149
+176,949
+178,978
+11,274
+Gas Producing Activities (Unaudited)
+(1,284)
+ENGLISH ABBREVIATION
+LEGAL REPRESENTATIVE
+REGISTERED ADDRESS CHANGE INFORMATION
+: http://www.sinopec.com
+ir@sinopec.com
+86-10-59960386
+E-mail addresses
+Website
+Fax
+8th Floor, Prince's Building
+10 Chater Road Central,
+Hong Kong
+Council Ordinance
+Auditor registered in accordance
+with the Financial Reporting
+Public Interest Entity
+Address
+Auditors
+: KPMG
+Overseas
+: 100738
+Postcode
+Beijing, PRC
+1 East Chang An Avenue,
+Oriental Plaza
+KPMG Tower
+: 8th Floor
+Certified Public Accountants in
+China
+: KPMG Huazhen LLP
+Address
+Auditors
+No change during the reporting period
+Domestic
+PLACE OF BUSINESS IN HONG KONG
+Convention Plaza
+Printed on environmentally friendly paper
+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
+Chaoyang District
+No.22 Chaoyangmen North Street,
+Board Secretariat
+China Petroleum & Chemical Corporation
+The PRC:
+AVAILABLE AT
+COPIES OF THIS ANNUAL REPORT ARE
+LEGAL ADVISORS
+No change during the reporting period
+DISCLOSURE AND THE PROVISION OF
+REPORTS
+CHANGES IN THE PLACES FOR INFORMATION
+Hong Kong
+Wanchai
+1 Harbour Road
+20th Floor, Office Tower
+SINOPEC CORP.
+NAMES AND ADDRESSES OF AUDITORS OF
+: 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.
+Postcode
+Beijing, PRC
+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
+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
+H Shares:
+Stock code : 600028
+: SINOPEC CORP
+Stock name
+Shanghai Stock Exchange
+A Shares:
+Sinopec Corp.
+NAMES AND STOCK CODES
+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
+PLACES OF LISTING OF SHARES, STOCK
+370
+Hong Kong Stock Exchange
+(3,900)
+End of year
+45
+46
+46
+Beginning of year
+Proved undeveloped reserves
+244
+244
+263
+263
+End of year
+245
+245
+244
+244
+Beginning of year
+Proved developed reserves
+(24)
+290
+11
+290
+309
+309
+(24)
+(25)
+(25)
+46
+End of year
+46
+45
+46
+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
+46
+Production
+11
+35
+Beijing PRC
+Postcode: 100020
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+223
+Corporate Information
+Documents for Inspection
+DOCUMENTS FOR INSPECTION
+224
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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:
+a) The original copies of the 2021 annual report
+signed by Mr. Ma Yongsheng, the Chairman;
+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.;
+c) The original auditors' reports signed by the
+auditors; and
+d) Copies of the documents and announcements
+that Sinopec Corp. has published in the
+newspapers designated by the CSRC during
+the reporting period.
+By Order of the Board
+Ma Yongsheng
+Chairman
+Beijing, PRC, 25 March 2022
+If there is any inconsistency between the Chinese
+and English versions of this annual report, the
+Chinese version shall prevail.
+中国石油化工股份有限公司
+SINOPEC CORP.
+中國北京市朝陽區朝陽門北大街 22 號
+22 Chaoyangmen North Street, Chaoyang District,
+370
+Beijing, China
+No.5, Dong San Huan Central Road
+Chaoyang District
+20th Floor, Fortune Financial Centre
+Haiwen & Partners
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+35
+Extensions and discoveries
+-
+-
+1
+1
+Improved recovery
+290
+13
+290
+13
+8
+8
+Revisions of previous estimates
+4
+290
+Beginning of year
+associates and joint ventures (oil) (million barrels)
+Proved developed and undeveloped reserves of
+Equity method investments
+Other
+countries
+China
+Total
+Other
+countries
+China
+2020
+2021
+Table IV: Reserve quantities information (Continued)
+290
+4
+Total
+(4)
+(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
+2020 (Revised) Note
+RMB million
+2021
+RMB million
+10% annual discount for estimated timing of cash flows
+Standardised measure of discounted future net cash flows
+Total of the Group's and its equity method investments' results
+of standardised measure of discounted future net cash flows
+Undiscounted future net cash flows
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+Equity method investments
+10% annual discount for estimated timing of cash flows
+Standardised measure of discounted future net cash flows
+Discounted future net cash flows attributable to
+non-controlling interests
+Undiscounted future net cash flows
+(3,585)
+(79,562)
+(77,687)
+(1,875)
+176,949
+173,049
+(4)
+1,125
+240,370
+241,495
+(1,452)
+(52,706)
+(54,158)
+(190)
+(93,164)
+(93,354)
+Future income tax expenses
+(2,448)
+227,207
+1,315
+333,534
+334,849
+(1,237)
+(11,758)
+(2,420)
+(111,178)
+(113,598)
+(3,126)
+(77,659)
+(80,785)
+229,655
+Future development costs
+(10,521)
+Future cash flows
+End of year
+307
+1,433
+1,740
+310
+1,232
+1,542
+Beginning of year
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+2
+2
+21
+1,749
+21
+6
+9
+9
+8
+86
+10
+10
+7
+Future production costs
+(3)
+(3)
+7
+8
+1,416
+8
+333
+Table V: Standardised measure of discounted future net cash flows
+The standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with
+the requirements of "ASC Topic 932 Extractive Activities - Oil and Gas", "SEC Rule 4-10 of Regulation S-X", and "Industrial Information Disclosure
+Guidelines for Public Company - No.8 Oil and Gas Exploitation". Estimated future cash inflows from production are computed by applying the average,
+first-day-of-the-month price adjusted for differential for oil and gas during the twelve-month period before the ending date of the period covered by
+the report to year-end quantities of estimated net proved reserves. Future price changes are limited to those provided by contractual arrangements in
+existence at the end of each reporting year. Future development and production costs are those estimated future expenditures necessary to develop and
+produce year-end estimated proved reserves based on year-end cost indices, assuming continuation of year-end economic conditions. Estimated future
+income taxes are calculated by applying appropriate year-end statutory tax rates to estimated future pre-tax net cash flows, less the tax basis of related
+assets. Discounted future net cash flows are calculated using 10% discount factors. This discounting requires a year-by-year estimate of when the future
+expenditure will be incurred and when the reserves will be produced.
+The information provided does not represent management's estimate of the Group's and its equity method investments' expected future cash flows or
+value of proved oil and gas reserves. Estimates of proved reserve quantities are imprecise and change over time as new information becomes available.
+Moreover, probable and possible reserves, which may become proved in the future, are excluded from the calculations. The arbitrary valuation requires
+assumptions as to the timing and amount of future development and production costs. The calculations are made for the years ended 31 December
+2021 and 2020 and should not be relied upon as an indication of the Group's and its equity method investments' future cash flows or value of its oil
+and gas reserves.
+The Group
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+220 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+10
+8,191
+7
+8,449
+8,456
+End of year
+9
+8,181
+7,225
+310
+7,216
+Proved developed and undeveloped reserves (gas)
+Beginning of year
+1,232
+(billion cubic feet)
+1,542
+8,181
+10
+8,191
+In 2021, sales revenue of gasoline was
+RMB460.1 billion, representing an
+increase of 40.7% over 2020.
+The sales revenue of chemical feedstock
+was RMB180.4 billion, representing an
+increase of 74.3% over 2020.
+The sales revenue of kerosene was
+RMB64.6 billion, representing an increase
+of 39.7% over 2020.
+The sales revenue of diesel was
+RMB327.1 billion, representing an
+increase of 22.8% over 2020.
+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.
+22
+Diesel
+Chemical feedstock
+Kerosene
+Gasoline
+Sales Volume (thousand tonnes)
+Year ended 31 December
+The following table sets forth the sales volumes, average realised prices and the respective changes of the Company's major refined oil products
+of the segment in 2021 and 2020.
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Management's Discussion
+Other refined petroleum products
+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
+5,813
+2021
+17,309
+27.8
+22
+0.0
+4,354
+5,563
+(3.9)
+61,167
+Average realised price (RMB/tonne)
+Year ended 31 December
+58,807
+17,313
+7,208
+13.5
+56,259
+63,827
+2020 Change (%)
+2021
+2020 Change (%)
+24.0
+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.
+45.8
+(2) Refining Segment
+1,300,926
+890,283
+1,297,701
+2.7
+10,818
+11,106
+37.0
+360,811
+890,676
+494,397
+371,629
+505,503
+1.8
+20,828
+3,734
+28.6
+1,081,378
+1,390,340
+21,204
+36.0
+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.
+46.1
+(4,421)
+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.
+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.
+Procurement cost of LNG increased
+by RMB45.0 billion year on year;
+Depreciation, depletion and amortisation
+increased by RMB6.6 billion year on
+year, as a result of the increase of
+depletion ratio; Resource Tax and special
+oil income levy increased by RMB3.9
+billion year on year; Exploration expense
+increased by RMB2.7 billion year on year;
+Impairment decreased by RMB6.0 billion
+year on year;
+In 2021, the operating expenses of
+this segment was RMB245.3 billion,
+representing an increase of 33.2%
+over 2020. That was mainly due to the
+following:
+In 2021, the segment sold 34.09 million
+tonnes of crude oil, representing a
+decrease of 1.2% over 2020. Natural
+gas sales volume was 30.8 billion cubic
+meters (bcm), representing an increase
+of 11.1% over 2020. Regasified LNG
+sales volume was 19.1 bcm, representing
+an increase of 22.3% over 2020. LNG
+sales volume was 6.18 million tonnes,
+representing an increase of 0.1% over
+2020. Average realised prices of crude
+oil, natural gas, Regasified LNG, and LNG
+were RMB2,932 per tonne, RMB1,605 per
+thousand cubic meters, RMB2, 119 per
+thousand cubic meters, and RMB3,909
+per tonne, respectively, representing an
+increase of 54.2%, 18.0%, 19.4%, and
+53.7% respectively over 2020.
+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.
+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.
+(1) Exploration and Production Segment
+(3,225)
+Elimination of inter-segment profit/(loss)
+Operating expenses
+Operating revenues
+Corporate and Others
+Operating profit
+Operating revenues
+Operating expenses
+Chemicals Segment
+Operating profit
+(393)
+4,417
+Operating loss
+2,673
+33,644
+45,234
+44,923
+Direct sales and distribution
+22.2
+5,351
+6,537
+(8.5)
+36,757
+Retail
+21.1
+4,865
+5,890
+1.4
+77,507
+78,566
+Diesel
+31.9
+4,955
+40,750
+10.2
+5,406
+4,426
+23
+Operating expenses
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+35.6
+2,536
+3,437
+10.8
+23,331
+6,537
+25,847
+43.2
+2,634
+3,772
+2.2
+20,828
+21,296
+Kerosene
+22.1
+Fuel oil
+39.7
+7.2
+26,548
+(3) Marketing and distribution segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from the
+refining segment and the third parties,
+conducting direct sales and wholesale
+to domestic customers and retailing,
+distributing oil products through the
+segment's retail and distribution network
+as well as providing related services.
+billion compared with that of 2020.
+This was mainly due to the fact that the
+segment seized the opportunity of market
+recovery to increase the utilisation rates
+of facilities and made efforts to optimise
+the product slate. The inventory gains of
+crude oil and refined products increased,
+and the refining margin improved
+significantly.
+In 2021, the operating revenue of
+the segment totaled RMB65.3 billion,
+representing an increase of RMB70.8
+In 2021, the refining unit cash operating
+cost (defined as operating expenses
+less the processing cost of crude oil
+and refining feedstock, depreciation and
+amortisation, taxes other than income
+tax and other operating expenses, then
+divided by the throughput of crude oil
+and refining feedstock) was RMB213 per
+tonne, representing an increase of 17.5%
+over 2020, which was mainly attributed
+to the increased expense of safety,
+environment protection, and maintenance
+year on year.
+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
+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.
+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:
+Sales volume (thousand tonnes)
+Year ended 31 December
+Average realised price (RMB/tonne)
+Year ended 31 December
+Direct sales and distribution
+18.5
+6,940
+8,223
+4.7
+61,446
+64,325
+Retail
+24,770
+21.4
+7,730
+5.4
+2020 Change (%)
+2021
+2020 Change (%)
+86,216
+90,873
+Gasoline
+2021
+6,370
+28.1
+117,847
+1,411,544
+Inter-segment sales
+5.6
+6.3
+3.4
+3.6
+173,109
+External sales*
+Refining Segment
+4.9
+5.2
+167,755
+249,998
+Operating revenues
+1.7
+1.8
+57,513
+87,298
+1,212,455
+5.2
+826,219
+23.7
+4,854
+7,075
+1,411,544
+Operating revenues
+Inter-segment sales
+52.1
+51.2
+31.6
+29.0
+1,097,352
+1,404,469
+External sales*
+Marketing and Distribution Segment
+27.1
+28.5
+944,066
+1,385,564
+Operating revenues
+24.9
+5.9
+3.2
+3.4
+(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.
+(4) Profit before taxation was RMB109.2
+billion, representing an increase of
+124.6% compared with 2020.
+(3) Operating profit was RMB94.6 billion,
+representing an increase of 592.3%
+over the same period of 2020. That was
+mainly because that with the increase
+of international crude oil prices and
+steady improvement of market demand,
+the Company increased its processing
+volume and sales volumes which led to
+an increase in the gross profit margin of
+petrochemical products and significant
+improvement of the Company's operating
+results.
+Other operating expense, net was
+RMB21.7 billion, representing an increase
+of RMB275.7% over the same period of
+2020. That was mainly due to impact of
+the loss on disposal of property, plant,
+equipment and other non-current assets.
+Taxes other than income tax was
+RMB259.0 billion, representing an
+increase of 10.2% over the same period
+of 2020. That was mainly due to the
+increase of consumption tax resulting
+from the increase of production volume
+in gasoline and diesel.
+Personnel expenses was RMB103.5
+billion, representing an increase of
+18.2% over 2020. That was due to the
+government's preferential policy on social
+insurance during the COVID-19 pandemic
+in 2020, which was cancelled in 2021,
+as well as a year-on-year increase in
+performance-related bonus as a reward
+for the significant improvement in
+operating profit.
+Exploration expenses was RMB12.4
+billion, representing an increase of
+27.4% compared with 2020. That was
+mainly due to increased investment in
+exploration and development to improve
+the quality of oil and gas assets.
+Depreciation, depletion and amortisation
+was RMB115.7 billion, representing an
+increase of 7.6% over the same period of
+2020. That was mainly because that the
+proved reserve decreased resulting from
+the decrease of international crude oil
+prices and appreciation of RMB exchange
+rate in 2020, thus the depletion ratio of
+oil and gas assets increased, which led to
+the depreciation and depletion increased.
+Selling, general and administrative
+expenses was RMB55.0 billion,
+representing an increase of 2.4% over
+2020.
+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.
+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.
+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:
+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:
+(2) Operating expenses
+In 2021, petroleum products (mainly
+consisting of refined oil products and
+other refined petroleum products) sold
+by Refining Segment and Marketing
+and Distribution Segment achieved
+external sales revenues of RMB1,535.5
+billion (accounting for 56.0% of the
+Company's revenue), representing an
+increase of 30.6% over 2020, mainly due
+to the increase in prices and volume of
+refined oil products. The sales revenue
+of gasoline, diesel and kerosene was
+RMB1,243.9 billion, representing an
+increase of 28.5% over 2020, and
+accounting for 81.0% of the total sales
+revenue of petroleum products. Turnover
+of other refined petroleum products
+was RMB291.6 billion, representing an
+increase of 49.0% compared with that of
+2020, accounting for 19.0% of the total
+sales revenue of petroleum products.
+The Company's external sales revenue
+of chemical products was RMB424.8
+billion, representing an increase of 31.8%
+over 2020, accounting for 15.5% of
+the Company's total revenue. This was
+mainly due to the increase in price and
+sales volume of chemical products.
+Most crude oil and a small portion of
+natural gas produced by the Company
+were internally used for refining and
+chemical production, with the remaining
+sold to external customers. In 2021,
+the turnover from crude oil, natural
+gas and other upstream products sold
+externally amounted to RMB156.0 billion,
+representing an increase of 49.3% over
+2020. The change was mainly due to
+increases in crude oil and natural gas
+prices, and the increase of natural gas
+sales volume.
+23
+(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
+110,242
+162,700
+(%)
+(%)
+(%)
+(%)
+2020
+2021
+0.1
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+Operating revenues
+Year ended 31 December
+2021
+2020
+RMB million RMB million
+Inter-segment sales
+Exploration and Production Segment
+External sales*
+The following table shows the operating revenues by each segment, the contribution of external sales and inter-segment sales as a percentage
+of operating revenues before elimination of inter-segment sales, and the contribution of external sales as a percentage of consolidated operating
+revenues (i.e. after elimination of inter-segment sales) for the periods indicated.
+revenues.
+The Company manages its operations through four business segments, namely exploration and production segment, refining segment, marketing
+and distribution segment and chemicals segment, and corporate and others. Unless otherwise specified, the inter-segment transactions have not
+been eliminated from financial data discussed in this section. In addition, the operating revenue data of each segment include other operating
+2 RESULTS OF SEGMENT OPERATIONS
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+As a percentage of
+consolidated operating
+revenue before elimination
+of inter-segment sales
+Year ended 31 December
+2021
+2020
+0.1
+1,102,206
+29.1
+Operating profit/(loss)
+Operating expenses
+Operating revenues
+Exploration and Production Segment
+(%)
+RMB million
+Change
+Year ended 31 December
+2021
+2020
+RMB million
+The following table sets forth the operating revenues, operating expenses and operating profit by each segment before elimination of the inter-
+segment transactions for the periods indicated, and the percentage change of 2021 compared to 2020.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Management's Discussion
+21
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Other operating revenues are included.
+Refining Segment
+Operating revenues
+249,998
+167,755
+Operating revenues
+Marketing and Distribution Segment
+(5,525)
+65,279
+Operating profit/(loss)
+39.0
+949,591
+1,320,285
+*
+Operating expenses
+944,066
+1,385,564
+(16,476)
+4,685
+33.2
+184,231
+245,313
+49.0
+46.8
+1,102,206
+100.0
+(2,109,426) (1,371,215)
+2,740,884 2,104,724
+15.2
+16.0
+9.5
+9.0
+330,927
+435,261
+Revenue
+Elimination of inter-segment sales
+Operating revenue before elimination of inter-segment sales
+Operating revenues
+Inter-segment sales
+Corporate and Others
+Inter-segment sales
+Operating revenues
+External sales*
+External sales*
+Chemicals Segment
+31.7
+70,242
+40,702
+1.4
+1.2
+100.0
+100.0
+4,850,310 3,475,939
+25.6
+26.8
+12.4
+15.1
+732,356 430,073
+1,297,701 890,283
+100.0
+21.9
+13.2
+11.7
+460,210
+565,345
+10.7
+10.4
+371,629
+505,503
+20.6
+and Analysis
+(20,570)
+(6,526)
+19,634
+Management's Discussion
+and Analysis
+9,521
+11,361
+23,102
+65,360
+613
+(1,371,215)
+2,104,724
+890,283
+1,297,701
+(2,109,426)
+2,740,884
+371,629
+505,503
+Consolidated operating profit
+other income and asset disposal gains/(losses)
+Financial expenses, investment income, losses from changes in fair value,
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+Marketing and Distribution Segment
+9,592
+(2,048)
+Refining Segment
+(4,421)
+6,878
+Total assets
+(2) Financial data prepared under CASS
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Management's Discussion
+and Analysis
+28
+and Analysis
+Management's Discussion
+27
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+Operating profit: In 2021, the operating profit of the Company was RMB112.4 billion, representing an increase of RMB62.1 billion as compared
+Iwith that of 2020.
+Net profit attributable to equity shareholders of the Company
+33,271
+71,208
+50,803
+112,414
+46,304
+4,417
+Exploration and Production Segment
+Operating profit/(loss)
+Consolidated operating income
+Funding
+Unit: RMB million
+current year
+loss
+provision
+of the
+Impairment
+15,653
+(14,179)
+15,659
+(6)
+(14,873)
+694
+1,350
+13,798
+767
+15,915
+1,525
+9,228
+Total
+Other equity instruments investment
+7,545
+157
+Cash flow hedges
+Derivative financial instruments
+source
+Self-owned fund
+Self-owned fund
+Self-owned fund
+Self-owned fund
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+1,102,206
+167,755
+944,066
+RMB million
+2020
+1,411,544
+Non-current liabilities
+1,385,564
+Year ended 31 December
+2021
+RMB million
+Marketing and Distribution Segment
+Refining Segment
+Exploration and Production Segment
+Operating income
+(1) Under CASS, the operating income and operating profit or loss by reportable segments were as follows:
+The major differences between the Company's financial statements prepared under CASS and IFRS are set out in Section C of the financial
+statements of the Company on page 216 of this report.
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+249,998
+Shareholder's equity
+Change analysis:
+As of 31
+Elimination of inter-segment sales
+0.4
+45.1
+45.8
+2.2
+1,268,685
+1,297,701
+(2.0)
+38.8
+36.0
+6.9
+466,971
+505,503
+(0.9)
+29.4
+28.1
+6.4
+(2,109,426)
+(2,105,005)
+N/A
+N/A
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+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
+1,317,918
+*: Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+31.5
+30.2
+9.7
+2,216,551
+2,740,884
+Total
+N/A
+N/A
+0.9
+1
+1,411,544
+Marketing and Distribution
+Increase/
+(decrease) of
+Increase
+(3) The results of the principal operations by segments
+At the end of 2021, the shareholders' equity of the Company was RMB916.0 billion, representing an increase of RMB27.3 billion compared with
+that of the end of 2020.
+At the end of 2021, the Company's non-current liabilities was RMB331.9 billion, representing an increase of RMB4.8 billion compared with that
+of the end of 2020.
+At the end of 2021, the Company's total assets was RMB1,889.3 billion, representing an increase of RMB150.4 billion compared with that of the
+end of 2020, mainly because inventory increased by RMB55.2 billion, cash at bank and on hand increased by RMB37.6 billion, long-term equity
+investment increased by RMB20.8 billion, and construction in progress increased by RMB30.4 billion.
+27,321
+888,720
+4,753
+327,181
+150,359
+1,738,896
+Change
+As of 31
+December 2020
+RMB million
+331,934
+916,041
+1,889,255
+December 2021
+RMB million
+Operation
+income
+Segments
+RMB million
+Operation
+cost
+RMB million
+Chemicals
+4.0
+50.8
+46.8
+6.0
+7.0
+37.3
+49.0
+Corporate and Others
+12.9
+249,998
+1,385,564
+Exploration and Production
+Refining
+basis (%)
+year-on-year
+gross profit
+margin on a
+of operation
+Increase of
+income on a operation cost
+year-on-year on a year-on-
+basis (%) year basis (%)
+margin (%)
+Gross profit
+206,332
+1,061,650
+Stock
+1
+Financial assets held for trading
+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.
+Chemical fertiliser
+Synthetic rubber
+Synthetic fibre
+Synthetic resin
+Synthetic fibre monomer and polymer
+Basic organic chemicals
+(5) Corporate and Others
+43.4
+1,950
+2,797
+(16.9)
+1,181
+981
+39.0
+7,986
+11,104
+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.
+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.
+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:
+Total equity
+Non-controlling interests
+Reserves
+Share capital
+Total equity attributable to shareholders of the Company
+Non-current liabilities
+(5.5)
+Current liabilities
+Non-current assets
+Current assets
+Total assets
+The major funding sources of the Company are its operating activities and short-term and long-term loans. The major use of funds includes
+operating expenses, capital expenditures, and repayment of the short-term and long-term debts.
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+(1) Assets, liabilities and equity
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+Total liabilities
+Non-current assets was RMB1,331.2
+billion, representing an increase of
+RMB48.0 billion as compared with that
+1,364
+17.4
+2021
+2020 Change (%)
+47,109
+48,059
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2021
+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.
+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.
+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.
+marketing and distributing petrochemical
+and inorganic chemical products.
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment
+and the third parties and producing,
+(4) Chemicals segment
+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.
+promoted company-owned and actively
+explored emerging business models to
+maintain the increase of volume and
+profit of non-fuel business.
+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's marketing
+expense (defined as the operating
+expenses less the purchase costs, taxes
+other than income tax, depreciation and
+amortization, divided by sales volume)
+was RMB197.66 per tonne, up by 4.11%
+year on year.
+In 2021, the operating 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.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+2020 Change (%)
+2.0
+5,311
+3,569
+6,407
+7,521
+3.8
+1,403
+1,457
+16.4
+7,150
+8,325
+1,289
+4.7
+17,924
+53.0
+4,302
+6,580
+(28.1)
+9,743
+7,010
+48.8
+17,124
+24
+Unit: RMB million
+As of
+(4) Capital Expenditure
+Please refer to "Material Guarantee
+Contracts and Their Performance" in the
+"Significant Events" section of this report.
+(3) Contingent Liabilities
+At the end of 2021, the cash and cash
+equivalents was RMB108.6 billion.
+RMB57.9 billion, representing an increase
+of cash outflow by RMB20.4 billion over
+2020. This was mainly due to an increase
+of RMB3.2 billion in investments from
+non-controlling shareholders,, increase of
+RMB3.6 billion in cash paid for dividends,
+decrease of RMB3.2 billion in dividends
+allocated to non-controlling shareholders
+by subsidiaries, and increase of RMB7.1
+billion in acquisition of non-controlling
+equity interests, and increase in
+repayment for lease liabilities of RMB4.1
+billion.
+Company's financing activities was
+In 2021, the net cash used in the
+In 2021, the net cash used in investing
+activities was RMB145.2 billion,
+representing an increase of RMB42.5
+billion over 2020, of which: income
+from sales of investment and gains from
+investing in associates and joint ventures
+decreased by RMB44.8 billion, capital
+expenditure increased by RMB9.6 billion,
+exploratory wells expenditure increased
+by RMB3.6 billion, purchasing investment
+and associates and joint ventures
+investments decreased by RMB1.1 billion,
+and cash outflow from changes in time
+deposit with maturities over three months
+decreased by RMB13.2 billion.
+In 2021, the net cash generated from
+operating activities of the Company
+was RMB225.2 billion, representing an
+increase of RMB56.7 billion over 2020.
+This was mainly due to the increase of
+RMB60.6 billion in profit before taxation.
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+Major items of cash flows
+Unit: RMB million
+The following table sets forth the major items in the consolidated cash flow statements for 2021 and 2020.
+(2) Cash Flow
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+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)
+variation of
+fair values
+recorded
+as equity
+variation of
+fair values
+in the
+current year
+Accumulated
+losses from
+Profits and
+the year
+of the year
+Items
+and Analysis
+End of
+Items relevant to measurement of main fair values
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+26
+26
+The Company has established sound
+decision-making mechanism, business
+process and internal control systems
+relevant to financial instrument
+accounting and information disclosure.
+(6) Measurement of fair values of derivatives
+and relevant system
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2021, the Company paid
+environmental expenditures of RMB11.0
+billion.
+R&D expenditures include expenses
+occurred in the period. In 2021 the
+expenditures for R&D was RMB21.1
+billion, of which expense was RMB11.5
+billion, and capitalised cost was RMB9.6
+billion.
+Beginning
+As of
+31 December
+2021
+Discussion
+25
+328,199
+332,901
+118,285
+522,995
+122,987
+851,194
+974,181
+47,995
+1,283,236
+1,331,231
+102,364
+455,660
+150,359
+Change
+2020
+1,738,896
+1,889,255
+558,024
+31 December
+4,702
+774,182
+746,325
+27,857
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Total equity attributable to owners of
+the Company was RMB774.2 billion,
+representing an increase of RMB27.9
+billion compared with that of the end of
+2020.
+Non-current liabilities was RMB332.9
+billion, representing an increase of
+RMB4.7 billion compared with that of the
+end of 2020.
+RMB11.5 billion, accounts payable and
+bills payable and liabilities from contracts
+increased by RMB53.7 billion as a
+result of raw materials price escalation
+and operation scale expansion, other
+payables increased by RMB60.6 billion,
+and contract liabilities decreased RMB1.6
+billion.
+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
+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:
+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.
+27,372
+Management's
+887,702
+(485)
+141,377
+140,892
+27,857
+625,254
+653,111
+121,071
+121,071
+915,074
+Management's Discussion
+and Analysis
+641,280
+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
+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.
+8 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+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.
+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.
+6 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+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.
+CORPORATE GOVERNANCE (CONTINUED)
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+Corporate Governance
+32
+Corporate Governance
+31
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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.
+32
+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).
+(1) Compliance with the Corporate
+Governance Code
+A Board of Directors
+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
+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. The Chairman encourages open and
+active discussions. The Directors
+fully and deeply participated in the
+discussions of significant decisions in
+the Board meetings.
+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
+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.
+(1) Mr. Bi was not a relationship
+holder of the Company or China
+Petrochemical Corporation in CICC
+throughout his service in CICC;
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+2 GENERAL MEETINGS
+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
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Ma Yongsheng, aged 60, Chairman of
+the Board of Sinopec Corp. Mr. Ma is
+Yu Baocai
+Li Yonglin
+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
+Ling Yiqun
+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.
+(1) Directors
+Zhao Dong
+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
+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.
+CORPORATE GOVERNANCE
+(3) Other information about Sinopec Corp.'s
+corporate governance
+11 INTRODUCTION OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+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.
+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
+10 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+(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;
+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
+effective internal control system.
+The Company established a whistle-
+blowing policy in its internal control
+system, providing several channels
+including online reporting, reporting
+by letters, appeals and complaint
+mailbox, etc. to employees to report
+behaviour that violates the internal
+control system of the Company. The
+Audit Committee has reviewed and
+approved such policy.
+d. 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
+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.
+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.
+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.
+C.3 Audit Committee
+evaluation of internal control and risk
+management of the reporting period,
+the Board is of the view that the
+internal control and risk management
+of the Company are effective.
+D 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.
+d. Based upon the review and
+Corporate Governance
+36
+Corporate Governance
+35
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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.
+CORPORATE GOVERNANCE (CONTINUED)
+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.
+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.
+E INVESTOR RELATIONS
+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.
+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.
+b. When Sinopec Corp. holds the general
+meeting of shareholders, shareholders
+who individually or collectively hold 3% of
+the total voting shares of Sinopec Corp.
+may propose a supplemental proposal
+10 days before the date of the general
+meeting.
+collectively hold 10% of the total voting
+shares of Sinopec Corp. may request
+the Board in writing to convene the
+general meeting of shareholders. If the
+Board fails to approve the request to
+convene the meeting according to the
+Rules of Procedure for General Meetings
+of Shareholders, the shareholders may
+convene and hold the meeting at their
+discretion according to applicable laws,
+and reasonable expenses incurred
+will be borne by Sinopec Corp. These
+aforementioned provisions are subject to
+the following conditions: the proposals
+at the general meeting of shareholders
+must fall within the responsibilities of
+the general meeting of shareholders,
+with specific proposals and resolutions
+and in compliance with relevant laws,
+administrative regulations and the
+Articles of Association.
+a. Shareholders who individually or
+G SHAREHOLDERS' RIGHTS
+b. During the reporting period, the Secretary
+to the Board actively participated in
+career development training for more
+than 15 training hours.
+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.
+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.
+Corp., the Secretary to the Board is
+responsible for establishing an effective
+communication channel between
+Sinopec Corp. and its shareholders,
+for setting up special departments to
+communicate with the shareholders and
+for passing the opinions and proposals
+of the shareholders to the Board and
+Management in a timely manner. Contact
+details of Sinopec Corp. can be found in
+the "Investor Centre" column on Sinopec
+Corp.'s website.
+d. According to relevant rules of Sinopec
+F
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+c. The Chairman (or the director who
+performs the duties of Chairman) of
+the Board hosted the annual general
+meeting for the year 2020 and the First
+Extraordinary General Meeting for the
+year 2021. Several members of the Board
+of Directors, the Board of Supervisors,
+and senior management attended
+the meetings and conducted in-depth
+communication with the investors.
+b. During the reporting period, separate
+resolutions were proposed for each
+substantially separate issue at the general
+meeting of shareholders. All resolutions
+were voted by poll in protection of the
+interest of all shareholders. Notices of
+the general meeting were dispatched to
+shareholders 45 days (excluding the date
+of the general meeting) in advance.
+a. Sinopec Corp. attach considerable
+significance to investor relations. The
+Management attends road shows every
+year to answer questions on subjects of
+concern to investors, such as introducing
+the development strategies and the
+production and business performance
+of the Company. The Board Secretariat
+of Sinopec Corp. is responsible for
+communicating with investors. In
+compliance with regulatory provisions,
+Sinopec Corp. enhances communication
+with investors by holding meetings with
+institutional investors, setting up an
+investor hotline, and communicating
+through internet platform, etc.
+COMPANY SECRETARY
+(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;
+(2) Auditors
+d. The external auditors of Sinopec Corp.
+made a statement on their reporting
+responsibilities in the auditor's report
+contained in the financial report.
+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).
+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.
+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.
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+34
+Corporate Governance
+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.
+33
+http://www.sinopec.com.
+Corp. are published on Sinopec
+Corp.'s website at
+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
+A.5 Nomination Committee
+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.
+(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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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. Each of the Directors was able to
+devote sufficient time and efforts to
+handling the affairs of Sinopec Corp.
+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.
+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.
+manner.
+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
+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.
+C.1 Financial reporting
+C ACCOUNTABILITY AND AUDITING
+Remuneration Committee held one
+meeting (please refer to "Meetings
+Held by the Board Committees" under
+the section of "Report of the Board of
+Directors" in this annual report).
+C.
+d. During the reporting period, the
+c. The members of the Remuneration
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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 REMUNERATION AND APPRAISAL
+COMMITTEE
+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.
+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.
+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.
+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.
+Corporate Governance
+49
+0
+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.
+Former Chairman of the 2017.06-2021.05
+Board of supervisor
+Position in
+Sinopec Corp.
+Age
+51
+Gender
+Male
+Name
+Zhao Dong
+Equity interests
+in Sinopec Corp.
+(as of 31 December)
+of the
+Company or
+their related
+Zou Huiping
+Sun Huanquan
+Yu Renming
+Whether
+paid by the
+shareholders
+Tenure
+in 2020
+Remuneration
+paid by
+LIST OF FORMER MEMBERS OF THE BOARD OF SUPERVISORS
+Note: Mr. Li Defang holds 40,000 A shares of Sinopec Corp. (the actual holder of the said shares is the spouse of Mr. Li Defang).
+0
+0
+(RMB1,000,
+before tax)
+No
+Male 61
+Male
+Male
+46
+Yu Xizhi
+Chen Ge
+ooo
+0
+Yes
+0
+Yes
+Supervisor 2006.05-2021.01
+57 Employee Representative Supervisor 2020.05-2021.01
+58 Employee Representative Supervisor 2010.12-2021.01
+0
+0
+0
+0
+2020
+2021
+entities
+Yes
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+No
+0
+0
+No
+Male
+Male
+Chen Yaohuan
+Lv Dapeng
+Male
+Li Defang
+56
+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
+Male
+Yin Zhaolin
+59
+Male
+Zhang Zhiguo
+57
+Male
+56
+Yes
+Yes
+Yes
+40,000
+40,000
+No
+0
+0
+No
+0
+0
+0
+0
+0
+0
+|3| 3| 3|2|2|22|
+1,165.4
+417.2
+298.4
+403.2
+Shou Donghua
+On 29 November 2021, Mr. Yu Baocai was
+appointed as President of Sinopec Corp.
+(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.
+Department of China Petrochemical
+Corporation; in January 2020, he
+0
+0
+No
+1,292.4
+Chief Financial Officer
+Vice President
+59
+Male
+1,451.9
+Zhao Rifeng
+Female
+Shou Donghua
+0
+0
+No
+1,411.0
+Vice President
+52
+59
+No
+Huang Wensheng
+On 2 August 2021, Mr. Zhang Yuzhuo
+resigned as Chairman of the Board, Non-
+executive Director and Chairman of each
+of the Strategy Committee, Nomination
+Committee and Sustainable Development
+Committee (Social Responsibility
+Management Committee) of the Board of
+Sinopec Corp. due to change of working
+arrangement.
+Other Senior Management: Mr. Chen Ge was
+elected as Senior Vice President. Mr. Yu
+Xizhi, Mr. Zhao Rifeng, Mr. Huang Wensheng
+were elected as Vice Presidents. Ms. Shou
+Donghua was appointed as Chief Financial
+Officer. Mr. Huang Wensheng was elected as
+Secretary to the Board.
+Board of Supervisors: Mr. Zhang Shaofeng
+was elected as the Chairman of Board
+of Supervisors. Mr. Jiang Zhenying, Mr.
+Zhang Zhiguo, Mr. Yin Zhaolin, Mr. Guo
+Hongjin were elected as Supervisors. Mr. Li
+Defang, Mr. Lv Dapeng, Mr. Chen Yaohuan
+were elected as Employee Representative
+Supervisors.
+Board of Directors: Mr. Zhang Yuzhuo
+was elected as Non-executive Director and
+Chairman of the Board. Mr. Ma Yongsheng
+was elected as Executive Director and
+President; Mr. Zhao Dong was elected as
+Non-executive Director; Mr. Yu Baocai, Mr
+Ling Yiqun, Mr. Li Yonglin, Mr. Liu Hongbin
+were elected as Executive Directors and
+Senior Vice President. Mr. Cai Hongbin and
+Mr. Ng Kar Ling Johnny, Ms. Shi Dan, Mr.
+Bi Mingjian were elected as Independent
+Non-executive Directors. Mr. Tang Min was
+no longer the Independent Non-executive
+Directors of the Board.
+On 25 May 2021, the members of the Eighth
+Session of the Board of Directors and the
+Board of Supervisors (non-Employee-
+Representative Supervisors) were elected at
+the 2020 general meeting of shareholders.
+The Chairman of the Board was elected and
+the senior management appointed at the
+1st meeting of the Eighth session of Board
+held at the same date.The Chairman of the
+Board of Supervisors was elected at The 1st
+meeting of the Eighth Session of the Board
+of Supervisors. The changes of the Directors,
+Supervisors and other senior management
+are as follows:
+to age.
+On 28 January 2021, Mr. Zou Huiping
+resigned as Supervisor of Sinopec Corp. due
+0
+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.
+0
+0
+0
+No
+1,407.9
+Vice President, Board Secretary
+55
+Male
+12 INFORMATION ON APPOINTMENT
+OR TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR MANAGEMENT
+Male
+Yu Xizhi
+0
+Position in
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Huang Wensheng, aged 55, Vice
+President of Sinopec Corp., Secretary to
+the Board of Directors. Mr. Huang is a
+professor level senior economist with a
+university diploma. In March 2003, he
+was appointed as Deputy Director General
+of the Board Secretariat of Sinopec
+Corp.; in May 2006, he was appointed as
+Representative on Securities Matters of
+Sinopec Corp.; in August 2009, he was
+appointed as the Deputy Director General
+of President's office of Sinopec Corp.;
+in September 2009, he was appointed
+as Director General of the Board
+Secretariat of Sinopec Corp.; in June
+2018, he was appointed concurrently as
+Director General of Department of Capital
+Management and Financial Services of
+China Petrochemical Corporation; in July
+2018, he was appointed concurrently
+as Chairman and Secretary of CPC
+Committee of Sinopec Capital Co., Ltd.;
+in December 2019, he was appointed
+as President of Department of Capital
+Management and Financial Services of
+China Petrochemical Corporation. In May
+2012, he was appointed as Secretary to
+the Board of Directors of Sinopec Corp.;
+in May 2014, he was appointed as Vice
+President of Sinopec Corp.
+Zhao Rifeng, aged 59, Vice President of
+Sinopec Corp. Mr. Zhao is a professor
+level Senior Engineer with a Master's
+degree. In July 2000, he was appointed
+as Deputy General Manager of Sinopec
+Jinling Petrochemical Co., Ltd. and
+Deputy Manager of Sinopec Jinling
+Company; in October 2004, he was
+appointed as General Manager of Sinopec
+Jinling Company; in October 2006, he was
+appointed as Vice Chairman and General
+Manager of Sinopec Jinling Petrochemical
+Co., Ltd.; in November 2010, he was
+appointed as Chairman, General Manger,
+Deputy Secretary of CPC Committee of
+Sinopec Jinling Petrochemical Co., Ltd.;
+in August 2013, he was appointed as
+Director General of Refining Department
+of Sinopec Corp.; in December 2017, he
+was appointed as the Director General
+of the Marketing Department of Sinopec
+Corp. and Chairman and Secretary of
+CPC Committee of Sinopec Marketing
+Company Limited; in December 2019,
+he was appointed as the President of
+the Marketing Department of Sinopec
+Corp. and Chairman and Secretary of
+CPC Committee of Sinopec Marketing
+Company Limited. In February 2018,
+he was appointed as Vice President of
+Sinopec Corp.
+Huang Wensheng
+Zhao Rifeng
+Name
+CORPORATE GOVERNANCE (CONTINUED)
+48
+Corporate Governance
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Shou Donghua, aged 52, Chief Financial
+Officer and General Manager of Finance
+Department of Sinopec Corp. Ms. Shou
+is a professor level senior accountant
+with a Master's degree of business
+administration. In July 2010, she was
+appointed as the Chief Financial Officer
+of Sinopec Zhenhai Refining & Chemical
+Company; in October 2014, she was
+appointed as Deputy Director General
+of Human Resource Department of
+Sinopec Corp.; in August 2017, she
+was appointed as the Secretary of CPC
+Committee of Sinopec Zhenhai Refining &
+Chemical Company and Deputy General
+Manager of Sinopec Zhenhai Refining
+& Chemical Company; in August 2018,
+she was appointed as the Director
+General of Finance Department of
+China Petrochemical Corporation and
+concurrently served as the Chairman
+of Sinopec Century Bright Capital
+Investment Limited; in December 2019,
+she was appointed as General Manager
+of Finance Department of Sinopec Corp.
+and concurrently served as the Chairman
+of Sinopec Century Bright Capital
+Investment Limited. In January 2020, she
+was appointed as Chief Financial Officer
+of Sinopec Corp. and General Manager of
+Finance Department.
+Petrochemical Corporation. In July 2020,
+he was appointed as Vice President of
+Sinopec Corp.
+was elected as Director of China
+Corporate Governance
+Gender
+Age
+Sinopec Corp.
+0
+No
+1,586.7
+Senior Vice President
+59
+Male
+Chen Ge
+2020
+2021
+(as of 31 December)
+Equity interests in Sinopec Corp.
+of the
+Company or
+their related
+Whether
+paid by the
+shareholders
+in 2021
+(RMB1,000,
+before tax)
+Sinopec Corp.
+paid by
+Remuneration
+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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+entities
+Corporate Governance
+68
+Male
+50
+Male
+Zhang Shaofeng
+Tang Min
+60
+Male
+Age
+Gender
+Name
+Remuneration
+LIST OF FORMER MEMBERS OF THE BOARD
+oooooo
+0
+0
+0
+0
+0
+0
+0
+0
+13,000
+13,000
+응응
+0
+Position in
+Sinopec Corp.
+No
+Former Chairman
+2020.03-2021.08
+Former Director 2020.09-2021.05
+Zhang Shaofeng
+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)
+in 2021
+paid by
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note: According to regulation of the authority, Mr. Fan Gang did not get remuneration from the Company.
+Former Independent 2015.05-2021.05
+Director
+Tenure
+0
+0
+zzzz à 303
+715.3
+2020
+2021
+Company
+(as at 31 December)
+Equity interests in Sinopec Corp.
+the holding
+paid by
+Whether
+(RMB1,000,
+before tax)
+in 2021
+paid by
+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
+Male
+Yu Baocai
+51
+Male
+Zhao Dong
+Yes
+441.8
+Yes
+Senior Vice President
+300.0
+300.0
+416.7
+416.7
+Independent Director 2018.05.2024.05
+Independent Director 2018.05-2024.05
+Independent Director 2021.05.2024.05
+Independent Director 2021.05-2024.05
+60
+66
+Male
+Female
+Bi Mingjian
+Shi Dan
+61
+Male
+Ng, Kar Ling Johnny
+Jiang Zhenying
+54
+Cai Hongbin
+Yes
+Board Director, 2020.05.2024.05
+Senior Vice President
+59
+Male
+Liu Hongbin
+Senior Vice President
+Yes
+Board Director, 2021.05.2024.05
+55
+Male
+Li Yonglin
+Male
+Zhang Zhiguo
+Zhang Yuzhuo
+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.
+(2) Supervisors
+LIST OF MEMBERS OF THE BOARD
+Position in
+Name
+Gender
+Age
+Ma Yongsheng
+Corporate Governance
+Male
+Jiang Zhenying
+2020
+2021
+entities
+Yes
+Chairman of the 2021.05-2024.05
+Board of Supervisors
+50
+50
+60
+Male
+42
+41
+CORPORATE GOVERNANCE (CONTINUED)
+Liu Hongbin
+Cai Hongbin
+Ng, Kar Ling Johnny
+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.
+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.
+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,
+Corporate Governance
+he was elected as Independent Director of
+Sinopec Corp.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shi Dan
+Bi Mingjian
+Shi Dan, aged 60, Independent Director
+of Sinopec Corp. Ms. Shi is the legal
+representative and Chairman of China
+Industrial Economics Society, a member of
+Expert Advisory Committee of the National
+Energy Commission and a member of
+National Expert Committee on Climate
+Change and enjoys special government
+subsidies from the State Council. Ms. Shi
+obtained bachelor's degree in engineering,
+master's degree in economics, master's
+degree of development economics and Ph.D.
+degree in management from Changchun
+University of Technology, Renmin University
+of China, Australian National University
+and Huazhong University of Science and
+Technology respectively. In October 1993,
+Ms. Shi was appointed as Research Fellow
+and Assistant to the Dean of the Institute of
+Industrial Economics of Chinese Academy
+of Social Sciences; in August 2010, Ms.
+Shi was appointed as a Research Fellow
+and Deputy Dean of National Academy of
+Economic Strategy, Chinese Academy of
+Social Sciences; in November 2013, she
+was appointed as a Research Fellow and
+Secretary of CPC Committee (Deputy Dean)
+of the Institute of Industrial Economics of
+Chinese Academy of Social Sciences; in
+November 2017, she served as External
+Director of China Energy Investment
+Corporation Limited. In March 2019, she was
+appointed as Dean of Institute of Industrial
+Economics of Chinese Academy of Social
+Sciences. In May 2021, she was elected as
+Independent Director of Sinopec Corp.
+Bi Mingjian, 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
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+40
+Zhang Shaofeng
+CORPORATE GOVERNANCE (CONTINUED)
+in Sinopec Corp.
+(as of 31 December)
+paid by
+Sinopec Corp.
+Remuneration
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+Corporate Governance
+45
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Chen Yaohuan, aged 58, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Chen is a professor level
+senior engineer with a Master's degree
+awarded by Central Party School of the
+CPC. In October 2008, he was appointed
+as Deputy Director General of Refining
+Department of Sinopec Corp.; in March
+2015, he was appointed as Executive
+Director, General Manager and Deputy
+Secretary of the CPC Committee of
+Sinopec Beihai Refining and Chemical
+Limited Liability Company; in May
+2015, he was appointed as a member
+of the Standing Committee of the CPC
+Beihai Municipal Committee; in June
+2018, he was appointed as General
+Manager and Deputy Secretary of the
+CPC Committee of Guanzhou Branch of
+Sinopec Corp. and General Manager of
+Guangzhou Branch of Sinopec Assets
+Management Corporation; in July 2019,
+he was appointed as Deputy Director
+General (Director General Level) and
+Chief Engineer of Refining Department of
+Sinopec Corp.; in October 2019, he was
+appointed concurrently as Chairman of
+Sinopec Kantons International Limited
+and Sinopec Kantons Holdings Limited;
+in December 2019, he was appointed as
+General Manager and Chief Engineer of
+Refining Department of Sinopec Corp.;
+in December 2019, he was appointed
+concurrently as Vice Chairman and
+Chairman of Audit Committee of Yanbu
+Aramco Sinopec Refining Company
+Ltd.; in August 2020, he was appointed
+concurrently as Executive Director and
+Secretary of CPC Committee of Sinopec
+Petroleum Marketing Company Limited
+and Chairman of Sinopec Petroleum
+Storage and Reserve Limited. In January
+2021, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Lv Dapeng, aged 60, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Lv is a professor level senior
+administration engineer with a Master's
+degree of business administration. In
+December 2001, he was appointed
+as Deputy Director General of China
+Petrochemical News; in March 2003, he
+was appointed as Deputy Director General
+and Chief Editor of China Petrochemical
+News; in June 2004, he was appointed
+as Director General and Chief Editor of
+China Petrochemical News; in December
+2004, he was appointed as Director
+General, Secretary of CPC Committee
+and Chief Editor of China Petrochemical
+News; in March 2011, he was appointed
+as Director General of Corporate Culture
+Department of Sinopec Corp., and
+Director General of the Political Work
+Department of and Deputy Secretary of
+the CPC Committee directly under China
+Petrochemical Corporation; in June 2012,
+he was appointed concurrently as Deputy
+Director General of Working Committee
+of Trade Union and Deputy Director of
+the Youth Working Committee of China
+Petrochemical Corporation; in March
+2015, he was appointed as Director
+General of Corporate Culture Department
+of Sinopec Corp. and Director General
+of Communications Department
+(Press Office) of China Petrochemical
+Corporation; in December 2019, he
+was appointed as Director General of
+Corporate Culture Department of Sinopec
+Corp., Director General of Communication
+Department and Director General of
+Press Office of China Petrochemical
+Corporation. In January 2021, he was
+elected as Employee's Representative
+Supervisor of Sinopec Corp.
+Chen Yaohuan
+Lv Dapeng
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+of Sinopec Communist Party School. In
+May 2020, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Li Defang, aged 60, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Li is a professor level senior
+engineer with a Ph.D. degree. In May
+2001, he was appointed as Deputy
+Secretary of CPC Committee and Trade
+Union Chairman of Sinopec Engineering
+Incorporation; in December 2001, he
+was appointed as Director General
+of Information System Management
+Department of Sinopec Corp.; in
+September 2013, he was appointed
+as Director General of Informatisation
+Management Department of Sinopec
+Corp.; in October 2014, he was
+appointed as Chairman of Petro-
+CyberWorks Information Technology
+Co., Ltd.; in January 2018, he was
+elected as Employee Supervisor of China
+Petrochemical Corporation; in March
+2019, he was appointed as Secretary of
+CPC Committee of Sinopec Management
+Institute (Sinopec Communist Party
+School); in November 2020, he was
+appointed as the Secretary of CPC
+Committee of Sinopec Management
+Institute and Executive Vice Principal
+Guo Hongjin, aged 56, Supervisor of
+Sinopec Corp. Mr. Guo is a professor
+level senior engineer with a Ph.D. degree.
+In July 2013, he was appointed as Deputy
+General Manager of Sinopec Shengli
+Oilfield Company; in March 2018, he
+was appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Sinopec Shengli Petroleum Administrative.
+Bureau Co., Ltd. and General Manager
+of Sinopec Shengli Oilfield Company;
+in December 2018, he was appointed
+as Executive Director, General Manager
+and Deputy Secretary of CPC Committee
+of Sinopec Jianghan Petroleum
+Administrative Bureau Co., Ltd. and
+General Manager of Sinopec Jianghan
+Oilfield Company; in July 2019, he was
+appointed as Executive Director and
+Secretary of CPC Committee of Sinopec
+Jianghan Petroleum Administrative
+Bureau Co., Ltd. and the representative
+of Sinopec Jianghan Oilfield Company; in
+April 2020, he was appointed as General
+Manager of the Petroleum Exploration
+& Development Department of Sinopec
+Corp. In May 2021, he was elected as
+Supervisor of Sinopec Corp.
+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.
+Li Defang
+Guo Hongjin
+Yin Zhaolin
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+44
+Corporate Governance
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Zhang Zhiguo, aged 59, Supervisor of
+Sinopec Corp. Mr. Zhang is a professor
+level senior administration engineer with
+a master's degree. In September 2009,
+he was appointed as Deputy Director
+General of Corporate Office of China
+Petrochemical Corporation (Sinopec
+President's office); in March 2015, he
+was appointed as Secretary of CPC
+Committee of Sinopec Management
+Institute (Sinopec Communist Party
+School); in December 2018, he was
+appointed as Director General of the
+Office of Leading Party Member Group
+Inspection Work of China Petrochemical
+Corporation; in December 2019, he
+was appointed as Director General of
+the General Management Department
+and Director of Leading Party Member
+Group Office of China Petrochemical
+Corporation. In May 2021, he was elected
+as Supervisor of Sinopec Corp.
+Whether
+paid by the
+shareholders
+Name
+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.
+Gender Age
+Position in
+Sinopec Corp.
+Tenure
+in 2021
+(RMB1,000,
+before tax)
+of the
+Company or
+their related
+Equity interests
+31-40
+Finance
+8,612
+2%
+Administration
+30,725
+8%
+Others
+22%
+2,540
+Production
+145,786
+38%
+Sales
+110,797
+29%
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS: (INCLUDING MASTER'S DEGREE OR ABOVE, UNDERGRADUATE,
+JUNIOR COLLEGE, SENIOR HIGH SCHOOL AND TECHNICAL SCHOOL DEGREES OR BELOW)
+Senior high school and
+technical school degrees or below
+136,667
+35%
+Master's degree or above
+21,839
+6%
+1%
+87,231
+Technology
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+14 CONTRACTUAL INTERESTS OF DIRECTORS
+AND SUPERVISORS
+As of 31 December 2021 or any time
+during the reporting period, no Director or
+Supervisor of the Company entered into any
+agreement with Sinopec Corp., its controlling
+shareholder, any subsidiary or related
+subsidiary which shall substantially benefit
+such Director or Supervisor.
+15 CONTRACTS WITH DIRECTORS AND
+SUPERVISORS
+The Company has entered into service
+contracts with all the Directors and
+Supervisors. None of the Directors and
+Supervisors has entered into or will
+enter into service contracts that are not
+terminable by the Company within one year
+without compensation (except for statutory
+compensation).
+16 REMUNERATION OF DIRECTORS,
+SUPERVISORS, AND THE SENIOR
+MANAGEMENT
+During this reporting period, a total of 16
+Directors, Supervisors and other senior
+managers received remuneration from
+Sinopec Corp. with a total amount of
+RMB12.1413 million.
+17 THE COMPANY'S EMPLOYEES
+As at 31 December 2021, the Company
+has a total of 385,691 employees. There
+are a total of 280,216 retired employees to
+be reimbursed by Sinopec Corp. Sinopec
+Marketing Co. Limited, the principal
+subsidiaries of Sinopec Corp., has 122,232
+employees.
+THE BREAKDOWN OF NUMBER OF EMPLOYEES BY OPERATION SEGMENTS IS AS FOLLOWS: (INCLUDING EXPLORATION AND PRODUCTION,
+REFINING, MARKETING AND DISTRIBUTION, CHEMICALS, R&D AND OTHERS)
+Marketing and Distribution
+122,232
+32%
+R&D
+6,212
+2%
+Other Segments
+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)
+Undergraduate
+109,327
+23%
+87,432
+19 EMPLOYEE BENEFITS SCHEME
+During the reporting period, there are no
+significant changes of core technical team or
+key technicians.
+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.
+18 CHANGES OF CORE TECHNICAL TEAM OR
+KEY TECHNICIANS
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+Corporate Governance
+51
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+51-60
+PHD
+Master's Degree
+Undergraduate
+or below
+TECHNOLOGY PERSONNEL AGE STRUCTURE
+2,500
+2,000
+1,500
+989
+1,000
+500
+2,114
+1,642
+1467
+0
+21-30
+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
+41-50
+Technical secondary school
+30,426
+8%
+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
+Junior college
+1,957
+1,800
+1,700
+There is no change in shareholdings of the
+Company by Directors, Supervisors and other
+senior managers during the reporting period.
+2 MEASURES TAKEN TO MITIGATE CARBON
+EMISSION AND ITS EFFECT IN THE
+REPORTING 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.
+PERIOD
+1 WORK CONDUCTED IN ECOLOGICAL
+PROTECTION, POLLUTION PREVENTION
+AND ENVIRONMENTAL RESPONSIBILITIES
+IMPLEMENTATION IN THE REPORTING
+ENVIRONMENT AND SOCIAL RESPONSIBILITIES
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+42
+52
+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.
+1,900
+13 CHANGE OF SHAREHOLDING OF
+DIRECTORS, SUPERVISORS, AND THE
+SENIOR MANAGEMENT
+28%
+50
+The listed company Russian Amur
+173
+Jan-21
+itself
+Natural Gas Chemical
+Integrated LLC
+January 2021-June 2026
+(the mature date is
+estimated)
+Joint and several
+Normal
+NICO
+No
+No
+No
+Sinopec Corp.
+No
+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 (%)
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+The amount of guarantees in excess of 50% of the net assets (E)
+Total amount of the above three guarantee items (C+D+E)
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Statement of guarantee status
+liability guarantee performance
+3,437
+14,863
+히
+No
+for
+connected
+parties
+Joint and several
+liability guarantee
+Normal
+performance
+guaranty
+- No No - No No
+or not guarantee guaranteed yes or no)¹²
+Sinopec Corp.
+The listed company Zhong An United Coal 5,680
+itself
+Apr-18
+April 2018 December 2031 Joint and several
+Chemical Co., Ltd.
+Sinopec Corp.
+No
+The listed company Russian Amur
+itself
+Dec-21
+December 2021-December
+Natural Gas Chemical
+Integrated LLC
+2035 (the mature date is
+estimated)
+Normal
+liability guarantee performance
+Joint and several Normal
+liability guarantee performance
+No
+No
+No
+DO
+NO
+No
+No
+No
+3,2644
+guaranteed
+0
+26,020
+Working capital loan
+Project construction loan
+(3) OTHER LOAN
+Class
+Project construction loan
+(4) OTHER FINANCING AND DERIVATIVE INVESTMENT
+Origin
+Self-owned fund
+Self-owned fund
+unit RMB million
+Transaction
+amount
+(467)
+(42)
+Undue
+amount
+Class
+Overdue
+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
+154
+2,690
+11,157
+(2) ENTRUSTED LOAN
+12 ENTRUSTED FINANCING AND LOAN
+(1) ENTRUSTED FINANCING
+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
+During the reporting period, the Company
+was not involved in any entrusted financing.
+6. SPECIFIC STATEMENTS AND
+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:
+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:
+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
+CORPORATE GOVERNANCE (CONTINUED)
+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
+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.
+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.
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING OUTSTANDING
+EXTERNAL GUARANTEES PROVIDED BY
+THE COMPANY DURING AND BY THE END
+OF 2021:
+Whether
+OTHER MATERIAL CONTRACTS
+completed
+or not
+便利店
+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.
+(4) Wuhan de-bottleneck project
+Wuhan de-bottleneck project expands
+the original an 800,000 tpa-to-1,100,000
+tpa ethylene capacity expansion
+project. The project started at the
+end of October 2018 and mechanical
+completion was finished in June. 2021.
+It's put into operation in Sep. 2021. The
+Company's self-owned fund accounts
+for approximately 30% of the project
+investment and bank loan is the main
+source of the remaining funds. As of 31
+December 2021, the aggregate amount
+invested was RMB3.9 billion.
+(5) Hainan 1,000,000 tpa ethylene and
+refining expansion project
+Hainan Ethylene and Refining Expansion
+project mainly consists of 1,000,000
+tpa ethylene and auxiliary units. The
+project started at the end of December
+2018 and is expected to achieve the
+mechanical completion in Jun. 2022.
+The Company's self-owned fund accounts
+for approximately 30% of the project
+investment and bank loan is the main
+source of the remaining funds. As of 31
+December 2021, the aggregate amount
+invested was RMB15.6 billion.
+(6) Yifzheng PTA project
+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.
+为美好生活加油
+H2
+氢能
+HNIT
+overdue overdue Counter-
+50
+Corporate Governance
+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
+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.
+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.
+(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
+5
+In the reporting period, for subsidiaries
+not listed as major pollution units,
+the Company has acquired related
+permissions from national and local
+government, and enforces environmental
+protection measures. The above
+mentioned subsidiaries are not obliged
+to disclose in accordance with the
+requirements of national and local
+ecological environment authorities.
+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.
+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
+(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.
+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.
+(7) Other environmental information to be
+disclosed
+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.
+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
+From 22 June 2001
+Relationship
+with the
+Company
+Name of
+guaranteed
+company
+Transaction date
+Amount"¹
+(date of signing)
+May-16
+Energy Co., Ltd
+Period of guarantee
+May 2016-December
+2023 (the mature date is
+estimated)
+Туре
+Principal
+debt
+condition
+Whether
+3. THE TRANSACTIONS WITH CHINA OIL &
+GAS PIPELINE NETWORK CORPORATION
+(PIPECHINA)
+Whether Amount of
+Guarantor
+Sinopec Corp.
+performed or not
+The listed company Zhongtian Hechuang 5,746
+itself
+Term for performance
+56
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+deadline or not
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+Type of
+Background
+Undertakings related to Initial
+Party
+Public Offerings (IPOs)
+Corporation
+Other undertakings
+Other
+Contents
+China Petrochemical 1 Compliance with the connected transaction
+Undertaking
+IPOs
+agreements;
+China Petrochemical
+Corporation
+Whether bears
+Whether strictly
+of interest with Sinopec Corp.
+Granting licenses for intellectual property rights;
+Avoiding competition within the same industry;
+Abandonment of business competition and conflicts
+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.
+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.);
+6
+5
+4
+3
+2 Solving the issues regarding the legality of land-
+Balance
+at the end
+of the year
+9,797
+of the year
+9,670
+Amount
+incurred
+(848)
+Amount
+incurred
+21,012
+Balance at
+the end
+of the year
+Balance
+at the
+beginning
+30,682
+6,087
+11,328
+(4,185)
+7,143
+21,973
+(5,033)
+16,940
+10,645
+15,757
+(2,494)
+18,518
+Associates and joint ventures
+Parent company and affiliated
+companies*
+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".
+Other related parties
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+3,593
+34,275
+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.
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business;
+(b) The transactions have been entered into
+based on either of the following terms:
+i normal commercial terms; or
+ii
+terms not less favorable than those
+available from or to independent third
+parties, where there is no available
+comparison to determine whether
+such terms are on normal commercial
+terms; and
+(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.
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+Funds to related parties
+Unit: RMB million
+Funds from related parties
+Balance
+at the
+beginning
+Related Parties
+Relations
+of the year
+Sinopec Group
+Total
+Reason for provision of funds between related parties
+Impacts on the Company
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL MEETINGS
+Loans and other accounts receivable and payable
+No material negative impact
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+2 IMPLEMENTATION OF RESOLUTIONS APPROVED AT THE GENERAL MEETINGS OF SHAREHOLDERS BY THE BOARD
+During this reporting period, in accordance with relevant laws and regulations as well as the Articles of Association, all members of the Board
+diligently implemented the resolutions approved at the general meetings of Sinopec Corp., and had completed all the tasks delegated to them at 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
+66
+General meeting
+meetings held
+Meetings
+On-site attended by
+attendance communication
+Meetings
+attend by
+proxy
+Chairman
+Director
+Director
+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.
+Director
+No. of
+Report of the Board of Directors
+65
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+1 MEETINGS OF THE BOARD
+During this reporting period, Sinopec Corp.
+held seven (7) Board meetings. The details
+are as follows:
+(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).
+(2) The 21st meeting of the seventh
+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;
+(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.
+(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.
+(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.
+(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.
+(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
+*: affiliated companies include subsidiaries, associates and joint ventures.
+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.
+Sinopec Finance Sinopec Group 51%; Sinopec Corp. 49%
+Decision-making procedures:
+Related party
+Related party relationship
+Century Bright
+Sinopec Group 100%
+unit: RMB million
+Transaction amount
+Total
+Total
+loan withdrawn
+Balance
+151,233
+32,305
+(2) LOAN
+154,648
+29,369
+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
+in the end
+3,199
+13,364
+Note 2: the current period's occurrence is on a time deposit basis.
+Note 1: generally, the deposit interest rate at Sinopec Finance and Century Bright is no lower than that of the same type of deposits for the same period from major
+commercial banks
+45,974
+Yu Baocai
+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
+RMB80 billion by Sinopec
+Finance and Century Bright
+Interest rate range
+current 0.35%-1.725%;
+time deposit: 1.35%-7.4%
+current 0%-0.25% time
+deposit: 0.08%-1.23%
+Balance
+at beginning
+23,953
+Transaction amount
+Total
+deposit
+9,385
+Total
+withdrawn
+9,480
+Balance
+in the end
+15,708
+29,464
+197,800
+176,800
+Daily Cap
+127,920
+13,364
+Transaction
+amount
+Sinopec Group 51%; Sinopec Corp. 49%
+62
+Connected Transactions
+CONNECTED TRANSACTIONS
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+BETWEEN SINOPEC CORP. AND CHINA
+PETROCHEMICAL CORPORATION
+Prior to Sinopec Corp.'s overseas listing,
+in order to ensure the smooth continuation
+of production and business conducted by
+the Company and China Petrochemical
+Corporation, the two parties entered into
+the agreements on continuing connected
+transactions.
+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.
+2 COMPLIANCE OF DISCLOSURE AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH HONG KONG
+LISTING RULES AND THE SHANGHAI
+LISTING RULES
+Pursuant to the Hong Kong Listing Rules and
+the Shanghai Listing Rules, the continuing
+connected transactions between the
+Company and Sinopec Group are subject
+to disclosure, independent non-executive
+directors' approval and/or independent
+shareholders' approval (if needed) based on
+the nature and the value of the transactions.
+Sinopec Corp. has fully complied with
+the above requirements in relation to the
+continuing connected transaction between
+the Company and Sinopec Group.
+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
+Significant Events
+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.
+61
+None
+Credit
+9,494
+23,590
+Discounted bills
+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
+15 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Ling Yiqun
+68
+Ma Yongsheng
+Zhao Dong
+(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.
+(8) The 3rd meeting of the seventh session
+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.
+(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.
+(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..
+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'
+(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.
+DUTIES
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+67
+Report of the Board of Directors
+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
+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.
+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.
+(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.
+(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
+3
+1
+2
+0
+0
+1
+0
+1
+2
+(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.
+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:
+0
+1
+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.
+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.
+Net profits attributed to the shareholders of the listed company shown in the
+consolidated statement for the dividend year (RMB billion)
+712.08
+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
+0.31
+375.33
+Note: The final cash dividend for 2021 is subject to the approval at the 2021 annual general meeting.
+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
+Interest
+rate range
+0.56%-4.25%
+1.08%-5.23%
+Li Yonglin
+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%.
+Proposals for dividend distribution
+0.20
+242.14
+Total amount of cash dividends (RMB billion, tax inclusive)
+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.
+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 (
+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):
+569.03
+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
+For dividends of investors of the Hong Kong
+Stock Exchange (including enterprises and
+individuals) investing in the A Shares of
+Sinopec Corp. through Shanghai-Hong Kong
+Stock Connect Program, the Company will
+withhold and pay income taxes at the rate
+of 10% on behalf of those investors and
+will report to the competent tax authorities
+for the withholding. For investors who are
+tax residents of other countries which have
+entered into a tax treaty with the PRC
+stipulating a dividend tax rate of lower than
+10%, the enterprises and individuals may,
+or may entrust a withholding agent to, apply
+to the competent tax authorities for the
+entitlement of the rate under such tax treaty.
+Upon approval by the tax authorities, the
+amount paid in excess of the tax payable
+based on the tax rate according to such tax
+treaty will be refunded.
+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
+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.
+Actual
+attendance
+Balance at
+beginning
+6,614
+10,428
+Absent
+0
+4
+0
+0
+2
+0
+4
+2
+2
+0
+3
+0
+0
+Liu Hongbin
+7
+2
+4
+1
+0
+2
+0
+1
+Cai Hongbin
+7
+2
+7
+No. of
+meetings held
+1
+3
+4
+0
+Absent
+0
+No. of
+meetings held
+2
+Actual
+attendance
+2
+2
+4
+2
+1
+0
+1
+7
+2
+4
+1
+0
+1
+7
+1
+4
+Director
+Director
+Independent Director
+Independent Director
+Independent Director
+Independent Director
+(2) Attendance to the board meetings and general meetings during the reporting period by the former Directors of the eighth session of the Board
+Director titles
+Name
+On-site
+Board meeting
+Meetings
+attend by
+attendance communication
+General meeting
+No. of
+0
+Meetings
+attend by
+Former Chairman
+Former Director
+Former Independent Director
+Zhang Yuzhuo
+Zhang Shaofeng
+Tang Min
+4
+2
+2
+0
+2
+meetings held
+0
+proxy
+0
+0
+2
+0
+1
+1
+1
+0
+Ng, Kar Ling Johnny
+7
+4
+0
+0
+2
+3
+Shi Dan
+Bi Mingjian
+4
+0
+2
+2
+0
+2
+2
+0
+4
+Zhang Shaofeng
+Chairman of the Board of Supervisors
+25 March 2022
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+CHANGES IN THE SHARE CAPITAL
+There was no change in the number and nature of shares of Sinopec Corp. during the reporting period
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+As of 31 December 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.
+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.
+The shareholdings of top ten shareholders as of 31 December 2021 are listed as below:
+(1) Shareholdings of top ten shareholders
+1
+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.
+Report of the Board of Supervisors
+Thirdly, Sinopec Corp.'s internal control system
+was effective. No material defects of internal
+control were found.
+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.
+Name of shareholders
+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.
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+75
+REPORT OF THE BOARD OF SUPERVISORS (CONTINUED)
+76
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Firstly, the Board and the senior management
+of Sinopec Corp. performed their responsibilities
+pursuant to relevant laws and regulations,
+and implemented efficient management. The
+Board diligently fulfilled its obligations and
+exercised its rights under the PRC Company
+Law and the Articles of Association, and made
+informed decisions on major issues. The senior
+management diligently executed the resolutions
+approved by the Board, 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.
+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
+the shareholders. No violation of confidential
+provisions of persons who prepared and
+reviewed the report was found.
+Report of the Board of Supervisors
+China Petrochemical Corporation
+213,881,539
+Total number of
+0.87
+1,054,953,821
+0
+中國人壽保險股份有限公司-傳統- 普通保險產品-005L-CT001滬
+中央匯金資產管理有限責任公司
+A Share
+0.69
+A Share
+834,160,431
+0
+A Share
+0.26
+315,223,600
+(6,814,300)
+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.
+19,554,400
+Nature of Percentage of
+Shareholders shareholdings %
+香港中央結算有限公司
+926,751
+(283,937,650)
+State-owned Share
+68.31
+HKSCC Nominees Limited²
+H Share
+20.97
+shares held
+82,709,227,393
+25,386,207,159
+0
+Changes of
+shareholding¹
+Number of
+shares subject
+to pledges or
+lock-up
+0
+0
+中國證券金融股份有限公司
+A Share
+1.92 2,325,374,407
+Unit: share
+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.
+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, 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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+70
+70
+We manage our reserves estimation through
+a two-tier management system. Our Oil
+and Natural Gas Reserves Management
+Committee, or RMC, at the headquarters
+level oversees the overall reserves estimation
+process including organisation, coordination,
+monitoring and major decision-making,
+and reviews the reserves estimation of
+our Company. Each of our branches has
+a reserves management committee that
+manages and coordinates the reserves
+estimation, organises the estimation process
+and reviews the reserve estimation report at
+the branch level, being responsible to the
+RMC of the Company.
+24 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+As of 31 December 2021, the Company has
+not entered into any equity-linked agreement.
+23 EQUITY-LINKED AGREEMENTS
+0
+No contracts concerning management
+or administration of the whole or any
+substantial part of the business of the
+Company were entered into or existed during
+the reporting period.
+21 MANAGEMENT CONTRACTS
+20 DIRECTORS' INTERESTS IN CONTRACTS
+No Director had a material interest, either
+directly or indirectly, in any contract of
+significance to the business of the Company
+to which Sinopec Corp. or any of its holding
+companies, subsidiaries or fellow subsidiaries
+was a party during the reporting period.
+As at the end of the reporting period, the
+Company has resolved its competition with
+Sinopec Group in the chemical business. For
+details for the positions held by the Directors
+(excluding Independent Non-Executive
+Directors) of Sinopec Corp. in the Sinopec
+Group during the reporting period, please
+refer to the section “Corporate Governance"
+of this annual report.
+19 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+During the reporting period, neither
+Sinopec Corp. nor any of its subsidiaries
+repurchased, sold or redeemed any listed
+shares of Sinopec Corp. or its subsidiaries.
+18 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+Pursuant to the Articles of Association
+and the laws of the PRC, the shareholders
+of Sinopec Corp. are not entitled to any
+pre-emptive rights. Therefore the existing.
+shareholders cannot request Sinopec Corp.
+to issue shares to them on a preferential
+basis in proportion to their shareholdings.
+17 PRE-EMPTIVE RIGHTS
+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.
+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.
+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.
+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.
+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.
+15 RESERVES
+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.
+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.
+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.
+25 CORE COMPETITIVENESS ANALYSIS
+The Company is a large scale integrated
+energy and petrochemical company with
+upstream, mid-stream and downstream
+operations. The Company is a large 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.
+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.
+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.
+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.
+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.
+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.
+72 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+By Order of the Board
+Ma Yongsheng
+Chairman
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+73
+Report of the Board of Directors
+REPORT OF THE BOARD OF SUPERVISORS
+Dear Shareholders:
+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.
+Beijing, China, 25 March 2022
+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.
+Risks from the uncertainties of obtaining
+additional oil and gas resources: The future
+sustainable development of the Company
+is partly dependent to a certain extent on
+our abilities in continuously discovering
+or acquiring additional oil and natural
+gas resources. To obtain additional oil
+and natural gas resources, the Company
+faces some inherent risks associated with
+exploration and development and/or with
+acquisition activities, and the Company has
+to invest a large amount of money with no
+guarantee of certainty. If the Company fails
+to acquire additional resources through
+further exploration, development and
+acquisition to increase the reserves of crude
+oil and natural gas, the oil and natural gas
+reserves and production of the Company
+may decline over time which may adversely
+affect the Company's financial situation and
+operation performance.
+Risks 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.
+The integrated business structure of
+the Company carries strong advantages
+in synergy among its various business
+segments, enabling the Company to
+continuously tap onto potentials in attaining
+an efficient and comprehensive utilisation
+of its resources, and endowed the Company
+with strong resistance against risks, as well
+as remarkable capabilities in sustaining
+profitability.
+The Company enjoys a favourable positioning
+with its operations located close to the
+consumer markets. Along with the steady
+growth in the Chinese economy, sales
+volume of both refined oil products and
+chemical products of the Company has been
+increasing steadily over the years; through
+continuous and specialised marketing efforts,
+the Company's capability in international
+operations and market expansion has been
+further enhanced.
+The 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 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+71
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+26 RISK FACTORS
+In the course of its production and
+operations, the Company will actively take
+various measures to circumvent operational
+risks. However, in practice, it may not be
+possible to prevent the occurrence of all
+risks and uncertainties described below.
+Risks with regard to the variations from
+macroeconomic situation: The business
+results of the Company are closely related to
+China's and global economic situation. 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.
+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.
+Report of the Board of Directors
+國信證券股份有限公司
+3 ISSUANCE AND LISTING OF SECURITIES
+0.17
+Outstanding balance (RMB billion)
+Interest rate (%)
+Amount issued (RMB billion)
+Maturity date
+Interest commencement date
+Issuance date
+Code
+Abbreviation
+Bond name
+1. CORPORATE BOND
+Bond General Information
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+78
+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.
+Sinopec Corp.
+68.83%*
+China Petrochemical Corporation
+100%
+Corporation
+10,727,896,364
+56.51%
+Sinopec Oilfield Equipment
+Corporation
+456,756,300
+58.74%
+Principal and interest repayment
+China Merchants Energy
+Shipping Co., Ltd
+13.54%
+(2) Other than HKSCC Nominees Limited,
+there was no other legal person
+shareholder holding 10% or more of the
+total issued share capital of Sinopec
+Corp.
+(3) Basic information of the de facto
+controller
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+State-owned Assets Supervision
+and Administration Commission
+of the State Council
+1,095,463,711
+Sinopec Oilfield Service
+Investor Qualification Arrangement
+Risk of suspension for listed trading,
+12
+79
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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).
+During the reporting period, the bondholders' meeting was not convened.
+China Petrochemical Corporation bears non-irrevocable joint liability guarantee. Interest is paid as usual
+during the reporting period without triggering any guarantee.
+No special terms for Issuer or investor option or investor protection, thus not applicable
+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.
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as
+disclosed. All the proceeds have been completely used.
+Shanghai Stock Exchange
+Floor trading at Shanghai Stock Exchange, in line with pledge repurchase requirement
+N/A
+12102 was publicly offered to qualified investors in accordance with Administration of the Issuance and
+Trading of Corporate Bonds.
+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.
+4.90
+7
+7
+1 June 2022
+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'
+Applicable trading mechanism
+meeting
+bonds trustee
+Sinopec Corp. 2012 Corporate bond
+12石化02
+122150
+1 June 2012
+1 June 2012
+Performance of corporate
+A Share
+65.67%
+Sinopec Engineering (Group)
+Co. Ltd
+Share Capital and
+Shareholdings
+Shareholders
+Changes in Share Capital and
+Shareholdings of Principal
+77
+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:
+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.
+Note 1: As compared with the number of shares held as of 31 December 2020.
+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
+202,363,585
+183,178,790
+0
+中國工商銀行 - 上證50交易型開放式指數證券投資基金
+A Share
+0.09
+principal Shareholders
+113,436,276
+0
+全國社保基金一一三組合
+A Share
+0.09
+110,044,157
+110,044,157
+13,846,100
+2,907,856,000
+of Principal
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO) as of 31 December
+2021
+Name of 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)
+1,704,518,264(L)
+0.26(S)
+66,210,083(S)
+0.27(L)
+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.
+Name of shareholders
+BlackRock, Inc.
+Citigroup Inc.
+(L): Long position, (S): Short position
+Status of shareholders
+Interest of corporation controlled by
+the substantial shareholder
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS (CONTINUED)
+Person having a security interest in shares
+the substantial shareholder
+Approved lending agent
+(1) Issuance of securities during the
+reporting period
+There was no issuance of securities of
+the Company during the reporting period.
+(2) Existing employee shares
+There was no existing employee shares of
+the Company during the reporting period.
+4 CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+Interest of corporation controlled by
+BOND GENERAL INFORMATION
+unknown
+Bond General Information
+6,058
+6,061
+85,307
+65,779
+Contract liabilities
+7,505
+5,840
+Employee benefits payable
+8,398
+1,673
+Taxes payable
+46,333
+43,500
+362
+Other payables
+188,568
+Non-current liabilities due within one year
+16,737
+12,026
+Other current liabilities
+13,702
+439
+Total current liabilities
+412,890
+344,917
+Non-current liabilities
+Long-term loans
+Debentures payable
+Lease liabilities
+211,179
+Provisions
+1,121
+16,550
+428
+283,695
+59,880
+108,737
+Intangible assets
+9,334
+8,779
+Long-term deferred expenses
+2,875
+2,499
+Deferred tax assets
+Other non-current assets
+Total non-current assets
+20,669
+Total assets
+Current liabilities
+Short-term loans
+Derivative financial liabilities
+Bills payable
+Accounts payable
+8,715
+12,661
+34,227
+26,828
+872,679
+846,863
+1,147,784
+1,069,943
+Liabilities and shareholders' equity
+343,356
+Other non-current liabilities
+Total liabilities
+Total shareholders' equity
+Total liabilities and shareholders' equity
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+526,314
+1,147,784
+522,275
+1,069,943
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+115,849
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+CONSOLIDATED INCOME STATEMENT
+For the year ended 31 December 2021
+Notes
+2021
+2020
+RMB million
+RMB million
+Operating income
+Less: Operating costs
+Taxes and surcharges
+Selling and distribution expenses
+87
+Total non-current liabilities
+116,440
+213,224
+Shareholders' equity
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+34,258
+30,413
+31,522
+26,977
+104,426
+105,691
+35,271
+36,089
+209,280
+3,103
+3,581
+202,751
+621,470
+547,668
+121,071
+121,071
+67,897
+68,976
+6,024
+5,910
+1,658
+1,189
+Surplus reserves
+Retained earnings
+208,580
+General and administrative expenses
+360,847
+201
+284,622
+66,146
+105,712
+Right-of-use assets
+34
+19
+35
+123123
+49,341
+45,459
+42,649
+38,356
+170,233
+171,740
+43,525
+45,552
+7,910
+333
+8,124
+17,950
+331,934
+327,181
+973,214
+850,176
+36
+121,071
+121,071
+37
+120,188
+127,389
+38
+(690)
+18,276
+1,038
+522,995
+17,781
+The accompanying notes form part of these financial statements.
+86
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+25
+27
+2622222223
+27,366
+3,223
+20,756
+4,826
+11,721
+10,394
+24
+203,919
+641,280
+151,514
+126,241
+14,048
+7,129
+81,267
+76,848
+28
+114,701
+85,012
+29
+28,651
+22,494
+30
+31,762
+124,622
+345
+2,664
+39
+99,188
+7
+4,503
+21,146
+7,776
+21,763
+227
+707
+9
+10
+|||
+4,540
+2,626
+46,929
+110,691
+37,938
+39,034
+Other current assets
+23,408
+14,048
+Total current assets
+275,105
+223,080
+Non-current assets
+Long-term equity investments
+12
+Other equity instrument investments
+Fixed assets
+Construction in progress
+63,661
+1,941
+Inventories
+Prepayments
+213,224
+209,280
+318,645
+286,575
+775,102
+747,294
+140,939
+141,426
+916,041
+888,720
+1,889,255
+1,738,896
+Shou Donghua
+Other receivables
+Chief Financial Officer
+As at 31 December 2021
+Notes
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+Assets
+Current assets
+Cash at bank and on hand
+Derivative financial assets
+Accounts receivable
+Receivables financing
+BALANCE SHEET
+Research and development expenses
+Financial expenses
+40
+40
+1,045,000
+770,321
+40
+808,540
+584,315
+156,174
+148,350
+1,774
+3,256
+30,551
+29,868
+10,102
+Interest income
+9,098
+8,749
+13,602
+11,892
+2,953
+3,181
+Exploration expenses, including dry holes
+10,502
+8,297
+Add: Other income
+4,045
+4,922
+Investment income
+49
+10,644
+30,881
+Including: Interest expenses
+Research and development expenses
+(2,441)
+(220)
+162
+19,018
+7,073
+(1,728)
+(4,457)
+17,507
+315
+102,537
+42,412
+88,782
+13,755
+34,665
+Financial expenses
+7,747
+Chief Financial Officer
+INCOME STATEMENT
+For the year ended 31 December 2021
+Notes
+2021
+2020
+RMB million
+RMB million
+Operating income
+Less: Operating costs
+Taxes and surcharges
+Selling and distribution expenses
+General and administrative expenses
+Shou Donghua
+441
+43,356
+8,151
+39,444
+18,572
+39,444
+18,572
+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
+(8,017)
+4,766
+53,056
+23,338
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Financial Statements (PRC)
+80
+Total comprehensive income
+Including: Income from investment in associates and joint ventures
+4,273
+43,717
+3,637
+Gains from changes in fair value
+644
+350
+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:
+10,555
+Continuous operating net profit
+Other comprehensive income
+Items that may be reclassified subsequently to profit or loss
+1
+71
+(7,192)
+58
+(16,374)
+261
+45,150
+10,974
+776
+900
+2,209
+1,319
+Termination of net profit
+337
+17,511
+(22)
+48
+5,850
+7,514
+Investment income
+49
+6,032
+47,486
+23,253
+6,712
+Losses from changes in fair value
+50
+3,341
+(1,253)
+Add: Other income
+Credit impairment losses
+(2,066)
+Impairment losses
+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
+(2,311)
+23
+9,716
+47
+2,740,884
+2,104,724
+40
+2,216,551
+1,685,674
+41
+259,032
+235,018
+44
+57,891
+64,495
+45
+46
+12,382
+42
+62,535
+67,082
+11,481
+10,087
+9,010
+9,510
+Including: Interest expenses
+15,018
+15,198
+Interest income
+5,732
+4,803
+Exploration expenses, including dry holes
+562
+55
+52
+3,516
+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.
+88
+Cash flow hedges
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+33,271
+13,822
+8,826
+65
+0.588
+0.275
+65
+0.588
+0.275
+38
+(4)
+(22)
+(4)
+71,208
+Cost of hedging reserve
+Other comprehensive income that can be converted into profit under the equity method
+Items that may be reclassified subsequently to profit or loss
+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
+Including: Net (loss)/profit of acquiree before business combination under common control
+(200)
+347
+Classification by going concern:
+Continuous operating net profit
+85,030
+42,097
+Termination of net profit
+Classification by ownership:
+Equity shareholders of the Company
+Minority interests
+Basic earnings per share
+Diluted earnings per share
+Other comprehensive income
+Items that may not be reclassified subsequently to profit or loss
+Changes in fair value of other equity instrument investments
+President
+Yu Baocai
+Including: Income from investment in associates and joint ventures
+Chairman
+Sinopec International Petroleum
+Corp.
+RMB million
+(%)
+Total Assets Net Assets
+RMB million RMB million
+8,250
+100
+31,713
+12,460
+Exploration and Production Limited
+Sinopec Great Wall Energy & Chemical
+Company Limited
+22,761
+100
+Name of Company
+30,655
+Sinopec Yangzi Petrochemical
+15,651
+100
+36,602
+22,482
+Company Limited
+Sinopec Yizheng Chemical Fibre
+4,000
+100
+9,100
+4,330
+Limited Liability Company
+Sinopec Lubricant Company Limited
+14,187
+3,374
+Percentage
+of
+Shares Held
+by Sinopec
+On 31 December 2021, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+0.27
+Increase in total profit
+EBITDA to interest coverage ratio
+15.12
+9.89
+5.23
+Increase in total profit
+Interest coverage ratio
+8.28
+4.05
+4.23
+Cash interest coverage ratio
+Interest payment rate (%)
+Registered
+Capital
+43.56
+100
+100
+18.91
+0
+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
+Bond General Information
+82
+Principal Wholly-Owned
+and Controlled
+lled Subsidiaries
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+24.65
+1.14
+100
+4,789
+6,317
+4,270
+Company Limited
+Sinopec Beihai Refining and Chemical
+5,294
+99
+19,396
+13,461
+Limited Liability Company
+Sinopec Qingdao Refining and
+5,000
+85
+23,807
+13,357
+21,113
+Chemical Company Limited
+9,606
+100
+40,040
+23,265
+Chemical Company Limited
+Sinopec Marketing Co., Limited
+28,403
+70
+486,036
+233,117
+Sinopec Shanghai SECCO Petrochemical
+500
+68
+Sinopec Hainan Refining and
+9,311
+100
+China Petrochemical International
+Sinopec Qingdao Petrochemical
+1,595
+100
+5,319
+1,370
+Company Limited
+Sinopec Chemical Sales Company
+Limited
+1,000
+100
+22,423
+5,476
+China International United Petroleum
+5,000
+1,400
+100
+44,082
+and Chemical Company Limited
+Sinopec Overseas Investment
+3,009
+100
+23,019
+13,467
+Holding Limited
+Million USD
+Sinopec Catalyst Company Limited
+1,500
+100
+11,330
+229,548
+1.41
+EBITDA to total debt ratio
+Increase in total profit
+2020/3/31
+2020/5/27
+2021/7/23
+2021/8/5
+2021/8/5
+2020/4/1
+2020/4/1
+2020/5/28
+2021/7/27
+2021/8/6
+2021/8/9
+2023/4/1
+2023/4/1
+2020/3/31
+2023/5/28
+2024/8/6
+2023/8/9
+5
+5
+10
+5
+2
+5
+5
+10
+5
+2
+2222
+2026/7/27
+132100172
+102101489
+102101386
+BOND GENERAL INFORMATION (CONTINUED)
+2. INTERBANK BOND MARKET DEBT FINANCING INSTRUMENT OF NON-FINANCIAL ENTERPRISES
+(Legal representative)
+Bond name
+Abbreviation
+code
+Issuance date
+Interest commencement date
+Maturity date
+Amount issued (RMB billion)
+Outstanding balance (RMB billion)
+Interest rate (%)
+The first
+medium-term
+The second
+medium-term
+notes in 2020
+notes in 2020
+20中石化MTN001 20中石化MTN002 20中石化MTN003 21中石化MTN001
+102101480
+The third
+medium-term
+The first
+medium-term
+notes in 2021
+The second
+medium-term
+medium-term
+notes in 2021
+notes in 2021
+21中石化MTN002 21中石化MTN003
+The third
+The first green
+medium-term
+notes in 2021
+21中石化GN001
+102000568
+102000569
+102001109
+notes in 2020
+2021/12/27
+2021/12/28
+2024/12/28
+2.55
+Loan repayment rate (%)
+31 Dec. 2021
+31 Dec. 2020
+0.87
+0.87
+0.55
+51.51
+100
+Change
+0
+0.58
+(0.03)
+48.89 2.62 percentage points
+100
+Reasons for change
+Increase in current liabilities
+Increase in liabilities
+0
+Liability-to-asset ratio (%)
+2021
+Change
+Reasons for change
+Net profit/(loss) attributable to equity shareholders of
+the Company excluding extraordinary gains and losses
+(RMB million)
+72,220
+(1,565)
+73,785
+Increase in total profit
+Net profit of the Company excluding extraordinary gains
+and losses (RMB million)
+85,935
+4,556
+81,379
+2020
+Quick ratio
+Current ratio
+Principal data
+2.55
+2.7
+2.7
+2.2
+3.2
+2.95
+2.8
+2.5
+Principal and interest repayment
+Investor Qualification Arrangement
+Applicable trading mechanism
+Risk of suspension for listed trading
+(if any), and countermeasures
+Trading market
+Use of proceeds
+Credit rating
+Special terms for Issuer or investor
+option or investor protection,
+whether triggered or executed
+Guarantee, repayment scheme and
+other related events during
+the reporting period
+Convening of corporate bond holders'
+meeting
+Interest is paid once a year. The principal will be paid at maturity with last instalment of interest.
+Nationwide inter-bank bond market institutional investors
+Circulated and transferred in nationwide inter-bank bond market
+Not applicable
+Nationwide inter-bank bond market
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as disclosed in the corporate bond
+prospectus. All the proceeds have been completely used till now.
+During the reporting period, United Credit Ratings Co., Ltd. issued the continuing credit rating report on May 21. The long-term credit rating of
+Sinopec Corp. remained AAA with its outlook being stable.
+Not applicable
+No guarantee. Interest is paid as usual during the reporting period without triggering any guarantee.
+Not applicable
+Performance of corporate bonds trustee Corporate bonds trustee has performed its duties in accordance with regulatory requirements
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Principal accounting data and financial indicators for the two years ended 31 December 2021
+17,468
+10,616
+89
+Sinopec-SK(Wuhan) Petrochemical
+5,939
+8,735
+9,267
+4,857
+10
+35,664
+33,724
+11
+207,433
+152,191
+Other current assets
+24,500
+23,773
+35,439
+Total current assets
+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
+593,653
+558,024
+Construction in progress
+34,861
+18,371
+25 March 2022
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+85
+Financial Statements (PRC)
+Financial Statements (PRC)
+(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
+12,528
+At 31 December
+2020
+RMB million
+Financial assets held for trading
+Derivative financial assets
+5
+221,989
+184,412
+1
+Accounts receivable
+Receivables financing
+Prepayments
+Other receivables
+Inventories
+9
+67820
+Cash at bank and on hand
+14
+155,939
+125,525
+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
+Provisions
+Deferred tax liabilities
+Other non-current liabilities
+Total non-current liabilities
+Bills payable
+Total liabilities
+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
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Total liabilities and shareholders' equity
+Ma Yongsheng
+Company Limited
+Shareholders' equity
+Derivative financial liabilities
+Short-term loans
+1,738,896
+Right-of-use assets
+15
+184,974
+189,018
+Goodwill
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+16
+119,210
+114,280
+17
+8,594
+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
+Current liabilities
+1,331,231
+1,889,255
+1,283,236
+He Shu
+Yang Jie (Engagement Partner)
+Intangible assets
+Certified Public Accountants
+and petrochemical materials
+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
+(27) Overseas investment holding
+715 Production and sale of catalyst products
+603 Trading of petrochemical products
+2,729 Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+3,711 Manufacturing of intermediate petrochemical
+products and petroleum products
+4,097 Manufacturing of intermediate petrochemical
+products and petroleum products
+18,582 Marketing and distribution of refined
+petroleum products
+2,817 Production and sale of petrochemical products
+1,606 Production, sale, research and development of
+petroleum, petrochemical, ethylene and
+downstream by-products
+871 Oil jetty and nature gas pipeline
+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
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by KPMG Huazhen LLP or KPMG.
+2: The above indicated total assets and net profit 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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+141 Production and sale of refined petroleum
+products, lubricant base oil,
+REPORT OF THE PRC AUDITOR
+AUDITOR'S REPORT
+KPMG Huazhen LLP
+8th Floor, KPMG Tower
+Oriental Plaza
+1 East Chang An Avenue
+Beijing 100738
+China
+Telephone +86 (10) 8508 5000
+Fax
++86 (10) 8518 5111
+Internet kpmg.com/cn
+畢馬威華振會計師事務所
+(特殊普通合夥)
+中國北京
+東長安街1號
+東方廣場畢馬威大樓8層
+郵政編碼:100738
++86 (10) 8508 5000
+KPMG
++86 (10) 8518 5111
+kpmg.com/cn
+(1,290) Production and sale of polyester chips and
+polyester fibres
+Net Profit/
+(Net Loss)
+RMB million
+27,441
+59
+7,193
+Registered in the People's
+Republic of China
+11,807
+Company Limited
+Sinopec Kantons Holdings Limited
+248
+60
+12,956
+12,590
+Million HKD
+Sinopec Shanghai Gaoqiao Petroleum
+1,429
+10,000
+37,561
+18,214
+and Chemical Limited
+Sinopec Shanghai Petrochemical
+10,824
+50
+47,039
+30,395
+Company Limited
+Fujian Petrochemical Company Limited 10,492
+50
+14,672
+13,830
+55
+畢馬威華振審字第2202273號
+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
+OPINION
+In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
+other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
+fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Accounting Standards for
+Business Enterprises, and for the design, implementation and maintenance of such internal control necessary to enable that the financial statements
+are free from material misstatement, whether due to fraud or error.
+In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing,
+as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the
+Company or to cease operations, or has no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing the Company's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+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.
+As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
+•
+•
+•
+Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
+procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
+detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal control.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
+Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern.
+If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial
+statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date
+of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
+• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements
+represent the underlying transactions and events in a manner that achieves fair presentation.
+• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express
+an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely
+responsible for our audit opinion.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
+findings, including any significant deficiencies in internal control that we identify during our audit.
+Financial Statements (PRC)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+KPMG
+The Shareholders of China Petroleum & Chemical Corporation:
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (Continued)
+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.
+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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+The Company's management is responsible for the other information. The other information comprises all the information included in 2021 annual
+report of the Company, other than the financial statements and our auditor's report thereon.
+•
+KPMG
+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
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
+period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
+not provide a separate opinion on these matters.
+OTHER INFORMATION
+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.
+Assessment of impairment of fixed assets relating to oil and gas producing activities
+Refer to Note 3 (8) Oil and gas properties, (12) Impairment of other non-financial long-term assets, Note 13 Fixed assets, and Note 58 Principal
+accounting estimates and judgements to the financial statements
+The Key Audit Matter
+The Company reported fixed assets of Renminbi ("RMB") 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.
+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.
+How the matter was addressed in our audit
+The following are the primary procedures we performed to address this
+key audit matter:
+•
+•
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+REPORT OF THE PRC AUDITOR (CONTINUED)
+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.
+Financial Statements (PRC)
+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 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.
+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;
+84
+Credit impairment reversals
+5,811
+14,462
+2022
+RMB Million
+Amount Percentage
+(1,715)
+(%)
+(59.8)
+Main reasons for changes
+2,182
+Gains/(losses) from changes in fair value
+RMB Million
+467
+RMB Million
+(8,651)
+Items of Consolidated Income Statement
+Investment income
+88.9
+Increase/(Decrease)
+(32,387)
+62,844
+Long-term loans
+243
+179,347
+94,964
+30,457
+84,383
+Debentures payable
+8,513
+12,997
+(4,484)
+(34.5)
+For the year ended
+31 December
+2023
+1,084
+Cash paid for acquisition of investments
+(77.6)
+Percentage
+(%)
+Main reasons for changes
+(38.9)
+2,429.7
+10,041
+(10,041)
+(5,918)
+(10,456)
+4,538
+Other cash paid relating to investing activities
+Net cash paid for the acquisition of subsidiaries
+and other business entities
+(110)
+Non-current liabilities due within one year
+(7,881)
+7,771
+Amount
+RMB Million
+(104,893)
+5,151
+(841)
+2022
+RMB Million
+269,895
+212
+Increase/(Decrease)
+Impairment losses
+(8,772)
+(12,009)
+3,237
+Asset disposal gains
+4,226
+672
+3,554
+528.9
+For the year ended
+The impact of gains from the sale of Shanghai SECCO's
+equity in the previous year and the decline in the profit
+of affiliates and joint ventures, resulting from the weak
+chemical market.
+Impact of increase in floating profit of hedging business.
+Decrease in bad debt reversal of accounts receivables.
+Decrease in impairment of oil and gas assets and refining
+and chemical facilities.
+Land and facilities disposal income generated by the
+relocation of Hunan Petrochemical, as well as increase in
+the disposal income of part of gas stations, oil depots, and
+pipeline assets.
+Items of Consolidated Cash Flow Statement
+Other cash received relating to operating activities
+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
+31 December
+2023
+RMB Million
+165,002
+5,363
+Increase in low-interest long-term loans to meet the capital
+needs of investment, production and operation activities.
+Partial amount of debentures payable reclassifying to non-
+current liabilities due within one year.
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+The impact of the Company's provision of levy for mineral
+rights concessions and the increase in turnover taxes
+including consumption tax.
+Short-term loans
+As of
+As of
+31 December 31 December
+Increase/(Decrease)
+2023
+2022
+RMB million
+RMB million
+Amount Percentage
+RMB million
+(%)
+Main reasons for changes
+3
+2
+1
+Prepayments
+50.0
+Receivables financing
+Derivative financial assets
+541
+(92,090)
+(5,053)
+6,969
+12,022
+2
+3
+1
+10
+16,261
+9,643
+(6,618)
+561
+(5) Significant changes of items in the financial statements
+Items of Consolidated Balance Sheet
+Financial assets held for trading
+Derivative financial liabilities
+(51.5) Repayment of long-term loans due within one year and
+maturity of debentures payable.
+Impact of changes in fair value of funds held by the
+Company.
+19,335
+38,502
+180.7
+accelerated turnover of bills.
+Bills payable
+Taxes payable
+29,122
+10,782
+18,340
+170.1
+40,008
+28,379
+11,629
+41.0
+Increase in low-interest short-term loans to meet the capital
+needs of production and operation activities during the
+reporting period.
+Increase in bill-settled purchases.
+21,313
+9,721
+59,815
+(36.3)
+(9,614)
+(49.7)
+Impact of changes in fair value of hedging business.
+2,752
+7,313
+(4,561)
+(62.4)
+2,221
+3,507
+(1,286)
+(36.7)
+Improved efficiency in the use of capital resulting from
+5,067
+7,956
+(2,889)
+Decrease in prepayments for equipment purchases.
+Cash received from capital contributions
+They played an effective role in decision-making,
+supervision and independence and the provision
+of professional consultancy. With an aim to
+enhance the quality, the Company beefed up
+efforts to deepen corporate reform. Our internal
+control and risk management mechanisms were
+constantly improved. Meanwhile, we continued
+to implement the share repurchase with a view
+to safeguarding the Company's market value
+and shareholders' interests. In recognition of
+our strict adherence to high quality information
+disclosure practice and investor relations
+management, the Company has been rated
+grade-A for information disclosure by the SSE
+for ten consecutive years.
+(33,505)
+3,946
+138,486
+Total equity attributable to shareholders of the Company
+Net assets per share (RMB)
+802,989
+787,600
+776,296
+747,931
+141,633
+744,572
+Adjusted net assets per share (RMB)
+6.486
+6.569
+6.310
+6.412
+6.178
+6.150
+6.728
+141,226
+151,942
+152,820
+1,284,416
+1,318,889
+Net current liabilities
+112,641
+144,245
+83,256
+67,335
+133,166
+Non-current liabilities
+421,811
+344,194
+332,162
+327,517
+302,665
+Non-controlling interests
+6.228
+5.957
+5.995
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS ACCOUNTING STANDARDS
+PLEASE REFER TO PAGE 213 OF THE REPORT.
+of refined oil products achieved a new record.
+Meanwhile, non-fuel business maintained healthy
+growth. With an aim to build ourselves into an
+integrated energy service provider of "petrol,
+gas, hydrogen, power and services", we pushed
+for the development of hydrogen energy, battery
+charging and swapping, renewable power
+generation, CCUS operations, etc., creating new
+competence from green development. With an
+emphasis on the innovation-driven development
+strategy, we achieved fruitful results in the
+development of core technologies in a number of
+key areas, such as exploration and development,
+refining, new chemical materials, new energy,
+and green and low carbon sector, laying a
+solid foundation for the Company's high-quality
+development.
+Continued strengthening of corporate
+governance effectiveness in past three years.
+The Board strengthened strategic planning,
+studied and formulated the development
+strategy for the "14th Five-Year Plan"
+period. While maintaining high cash dividend
+payout ratio, the Board has implemented
+the share repurchase in both domestic and
+overseas markets for two consecutive years
+to safeguard the Company's market value
+and shareholders' interests. In addition, we
+improved the fundamental system for corporate
+governance, enhanced the compliance system,
+and continuously improved the effectiveness of
+the internal control system. Our management
+was enhanced by benchmarking against the
+world-class standards so as to promote the
+Company's professional development. As the
+quality of information disclosure and investor
+relations practices further improved, our
+communication with stakeholders became
+more effective. The delisting of our American
+depositary shares was completed in an orderly
+manner. The Company leveraged the advantage
+of party-building, strengthened the supervisory
+and protection work, boosted the employees'
+vitality, and improved their motivation. Our
+outstanding corporate governance has gained
+wide recognition in various capital markets.
+Chairman's Address
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Significant progress in ESG practice over
+past three years. The Board bolstered the ESG
+governance based on strategic height, attached
+great importance to the guiding principles and
+strengthened the management effectiveness.
+We implemented the low carbon development
+strategy and action plan for carbon peak. While
+continuously enhancing the HSE management
+system, the Company conducted specialized
+work safety rectification, vigorously promoted
+pollution prevention and contributed our efforts
+to promote the development of ecological
+civilization. In the face of major disasters and
+emergencies, we actively participated in relief
+operations, made every effort to ensure the
+supply of energy and materials, and ensured the
+stable operation of industrial and supply chains.
+In addition, we supported rural revitalization,
+contributed efforts to the Winter Olympics
+and Paralympics in Beijing, and extensively
+participated in charities. In adherence to the
+people-oriented approach, we protected the
+physical and mental health of employees,
+promoted the harmoniously development of
+economies, environment and communities of the
+sites where our domestic and overseas projects
+located. As our development brought many
+benefits to the public, the Company's corporate
+image as a responsible enterprise became more
+prominent.
+The hard-won achievements were attributable
+to the joint efforts of the Board, the Supervisory
+Committee, management and all employees.
+They would not have been gained without the
+strong support from shareholders and all walks
+of life in the community. On behalf of the Board,
+I would like to express my sincere gratitude
+to all shareholders and all walks of life in the
+community for their support. I would also
+express my sincere gratitude to all of directors,
+supervisors and management for their dedicated
+work and outstanding contributions!
+In 2024, Sinopec Corp. will continue to act
+on the principle of seeking progress while
+maintaining stability, promoting stability through
+progress. We will improve the operation and
+profitability, transformation and upgrading,
+reform and innovation, and risk management.
+In addition, greater emphasis will be put
+on the value creation and persistent efforts
+will be carried out to effectively enhance our
+development quality and ensure the reasonable
+growth of business volume. By cultivating
+new quality productivity, we will lay a decisive
+foundation for the Company to fully complete
+the goals and tasks for the "14th Five-Year Plan"
+period.
+We will improve development quality,
+enhance profitability, stabilize growth and
+emphasis on tackling difficulties and creating
+value. We will leverage on our integrated
+advantage, coordinate the whole value chain of
+procurement, transportation, production, storage
+and marketing, tap the potential of system
+optimisation, meet market demand, improve
+service quality, continue to increasing business
+scale, thereby maximizing the overall profitability
+of our industrial chain. We will emphasis on
+promoting transition and upgrading, and push
+for the development of new growth drivers.
+The integrative development oil and gas
+exploration and development operation and new
+energy business will be expedited, and greater
+efforts will be made to boost the exploration
+and development. We will fuel the growth of
+natural gas business, expand the utilization of
+green electricity, and establish and promote
+the collaborative development of a safe and
+reliable green energy supply system which is
+complementary to multi-energy consumption.
+At the same time, the development of world-
+class, high-tech and integrated refining and
+chemical center will be accelerated and the plan
+for developing strategic emerging businesses
+such as new materials and bio-technology will
+be formulated. The Company is determined to
+become the best hydrogen energy company in
+China. We will take a multi-scenario approach
+to the expansion of recharging network, create
+first-tier directly-operated platform, cultivate
+diversified service models and add value to the
+sales network across the board. The digital and
+intelligent transformation of the industry will
+be vigorously promoted and the coordinated
+development of a modern service and trading
+system incorporating the consumer Internet
+and the industrial Internet will be carried out.
+Besides, the ProMACE industrial platform will be
+further strengthened. We will power the green
+transformation and craft new competitive edges
+from green development. While driving all-round
+improvement in ESG management, the Company
+will vigorously promote the conservation and
+efficient utilization of resources. The carbon
+peak strategy will be steadily implemented,
+and collaborative efforts will be taken to reduce
+carbon emissions and pollution, promoting green
+development and business growth. As enhanced
+efforts will be made to drive the R&D and
+applications of green and low carbon technology,
+we will push for the industrialization and large-
+scale application of CCUS technology, expand
+carbon trading and enhance carbon footprint
+management. In order to contribute our efforts
+to the ecosystem protection, we will accelerate
+the implementation of pollution prevention and
+control projects. Meanwhile, greater efforts will
+be made to promote technological advancement
+and innovation-driven development. The
+integration of innovation chain and industrial
+chain will be further strengthened to support
+the transition and upgrading of our businesses
+and the development of strategic emerging
+businesses, whereby reinforcing our capability of
+proprietary innovation and original innovation.
+Ambitious players are most likely to win in
+fierce competition. I believe that Sinopec Corp.
+is poised to forge our own path for high-quality
+development under the leadership of new Board
+members to be elected, with the joint efforts of
+the management and all employees, and with
+the strong support from shareholders and all
+walks of life in the community. We will expedite
+our development into a world-class enterprise,
+and thus deliver greater value for shareholders
+and the society.
+Ma Yongsheng
+Chairman
+Beijing, China
+22 March 2024
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+9
+Enhanced high-quality development as defining
+feature of the Company's over past three years.
+We continued to push ahead with the seven.
+year action plan to reinforce the resource base,
+leading to continual growth in our oil and gas
+reserves and output. Besides, our efforts to
+boost reserves, stabilize oil output, ramp up gas
+output and reduce costs achieved remarkable
+results. By accelerating the development of
+world-class refining and chemicals centers,
+we increased capacity with competitive edges.
+At the same time, the strategy of shifting
+refined oil products to chemical feedstocks and
+refining specialties progressed steadily with the
+capacity of our refining and polyolefin capacity
+ranked first in the world. In addition, oil and
+gas equivalent output and refinery throughput
+climbed to historic highs, and the high value.
+added chemical products portion continued
+growing. As for the marketing business,
+the advantage of sales network was further
+enhanced. The number of gas stations ranked
+second in the world and domestic sales volume
+2019
+The eighth session of the board of directors
+(the "Board") and the supervisory committee
+(the "Supervisory Committee") of the Company
+will complete their terms this year. The past
+three years were extremely extraordinary and
+challenging for Sinopec Corp. Faced with a
+severe and complex external environment and
+unexpected adversity, the Board steadfastly
+pursued the new development philosophy,
+launched the action plan to drive high-quality
+development, and played the advantages of
+integrated value chain to the full. Besides, we
+continued to promote the business layout with
+"One Foundation of energy and resources, Two
+Wings of clean fuels and advanced chemicals,
+and Three Growth Engines in new energy, new
+materials and new economy". The management
+led the entire staff to overcome difficulties and
+made every effort to strengthen development
+quality, enhance profitability and stabilize
+growth. While new progress and achievements
+were made in all aspects of work, our operating
+performance remained stable amid volatile
+market conditions. All operating costs continued
+to decline, and the Company retained a stable
+financial position and delivered promising
+returns to shareholders.
+Technological innovation to enhance
+development quality and drive business
+transformation and upgrading. With increased
+emphasis on technological innovation, we
+enhanced R&D efforts and strengthened
+cutting-edge basic research. Persistent efforts
+were made in oil and gas exploration and the
+development of high-end new materials. Major
+breakthroughs were achieved in a number
+of core technologies with the quality of our
+patents ranked best among the top in domestic
+market. We accelerated the transformation and
+upgrade of refining and chemical business,
+and completed the transformation of certain
+refining projects to chemical projects and the
+upgrading of some ethylene projects. Moreover,
+our transformation towards an integrated energy
+service provider of "petrol, gas, hydrogen,
+power and services" progressed in an orderly
+manner. The three-year plan for charging
+network development was kicked off with an
+aim to vigorously promote battery charging and
+swapping operation. We created a roadmap for
+the development of hydrogen energy business
+with primary focus on hydrogen transportation
+and green hydrogen for refining and chemical.
+Meanwhile, the power generated from wind and
+solar energy steadily grew and breakthroughs
+were made in the industrialization of the CCUS
+project, hence reinforcing our competitive edges
+in green and low-carbon development.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHAIRMAN'S ADDRESS
+Dear Shareholders and Friends:
+First of all, on behalf of the board of directors,
+management and all our employees, I would
+like to express my sincere gratitude to our
+shareholders and all walks of life in the
+community for their care and support for
+Sinopec Corp.
+In 2023, the global economy recovered slowly,
+geopolitical tensions intensified, macro-
+environment became increasingly unstable and
+uncertain, and international oil prices fluctuated
+widely. In domestic China, the economy
+regained steam, refined oil products demand
+gradually picked up, new energy developed
+rapidly, chemical industry faced supply glut and
+the petroleum and chemical industry changed
+profoundly. In the face of complicated operating
+environment and fierce market competition,
+the Company stepped up efforts to promote
+high-quality development, drove all-round
+improvement in production and operations
+management, and proceeded with the customer-
+centric strategy. As a result, we achieved
+promising operating results with new progress
+and new developments made in various aspects
+of work.
+In accordance with IFRS Accounting Standards,
+the Company realized revenues from primary
+business and other operating revenues of
+RMB3.2 trillion. The profit attributable to
+shareholders of the Company amounted to
+RMB58.3 billion. The Company retained a stable
+financial position and saw substantial increase
+in operating cash flow. Taking into account the
+Company's profitability, shareholders' returns
+and sustainable development, the board of
+directors proposed a final cash dividend of
+RMBO.2 per share (tax inclusive). Together
+with the interim cash dividend of RMB0.145
+per share (tax inclusive) already paid, the
+total dividend for the year amounted to
+RMBO.345 per share (tax inclusive), and the
+total distribution ratio for 2023 reaches 75%
+including share repurchase.
+Remarkable enhancement of corporate
+governance. The board of directors insisted
+on scientific decision-making, dynamically
+optimized the development plan, and
+strengthened the strategic management
+of ESG. While exercising performing their
+responsibilities diligently and with due care, the
+independent directors thoroughly conducted
+in-depth research on the enterprises and
+communicated extensively with shareholders.
+(1,286)
+Effective improvement in quality and reasonable
+growth of quantity in each business segment.
+As for the upstream business, we reinforced our
+resource base with major breakthroughs in a
+number of oil and gas explorations. Our efforts
+to boost reserves and output, reduce costs and
+enhance profitability bore fruitful results. While
+the natural gas production, supply, storage
+and marketing system was further improved,
+the value-creation capability of entire industrial
+chain substantially increased. We insisted on the
+integrated operation in refining and marketing
+businesses, strengthened orientation of market
+needs and profitability, dynamic coordinated the
+resource allocation, and enhanced cost reduction
+and efficiency improvement. The strategy of
+adjusting the yield of refined oil products,
+chemical feedstocks and refining specialities
+was carried out in a scientific manner. As we
+vigorously drove market expansion, boosted
+sales and improved profitability, the refinery
+throughput and domestic sales volume of
+refined oil products hit a record high and non-
+fuel business maintained brisk growth. At the
+same time, we strengthened the collaborative
+development of chemicals and refining.
+businesses, whereby improving our profitability,
+adjusting the utilization rate, strengthening cost
+management and expanding external sales. As
+a result, the overall sales volume of chemical
+products steadily increased.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+7
+Chairman's Address
+8
+CHAIRMAN'S ADDRESS (CONTINUED)
+Commitment to fulfill the corporate social
+responsibilities. The Company was actively
+responding to global climate change and made
+relentless efforts to promote the development of
+clean energy. While the action plan for carbon
+peak went ahead smoothly, we took measures to
+protect the ecosystem and ensure biodiversity.
+We stepped up efforts to enhance safety
+management and intrinsic safety standards.
+In addition, we supported rural revitalization,
+participated in domestic emergency and disaster
+relief programs and the charitable projects
+such as "Spring Bud Gas Station for Girls" and
+"Classes Given by Academicians", which received
+favourable response in the society. We cared
+about the staff's physical and mental health
+and create stable and harmonious community
+relationships in our domestic and overseas
+projects operate.
+2020
+As of 31 December
+2021
+1,332,940
+2022
+1,427,981
+Operating profit
+86,828
+75,835
+94,628
+2020
+2,104,724
+13,669
+2019
+2,957,868
+86,516
+Profit before taxation
+83,934
+94,400
+109,169
+48,615
+90,161
+Profit attributable to shareholders of the Company
+58,310
+66,933
+For the year ended 31 December
+2022
+2021
+3,318,168
+2,740,884
+72,483
+3,212,215
+Revenue
+(58,585)
+(2,437)
+Impact of margin changes of derivative business.
+Proceeds from disposal of fixed assets including Hunan
+Petrochemical increased year-on-year.
+(100.0) Impact of cash consideration on the sale of Shanghai
+SECCO's equity in the previous year.
+(43.4) Capital injection to associates and joint ventures in this
+period decreased year-on-year.
+(98.6) Payment for equity and asset acquisition in the previous
+year, which did not happen during the reporting period.
+174.9 Increase in time deposits with maturities over three months.
+(61.8) Decrease in capital injection for projects received from
+minority shareholders year-on-year.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+5
+LO
+Principal Financial Data and Indicators
+6
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS ACCOUNTING
+STANDARDS
+Unit: RMB million
+Items
+2023
+1,509
+34,196
+Basic earnings per share (RMB)
+8.50
+9.34
+4.57
+7.90
+Net cash generated from operating activities per share (RMB)
+1.348
+0.962
+1.860
+1.392
+1.275
+Unit: RMB million
+Items
+2023
+Non-current assets
+1,490,261
+7.26
+58,370
+Return on net assets (%)
+6.50
+0.487
+0.554
+0.599
+0.282
+0.482
+Diluted earnings per share (RMB)
+0.487
+0.554
+0.599
+0.282
+0.482
+Return on capital employed (%)
+7.22
+8.73
+11.33
+9.11
+2,221
+RMB Yuan
+10
+75
+Subsidiaries
+Principal Wholly-owned and Controlled
+Bond General Information
+74
+72
+Financial Statements
+of Principal Shareholders
+70
+Report of the Supervisory Committee
+68
+Report of the Board of Directors
+59
+Connected Transactions
+Changes in Share Capital and Shareholdings
+219
+Corporate Information
+220 Documents for Inspection
+SSE: Shanghai Stock Exchange
+NDRC: China National Development and Reform Commission
+China Petrochemical Corporation: the controlling shareholder of Sinopec Corp., China Petrochemical Corporation
+Sinopec Group: China Petrochemical Corporation and its subsidiaries
+Company: Sinopec Corp. and its subsidiaries
+In this report, unless the context otherwise requires, the following terms shall have the meaning as set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation
+DEFINITIONS:
+Sinopec Corp.'s H shares were listed in Hong Kong Stock Exchange on 18 October 2000 and A shares were listed in the SSE on 8 August 2001.
+Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production,
+pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical
+products, coal chemical products, synthetic fibre, and other chemical products; the import and export, including an import and export agency business,
+of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; research, development
+and application of technologies and information; hydrogen energy business and related services such as hydrogen production, storage, transportation
+and sales; battery charging and swapping, solar energy, wind energy and other new energy business and related services.
+COMPANY PROFILE
+AS APPROVED AT THE 21ST MEETING OF THE EIGHTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED A
+FINAL CASH DIVIDEND OF RMBO.2 (TAX INCLUSIVE) PER SHARE FOR 2023, COMBINING WITH THE INTERIM CASH DIVIDEND OF RMBO.145 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2023 WILL BE RMBO.345 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2023.
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023 OF THE COMPANY PREPARED IN ACCORDANCE WITH THE PRC
+ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (CASS) AND IFRS ACCOUNTING STANDARDS 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 SUPERVISORY COMMITTEE, DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+OF SINOPEC CORP. WARRANT THAT THERE ARE NO FALSE REPRESENTATIONS, MISLEADING STATEMENTS OR MATERIAL OMISSIONS IN THIS
+ANNUAL REPORT, AND JOINTLY AND SEVERALLY ACCEPT FULL RESPONSIBILITY FOR THE AUTHENTICITY, ACCURACY AND COMPLETENESS
+OF THE INFORMATION CONTAINED IN THIS ANNUAL REPORT. THERE IS NO OCCUPANCY OF NON-OPERATING FUNDS BY THE CONTROLLING
+SHAREHOLDERS OF SINOPEC CORP. ALL DIRECTORS ATTENDED THE 21ST 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
+FINANCIAL DEPARTMENT OF SINOPEC CORP. WARRANT THE AUTHENTICITY, ACCURACY 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 2023.
+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 22 March 2024 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these forward-looking statements.
+57
+Significant Events
+51
+Environment and Social Responsibilities
+【便利店
+为美好生活加油
+氢能
+OPEC SINOPEC
+中国石化
+中国石化
+7,497
+60,463
+19,716
+(18,397)
+13,939
+16,624
+10,413
+60,692
+45,959
+70,747
+NA SUT66
+RMC: Oil and Natural Gas Reserves Management Committee of the Company
+H₂
+ANNUAL REPORT
+Corporate Governance
+Management's Discussion and Analysis
+Business Review and Prospects
+Chairman's Address
+Principal Financial Data and Indicators
+Company Profile
+CONTENTS
+237
+49
+27
+17
+10
+SINOPEC CORP.
+中国石油化工股份有限公司
+AND ACCOUNTS
+2023
+63,166
+Sinopec Finance Co.: Sinopec Finance Co., Ltd.
+CSRC: China Securities Regulatory Commission.
+161,475
+57,962
+60,692
+71,716
+(9.9)
+67,082
+116,269
+60,463
+(8.9)
+94,515
+86,116
+112,414
+(10.0)
+96.414
+108,348
++ 000
+4.7
+38.9
+742,274
+3,212,215
+Chairman's Address
+20,102
+876,259
+802,351
+791,331
+RMB million
+Total
+Quarter
+RMB million
+Fourth
+Third
+Quarter
+RMB million
+Second
+Quarter
+RMB million
+2023
+72,728
+225,174
+86,744
+2,740,884
+(3.2)
+3,318,168
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+Net cash flow from operating activities
+Profit before taxation
+Operating profit
+Operating income
+Items
+(1) Principal financial data
+1. FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+For overseas production of crude oil: 1 tonne = 7.26 barrels in 2023, 1 tonne = 7.26 barrels in 2022, 1 tonne = 7.22 barrels in 2021;
+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
+Items
+Century Bright: Sinopec Century Bright Capital Investment, Ltd.
+Operating income
+First
+Quarter
+RMB million
+3,212,215
+RMB million
+(%)
+RMB million
+RMB million
+2021
+Change
+2022
+2023
+For the year ended 31 December
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+Total liabilities
+Total assets
+Items
+Net cash flow (used in)/generated from operating activities
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+161,475
+As of 31 December
+2023
+RMB million
+Receivables financing
+Derivative financial instruments and cash flow hedging
+Financial assets held for trading
+Total
+4
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Other equity instruments investment
+For the year ended 31 December
+(Income)/expenses
+2023
+2021
+RMB million
+RMB million
+RMB million
+(4,226)
+310
+2022
+Items
+(4) Items measured by fair values
+Minority interests
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+(3) Extraordinary items and corresponding amounts
+Items
+Net gain on disposal of non-current assets
+Donations
+Government grants
+Gain on holding and disposal of various investments
+Other non-operating expenses, net
+Net loss acquired through business combination under common control
+during the reporting period
+One-time impact on loss during the reporting period due to adjustments
+to laws and regulations
+Subtotal
+Tax effect
+Total
+Attributable to: Equity shareholders of the Company
+(672)
+(665)
+447
+165
+(9,120)
+1,012
+(1,222)
+(4,351)
+(107)
+Unit: RMB million
+Influence
+on the profit
+Beginning
+of the year
+730
+End
+of the year
+450
+Changes
+of the year
+(280)
+229
+Principal Financial Data and Indicators
+905
+(72)
+(3,533)
+(3,826)
+(3,085)
+(931)
+(13,902)
+(259)
+797
+2,178
+4,720
+101
+5,955
+(1,628)
+635
+(993)
+(15,775)
+977
+2,304
+(13,471)
+3
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+6.420
+51.43
+121,071,210
+2023
+For the year ended 31 December
+2022
+Change
+2021
+Items
+RMB Yuan
+(%)
+RMB Yuan
+Basic earnings per share
+0.505
+0.555
+(9.0)
+0.592
+Diluted earnings per share
+(0.5)
+0.505
+119,896,408
+2.2
+2022
+RMB million
+Change
+2021
+(%)
+RMB million
+2,026,674
+1,951,121
+3.9
+1,068,019
+1,010,664
+5.7
+1,890,964
+972,475
+805,794
+119,349,252
+788,471
+777,216
+3,507
+0.555
+0.592
+points
+40.1
+1.860
+2023
+Items
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+RMB Yuan
+As of 31 December
+2022
+RMB Yuan
+Change
+2021
+(%)
+RMB Yuan
+6.752
+52.70
+6.576
+51.80
+2.7
+0.90
+percentage
+points
+0.962
+(9.0)
+1.348
+percentage
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.507
+0.479
+5.9
+0.601
+7.59
+8.57
+(0.98)
+9.40
+percentage
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+7.61
+7.40
+points
+0.21
+9.53
+Net cash flow from operating activities per share
+(2) Principal financial indicators
+17,855
+15,009
+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 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
+Financial instruments, refer to the contracts that form one party's financial assets and form the financial liabilities or equity instruments of the
+other party. The Group recognises a financial asset or a financial liability when the Group enters into and becomes a party to the underlining
+contract of the financial instrument.
+(11) Financial Instruments
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(12)). On disposal of an asset group or a set of
+asset groups, any attributable amount of purchased goodwill is written off and included in the calculation of the profit or loss on disposal.
+The initial cost of goodwill represents the excess of cost of acquisition over the acquirer's interest in the fair value of the identifiable net assets
+of the acquiree under the business combination involving entities not under common control.
+(10) Goodwill
+For the sales of products or by-products produced during the research and development process, the group shall conduct accounting treatment
+for the relevant income and costs in accordance with the Accounting Standards for Business Enterprises No. 14 - Revenue, Accounting Standards
+for Business Enterprises No. 1 - Inventory, and include in the current profit and loss.
+Useful lives and amortisation methods are reviewed at least each year end.
+An intangible asset is regarded as having an indefinite useful life and is not amortised when there is no foreseeable limit to the year over which
+the asset is expected to generate economic benefits for the Group.
+Straight-line method
+Straight-line method
+Straight-line method
+Straight-line method
+Straight-line method
+Amortization method
+Expected years of economic benefits
+Useful life Basis of determination
+Title registration period
+Expected years of economic benefits
+Expected years of economic benefits
+Contractual period
+Others
+Non-patented technology
+Operating rights
+Land use rights
+Patents
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+93
+Financial Statements (PRC)
+Financial Statements (PRC)
+For accounts receivable, other receivables and receivables financing, the Group usually measures its loss allowance according to
+the combination of credit risk characteristics. If the credit risk characteristics of a counterparty are significantly different from
+those of other counterparties in the portfolio, or if the credit risk characteristics of the counterparty change significantly, the
+amount receivable from the counterparty shall be exposed to provision measurement and/or recognition on a separate basis.
+(b) According to the criteria for judging the individual provision for bad debts
+The Group's other receivables mainly include security deposits and deposits, receivables from related
+parties, dividends receivable, etc. Based on their credit risk, the Group estimates the allowance for
+doubtful accounts of the other receivables for different ages as a separate portfolio respectively.
+The Group's receivables financing consists of bank acceptance bills held for dual purposes. Due to
+the high credit ratings of the accepting banks, the Group treats all receivables financing as a single
+portfolio.
+Based on the historical experience of the Group, there are significant differences in losses across
+different operating segments. Therefore the Group estimates the allowance for doubtful accounts of
+the accounts receivable of each operating segment as a separate portfolio respectively.
+Basis of determination
+Receivables financing
+Other receivables
+Receivables items
+Accounts receivable
+(a) The type of portfolio for which provision for bad debts is made according to the credit risk characteristics and the basis for its
+determination
+Allowance for doubtful accounts on receivables
+•
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For accounts receivable and receivables financing arising from ordinary business activities such as sales of goods and rendering of
+services, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase
+in credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss
+allowance at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the
+initial recognition of a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss
+allowance at an amount equal to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a
+financial instrument, on third stage, the Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant
+past events, current conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for expected credit losses on financial assets measured at amortised cost and receivables
+financing measured at fair value through other comprehensive income.
+Expected credit losses measurement
+•
+(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
+(i) Classification and measurement (Continued)
+(a) Financial assets (Continued)
+(11) Financial Instruments (Continued)
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+Item
+The useful life, basis of determination and amortization method of each intangible asset are as follows:
+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.
+(9) Intangible assets
+Equipment, machinery and others
+Plants and buildings
+Category
+The criteria and timing for each type of construction in progress to be transferred to fixed assets are as follows:
+Construction in progress is transferred to fixed assets when the asset is ready for its intended use. No depreciation is provided against
+construction in progress.
+The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset
+to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, capitalised borrowing
+costs (see Note 3(20)), and any other costs directly attributable to bringing the asset to working condition for its intended use. According to legal
+or contractual obligations, costs of dismantling and removing the items and restoring the site on which the related assets located are included in
+the initial cost.
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(12)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(12)).
+Fixed assets represent the tangible assets held by the Group using in the production of goods, rendering of services and for operation and
+administrative purposes with useful life over one year.
+(7) Fixed assets and construction in progress
+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.
+(b) As Lessor
+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 (the individual lease asset has a relatively low value when brand 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.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset is less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+The Group recognises a right-of-use asset at the commencement date, and recognises the lease liability at the present value of the lease
+payments that are not paid at that date. The lease payments include fixed payments, the exercise price of a purchase option if the Group is
+reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease term reflects the Group exercising
+that option, etc. Variable payments that are based on a percentage of sales are not included in the lease payments, and should be recognised
+in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from balance sheet date is presented in non-
+current liabilities due within one year.
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(a) As Lessee
+(6) Leases
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures are stated in Note 3(12).
+(c) The impairment assessment method and provision accrual on investment
+The Group discontinues recognising its share of net losses of the investee after the carrying amount of the long-term equity investment
+and any long-term interest that is in substance forms part of the Group's net investment in the associate or the joint venture is reduced to
+zero, except to the extent that the Group has an obligation to assume additional losses. However, if the Group has incurred obligations for
+additional losses and the conditions on recognition of provision are satisfied in accordance with the accounting standard on contingencies,
+the Group continues recognising the investment losses and the provision. Where net profits are subsequently made by the associate or joint
+venture, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
+The Group adjusts the carrying amount of the long-term equity investment for changes in owners' equity of the investee other than those
+arising from net profits or losses and other comprehensive income, and recognises the corresponding adjustment in capital reserve.
+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.
+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.
+Where the initial investment cost of a long-term equity investment exceeds the Group's interest in the fair value of the investee's identifiable
+net assets at the date of acquisition, the investment is initially recognised at the initial investment cost. Where the initial investment cost is
+less than the Group's interest in the fair value of the investee's identifiable net assets at the time of acquisition, the investment is initially
+recognised at the investor's share of the fair value of the investee's identifiable net assets, and the difference is charged to profit or loss.
+The Group's accounting treatments when adopting the equity method include:
+The initial cost of investment in joint ventures and associates is stated at the consideration paid except for cash dividends or profits
+distributions declared but unpaid at the time of acquisition and therefore included in the consideration paid should be deducted if the
+investment is made in cash. Under the circumstances that the long-term investment is obtained through non-monetary asset exchange, the
+initial cost of the investment is stated at the fair value of the assets exchanged if the transaction has commercial substance, the difference
+between the fair value of the assets exchanged and its carrying amount is charged to profit or loss; or stated at the carrying amount of the
+assets exchanged if the transaction lacks commercial substance.
+Criteria and time point for transfer to fixed assets
+Asset management relevant departments complete on-site inspection and acceptance with conditions
+for use.
+(1) A single set of equipment can be put into operation separately and produce qualified products
+independently of other equipment or processes, and the relevant departments have issued a
+commissioning report; (2) Combined devices can be successfully commissioned jointly and produce
+qualified products normally, and the relevant departments will issue a commissioning report; (3)
+The supporting facilities are completed with the joint device as a whole and reach the point of the
+intended usable state; (4) The petrol station has completed on-site acceptance by the relevant
+management department; (5) The petrol filling station has completed on-site acceptance by the
+relevant departments and passed the relevant special acceptance by the local law enforcement
+authorities; (6) Fixed assets not required to be installed have passed acceptance by relevant
+departments; (7) The long-distance pipeline reaches the conditions for oil injection or section oil
+injection operation, and the relevant management departments of the enterprise complete the on-site
+acceptance and pass the relevant special acceptance by the local law enforcement departments.
+When an enterprise sells products or by-products produced before a fixed asset is available for its intended use, the proceeds and related cost
+are accounted for in accordance with CAS 14 - Revenue and CAS 1 - Inventories respectively, and recognised in profit or loss for the current
+period.
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+The capitalization cost of proven oil and gas assets is amortized based on production and oil and gas reserves using the production method.
+The estimation of the future demolition costs of oil and gas assets by our group is based on current industry practices, taking into account
+expected demolition methods and referring to the estimates of engineers. The relevant demolition costs are discounted to present value based
+on the pre tax risk-free rate of return and capitalized as part of the value of oil and gas assets, which are subsequently amortized.
+For auxiliary equipment related to oil and gas assets, they will be converted into oil and gas assets when the project is completed and reaches
+the predetermined usable state.
+For the development well, if it is determined to obtain industrial oil and gas flow and can be economically and effectively included in oil and gas
+production management, the actual expenses, production costs, and disposal fees determined according to the disposal plan of the well will be
+converted into oil and gas assets when it is put into production (reaching a usable state), and an estimated liability for oil and gas asset disposal
+fees will be calculated.
+For completed exploration wells that have completed exploration tasks, obtained industrial oil and gas flow, and can be economically and
+effectively included in oil and gas production management, the actual expenses for drilling the well, production costs, and disposal fees
+determined according to the disposal plan will be converted into oil and gas assets when it is put into production (reaching a usable state),
+and an estimated liability for oil and gas asset disposal fees will be calculated; Exploration tasks have been completed, and exploration wells
+that have not obtained industrial oil and gas flow have been identified. If they are economically and effectively utilized for other purposes (co
+associated resources, injection wells, etc.), the actual expenses and production costs of drilling the well will be converted into corresponding
+assets when it is put into production (reaching a usable state); Exploration tasks have been completed, and exploration wells that have not
+obtained industrial oil and gas flow, or exploration wells that have obtained industrial oil and gas flow but do not have the conditions for oil
+and gas production and cannot be economically and effectively included in oil and gas production management (including other economically
+and effectively utilized methods), shall be written off. The actual drilling and exploration expenses of the well shall be included in the current
+period's profit and loss. For unfinished exploration wells, the drilling support of the well shall be listed as under construction within one year
+after completion; After one year of completion, it is still uncertain whether the well has obtained industrial oil and gas flow. If further exploration
+activities of the well are already in progress or have clear plans and are about to be implemented, the expenditure of the well will continue to be
+included in the construction project. Otherwise, the actual expenditure of the well will be recognized in the current profit and loss.
+For mining rights and interests, if proven economically recoverable reserves are discovered in the mining area within the year, the expenses
+incurred in the current period should be capitalized. If no proven economically recoverable reserves are found in the mining area within the
+year, the expenses incurred in the current period should be temporarily capitalized; When reserves are subsequently discovered, they should be
+transferred within the oil and gas assets.
+Oil and gas assets refer to the ownership or control of mining interests and the formation of oil and gas wells and related auxiliary equipment
+through oil and gas exploration and development activities.
+3%
+Estimated Estimated rate
+useful life of residual value
+12-50 years
+3%
+4.30 years
+(8) Oil and gas properties
+94
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+Plants and buildings
+Other than oil and gas properties, the cost of fixed assets less residual value and accumulated impairment losses is depreciated using the
+straight-line method over their estimated useful lives, unless the fixed asset is classified as held for sale. The estimated useful lives and the
+estimated rate of residual values adopted for respective classes of fixed assets are as follows:
+The Group terminates the recognition of an item of fixed asset when it is in a state of disposal or it is estimated that it is unable to generate
+any economic benefits through use or disposal. Gains or losses arising from the retirement or disposal of an item of fixed asset are determined
+as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of
+retirement or disposal.
+The subsequent costs including the cost of replacing part of an item of fixed assets are recognised in the carrying amount of the item if the
+recognition criteria are satisfied, and the carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of fixed
+assets are recognised in profit or loss as incurred.
+Where the individual component parts of an item of fixed asset have different useful lives or provide benefits to the Group in different patterns
+thus necessitating use of different depreciation rates or methods, each part is recognised as a separate fixed asset.
+(7) Fixed assets and construction in progress (Continued)
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+92
+Financial Statements (PRC)
+91
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Equipment, machinery and others
+94
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+When the safety fund is subsequently used for revenue expenditure, the specific reserve is reduced accordingly. When the safety fund is
+subsequently used for the construction or acquisition of fixed assets, the Group recognises the capitalised expenditure incurred as the cost
+of the fixed assets when the related assets are ready for their intended use. In such cases, the specific reserve is reduced by the amount that
+corresponds to the cost of the fixed assets and the credit side is recognised in the accumulated depreciation with respect to the related fixed
+assets. Consequently, such fixed assets are not depreciated in subsequent periods.
+The Group recognises a safety fund in the specific reserve pursuant to relevant government regulations, with a corresponding increase in the
+costs of the related products or expenses.
+(17) Specific reserve
+Loss-making contracts exist when the costs of performing contractual obligations inevitably exceed the expected economic benefits in the
+contracts entered into by the Group. The projected liability for loss-making contracts is calculated at the present value of the lesser of the
+expected cost of termination and the net cost of continuing to perform the contract. The cost of performing a contract includes the allocation of
+incremental costs for the performance of the contract and other costs directly related to the performance of the contract.
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+costs, is reflected as an adjustment to the provision of oil and gas properties.
+Provisions are recognised when the Group has a present obligation as a result of a contingent event, it is probable that an outflow of economic
+benefits will be required to settle the obligations and a reliable estimate can be made. Where the effect of time value of money is material,
+provisions are determined by discounting the expected future cash flows.
+they relate to income taxes levied by the same tax authority on either the same taxable entity or different taxable entities which either to
+intend to settle the current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each
+future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
+(16) Provisions
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities;
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+The carrying amount of deferred tax assets is reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset
+against the benefit of deferred tax asset, the carrying amount of the deferred tax assets is written down. Any such write-down should be
+subsequently reversed where it becomes probable that sufficient taxable income will be available.
+At the balance sheet date, the amounts of deferred tax recognised is measured based on the expected manner of recovery or settlement of the
+carrying amount of the assets and liabilities, using tax rates that are expected to be applied in the period when the asset is recovered or the
+liability is settled in accordance with tax laws.
+Temporary differences arise in a transaction, which is not a business combination, and at the time of transaction, does not affect accounting
+profit or taxable profit (or unused tax losses), will not result in deferred tax. Temporary differences arising from the initial recognition of goodwill
+will not result in deferred tax.
+Deferred tax assets and liabilities are recognised based on deductible temporary differences and taxable temporary differences respectively.
+Temporary difference is the difference between the carrying amounts of assets and liabilities and their tax bases. Unused tax losses and unused
+tax credits able to be utilised in subsequent years are treated as temporary differences. Deferred tax assets are recognised to the extent that it
+is probable that future taxable income will be available to offset the deductible temporary differences.
+At the balance sheet date, current tax assets and liabilities are offset if the Group has a legally enforceable right to set them off and also intends
+either to settle on a net basis or to realise the asset and settle the liability simultaneously.
+Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year, plus any adjustment to tax payable
+in respect of previous years.
+Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to business combinations and items recognised
+directly in equity (including other comprehensive income).
+(15) Income tax
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+97
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+When the Group terminates the employment relationship with employees before the employment contracts expire, or provides compensation
+as an offer to encourage employees to accept voluntary redundancy, a provision for the termination benefits provided is recognised in profit
+or loss under the conditions of both the Group has a formal plan for the termination of employment or has made an offer to employees for
+voluntary redundancy, which will be implemented shortly; and the Group is not allowed to withdraw from termination plan or redundancy
+offer unilaterally.
+(c) Termination benefits
+Employees of the Group participate in the social insurance system established and managed by local labor and social security department.
+The Group makes basic pension insurance to the local social insurance agencies every month, at the applicable benchmarks and rates
+stipulated by the government for the benefits of its employees. After the employees retire, the local labor and social security department has
+obligations to pay them the basic pension. When an employee has rendered service to the Group during an accounting period, the Group
+shall recognise the accrued amount according to the above social security provisions as a liability and charge to the cost of an asset or to
+profit or loss in the same period.
+Basic pension insurance
+The Group classifies post-employment benefits into either Defined Contribution Plan (DC plan) or Defined Benefit Plan (DB plan). DC plan
+means the Group only contributes a fixed amount to an independent fund and no longer bears other payment obligation; DB plan is post-
+employment benefits other than DC plan. In this reporting period, the post-employment benefits of the Group primarily comprise basic
+pension insurance and unemployment insurance and both of them are DC plans.
+98
+(b) Post-employment benefits
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2023
+Financial Statements (PRC)
+99
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Government grants received in relation to assets are recorded as deferred income, and recognised evenly in profit or loss over the assets'
+useful lives. Government grants received in relation to revenue are recorded as deferred income, and recognised as income in future periods as
+compensation when the associated future expenses or losses arise; or directly recognised as income in the current period as compensation for
+past expenses or losses.
+Government grants are recognised when there is reasonable assurance that the grants will be received and the Group is able to comply with
+the conditions attaching to them. Government grants in the form of monetary assets are recorded based on the amount received or receivable,
+whereas non-monetary assets are measured at fair value.
+Government grants are non-reciprocal transfers of monetary or non-monetary assets from the government to the Group except for capital
+contributions from the government in the capacity as an investor in the Group.
+(19) Government grants
+The Group reserves the right to determine the price of the products it trades at its own discretion.
+The Group assumes the inventory risk of the goods before or after the transfer of the goods;
+The Group bears the primary responsibility for the transfer of goods to customers;
+-
+-
+In determining whether the Group has control over the Goods before the transfer of the Goods to the Customer, the Group takes into account all
+relevant facts and circumstances, including:
+After the Group acquires control of a product from a third party, it transfers the product to a customer by integrating the product with other
+products into a combination of products through the provision of significant services;
+The Group is able to lead third parties to provide services to customers on behalf of the Group;
+The Group acquires control of the goods or other assets from a third party and then transfers them to the customer;
+-
+-
+The circumstances in which the Group is able to control the goods before transferring them to customers include:
+The Group determines whether it is a principal or an agent, based on whether it obtains control of the specified good or service before that
+good or service is transferred to a customer. The Group is a principal if it controls the specified good or service before that good or service is
+transferred to a customer, and recognises revenue in the gross amount of consideration which it has received (or which is receivable). Otherwise,
+the Group is an agent, and recognises revenue in the amount of any fee or commission to which it expects to be entitled. The fee or commission
+is the net amount of consideration that the Group retains after paying the other party the consideration, or is determined according to the
+established amount or proportion.
+the customer has accepted the asset.
+the customer has the significant risks and rewards of ownership of the asset;
+the Group has transferred physical possession of the asset to the customer;
+the Group has a present right to payment for the asset;
+-
+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:
+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.
+(18) Revenue recognition
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Short term compensation includes salaries, bonuses, allowances and subsidies, employee benefits, medical insurance premiums, work-
+related injury insurance premium, maternity insurance premium, contributions to housing fund, unions and education fund and short-term
+absence with payment etc. When an employee has rendered service to the Group during an accounting period, the Group shall recognise the
+short-term compensation actually incurred as a liability and charge to the cost of an asset or to profit or loss in the same period, and non-
+monetary benefits are valued with the fair value.
+(a) Short-term compensation
+Employee benefits are all forms of considerations and compensation given in exchange for services rendered by employees, including short-term
+compensation, post-employment benefits, termination benefits and other long term employee benefits.
+(11) Financial Instruments (Continued)
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+95
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+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
+(c) Determination of fair value
+Subsequent to initial recognition, the amount initially recognised as deferred income is amortised in profit or loss over the term of the
+guarantee as income from financial guarantees issued.
+Financial guarantees issued are initially recognised at fair value, which is determined by reference to fees charged in an arm's length
+transaction for similar services, when such information is obtainable, or to interest rate differentials, by comparing the actual rates charged
+by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees not been
+available, where reliable estimates of such information can be made. Where consideration is received or receivable for the issuance of the
+guarantee, the consideration is recognised in accordance with the Group's policies applicable to that category of asset. Where no such
+consideration is received or receivable, an immediate expense is recognised in profit or loss.
+Financial guarantees are contracts that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a
+specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
+Financial guarantee liabilities
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities
+or discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or
+loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable, accounts payable, other
+payables, loans and debentures payable, etc. These financial liabilities are initially measured at the amount of their fair value after deducting
+transaction costs and use the effective interest rate method for subsequent measurement.
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or
+financial liabilities at fair value through profit or loss.
+(b) Financial liabilities
+On derecognition of other equity instrument investments, the difference between the carrying amounts and the sum of the consideration
+received and any cumulative gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While
+on derecognition of other financial assets, this difference is recognised in profit or loss.
+The Group derecognises a financial asset when a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial assets have
+been transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but
+the Group has not retained control.
+(iii)Derecognition
+(a) Financial assets (Continued)
+(11) Financial Instruments (Continued)
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+(d) Derivative financial instruments and hedge accounting (Continued)
+The hedging relationship meets all of the following hedge effectiveness requirements:
+(1) There is an economic relationship between the hedged item and the hedging instrument, which share a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+(2) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(14) Employee benefits
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods
+(13) Long-term deferred expenses
+Once an impairment loss is recognised, it is not reversed in a subsequent period.
+If the recoverable amount of an asset is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The amount
+by which the carrying amount is reduced is recognised as an impairment loss in profit or loss. A provision for impairment loss of the asset
+is recognised accordingly. Impairment losses related to an asset unit or a set of asset units first reduce the carrying amount of any goodwill
+allocated to the asset unit or set of asset units, and then reduce the carrying amount of the other assets in the asset unit or set of asset units on
+a pro rata basis. However, the carrying amount of an impaired asset will not be reduced below the highest of its individual fair value less costs
+to sell (if determinable), the present value of expected future cash flows (if determinable) and zero.
+Fair value less costs to sell of an asset is based on its selling price in an arm's length transaction less any direct costs attributable to the
+disposal. Present value of expected future cash flows is the estimation of future cash flows to be generated from the use of and upon disposal of
+the asset, discounted at an appropriate pre-tax discount rate over the asset's remaining useful life.
+The recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows generated by the
+asset (or asset unit, set of asset units).
+An asset unit is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or
+groups of assets. An asset unit comprises related assets that generate associated cash inflows. In identifying an asset unit, the Group primarily
+considers whether the asset unit is able to generate cash inflows independently as well as the management style of production and operational
+activities, and the decision for the use or disposal of asset.
+Assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The
+recoverable amounts of goodwill and intangible assets with uncertain useful lives are estimated annually no matter there are any indications of
+impairment. Goodwill is tested for impairment together with related asset units or groups of asset units.
+Internal and external sources of information are reviewed at each balance sheet date for indications that the following assets, including fixed
+assets, construction in progress, right-of-use assets, goodwill, intangible assets, long-term deferred expenses and investments in subsidiaries,
+associates and joint ventures may be impaired.
+(12) Impairment of other non-financial long-term assets
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Any adjustment to the carrying amount of a hedged item is amortised to profit or loss if the hedged item is a financial instrument (or
+a component thereof) measured at amortised cost. The amortisation is based on a recalculated effective interest rate at the date that
+amortisation begins.
+The gain or loss from remeasuring the hedging instrument is recognised in profit or loss. The gain or loss on the hedged item
+attributable to the hedged risk adjusts the carrying amount of the recognised hedged item not measured at fair value and is
+recognised in profit or loss.
+A fair value hedge is a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognised firm
+commitment, or a portion of such an asset, liability or firm commitment.
+Fair value hedges
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting
+(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.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that
+loss will not be recovered in one or more future periods, the Group immediately reclassify the amount that is not expected to be
+recovered into profit or loss.
+For cash flow hedges, other than those covered by the preceding two policy statements, that amount shall be reclassified from the
+cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged.
+expected future cash flows affect profit or loss.
+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 change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The cumulative gain or loss on the hedging instrument from inception of the hedge;
+-
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a
+component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable
+forecast transaction, and could affect profit or loss. As long as a cash flow hedge meets the qualifying criteria for hedge accounting,
+the hedging relationship shall be accounted for as follows. The cash flow hedge reserve is adjusted to the lower of the following in
+absolute amounts:
+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.
+96
+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.
+Financial Statements (PRC)
+(b) Investment in joint ventures and associates
+(5) Long-term equity investments (Continued)
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+90
+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.
+12,690
+7.0827
+7.8592
+8,196
+10
+79,988
+98,993
+1,277
+1
+7
+7.4229
+7,433
+56
+4
+7.8592
+1
+185
+6.9646
+7.4229
+65,064
+413
+187
+31 December 2023
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and hedge accounting. See Note 64.
+6 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+51,774
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+At 31 December 2023, time deposits with financial institutions of the Group amounted to RMB41,778 million (2022: RMB51,614 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.
+145,052
+4,611
+65,967
+164,960
+105
+0.8933
+690
+5,162
+6.9646
+EUR
+Others
+Deposits at related parities
+9,932
+Renminbi
+US Dollar
+EUR
+Others
+Total
+At 31 December 2023
+Original
+currency
+million
+At 31 December 2022
+Original
+Exchange
+rates
+RMB
+million
+31 December 2022
+3,248
+0.9062
+3,584
+8,277
+7.0827
+4,809
+1,169
+87,278
+2
+1
+RMB
+million
+Exchange
+rates
+currency
+million
+69,282
+Cash flow hedge instruments
+Accounts receivable
+7 ACCOUNTS RECEIVABLE
+247
+7,066
+7,313
+At 31 December
+2022
+RMB million
+33,919
+78
+33,841
+At 31 December 2022
+Percentage
+Percentage
+of allowance
+Amount
+21,098
+2,875
+10,007
+8,594
+9,334
+119,210
+598,932
+201
+284,622
+Construction in progress
+155,939
+66,146
+Right-of-use assets
+27,949
+71
+27,878
+184,974
+Intangible assets
+Goodwill
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+Total non-current assets
+Total assets
+105,712
+2023
+RMB million
+At 31 December
+The Company
+At 31 December At 31 December
+The Group
+1,768
+984
+2,752
+9,721
+6,838
+2,883
+2023
+financial assets financial liabilities
+Derivative
+RMB Million
+Ageing analysis on accounts receivable is as follows:
+Total
+Less: Allowance for doubtful accounts
+Hong Kong Dollar
+Derivative
+Other derivatives
+RMB million
+4,016
+48,652
+19,335
+17,148
+2,187
+financial assets financial liabilities
+Derivative
+Derivative
+52,668
+RMB Million
+Percentage
+The Group
+Percentage
+At 31 December 2023
+50,443
+4,079
+46,364
+2022
+RMB million
+of allowance
+US Dollar
+Cash on hand
+Cash at bank
+8,398
+Taxes payable
+81,267
+46,333
+Other payables
+114,701
+211,179
+Non-current liabilities due within one year
+28,651
+16,737
+Other current liabilities
+31,762
+13,702
+Total current liabilities
+Non-current liabilities
+Long-term loans
+Debentures payable
+Lease liabilities
+170,233
+31,522
+42,649
+34,258
+49,341
+412,890
+14,048
+641,280
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Deferred tax liabilities
+Provisions
+Share capital
+Employee benefits payable
+7,505
+124,622
+(27) Changes in significant accounting policies (Continued)
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+Financial Statements (PRC)
+Financial Statements (PRC)
+103
+(ii) After retrospective adjustments of the above accounting policy changes, the consolidated balance sheet and company balance sheet as at
+1 January 2022 are as follows: (Continued)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+1,890,964
+Fixed assets
+873,896
+1,332,940
+34,227
+24,240
+1,149,001
+104,426
+The Group
+RMB million
+RMB million
+Contract liabilities
+85,307
+203,919
+6,058
+11,721
+1,121
+The Company
+16,550
+Accounts payable
+Bills payable
+Derivative financial liabilities
+Short-term loans
+Current liabilities
+Liabilities and shareholders' equity
+27,366
+3,223
+Renminbi
+43,525
+7,171
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+4 TAXATION
+Major types of tax applicable to the Group are value-added tax, resources tax, consumption tax, income tax, crude oil special gain levy, Levy for
+mineral rights concessions, city construction tax, education surcharge and local education surcharge etc.
+Tax rate of products is presented as below:
+Type of taxes
+Tax rate
+Value Added Tax (the "VAT")
+13%, 9%, 6%
+Resource Tax
+Consumption Tax
+6%
+Corporate Income Tax
+Crude Oil Special Gain Levy
+Levy for mineral rights
+concessions ()
+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%
+Oil, gas, shale gas Natural gas hydrates 0.8%
+onshore, 0.6% offshore, coal bed methane 0.3%,
+mineral salts (rock salt) 2.8%
+1%, 5% or 7%
+City Maintenance and
+Construction Tax
+Renminbi
+The Group
+5 CASH AT BANK AND 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 revenue from sales of mineral products
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Based on the sales of domestic crude oil at prices higher
+than a specific level.
+Based on taxable value added amount. Tax payable is
+calculated using the taxable sales amount multiplied by the
+applicable tax rate less current period's deductible VAT input.
+Based on the revenue from sales of crude oil and natural gas.
+Based on quantities
+Tax basis and method
+2%
+Local Education surcharges
+3%
+Education surcharges
+Based on taxable income.
+104
+1,149,001
+1,890,964
+6,024
+(690)
+Other comprehensive income
+67,897
+120,188
+Capital reserve
+Specific reserve
+121,071
+621,470
+972,475
+208,580
+331,195
+3,103
+18,276
+121,071
+35,271
+2,664
+Surplus reserves
+Total liabilities and shareholders' equity
+527,531
+918,489
+Total shareholders' equity
+141,273
+Non-controlling interests
+1,658
+527,531
+Total equity attributable to shareholders of the Company
+117,535
+320,637
+Retained earnings
+213,346
+213,346
+777,216
+767
+0.5
+360,847
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+102
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Retained earnings
+Surplus reserves
+Shareholders' equity
+Total assets
+Total non-current assets
+Deferred tax assets
+Non-current assets
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+Retained earnings
+Surplus reserves
+Shareholders' equity
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+(27) Changes in significant accounting policies (Continued)
+(i) The effects on the comparative financial statements (Continued)
+The effects of the above changes in accounting policies on each item of the consolidated balance sheet and company balance sheet as at 31
+December 2022 are summarised as follows:
+The Group
+Before
+adjustments
+RMB million
+Non-current assets
+Total non-current assets
+Total assets
+Non-current liabilities
+Deferred tax liabilities
+Total non-current liabilities
+Total liabilities
+Deferred tax assets
+The amounts
+of adjustments
+RMB million
+After
+adjustments
+RMB million
+175
+218,009
+323,087
+2,719
+325,806
+785,577
+217,834
+2,894
+151,576
+410
+151,986
+937,153
+3,304
+1,948,640
+788,471
+Financial Statements (PRC)
+1,010,664
+1,011,487
+19,952
+2,481
+1,425,500
+2,481
+22,433
+1,427,981
+1,948,640
+(823)
+2,481
+8,079
+(823)
+7,256
+344,102
+(823)
+343,279
+1,951,121
+2,481
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+The Group has made retrospective adjustments in accordance with these provisions for applicable single transactions occurring between 1
+January 2022 and the date of initial implementation. With regard to deductible temporary differences and taxable temporary differences arising
+from lease liabilities and right-of-use assets recognised as at 1 January 2022 as a result of single transactions to which these provisions apply,
+the Group shall, in accordance with CAS Bulletin No.16 and Accounting Standards for Business Enterprises No. 18 - Income Taxes, adjust the
+cumulative effect amount with the retained earnings at the beginning of the earliest period presented in the financial statements and other
+relevant items of the financial statements.
+In accordance with CAS Bulletin No.16, the provisions of the Accounting Standards for Business Enterprises No. 18 - Income Taxes on
+exemption from initial recognition of deferred tax liabilities and deferred tax assets shall not apply to single transactions that are not business
+combinations, that do not affect accounting profits or taxable income (or deductible losses) upon transaction's occurrence, and result in equal
+amount of taxable temporary differences and deductible temporary differences caused by initially recognised assets and liabilities.
+In 2023, the Group has adopted the revised accounting requirements and guidance under CAS newly issued by the Ministry of Finance ("MOF")
+as follows:
+(27) Changes in significant accounting policies
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+100
+Financial Statements (PRC)
+Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment
+accounting policies are consistent with those for the consolidated financial statements.
+for which financial information regarding financial position, results of operations and cash flows are available.
+whose operating results are regularly reviewed by the Group's management to make decisions about resource to be allocated to the segment
+and assess its performance; and
+engage in business activities from which it may earn revenues and incur expenses;
+Reportable segments are identified based on operating segments which are determined based on the structure of the Group's internal
+organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the
+following respective conditions:
+(26) Segment reporting
+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.
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+(20) Borrowing costs
+Borrowing costs incurred on borrowings for the acquisition, construction or production of qualified assets are capitalised into the cost of the
+related assets in the capitalisable period.
+Except for the above, other borrowing costs are recognised as financial expenses in the income statement when incurred.
+(21) Repairs and maintenance expenses
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+(i) The effects on the comparative financial statements
+(22) Environmental expenditures
+(23) Research and development costs
+Research costs and development costs that cannot meet the capitalisation criteria are recognised in profit or loss when incurred.
+(24) Dividends
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+(25) Related parties
+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.
+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.
+The effects of these changes in accounting policies on net profit for the twelve months ended 31 December 2022, and opening and closing
+balances of shareholders' equity as at 1 January and 31 December 2022 are summarised as follows:
+Net profit and shareholders' equity before adjustments
+The effects of the exemption of initial recognition not applicable to the
+deferred tax relating to assets and liabilities arising from a single transaction
+Net profit and shareholders' equity after adjustments
+equity
+RMB million
+916,041
+2,448
+918,489
+2022 Opening
+balance of
+shareholders'
+balance of
+shareholders'
+equity
+RMB million
+RMB million
+504,877
+526,314
+533
+46,637
+1,750
+506,627
+1,217
+527,531
+equity
+101
+2022 Opening
+The Company
+Net profit and shareholders' equity before adjustments
+The effects of the exemption of initial recognition not applicable to the
+deferred tax relating to assets and liabilities arising from a single transaction
+Net profit and shareholders' equity after adjustments
+Net profit
+for the twelve
+months ended
+31 December
+2022
+RMB million
+75,758
+856
+76,614
+2022 Closing
+balance of
+shareholders'
+Net profit
+for the twelve
+months ended
+31 December
+2022
+46,104
+The Group
+2022 Closing
+balance of
+shareholders'
+equity
+RMB million
+937,153
+3,304
+940,457
+RMB million
+Other equity instrument investments
+940,457
+1,951,121
+Before
+adjustments
+RMB million
+52,373
+533
+51,840
+Total comprehensive income
+46,637
+533
+46,104
+Net profit from continuing operations
+46,637
+533
+46,104
+5,711
+(533)
+6,244
+Classification by continuity of operations
+Net profit
+Income tax expense
+780
+86,208
+Non-controlling interests
+12,159
+76
+12,235
+(ii) After retrospective adjustments of the above accounting policy changes, the consolidated balance sheet and company balance sheet as at
+1 January 2022 are as follows:
+The Company
+The amounts
+After
+adjustments
+RMB million
+of adjustments
+RMB million
+adjustments
+RMB million
+Before
+The Group
+RMB million
+The Company
+RMB million
+35,664
+46,929
+Inventories
+207,433
+63,661
+Other current assets
+4,540
+24,500
+Total current assets
+558,024
+275,105
+Non-current assets
+Long-term equity investments
+209,179
+23,408
+85,428
+9,267
+5,939
+Assets
+Current assets
+Cash at bank and on hand
+Derivative financial assets
+Accounts receivable
+Receivables financing
+227
+Prepayments
+221,989
+110,691
+to total
+accounts
+receivable
+18,371
+34,861
+4,503
+21,146
+Other receivables
+The Company
+Shareholders of the Company
+856
+The effects of the above changes in accounting policies on each item of the consolidated income statement and company income statement
+for the twelve-month period ended 31 December 2022 are summarised as follows:
+(i) The effects on the comparative financial statements (Continued)
+(27) Changes in significant accounting policies (Continued)
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+1,143,420
+1,750
+1,141,670
+506,627
+1,750
+504,877
+102,522
+1,575
+100,947
+218,009
+175
+The amounts
+After
+of adjustments
+RMB million
+7,737
+1,750
+The Group
+adjustments
+RMB million
+914,040
+1,750
+1,141,670
+1,750
+915,790
+1,143,420
+217,834
+9,487
+Before
+adjustments
+RMB million
+Net profit
+Income tax expense
+67,082
+9,456
+76
+9,532
+Basic earnings per share (RMB/Share)
+0.548
+780
+0.007
+Diluted earnings per share (RMB/Share)
+0.548
+0.007
+0.555
+Total comprehensive income
+97,587
+0.555
+98,443
+66,302
+856
+Classification by continuity of operations
+Net profit from continuing operations
+Classification by ownership
+Shareholders of the Company
+Non-controlling interests
+18,757
+76,614
+The amounts
+of adjustments
+RMB million
+(856)
+adjustments
+RMB million
+17,901
+75,758
+856
+76,614
+75,758
+After
+to accounts
+0.5
+to total
+accounts
+Loss
+allowance
+RMB million
+RMB million
+%
+RMB million
+RMB million
+46,097
+216
+269
+7,014
+29
+193
+2
+0.1%
+56
+58
+25
+20.9%
+39
+64
+148
+At 31 December 2023, 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.
+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.
+4,079
+499
+3,580
+3,776
+Impairment
+provision
+371
+3,405
+3,487
+10,723
+3,861
+50,443
+181
+33
+43.4%
+99.2%
+At 31 December 2023, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB49,616 million (2022:
+RMB34,978 million).
+loss rate
+Carrying provision on
+amount individual basis
+46
+47
+34
+25
+45.1%
+37
+62
+3,965
+52,668
+3,599
+12,730
+3,467
+100.0%
+366
+3,833
+3,497
+519
+4,016
+carrying
+amount
+RMB million
+Gross
+individual basis
+8 RECEIVABLES FINANCING
+Total
+Over 3 years past due
+average
+2 to 3 years past due
+Current and within 1 year past due
+31 December 2022
+Impairment provision
+on provision matrix basis
+Weighted.
+Impairment
+Impairment provision on
+1 to 2 years past due
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+107
+Financial Statements (PRC)
+Amount
+RMB million
+to total
+prepayments
+prepayments
+Allowance
+balance
+%
+RMB million
+%
+Within one year
+4,373
+83.4
+Between one and two years
+568
+10.8
+86
+15.1
+7,608
+249
+175
+100.0
+5,242
+34.4
+65
+3.7
+%
+189
+67
+21.4
+24
+2.1
+112
+Between two and three years
+Over three years
+Total
+RMB million
+%
+RMB million
+8,067
+111
+7,956
+5,242
+175
+5,067
+At 31 December
+2022
+RMB million
+RMB million
+At 31 December
+2023
+The Company
+At 31 December
+2023
+RMB million
+1,767
+7
+1,760
+The Group
+Total
+Less: Allowance for doubtful accounts
+Prepayments
+9 PREPAYMENTS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+Financial Statements (PRC)
+Ageing analysis of prepayments is as follows:
+24.6%
+At 31 December
+4,473
+balance
+Allowance
+allowance to
+Percentage of
+Percentage
+At 31 December 2022
+2022
+RMB million
+Percentage of
+allowance to
+prepayments
+Amount
+Percentage
+At 31 December 2023
+The Group
+4,461
+12
+to total
+prepayments
+1
+139
+74
+of allowance
+to total
+Amount
+accounts
+receivable
+Allowance
+to accounts
+receivable
+balance
+to total
+to accounts
+RMB million
+%
+RMB million
+%
+Amount
+RMB million
+accounts
+receivable
+Allowance
+receivable
+balance
+% RMB million
+0.0
+0022
+61
+0.8
+219
+27,949
+5
+Percentage
+0.1
+1
+1.1
+4
+98.0
+27,387
+319
+%
+24
+Percentage
+At 31 December 2022
+of allowance
+44570
+100.0
+50,443
+4,016
+100.0
+52,668
+58
+Total
+3,861
+96.7
+3,833
+7.5
+3,965
+Over three years
+7.7
+0.3
+0.1
+29.6
+Percentage
+Percentage
+At 31 December 2023
+Total
+Over three years
+Between two and three years
+64
+Between one and two years
+The Company
+4,079
+97.8
+3,776
+67.3
+181
+Within one year
+143
+8,067
+20.8
+0389
+106
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+7 ACCOUNTS RECEIVABLE (Continued)
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+China Petrochemical Corporation ("Sinopec Group Company") and fellow subsidiaries are repayable under the same terms.
+Accounts receivable (net of allowance for doubtful accounts) primarily represent receivables that are neither past due nor impaired. These
+receivables relate to a wide range of customers for whom there is no recent history of default. Information about the impairment of accounts
+receivable and the Group exposure to credit risk can be found in Note 64.
+During 2023 and 2022, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+During 2023 and 2022, 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.
+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.
+31 December 2023
+Current and within 1 year past due
+1 to 2 years past due
+2 to 3 years past due
+Over 3 years past due.
+Total
+Impairment provision on
+individual basis
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+70
+0.2%
+4
+8,958
+RMB million
+RMB million
+As at 31 December 2023, the carrying amount of accounts receivable under factoring arrangement that are derecognised is RMB12,767 million.
+%
+RMB million
+48,261
+326
+116
+Loss
+allowance
+Impairment
+provision
+average
+loss rate
+Gross
+carrying
+amount
+Impairment provision
+on provision matrix basis
+Weighted-
+RMB million
+2,187
+2,204
+31.4%
+0.0
+1
+13620
+100.0
+33,919
+71
+11
+100.0
+65
+0.6
+191
+0.3
+98.9
+33,555
+108
+0.2
+27.9
+10.2
+0.5
+28.7%
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+15,846
+15,137
+Total amount (RMB million)
+2022
+1
+2023
+At 31 December
+As at 31 December 2023 and 31 December 2022, the total amounts of the top five accounts receivable of the Group are set out below:
+78
+0250
+100.0
+65
+At 31 December
+23010
+94.3
+3.1
+%
+RMB million
+Within one year
+36.754
+70.9
+Between one and two years
+6,676
+12.9
+5
+Between two and three years
+2,118
+4.1
+3
+Over three years
+Total
+6,295
+51,843
+12.1
+004
+65.8
+25,945
+Allowance
+RMB million
+%
+receivables
+RMB million
+Amount
+RMB million
+to total other
+Percentage
+to other
+receivables
+balance
+903
+100.0
+895
+%
+Allowance
+receivables
+Amount
+1,582
+36.7
+10,175
+Over three years
+Total
+39.4
+139
+15.5
+1.2
+28.3
+43
+269
+152
+Between two and three years
+8.9
+353
+0.1
+9,867
+1,345
+to total other
+Percentage
+of allowance
+Percentage
+At 31 December 2023
+The Company
+34.5
+1,553
+28,562
+1,672
+53.4
+100.0
+27,761
+13.6
+100.0
+44
+2,847
+5
+116
+Between two and three years
+0.4
+216
+14.4
+47
+0.6
+326
+Between one and two years
+91.4
+46,097
+0.2
+74
+91.6
+48,261
+Within one year
+%
+to accounts
+Allowance
+balance
+Amount
+receivable
+Allowance
+0.3
+receivable
+balance
+%
+RMB million
+%
+RMB million
+%
+RMB million
+RMB million
+62
+Financial Statements (PRC)
+109
+39,416
+ल
+13.3
+0.1
+0.2
+003
+100.0
+892
+6,695
+14.2
+2
+10.0
+3,929
+0.1
+17.0
+7.2
+899
+Percentage
+of allowance
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+During the year ended 31 December 2023 and 2022, 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 2023 and 2022, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+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
+52.4%
+48.8%
+72.0
+72.0
+2022
+13,936
+At 31 December
+At 31 December 2022
+2023
+14,545
+Percentage to the total balance of other receivables
+Allowance for doubtful accounts
+Ageing
+Total amount (RMB million)
+At 31 December 2023 and at 31 December 2022, the total amounts of the top five other receivables of the Group are set out below:
+%
+to other
+receivables
+balance
+At 31 December
+receivable
+1.7
+10.9
+39
+0.9
+Between two and three years
+13
+0.3
+Total
+12
+1,767
+0.7
+100.0
+Over three years
+At 31 December 2023 and 31 December 2022, the total amounts of the top five prepayments of the Group are set out below:
+7
+58.3
+90
+2.0
+7
+4,473
+108
+Percentage to the total balance of prepayments
+Total amount (RMB million)
+610
+2.6
+2300
+1.6
+12
+8
+23.1
+3
+1
+89360
+100.0
+8.9
+96.8
+4,331
+Percentage of
+allowance to
+prepayments
+balance
+%
+Percentage
+At 31 December 2023
+The Company
+111
+48.3
+69
+At 31 December 2022
+14.9
+12.9
+32
+31880
+100.0
+1.8
+0.8
+10
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Percentage of
+Percentage
+Allowance
+RMB million
+%
+to total
+prepayments
+Amount
+RMB million
+prepayments
+balance
+%
+RMB million
+allowance to
+%
+97.7
+Between one and two years
+Within one year
+RMB million
+Allowance
+to total
+prepayments
+Amount
+1,726
+29
+496
+At 31 December
+2023
+Percentage
+to total other
+to other
+receivables
+Amount
+receivables
+Allowance
+balance
+Amount
+receivables
+Allowance
+balance
+RMB million
+%
+RMB million
+%
+RMB million
+%
+RMB million
+34
+1.1
+313
+Between one and two years
+0.1
+25
+to other
+receivables
+62.6
+0.1
+13
+61.7
+17,121
+Within one year
+%
+17,846
+to total other
+Percentage
+of allowance
+The Group
+Ageing analysis of other receivables is as follows:
+Other receivables mainly include security deposits and deposits.
+Total
+Less: Allowance for doubtful accounts
+Other receivables
+At 31 December
+2023
+RMB million
+10 OTHER RECEIVABLES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+31.8%
+19.9%
+2,565
+1,041
+2022
+For the year ended 31 December 2023
+At 31 December
+At 31 December
+2022
+RMB million
+28,562
+1,553
+27,009
+Percentage
+899
+38,517
+39,416
+At 31 December 2022
+903
+50,940
+51,843
+27,761
+1,672
+26,089
+2022
+RMB million
+At 31 December
+2023
+RMB million
+The Company
+of allowance
+Percentage
+At 31 December 2023
+The Group
+At 31 December
+7,602
+58,050
+76
+239
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+74,399
+4,897
+Balance at 1 January 2023
+Less: Provision for impairment losses:
+(19,637)
+739
+1,435,131
+38
+687,220
+682
+676,150
+71,761
+Balance at 31 December 2023
+19
+Exchange adjustments
+(17,868)
+(453)
+(1,316)
+Decreases for the year
+176
+(406)
+230
+Reclassifications
+1,365,517
+88,512
+52,057
+31,525
+4,930
+Additions for the year
+149
+Decreases for the year
+(356)
+143,107
+79,637
+Balance at 31 December 2022
+442,056
+166,907
+81,934
+Balance at 31 December 2023
+Net book value:
+100,174
+42,088
+652,817
+53,396
+Balance at 31 December 2023
+49
+1
+48
+Exchange adjustments
+2,491
+(4,625)
+1,567
+(4,032)
+102,259
+44,552
+52,810
+775
+(237)
+4,690
+644,802
+67,898
+Additions for the year
+Decreases for the year
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2023
+Cost:
+Plants and
+buildings
+RMB million
+630,758
+58
+630,700
+Exchange adjustments
+RMB million
+At 31 December
+690,957
+690,897
+60
+At 31 December
+2023
+RMB million
+(a) Fixed assets
+Total
+Fixed assets pending for disposal
+Fixed assets (a)
+The Group
+13 FIXED ASSETS
+2022
+407,956
+Balance at 31 December 2023
+6,163
+Balance at 1 January 2023
+Less: Accumulated depreciation:
+2,226,202
+1,171,364
+(28,762)
+849
+60
+751
+896,453
+158,385
+38
+(25,791)
+152,432
+250
+(656)
+(1,401)
+(416)
+1,817
+90,823
+2,098,476
+4,279
+151,360
+Total
+RMB million
+1,105,325
+2,348
+Equipment,
+machinery
+and others
+RMB million
+Oil and gas
+properties
+RMB million
+840,719
+1,681
+54,374
+(2,315)
+690,897
+630,700
+The Company
+Fixed assets (b)
+28,542
+Balance at 31 December 2023
+(6,942)
+(6,233)
+(464)
+(245)
+Decreases for the year
+(29,379)
+(26,155)
+(2,259)
+544,606
+(965)
+75
+235
+(388)
+153
+892,218
+46,516
+21,313
+23,703
+1,500
+340,180
+523,939
+75
+28,099
+329,340
+Provision for impairment losses:
+Net book value:
+Balance at 31 December 2023
+(1,744)
+(1,461)
+(235)
+(48)
+Decreases for the year
+(3,349)
+(2,643)
+(645)
+902,488
+(61)
+1,399
+577
+775
+47
+Additions for the year
+73,675
+25,358
+45,816
+2,501
+Balance at 1 January 2023
+Transferred to subsidiaries
+1,277,908
+506,242
+720,488
+681,940
+1,342
+43,209
+51,042
+43
+1,743
+472
+Transferred to subsidiaries
+Transferred from subsidiaries
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2023
+Cost:
+RMB million
+Plants and
+buildings
+(b) Fixed assets
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+296,530
+50
+296,480
+At 31 December
+2022
+RMB million
+305,439
+55
+305,494
+At 31 December
+2023
+RMB million
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Fixed assets pending for disposal
+Total
+13 FIXED ASSETS (Continued)
+Oil and gas
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+51,178
+488
+(11,450)
+(10,381)
+(678)
+(391)
+Transferred to subsidiaries
+Reclassifications
+Additions for the year
+Balance at 1 January 2023
+Accumulated depreciation:
+Balance at 31 December 2023
+Decreases for the year
+Transferred from subsidiaries
+(48,821)
+(42,096)
+(4,994)
+(1,731)
+113
+(52)
+24
+(420)
+89
+529,391
+354
+29,002
+1,262,373
+1,739
+73,954
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+114
+20,819
+27,001
+27,260
+13,602
+14,158
+32,731
+33,754
+589,249
+584,868
+Net assets
+20,504
+(1,561)
+(23,435)
+(17,563)
+(990)
+(1,275)
+(673)
+(906)
+(199,675)
+(225,296)
+Non-current liabilities
+(11,932)
+(1,533)
+(17,200)
+Net assets attributable to
+536,607
+10,563
+6,665
+6,937
+16,038
+16,539
+73,533
+75,125
+Share of net assets from associates
+2,075
+2,331
+shareholders of the Company
+64,014
+non-controlling interests
+Net assets attributable to
+18,429
+18,488
+27,001
+27,260
+13,602
+32,731
+33,754
+525,235
+48,261
+10,463
+(3,811)
+(101)
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2022
+2023
+2022
+2023
+Current assets
+Non-current assets
+2022
+At 31
+December
+At 31
+December
+Aviation Fuel
+Zhongtian Synergetic Energy
+At 31
+December
+At 31
+December
+Sinopec Capital
+At 31
+December
+2023
+At 31
+December
+2022
+RMB million
+Sinopec Finance
+At 31
+December
+2023
+RMB million
+2022
+RMB million
+RMB million
+At 31
+December
+(7,464)
+Current liabilities
+104,889
+(74)
+(236,840)
+(179,459)
+(130,331) (132,266)
+13,617
+14,158
+51,035
+48,615
+249
+409
+118,631
+57,394
+816,301
+821,864
+20,380
+25,394
+3,212
+3,672
+14,444
+15,098
+212,850
+148,026
+66,093
+5,362
+5,344
+Carrying Amounts
+188
+319
+490
+2,019
+2,306
+Dividends declared by associates
+3,026
+2,515
+4,562
+2,752
+73
+1,213
+2,427
+2,023
+31,908
+34,054
+Total comprehensive income
+(68)
+52
+89
+(182)
+Other comprehensive income
+940
+3,026
+966
+638
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 113
+As at 31 December 2023, there are indicators of impairment in the long-term equity investment in Shanghai SECCO. The recoverable amount of
+this long-term equity investment is estimated based on a value-in-use calculation. The projected future cash flows primarily take into account the
+five-year profit forecast for Shanghai SECCO approved by the management, which is adjusted based on the historical performance of Shanghai
+SECCO and relevant industry trends, with cash flows remaining stable after five years. The pre-tax discount rate of 11.29% is calculated based
+on the weighted average cost of capital. The result of value-in-use calculation indicates that there is no impairment loss in this long-term equity
+investment as at 31 December 2023.
+(d) Long-term equity investment impairment assessment
+The share of profit and other comprehensive income of the Group in the year 2023 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB4,506 million (2022: RMB6,386 million) and loss RMB1,540 million (2022: loss RMB201 million)
+respectively. As at 31 December 2023, the carrying amount of all individually immaterial associates accounted for using equity method in
+aggregate was RMB49,603 million (2022: RMB52,451 million).
+(33)
+25
+44
+(89)
+Share of other comprehensive income
+from associates
+632
+745
+1,768
+1,066
+627
+435
+1,145
+1,080
+3,670
+4,035
+Share of profit from associates
+626
+656
+2,515
+4,562
+2,752
+RMB million RMB million RMB million
+2023
+2022
+2023
+2022
+RMB million
+RMB million
+Aviation Fuel
+ZTHC Energy
+Sinopec Capital
+Sinopec Finance
+2022
+RMB million
+PipeChina
+2023
+5,344
+5,362
+10,463
+10,563
+6,665
+6,937
+16,038
+16,539
+73,533
+75,125
+Summarised income statement
+2023
+2022
+2023
+1,281
+888
+2,338
+2,205
+31,908
+34,054
+Profit for the year
+105,162
+181,290
+17,551
+15,676
+5
+4
+5,636
+5,988
+112,832
+120,943
+Turnover
+RMB million
+RMB million
+RMB million
+RMB million
+2022
+Balance at 31 December 2023
+2.439
+45,711
+21,831
+130
+482
+237
+Balance at 1 January 2023
+Provision for impairment losses:
+75,756
+5,305
+27,641
+4,312
+3,940
+397
+34,558
+(1,045)
+(557)
+(315)
+(24)
+(149)
+Decreases for the year
+7,444
+984
+2,232
+304
+Balance at 31 December 2023
+271
+20
+Additions for the year
+89,525
+86,497
+Balance at 31 December 2022
+Balance at 31 December 2023
+Net book value:
+1,244
+17
+361
+123
+485
+258
+1,266
+Balance at 31 December 2023
+(3)
+(54)
+(24)
+(4)
+Decreases for the year
+63
+18
+17
+3
+25
+(85)
+810
+3,653
+69,357
+191,317
+9,252
+54,130
+5,407
+4,740
+117,788
+Additions for the year
+Balance at 1 January 2023
+Cost:
+RMB million
+7,209
+RMB million
+Total
+Others
+technology Operation rights
+RMB million
+Patents
+RMB million
+Land use rights
+RMB million
+Non-patent
+The Group
+16 INTANGIBLE ASSETS
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+Additions for the year
+495
+599
+4,878
+25,724
+4,032
+3,669
+31,054
+Balance at 1 January 2023
+Accumulated amortisation:
+215,181
+25,445
+54,186
+636
+5,974
+124,341
+Balance at 31 December 2023
+(2,243)
+(975)
+(543)
+(69)
+(656)
+Decreases for the year
+26,107
+17,168
+5,235
+589
+1,539
+1,245
+26,184
+28,009
+81,800
+Deferred tax assets/(liabilities)
+1,395
+2,792
+Others
+(42,264)
+(40,422)
+(85)
+(92)
+1,067
+45,568
+81,787
+44,334
+1,084
+Intangible assets
+(6)
+(7)
+4,643
+131
+137
+Other equity instrument investments
+(22,341)
+(736)
+(1,142)
+(26,669)
+Lease liabilities and right of use assets
+21,536
+(1,155)
+(69,507)
+(66,610)
+Financial Statements (PRC)
+119
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Other non-current assets mainly represent long-term receivables, prepayments for construction projects, prepayments for purchases of equipment
+and time deposits with maturities over one year.
+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 2023, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB24,783 million
+(2022: RMB21,268 million), of which RMB5,496 million (2022: RMB8,972 million) was incurred for the year ended 31 December 2023, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB1,656 million, RMB3,349 million,
+RMB5,310 million, RMB8,972 million and RMB5,496 million will expire in 2024, 2025, 2026, 2027, 2028 and after, respectively.
+At 31 December
+2022
+RMB million
+22,433
+7,256
+20,110
+7,817
+2023
+RMB million
+(1,161)
+Deferred tax assets
+Deferred tax liabilities
+Deferred tax assets and liabilities after the offsetting adjustments are as follows:
+Deferred tax liabilities
+Deferred tax assets
+59,354
+59,354
+RMB million
+At 31 December
+2022
+61,690
+61,690
+RMB million
+At 31 December
+2023
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+At 31 December
+17,965
+9,036
+Tax value of losses carried forward
+85
+The Group's goodwill impairment assessment is carried out in conjunction with its related asset group or combination of asset groups, and the
+recoverable amounts of goodwill are estimated annually based on value in use calculations, which is consistent with prior years. These calculations
+use cash flow projections based on five-year financial budgets approved by management for a goodwill-related asset group or a combination of
+asset groups, with cash flow remaining stable after five years. The cash flow forecasts use sales volumes, selling price and discount rates as key
+assumptions, with sales volumes based on production capacity and/or actual sales volumes for periods prior to the budget period, selling prices
+based on management's expectations of future international crude oil and petrochemical price trends, and pre-tax discount rates based on weighted
+average cost of capital, which ranged from 11.26% to 13.1% (2022: 10.1% to 12.2%). Based on the result of the impairment assessment of
+goodwill, no major impairment loss was recognised.
+6,464
+6,472
+Total
+2,421
+2,429
+Other units allocated
+At 31 December
+2022
+RMB million
+4,043
+RMB million
+4,043
+Manufacturing of intermediate petrochemical products
+and petroleum products
+18 LONG-TERM DEFERRED EXPENSES
+Sinopec Zhenhai Refining and Chemical Branch
+Principal activities
+Name of investees
+At 31 December
+Goodwill is allocated to the following Group's cash-generating units:
+17 GOODWILL
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2023 is RMB6,641 million (2022: RMB6,489 million).
+120,694
+4,354
+138,181
+20,123
+2023
+Long-term deferred expenses primarily represent catalysts expenditures and improvement expenditures of leased fixed assets.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+16
+3,091
+2,715
+Fixed assets
+Cash flow hedges
+Payables
+(17)
+(20)
+4,271
+3,721
+Receivables and inventories
+RMB million
+RMB million
+2022
+2023
+At 31 December At 31 December
+Deferred tax liabilities
+At 31 December
+2022
+RMB million
+RMB million
+Deferred tax assets
+At 31 December
+2023
+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 2023
+Financial Statements (PRC)
+118
+Financial Statements (PRC)
+117
+2023
+Balance at
+1 January
+Budgeted
+amount
+West Sichuan Gas Field Leikoupo Group Gas
+Adjustment Project
+Yangzi Petrochemical Refining Structural
+Zhenhai Refining and Chemical Refining and
+High-end Synthetic New Material Project
+Project name
+81,501
+70,306
+RMB million
+180,250
+196,045
+2,741
+26
+(7)
+(48)
+102
+116
+302
+2,647
+70,703
+182,991
+397
+27
+RMB million
+Balance at
+31 December
+2023
+RMB million
+8,591
+Reservoir Development and Construction Project
+32
+Bank loans & self-financing
+99.20%
+4,960
+1,600
+3,360
+5,000
+60
+Net change
+for the year
+RMB million
+Bank loans & self-financing
+17,512
+11,180
+6,332
+41,639
+RMB million
+2023
+Source of funding
+capitalised at
+31 December
+Accumulated
+interest
+Percentage
+of project
+investment
+to budgeted
+amount
+41.54%
+(73,954)
+(1,485)
+(24,372)
+(151,360)
+Balance at 1 January 2023
+Cost:
+14 CONSTRUCTION IN PROGRESS
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+115
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Details of the determination method of for determining the impairment of fixed assets are set out in Note 59.
+At 31 December 2023 and 31 December 2022, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal, or individually significant fully depreciated fixed assets which were still in use.
+Additions for the year
+The impairment provisions for the chemical and refining divisions are related to the refining and chemical production equipment, mainly due
+to individual production units being shut down due to sustained lower than expected economic performance or having a clear shutdown plan in
+place, resulting in their book value being written down to their recoverable amount. The recoverable amount mainly considers the profit forecast
+approved by the management for a five-year period, which refers to the historical operating performance of relevant refining and chemical
+production facilities and is adjusted according to the development trends of the refining and chemical industry. The predicted cash flow after five
+years will remain stable, and the pre tax discount rate is calculated based on the weighted average cost of capital, which is 10.30% to 16.50%
+(2022: 7.64% to 18.68%).
+In 2023, the impairment loss on fixed assets was mainly due to the impairment loss of the E&P segment of RMB785 million (2022: RMB2,891
+million), the impairment loss of the chemical segment of RMB1,280 million (2022: RMB1,790 million), the impairment loss of the refining
+segment of RMB191 million (2022: RMB2 million), and the impairment loss of the marketing and distribution segment of RMB235 million (2022:
+RMB398 million).
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2023 included RMB1,681 million (2022:
+RMB4,277 million) and RMB1,344 million (2022: RMB3,982 million), respectively of the estimated dismantlement costs for site restoration.
+296,480
+155,071
+163,853
+Financial Statements (PRC)
+305,439
+130,171
+112,185
+20,197
+20,442
+Balance at 31 December 2022
+69.981
+The impairment loss of fixed assets related to oil and gas producing activities was caused by the decline in oil and gas reserves and the
+excessively high exploitation costs in individual oilfields of the exploration and production segment, resulting in an impairment loss of RMB777
+million for oil and gas properties. The recoverable amount used in the impairment assessment of fixed assets in the exploration and production
+segment was determined based on the present value of the estimated future cash flows of the relevant asset group. The duration of the forecast
+period and the crude oil and natural gas production during the forecast period were determined based on the proven reserves; the selling prices
+of crude oil and natural gas during the forecast period were determined based on a comprehensive analysis of energy supply and demand,
+China's development requirements for low-carbon transformation, and domestic and international economic situations. The pre-tax discount rate
+was calculated based on the weighted average cost of capital, ranging from 7.86% to 15.94% (2022: 8.17% to 14.86%). Under the condition
+that other factors remain unchanged and the forecasted future oil price decreases by 5%, the impairment loss of relevant fixed assets would
+increase by approximately RMB1,418 million (2022: RMB1,693 million); if the operating costs increase by 5%, the impairment loss would
+increase by approximately RMB634 million (2022: RMB1.508 billion); and if the discount rate increases by 5%, the impairment loss would
+increase by approximately RMB8 million (2022: RMB126 million).
+Disposals for the year
+Dry hole costs written off
+Transferred to fixed assets
+Reclassification to other assets
+(5,708)
+(6,723)
+(15,170)
+(17,623)
+85,217
+184,350
+81,803
+198,692
+RMB million
+RMB million
+The Company
+The Group
+At 31 December 2023, material construction in progress projects of the Group are as follows:
+Balance at 31 December 2022
+Balance at 31 December 2023
+Net book value:
+Balance at 31 December 2023
+Exchange adjustments
+Decreases for the year
+Additions for the year
+Balance at 1 January 2023
+Balance at 31 December 2023
+Provision for impairment losses:
+Exchange adjustments
+3,694
+2023
+1.192
+67.89%
+(7,092)
+107,275
+1,741
+1,258
+4,326
+102,949
+483
+RMB million
+RMB million
+RMB million
+Total
+Others
+(1,006)
+Land
+30,993
+147,366
+174,529
+31,850
+142,679
+53,216
+25,793
+27,423
+(6,651)
+(3,225)
+178,359
+(3,426)
+(8,098)
+4,578
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Depreciation of the right-of-use assets of the Group and Company charged for the year ended 31 December 2023 are RMB14,829 million (2022:
+RMB13,760 million) and RMB4,700 million (2022: RMB4,764 million) respectively.
+91,549
+Balance at 31 December 2022
+2,008
+89,541
+84,589
+1,791
+82,798
+16.329
+96.340
+2,787
+(4,097)
+(898)
+(3,199)
+4,700
+1,367
+3,333
+15,726
+2,318
+13,408
+100,918
+13.542
+14,876
+8,211
+6,665
+Decreases for the year
+Additions for the year
+Balance at 1 January 2023
+Cost:
+The Company
+Balance at 31 December 2023
+Balance at 31 December 2022
+Net book value:
+Balance at 31 December 2023
+Decreases for the year
+Additions for the year
+Balance at 31 December 2023
+Balance at 31 December 2023
+Accumulated depreciation:
+Balance at 1 January 2023
+Balance at 1 January 2023
+Additions for the year
+Cost:
+The Group
+15 RIGHT-OF-USE ASSETS
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+116
+88
+Bank loans & self-financing
+Decreases for the year
+Accumulated depreciation:
+Balance at 1 January 2023
+Additions for the year
+44,991
+20,807
+24,184
+227,745
+57,643
+170,102
+(8,845)
+(4,233)
+(4,612)
+13,240
+10,076
+3.164
+223,350
+51,800
+171,550
+Total
+RMB million
+Others
+RMB million
+RMB million
+Land
+Balance at 31 December 2023
+Net book value:
+Balance at 31 December 2023
+Decreases for the year
+4,886
+December
+14,158
+(1,832)
+19,381
+59,347
+60,091
+Turnover
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2023
+2022
+Shanghai
+SECCO
+Sinopec SABIC Tianjin
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+Taihu
+BASF-YPC
+FREP
+Summarised income statement
+10,863
+9,909
+6,133
+5,429
+10,751
+25,076
+6,876
+14,090
+Interest income
+(2,396)
+1,657
+1,666
+3,542
+430
+(2,004)
+(1,215)
+(Loss)/profit before taxation
+(199)
+(111)
+(204)
+(274)
+(61)
+(7)
+(4)
+(338)
+(315)
+Interest expense
+72
+RMB million
+17,426
+24,294
+144
+RMB million
+RMB million
+22,915
+113
+975
+720
+116
+67
+107
+136
+19,542
+6.353
+5,422
+6,497
+15,883
+13,555
+12,993
+12,124
+Net assets
+(944)
+(5,400)
+(7,028)
+(5,755)
+(2,009)
+(1,053)
+(107)
+(123)
+(3,979)
+(2,961)
+Total non-current liabilities
+(944)
+(1,097)
+(635)
+(603)
+(1,852)
+(914)
+(107)
+(123)
+(237)
+(223)
+Other non-current liabilities
+(4,303)
+(6,393)
+14,434
+22,591
+10,857
+12,266
+6.062
+10,863
+9,909
+6,133
+5,429
+10,751
+6,876
+6,353
+5,422
+6,497
+6,062
+Share of net assets from joint ventures
+650
+400
+(2,551)
+non-controlling interests
+21,726
+19,817
+12,266
+10,857
+21,941
+14,034
+15,883
+13,555
+12,993
+12,124
+owners of the company
+Net assets attributable to
+21,726
+19,817
+Net assets attributable to
+(5,152)
+Income tax expense
+578
+2,994
+93,994
+95,227
+14,536
+20,375
+139,307
+138,143
+RMB million
+2022
+At 31 December
+RMB million
+At 31 December
+2023
+Less: Provision for diminution in value of inventories
+Spare parts and consumables
+Finished goods
+Work in progress
+Raw materials
+The Group
+11 INVENTORIES
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+110
+Financial Statements (PRC)
+(7)
+227
+(3,914)
+(7,863)
+(830)
+(402)
+2,987
+233,941
+11,161
+8,177
+(6,683)
+256,739
+5,841
+250,898
+6,583
+(1,604)
+(5,079)
+Total
+RMB million
+losses
+RMB million
+(3,890)
+Provision for
+impairment
+Investments
+in associates
+RMB million
+159,985
+2,152
+11,778
+(3,601)
+9,009
+77,846
+RMB million
+joint ventures
+Investments in
+The Company
+Balance at 31 December 2023
+Other movements
+Movement of provision for impairment
+Foreign currency translation differences
+Disposals for the year
+Dividends declared
+Other equity movements under the equity method
+Change of other comprehensive income under the equity method
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2023
+The Group
+12 LONG-TERM EQUITY INVESTMENTS
+At 31 December 2023, the provision for diminution in value of inventories of the Group was primarily due to the costs of finished goods and raw
+materials were higher than net realisable value.
+244,241
+Total
+250,824
+220
+(11,777)
+(1,232)
+487
+(1,793)
+(1,409)
+8,600
+(8,157)
+2,657
+322
+(1,426)
+(869)
+Total comprehensive income
+7,144
+(9,531)
+Other comprehensive income
+(1,909)
+(1,793)
+(1,409)
+1,456
+1,374
+2,657
+322
+(1,426)
+(869)
+(Loss)/profit for the year
+642
+603
+423
+(201)
+(292)
+(885)
+(108)
+(1,909)
+Dividends declared by joint ventures
+910
+1,060
+355
+(36)
+6
+806
+6
+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 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+The share of profit and other comprehensive income of the Group in the year 2023 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was loss RMB2,296 million (2022: loss RMB18 million) and loss RMB544 million (2022: loss RMB376 million)
+respectively. As at 31 December 2023, the carrying amount of all individually immaterial joint ventures accounted for using equity method in
+aggregate was RMB40,701 million (2022: RMB34,194 million).
+3,422
+346
+(4,535)
+Share of other comprehensive income
+(955)
+(897)
+(704)
+703
+660
+1,063
+129
+(713)
+(435)
+joint ventures
+Share of net (loss)/profit from
+454
+2,462
+from joint ventures
+(157)
+Carrying Amounts
+(3,742)
+Limited. ("Shanghai SECCO")(i)
+Wang Jingyi
+PRC
+PRC
+Shanghai SECCO Petrochemical Company
+petrochemical products
+Company Limited ("Sinopec SABIC Tianjin")
+50.00%
+10,520
+Manufacturing and distribution of
+SAMI ALOSAIMI
+PRC
+PRC
+Sinopec SABIC Tianjin Petrochemical
+49.00%
+25,000 USD
+40.00%
+13,141
+Manufacturing and distribution of
+petrochemical products
+Crude oil and natural gas extraction
+NA
+Cyprus
+Russia
+Taihu Limited ("Taihu")
+Gu Yuefeng
+PRC
+PRC
+BASF YPC Company Limited ("BASF-YPC")
+(139)
+14,758
+Manufacturing and distribution of
+petrochemical products
+3,115
+50.00%
+2. Associates
+17,516
+management, investment consulting,
+self-owned equity management
+Mining coal and manufacturing of coal-
+chemical products
+("Zhongtian Synergetic Energy")
+Yang Dong
+PRC
+PRC
+Zhongtian Synergetic Energy Company Limited
+49.00%
+10,000
+Project management, equity investment
+Zhou Meiyun
+PRC
+PRC
+Sinopec Capital Co., Ltd. ("Sinopec Capital")
+Manufacturing refining oil products
+("Sinopec Finance")
+18,000
+Provision of non-banking financial services
+Jiang Yongfu
+PRC
+PRC
+Sinopec Finance Company Limited
+14.00%
+500,000
+Operation of oil and natural gas pipelines
+and auxiliary facilities
+("PipeChina")(ii)
+Zhang Wei
+PRC
+PRC
+China Oil & Gas Pipeline Network Corporation
+49.00%
+38.75%
+Zhang Xiguo
+PRC
+(2,393)
+(36)
+(24)
+(12)
+(1,702)
+Dividends declared
+Other equity movements under the equity method
+(63)
+(63)
+4,552
+4,574
+(22)
+31,074
+190
+382,879
+Total
+RMB million
+losses
+RMB million
+(7,929)
+75,524
+Provision for
+impairment
+Investments in
+associates
+RMB million
+Investments in
+joint ventures
+RMB million
+17,239
+7,785
+298,045
+23,099
+Investments in
+subsidiaries
+RMB million
+Change of other comprehensive income under the equity method
+Share of profits less losses under the equity method
+Balance at 1 January 2023
+Additions for the year
+(11)
+234,608
+(3,920)
+(499)
+164,129
+(4,095)
+Disposals for the year
+(738)
+(1)
+Fujian Refining & Petrochemical Company
+Limited ("FREP")
+1. Joint ventures
+by the Company
+RMB million
+Principal activities
+Registered Capital
+Legal
+representative
+location
+Principal place Register
+of business
+Name of investees
+directly or
+indirectly held
+Percentage of
+equity/voting right
+(a) Principal joint ventures and associates
+Principal joint ventures and associates of the Group are as follows:
+PRC
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Details of the Company's principal subsidiaries are set out in Note 60.
+For the year ended 31 December 2023, the Group and the Company had no individually significant long-term investment impairment.
+413,572
+(7,929)
+77,491
+23,604
+320,406
+Balance at 31 December 2023
+(316)
+316
+Other movement
+Movement of provision for impairment
+(739)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+China National Aviation Fuel Supply Co., Ltd.
+("Aviation Fuel")
+50.00%
+PRC
+(829)
+(827)
+Current financial liabilities
+Current liabilities
+26,677
+26,386
+18,466
+17,345
+10,488
+12,254
+9,244
+9,000
+6,666
+(25)
+12,708
+Total non-current assets
+4,970
+4,669
+7,060
+5,429
+16,894
+16,275
+Total current assets
+3,647
+3,106
+2,554
+5,518
+2,455
+11,752
+(63)
+(42)
+(55)
+(2,243)
+(2,727)
+(2,262)
+(3,282)
+(2,256)
+(2,368)
+Total current liabilities
+(12,942)
+(10,780)
+(1,988)
+(2,308)
+(2,285)
+(2,782)
+(6,162)
+(6,232)
+(5,838)
+(8,977)
+Non-current liabilities
+Non-current financial liabilities
+(2,738)
+(1,963)
+(9,951)
+(12,115)
+Other current liabilities
+15,044
+(6,609)
+(3,582)
+(2,950)
+(3,900)
+15,269
+4,864
+5,993
+4,615
+At 31
+December
+At 31
+December
+2023
+2022
+At 31
+December
+Taihu
+BASF-YPC
+At 31
+December
+2023
+2022
+RMB million
+RMB million
+2023
+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 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+112
+Financial Statements (PRC)
+111
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+(ii) 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.
+(i) The Company and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. ("Gaoqiao Petrochemical") and INEOS Investment (Shanghai) Company Limited ("INEOS
+Shanghai") entered into an equity transfer agreement. According to the agreement, the Company and Gaoqiao Petrochemical transferred 15% and 35% equity
+interests in Shanghai SECCO to INEOS Shanghai respectively. The transactions were completed on 28 December 2022, and Shanghai SECCO was changed from a
+subsidiary to a joint venture after the completion of the transaction.
+Joint ventures and associates above are limited companies.
+29.00%
+3,800
+Wholesale of gasoline, kerosene, and
+diesel within the civil aviation system
+Zhang Zhicheng
+9,054
+Sinopec SABIC Tianjin
+At 31
+December
+(2,245)
+Shanghai SECCO
+At 31
+December
+11,311
+13,017
+Other current assets
+1,323
+1,563
+4,506
+2,974
+1,625
+654
+3,061
+2,051
+3,733
+3,258
+Cash and cash equivalents
+Current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2022
+2023
+2022
+2023
+2022
+At 31
+December
+At 31
+December
+PRC
+2,856
+other equity
+instrument
+investments
+7,254
+7,254
+24,974
+Other comprehensive income
+Foreign currency translation differences
+2,856
+Other comprehensive loss that can be converted into profit or loss under
+the equity method
+(3,145)
+(67)
+(79)
+Changes in fair value of other equity instrument investments
+149
+149
+Fair value hedges
+(6,645)
+11,637
+12
+currency
+21,829
+1 January 2022
+Foreign
+fair value of
+Changes in
+Equity Attributable to shareholders of the company
+RMB million
+be converted
+into profit or
+loss under
+the equity
+method
+(b) The change of each item in other comprehensive income
+income that can
+Other
+31 December 2023
+Changes in 2023
+1 January 2023
+31 December 2022
+Changes in 2022
+comprehensive
+fair value
+hedges
+2,021
+RMB million
+surplus reserve
+RMB million
+101,009
+5,125
+106,134
+Statutory
+Movements in surplus reserves are as follows:
+40 SURPLUS RESERVES
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+In accordance with the provisions stipulated in the Regulations on the Extraction and Utilization of Enterprise Safety Production Expenses issued
+by China's Ministry of Finance and Ministry of Emergency Management, the Group primarily allocates a proportionate amount of safety production
+fund from monthly net profits, based on the business-related operating revenue applicable to these regulations or the production volume of raw ore
+extracted within China, which are then recorded as special reserves. The safety production fund extracted by the enterprise are earmarked solely for
+enhancing and improving the safety production conditions of the enterprise or its projects, and any expenditures falling within the scope of safety
+production expenses should be disbursed from these allocated funds. Assets formed through the utilisation of safety production expenses are to be
+incorporated into relevant asset management. Any surplus funds from the safety production expenses of the current year will be carried forward for
+use in the subsequent year.
+39 SPECIFIC RESERVE
+As at 31 December 2023, cash flow hedge reserve amounted to a gain of RMB5,758 million (31 December 2022: a gain of RMB3,079 million),
+of which a gain of RMB5,656 million was attribute to shareholders of the Company (31 December 2022: a gain of RMB3,024 million).
+(45)
+(3,105)
+3,060
+5,643
+5,656
+294
+(2,066)
+(2,054)
+(12)
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+Total
+RMB million
+3,212,215
+2,709,656
+(3,157)
+65,342
+3,257,356
+RMB million
+2022
+The Group
+2023
+RMB million
+3,146,873
+Operating costs
+Operating income
+1,651
+Income from principal operations
+Income from other operations
+(b) After the transfer to the statutory surplus reserve, a transfer to discretionary surplus reserve can be made upon the passing of a resolution at the
+shareholders' meeting.
+(a) 10% of the net profit is transferred to the statutory surplus reserve. In the event that the reserve balance reaches 50% of the registered capital,
+no transfer is needed;
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+117,000
+Balance at 31 December 2023
+Appropriation
+Balance at 1 January 2023
+223,134
+218,009
+5,125
+41 OPERATING INCOME AND OPERATING COSTS
+RMB million
+2,632
+(8,442)
+(4,005)
+(3,315)
+(690)
+(2,092)
+7,214
+(29)
+(18)
+(5,765)
+RMB million
+RMB million
+RMB million
+RMB million
+income
+Total other
+comprehensive
+Non-controlling
+interests
+Subtotal
+differences
+translation
+Cash flow
+hedges
+RMB million
+1,610
+(65)
+323
+(4,190)
+(4,287)
+2,021
+(1,051)
+3,072
+3,992
+3,024
+294
+(83)
+(4,155)
+(8)
+(91)
+(1,051)
+3,992
+3,024
+294
+(83)
+(4,155)
+6,026
+2,264
+3,762
+6,084
+3,072
+14,794
+Tax effect
+1,482
+119,349
+119,896
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of
+RMB1.00 each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note
+1).
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB1.00 each, representing 12,521,864,000 H shares
+and 25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD1.59 per H share and USD20.645 per
+ADS, respectively, by way of a global initial public offering to Hong Kong 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.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB1.00 each at RMB4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+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.
+In June 2013, the Company issued 21,011,962,225 listed A shares and 5,887,716,600 listed H shares as a result of bonus issues of 2 shares
+converted from the retained earnings, and 1 share transferred from capital reserve for every 10 existing shares.
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of 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 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 2022, the Company repurchased 442,300,000 listed A shares and 732,502,000 listed H shares respectively
+at a price of RMB4.06 per share to RMB4.50 per share for the repurchase of listed A shares, with a total amount of RMB1,888,163,981.61, and a
+price of HKD3.06 per share to HKD3.75 per share for the repurchase of listed H shares, with a total amount of HKD2,499,261,860.00, which had
+been cancelled in the year ended 31 December 2022.
+During the year ended 31 December 2023, the Company repurchased 143,500,000 listed A shares and 403,656,000 listed H shares respectively at
+a price of RMB5.29 per share to RMB6.17 per share for the repurchase of listed A shares, with a total amount of RMB816,009,269.44, and a price
+of HKD3.78 per share to HKD4.56 per share for the repurchase of listed H shares, with a total amount of HKD1,646,392,242.20, which had been
+cancelled in the year ended 31 December 2023.
+All A shares and H shares rank pari passu in all material aspects.
+124
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+36 SHARE CAPITAL (Continued)
+The Group (Continued)
+Capital management
+Management optimises the structure of the Group's capital, which comprises of equity, debts and bonds. In order to maintain and 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 2023, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 18.9% (2022: 12.0%) and 52.7%
+(2022: 51.8%), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 31,32 and 61, respectively.
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+37 CAPITAL RESERVE
+The movements in capital reserve of the Group are as follows:
+24,781
+Balance at 1 January 2023
+24,377
+94,972
+60,812
+Accretion expenses
+Decrease for the year
+Exchange adjustments
+Balance at 31 December 2023
+35 OTHER NON-CURRENT LIABILITIES
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+The Group
+RMB million
+43,599
+1,681
+1,099
+(1,195)
+38
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+45,222
+123
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+36 SHARE CAPITAL
+The Group
+Registered, issued and fully paid:
+94,971,971,046 listed A shares (2022: 95,115,471,046) of RMB1.00 each
+24,377,280,600 listed H shares (2022: 24,780,936,600) of RMB1.00 each
+Total
+At 31 December
+2023
+At 31 December
+2022
+RMB million
+RMB million
+95,115
+Purchase of own shares
+Other equity movements under the equity method
+Others
+Balance at 31 December 2023
+(1,075)
+6,345
+1,245
+(234)
+1,011
+6,175
+(841)
+5,334
+(13)
+5
+(8)
+(6,683)
+1,946
+(6,683)
+1,946
+1,425
+(836)
+589
+2022
+Before-tax
+amount
+RMB million
+RMB million
+Net-of-tax
+amount
+RMB million
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+Cash flow hedges:
+Effective portion of changes in fair value of hedging instruments recognised during
+the year
+6,667
+(1,675)
+4,992
+(8,127)
+7,420
+amount
+RMB million
+Net-of-tax
+Tax effect
+RMB million
+RMB million
+118,875
+(1,778)
+220
+(44)
+117,273
+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 non-controlling interests over the carrying amount of the net assets acquired.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+125
+Financial Statements (PRC)
+Financial Statements (PRC)
+126
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+Subtotal
+38 OTHER COMPREHENSIVE INCOME
+(a) The changes of other comprehensive income in consolidated income statement
+Cash flow hedges:
+Effective portion of changes in fair value of hedging instruments recognised during
+the year
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+Subtotal
+Changes in fair value of other equity instrument investments
+Other comprehensive loss that can be converted into profit or loss under
+the equity method
+Foreign currency translation differences
+Other comprehensive income
+Before-tax
+amount
+RMB million
+2023
+The Group
+3,318,168
+2,819,363
+Net fair value losses on financial assets and financial liabilities at fair value through loss
+Unrealised or gains/(losses) from ineffective portion cash flow hedges, net
+2022
+RMB million
+624
+8,219
+The Group
+2023
+The Company
+2022
+RMB million
+RMB million
+2023
+RMB million
+2022
+RMB million
+Income from investment of subsidiaries accounted for under cost method
+Income from investment accounted for under equity method
+Investment income from disposal of business and long-term equity investments(i)
+Dividend income from holding of other equity instrument investments
+Investment (loss)/income from holding/disposal of financial assets and
+liabilities and derivative financial instruments at fair value
+through profit or loss
+29,431
+20,338
+8,177
+303
+10
+14,479
+13,754
+4,552
+15
+25
+4,449
+2,406
+76
+6
+4
+Gain from ineffective portion of cash flow hedges
+Others
+Total
+(4,575)
+1,380
+516
+5,811
+(15,063)
+263
+184
+997
+(809)
+7,595
+465
+10,905
+10,553
+113,750
+109,906
+11,055
+10,591
+53,274
+49,664
+2,855,508
+2,958,502
+Selling expenses mainly include wages and salaries of sales staff, depreciation and amortization of sales equipment and related systems, etc.
+46 GENERAL AND ADMINISTRATIVE EXPENSES
+Administrative expenses mainly include salaries of administrative personnel, depreciation and amortization of office facilities, office systems and
+software, and repair costs.
+47 RESEARCH AND DEVELOPMENT 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.
+48 EXPLORATION EXPENSES
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+128
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+49 OTHER INCOME
+Classified by characteristic
+Government grants
+Others
+Total
+Other income are mainly the government grants related to the business activities.
+50 INVESTMENT INCOME
+2023
+RMB million
+2022
+RMB million
+352
+103,585
+219
+1,375
+(1,715)
+2023
+RMB million
+77
+6.053
+2022
+RMB million
+10
+6,322
+2
+2
+2,491
+5,082
+27
+4
+116
+581
+6
+8
+8,772
+12,009
+2023
+RMB million
+2022
+RMB million
+636
+1,334
+1,003
+1,957
+1,970
+2,960
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+129
+Financial Statements (PRC)
+467
+1,412
+(2)
+(461)
+(1,252)
+14,462
+34,870
+29,221
+Note:
+(i) The Company and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. ("Gaoqiao Petrochemical") and INEOS Investment (Shanghai) Company Limited ("INEOS
+Shanghai") entered into an equity transfer agreement on 28 July 2022. According to the agreement, the Company and Gaoqiao Petrochemical transferred 15%
+and 35% equity interests in Shanghai SECCO Petrochemical Co., Ltd. to INEOS Shanghai respectively at a total consideration of RMB10,863 million. The above
+transactions were considered and approved by the 10th Session of 8th Directorate Meeting of the Company. The transactions were completed on 28 December 2022
+and the Company lost control over Shanghai SECCO. The Group accounted for its remaining 50% equity interest retained in Shanghai SECCO, at fair value upon initial
+recognition, as an interest in a joint venture from the date when control was lost. The investment income from disposal of Shanghai SECCO is RMB13,697 million.
+51 INCOME FROM CHANGES IN FAIR VALUE
+The Group
+Provision for the year
+Others
+Total
+52 IMPAIRMENT LOSSES
+The Group
+Prepayments
+Inventories
+Long-term equity investment
+Fixed assets
+Intangible assets
+Construction in progress
+Others
+Total
+53 NON-OPERATING INCOME
+The Group
+Government grants
+Others
+Total
+2023
+2022
+RMB million
+RMB million
+(159)
+649
+(23)
+108,017
+2022
+RMB million
+2,684,756
+2023
+RMB million
+2,569,412
+517,183
+38,039
+210,216
+42,785
+223,679
+132,625
+144,524
+216,456
+168,017
+79,681
+83,853
+34,059
+45,335
+439,549
+491,762
+65,342
+60,812
+63,990
+59,590
+1,352
+1,222
+3,212,215
+3,318,168
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+127
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+42 TAXES AND SURCHARGES
+The Group
+412,488
+Consumption tax
+743,551
+796,667
+1,173,747
+32,981
+1,269,093
+32,980
+1,206,728
+962,889
+1,302,073
+1,052,885
+The income from principal operations mainly represents revenue from the sales of refined petroleum products, chemical products, crude oil and
+natural gas. The income from other operations mainly represents revenue from sale of materials, 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.
+The Group's operating income is mainly composed of sales revenue from the products as follows:
+Income from principal operations
+Included: Gasoline
+Diesel
+Crude oil
+Chemical feedstock
+Basic organic chemicals
+Synthetic resin
+Kerosene
+Natural gas
+Synthetic fiber monomers and polymers
+Others (i)
+Income from other operations
+Included: Sale of materials and others
+Rental income
+Total
+Notes:
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products and so on.
+(ii) The above operating incomes, except rental income, are all income from contracts.
+2023
+RMB million
+3,146,873
+2022
+RMB million
+3,257,356
+861,453
+722,307
+City construction tax
+Special oil income levy
+Education surcharge
+2023
+2022
+RMB million
+RMB million
+9,807
+7,877
+1,788
+1,307
+8,951
+9,096
+16,970
+15,666
+1,099
+1,103
+(6,828)
+(6,266)
+(1,319)
+(529)
+9,922
+9,974
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2023 by the Group ranged from 1.70%
+to 4.25% (2022: 1.89% to 4.25%).
+44 CLASSIFICATION OF EXPENSES BY NATURE
+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:
+Purchased crude oil, products and operating supplies and expenses
+Personnel expenses
+Depreciation, depletion and amortisation
+Exploration expenses (including dry holes)
+Other expenses
+Total
+45 SELLING AND DISTRIBUTION EXPENSES
+263,991
+272,921
+5,109
+5,248
+Resources tax
+Levy for mineral rights concessions
+Others
+Total
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+43 FINANCIAL EXPENSES
+The Group
+Interest expenses incurred
+Less: Capitalised interest expenses
+Add: Interest expense on lease liabilities
+Net interest expenses
+Accretion expenses (Note 34)
+Interest income
+Net foreign exchange gains
+The Company
+2023
+RMB million
+Total
+2022
+RMB million
+RMB million
+215,483
+206,838
+17,478
+17,081
+6,223
+13,874
+12,847
+12,337
+8,230
+8,752
+7,412
+2023
+Balance at 1 January 2023
+6,852
+166,407
+5,911
+143
+7.0827
+7.8592
+1,012
+130
+6.9646
+906
+5
+7.4229
+35
+59,815
+21,313
+At 31 December 2023, the Group's interest rates on short-term loans were from interest 1.08% to 6.39% (At 31 December 2022: 1.65% to 5.51%)
+per annum. The majority of the above loans are by credit.
+At 31 December 2023 and 31 December 2022, the Group had no significant overdue short-term loans.
+23 BILLS PAYABLE
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+At 31 December 2023 and 31 December 2022, the Group had no overdue unpaid bills.
+24 ACCOUNTS PAYABLE
+Accounts payable primarily represent goods payable or material payable.
+25 CONTRACT LIABILITIES
+As at 31 December 2023 and 31 December 2022, 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.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+8,640
+7,628
+26 EMPLOYEE BENEFITS PAYABLE
+136
+20
+The Group's short-term loans represent:
+Short-term bank loans
+-Renminbi loans
+- US Dollar loans
+Short-term loans from Sinopec Group Company and
+fellow subsidiaries
+-Renminbi loans
+- US Dollar loans
+-Euro loans
+Total
+At 31 December 2023
+Original
+At 31 December 2022
+Original
+currency
+million
+Exchange
+currency
+Exchange
+rates RMB million
+million
+rates RMB million
+51,175
+51,175
+14,461
+14,325
+7.0827
+6.9646
+(1) Employee benefits payable:
+Short-term employee benefits
+Post-employment benefits- defined contribution plans
+Termination benefits
+Accrued
+during the year
+Decreased
+during the year
+Balance at
+the end
+of the year
+99,618
+(99,263)
+13,891
+14,287
+177
+114,082
+(14,316)
+(179)
+(113,758)
+44
+6
+13,941
+Balance at
+the beginning
+of the year
+Accrued
+during the year
+Decreased
+during the year
+Balance at
+the end
+of the year
+11,241
+72,778
+(72,434)
+11,585
+13,617
+the beginning
+of the year
+13,536
+73
+8
+Balance at
+Total
+Total
+(2) Short-term employee benefits
+Salaries, bonuses, allowances
+Staff welfare
+Social insurance
+Included: Medical insurance
+Work-related injury insurance
+Maternity insurance
+Housing fund
+Labour union fee, staff and workers' education fee
+Other short-term employee benefits
+22 SHORT-TERM LOANS
+Total
+Basic pension insurance
+Unemployment insurance
+Annuity
+Total
+27 TAXES PAYABLE
+The Group
+Value-added tax payable
+Consumption tax payable
+Income tax payable
+Mineral resources compensation fee payable
+Levy for mineral rights concessions
+Other taxes
+(3) Post-employment benefits - defined contribution plans
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+128,606
+(5)
+(68)
+64
+4,016
+Prepayments
+9
+111
+77
+(5)
+(8)
+175
+Other receivables
+10
+1,553
+287
+(165)
+(9)
+6
+1,672
+Other non-current assets
+1,185
+(306)
+20
+899
+(372)
+313
+4,079
+7
+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:
+Financial Statements (PRC)
+120
+For the year ended 31 December 2023
+21 DETAILS OF IMPAIRMENT LOSSES
+At 31 December 2023, impairment losses of the Group are analysed as follows:
+Note
+Balance at
+1 January
+2023
+RMB million
+Written
+Provision for
+the year
+RMB million
+Written back
+for the year
+6,928
+off for
+Other
+increase/
+(decrease)
+Balance at
+31 December
+2023
+RMB million
+RMB million
+RMB million
+RMB million
+Allowance for doubtful accounts
+Included: Accounts receivable
+the year
+1,635
+677
+(82)
+(4,405)
+(171)
+100,174
+2,647
+116
+(46)
+24
+2,741
+1,266
+27
+(28)
+(21)
+1,244
+7,861
+7,861
+57
+6
+63
+Total
+131,491
+9,619
+(1,090)
+(11,409)
+2,491
+102,259
+3,920
+36
+82
+6,762
+Inventories
+11
+Long-term equity investments
+12
+Fixed assets
+13
+Construction in progress
+14
+Intangible assets
+(843)
+Goodwill
+17
+123467
+6,583
+6,300
+(247)
+(6,840)
+45
+5,841
+3,890
+2
+(8)
+Others
+7,459
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+1,625
+currency
+million
+Exchange
+rates
+RMB
+million
+157,298
+86,532
+Interest rates at 0.00% per annum at
+31 December 2023 (2022:0.00%) with
+maturities through 2038
+7
+7.0827
+51
+8
+6.9646
+53
+Less: Portion with one year (note 29)
+Long-term bank loans
+(2,813)
+154,536
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+- Renminbi loans
+Interest rates ranging from interest 1.08%
+to 4.99% per annum at 31 December 2023
+28,608
+(2022:1.08% to 5.23%) with maturities
+through 2038
+Less: Portion with one year (note 29)
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Total
+The maturity analysis of the Group's long-term loans is as follows:
+Between one and two years
+RMB
+million
+Between two and five years
+Exchange
+rates
+At 31 December 2022
+Original
+6,610
+4,546
+17,536
+1,765
+30,457
+At 31 December 2023 and 31 December 2022, the Group had no significant overdue long-term loans.
+30 OTHER CURRENT LIABILITIES
+At 31 December 2023 and 31 December 2022, other current liabilities mainly represent output VAT to be transferred.
+31 LONG-TERM LOANS
+The Group's long-term loans represent:
+Long-term bank loans
+- Renminbi loans
+- US Dollar loans
+Interest rate and final maturity
+Interest rates ranging from interest 1.08%
+to 4.80% per annum at 31 December 2023
+(2022:1.00% to 4.66%) with maturities
+through 2035
+440
+14,316
+30,700
+16,004
+1,824
+62,844
+At 31 December 2023
+Original
+currency
+million
+After five years
+Total
+Long-term loans are carried at amortised costs.
+At 31 December
+2023
+RMB million
+At 31 December
+2022
+RMB million
+13,059
+43,697
+4,546
+30,700
+8,513
+12,997
+Total
+Note:
+(i) These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB3,520 million, and RMB denominated corporate bonds of
+RMB9,541 million on 31 December 2023 (2022: USD denominated corporate bonds of RMB12,164 million, and RMB denominated corporate bonds of RMB31,533
+million).
+33 LEASE LIABILITY
+The Group
+Lease liabilities
+Deduct: Portion of lease liabilities within one year (Note 29)
+Total
+34 PROVISIONS
+At 31 December
+2023
+RMB million
+181,400
+17,536
+At 31 December
+2022
+RMB million
+(7,469)
+Less: Portion within one year (Note 29)
+Corporate Bonds (i)
+Debentures payable:
+The Group
+122
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(3,797)
+24,811
+179,347
+(13,876)
+72,709
+22,695
+(440)
+22,255
+94,964
+At 31 December
+2023
+At 31 December
+2022
+3,797
+RMB million
+66,265
+10,852
+84,656
+73,387
+28,426
+10,725
+179,347
+94,964
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+32 DEBENTURES PAYABLE
+RMB million
+1
+163,864
+7.0827
+37
+13,536
+99,618
+(99,263)
+13,891
+Balance at
+the beginning
+of the year
+Accrued
+during the year
+Decreased
+during the year
+Balance at
+the end
+of the year
+63
+9,393
+(9,421)
+35
+2
+356
+(357)
+1
+8
+4,538
+(4,538)
+8
+(2,580)
+2,577
+40
+275
+308
+6.9646
+6,814
+(6,788)
+334
+304
+6,209
+(6,182)
+331
+3
+482
+73
+(483)
+1
+123
+(123)
+1
+47
+7,243
+(7,255)
+35
+265
+2,747
+(2,737)
+2
+14,287
+182,411
+16,004
+44
+- US Dollar loans
+Long-term loans from Sinopec Group Company and fellow
+subsidiaries
+- Renminbi loans
+Long-term loans due within one year
+Debentures payable due within one year
+- Renminbi debentures.
+Lease liabilities due within one year
+Others
+At 31 December 2023
+At 31 December 2022
+Original
+currency
+million
+Original
+2,813
+Exchange
+rates
+RMB million
+currency
+million
+Exchange
+rates
+RMB million
+13,875
+(14,316)
+- Renminbi loans
+Long-term bank loans
+Non-current liabilities due within one year
+29 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+2023
+At 31 December
+The Group's non-current liabilities due within one year represent:
+At 31 December
+RMB million
+2022
+RMB million
+2,989
+18,275
+1,455
+2
+6
+7,385
+934
+13,038
+4,725
+9,676
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+Financial Statements (PRC)
+9,902
+121
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Financial Statements (PRC)
+28 OTHER PAYABLES
+28,379
+40,008
+At 31 December 2023 and 31 December 2022, other payables of the Group over one year primarily represented payables for constructions.
+Zhongtian Synergetic Energy
+Shanghai SECCO
+Sinopec SABIC Tianjin
+Taihu
+BASF-YPC
+FREP
+Joint ventures of the Group:
+Aviation Fuel
+Sinopec Capital
+Related parties under common control of a parent company with the Company:
+PipeChina
+Associates of the Group:
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Century Bright Capital Investment Limited
+Sinopec Engineering Incorporation
+Sinopec Assets Management Corporation
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Finance (Note)
+(2) Related parties not having the ability to exercise control over the Group
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+Sinopec Finance
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+RMB4,284
+Financial Statements (PRC)
+2,870
+55.00
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 68.24%
+shareholding of the Company.
+RMB3,000
+Crude oil processing and petroleum products manufacturing
+10.020
+55.00
+RMB4,804
+RMB10,000
+Manufacturing of intermediate petrochemical products and
+petroleum products
+Sinopec Baling Petrochemical Co. Ltd.
+("Gaoqiao Petrochemical")
+Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd.
+100.00
+RMB7,233
+RMB1,595
+Manufacturing of intermediate petrochemical products and
+petroleum products
+Sinopec Qingdao Petrochemical Company Limited
+357
+100.00
+RMB12,615
+RMB9,606
+Financial Statements (PRC)
+133
+RMB326,547 million
+(31,766)
+(570)
+(32,336)
+Ma Yongsheng
+Long-term and Short-term loans and
+2023
+RMB million
+Non-cash
+RMB million
+Cash
+RMB million
+Non-cash
+RMB million
+Cash
+RMB million
+31 December
+Balance at
+Balance at
+1 January
+2023
+RMB million
+Decreases for the year
+Additions for the year
+(22,945)
+(21,919)
+(94)
+(603)
+(4,179)
+(2,325)
+(18,672)
+RMB million
+(18,991)
+RMB million
+2022
+2023
+debentures payable
+Other non-current liabilities- loans to related parties
+Total
+174,290
+5,180
+179,470
+698,936
+474
+699,410
+Registered capital
+Authorised representative
+State-owned
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+Exploration, production, storage and transportation (including pipeline transportation), sales and
+utilisation of crude oil and natural gas; refining; wholesale and retail of gasoline, kerosene and diesel;
+production, sales, storage and transportation of petrochemical and other chemical products; industrial
+investment and investment management; exploration, construction, installation and maintenance of
+petroleum and petrochemical constructions and equipments; manufacturing electrical equipment;
+research, development, application and consulting services of information technology and alternative
+energy products; import & export of goods and technology.
+Ultimate holding company
+Types of legal entity
+Relationship with the Group
+:
+Principal activities
+Registered address
+9111000010169286X1
+:
+:
+Unified social credit identifier
+:
+The name of the company
+(1) Related parties having the ability to exercise control over the Group
+58 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+132
+The decrease in cash for the year includes interest actually paid: RMB7,997 million.
+258,831
+5,133
+263,964
+(607,667)
+(284)
+(607,951)
+25,038
+333
+25,371
+China Petrochemical Corporation
+("Hunan Petrochemical")
+At 31
+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.
+(13,998)
+(14,573)
+(9,468)
+(936)
+(212,593)
+(217,315)
+23,991
+18,521
+5,436
+6,118
+1,901
+3,729
+15,766
+15,455
+25,677
+19,529
+190,697
+202,333
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+(1,841)
+RMB million
+(169)
+(209)
+7.902
+8,001
+(31,670)
+(792)
+(1,043)
+(33,505)
+10,215
+8,862
+25,477
+24,203
+12,869
+8,983
+324,288 326,170
+13,829
+11,414
+5,227
+5,911
+1,732
+1,888
+1,768
+882
+16,209
+18,593
+(14,982) (21,896)
+(10,162)
+(7,107)
+(207)
+RMB million
+RMB million
+RMB million
+Fujian Petrochemical
+Shanghai Petrochemical
+At 31
+At 31
+At 31
+At 31
+SIPL
+Marketing Company
+At 31 At 31
+Net non-current assets/(liabilities)
+Non-current liabilities
+Non-current assets
+Net current (liabilities)/assets
+Current liabilities
+Current assets
+Summarised consolidated balance sheet
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary whose non-
+controlling interests that are material to the Group.
+Summarised financial information on subsidiaries with material non-controlling interests
+60 PRINCIPAL SUBSIDIARIES (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+138
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those return through its power over the entity.
+Note:
+At 31
+December
+December
+December
+RMB million
+RMB million
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+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.
+2023
+2023
+December
+At 31
+Gaoqiao Petrochemical
+At 31
+December
+December
+Sinopec Kantons
+At 31
+At 31
+December
+December
+December
+December
+December
+December
+2022
+RMB million
+Cash balance at the end of the year
+2022
+56 DIVIDENDS
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate
+of 15% through the year 2023. According to Announcement [2020] No.23 of the MOF "Announcement of the MOF, the State Taxation Administration and the National
+Development and Reform Commission on continuation of the income tax policy of western development enterprises", the preferential income tax rate of 15% extends
+from 1 January 2021 to 31 December 2030.
+Note:
+(1,757)
+17,901
+(1,470)
+16,070
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+58
+72
+Write-down of deferred tax assets
+2,243
+1,374
+(850)
+(399)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised and temporary differences
+(128)
+(846)
+Effect of income taxes at foreign operations
+(3,091)
+(3,117)
+Tax effect of preferential tax rate (i)
+(5,900)
+(4,060)
+Tax effect of non-taxable income
+(a) Dividends of ordinary shares declared after the balance sheet date
+3,697
+Pursuant to a resolution passed at the director's meeting on 22 March 2024, final dividends in respect of the year ended 31 December 2023 of
+RMBO.200 (2022: RMBO.195) per share totaling RMB23,870 million (2022: RMB23,380 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.
+Pursuant to the shareholders' approval at the General Meeting on 25 August 2023, the interim dividends for the year ending 31 December 2023
+of RMBO.145 (2022: RMBO.16) per share totaling RMB17,380 million (2022: RMB19,371 million) were approved. Dividends were paid on 15
+September 2023.
+Increase in inventories
+Increase/(decrease) in deferred tax liabilities
+Decrease in deferred tax assets
+Investment income
+Financial expenses
+Fair value (gain)/loss
+Net (gain)/loss on disposal of non-current assets
+Dry hole costs written off
+Amortisation of intangible assets and long-term deferred expenses
+Depreciation of fixed assets
+Depreciation of right-of-use assets
+Credit impairment reversals
+Add: Impairment losses on assets
+Net profit
+(a) Reconciliation of net profit to cash flows from operating activities:
+The Group
+57 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+130
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2022, a final dividend of RMBO.31 per share totaling
+RMB37,532 million according to total shares on 9 June 2022 was approved. All dividends have been paid in the year ended 31 December 2022.
+Pursuant to the shareholders' approval at the General Meeting on 26 August 2022, the interim dividends for the year ending 31 December 2022
+of RMBO.16 (2021: RMBO.16) per share totaling RMB19,371 million (2021: RMB19,371 million) were approved. Dividends were paid on 19
+September 2022.
+Pursuant to the shareholders' approval at the Annual General Meeting on 30 May 2023, a final dividend of RMBO.195 per share totaling
+RMB23,380 million according to total shares on 20 June 2023 was approved. All dividends have been paid in the year ended 31 December
+2023.
+(b) Dividends of ordinary shares declared during the year
+Safety fund reserve
+2,987
+23,629
+2,598
+2,979
+1,014
+1,394
+1,231
+447
+310
+39
+RMB million
+RMB million
+43
+2022
+2023
+The Group
+55 INCOME TAX EXPENSE
+Total
+Others
+Asset scrap, damage loss
+Fines, penalties and compensation
+Donations
+The Group
+54 NON-OPERATING EXPENSES
+Manufacturing of intermediate petrochemical products and
+petroleum products
+14.904
+For the year ended 31 December 2023
+4,859
+Tax effect of non-deductible expenses
+2023
+RMB million
+21,529
+Expected income tax expense at a tax rate of 25%
+94,515
+86,116
+Profit before taxation
+RMB million
+RMB million
+2022
+2023
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+17,901
+16,070
+Total
+(1,757)
+(1,470)
+Under-provision for income tax in respect of preceding year
+862
+2,442
+Deferred taxation
+18,796
+15,098
+Provision for income tax for the year.
+RMB million
+2022
+Decrease in operating receivables
+Decrease in operating payables
+Net cash flow from operating activities
+86,975
+8,929
+2022
+RMB million
+RMB million
+2023
+10.041
+2022
+RMB million
+RMB million
+2023
+93,438
+93,436
+2
+121,758
+121,759
+1
+2022
+RMB million
+RMB million
+2023
+108,590
+(15,152)
+28,321
+93,438
+93,438
+121,759
+RMB million
+RMB million
+93,455
+6,918
+2022
+13
+95,917
+103,157
+(92,090)
+(1,028)
+(90,562)
+(500)
+RMB million
+2023
+(h) Reconciliation of liabilities (excluding lease liabilities) arising from financial activities :
+Total
+Others
+Cash payments to purchase own shares
+Repayments of lease liabilities
+(g) Other cash paid relating to financing activities :
+Total
+Others
+Increase in time deposits with maturities over three months
+Loans from fellow subsidiaries
+(f) Other cash paid relating to investing activities :
+The Group (Continued)
+57 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+131
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+2,784
+2023
+116,269
+161,475
+(243)
+12,009
+8,772
+76,614
+70,046
+RMB million
+RMB million
+2022
+2023
+Total
+Others
+Decrease in time deposits with maturities over three months
+Interest income
+(e) Other cash received relating to investing activities :
+Cash received from disposal of equity interests in the relevant companies,
+oil and gas pipeline and ancillary facilities.
+(d) Net cash received from disposal of subsidiaries and other business entities :
+Cash at the end of the year
+- Demand deposits
+- Cash on hand
+Cash at bank and on hand
+(c) The analysis of cash held by the Group is as follows:
+Net increase/(decrease) of cash
+Less: Cash at the beginning of the year
+(b) Net change in cash:
+(1,084)
+14,829
+13,760
+88,512
+1,974
+(43,664)
+(32,983)
+3,974
+179
+(248)
+(45,421)
+(12,726)
+(1,142)
+2,435
+2,004
+7
+RMB million
+(14,462)
+10,503
+11,241
+1,715
+(467)
+722
+(2,995)
+6,416
+6,723
+9,968
+10,409
+86,178
+(5,811)
+15,681
+Non-controlling
+(11,892)
+25
+15
+4,377
+4,721
+64
+46
+25,988
+38,266
+5,133
+5,180
+8,640
+6,852
+28,608
+22,695
+65,228
+70,860
+88,823
+85,677
+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 2023, and as at and for the year ended 31 December 2022, 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
+33,349
+Retirement scheme contributions
+Total
+13,017
+16
+RMB million
+RMB million
+65,967
+65,064
+2
+20
+12,054
+11,460
+101
+596
+74
+43
+32
+14,487
+10,017
+4
+389
+322
+9,025
+8,633
+-
+6,938
+4,689
+299
+2022
+59 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+RMB thousand
+6,757
+512
+7,269
+59 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+(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.
+60 PRINCIPAL SUBSIDIARIES
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2023. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+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
+Sinopec Lubricant Company Limited
+Sinopec Yizheng Chemical Fibre Limited Liability Company
+Marketing Company
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+(b) Subsidiaries established by the Group:
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Sinopec Great Wall Energy & Chemical Company Limited
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+ZhongKe (Guangdong) Refinery & Petrochemical
+Company Limited
+Trading of petrochemical products
+Principal activities
+Registered
+capital/paid-
+up capital
+For the year ended 31 December 2023
+2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+2022
+RMB thousand
+9,299
+566
+9,865
+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.
+136
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+59 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. Therefore, the
+Group determines the recoverable amount based on the present value of the expected future cash flows of assets. The expected future cash
+flows of assets are based on the most recent financial budget or forecast data approved by management, as well as stable or decreasing
+growth rates for years after the budget or forecast period. If the increasing growth rate is reasonable, then it should be based on the increasing
+growth rate. In appropriate and reasonable circumstances, the growth rate can be zero or negative. Expected cash flows based on budgets or
+forecasts typically cover five years, and if a longer period is reasonable, it can cover a longer period. When estimating cash flows for years after
+the budget or forecast period, the growth rate used should not exceed the long-term average growth rate of the industry or market in which
+the products operated by the group are located, or the long-term average growth rate of the market in which the asset is located, unless it can
+prove that a higher growth rate is reasonable. In determining the discount rate, the weighted average cost of capital is usually used as the basis.
+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 other than oil and gas properties, are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking
+into account the estimated residual value. Management reviews the estimated useful lives of the assets at least annually in order to determine
+the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Group's historical experience
+with similar assets and taking into account anticipated technological changes. The depreciation expense for future periods is adjusted if there
+are significant changes from previous estimates.
+(d) Measurement of expected credit losses
+ECLS are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the
+difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+137
+Financial Statements (PRC)
+Lease liabilities (including current portion)
+Long-term loans (including current portion)
+Short-term loans
+(iv)
+41,783
+37,317
+(v)
+43,361
+48,465
+(vi)
+179
+173
+(vii)
+2,838
+1,203
+(viii)
+1,283
+541
+(vii)
+(903)
+(ix)
+43,621
+(3,382)
+36,608
+The amounts set out in the table above in respect of the year ended 31 December 2023 and 2022 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 2023 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB200,604 million (2022: RMB158,874 million) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB187,117 million
+(2022: RMB146,114 million), lease charges for land, buildings and others paid by the Group of RMB10,926 million, RMB1,050 million and
+RMB228 million (2022: RMB11,046 million, RMB938 million and RMB235 million), respectively and interest expenses of RMB1,283 million
+(2022: RMB541 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB87,247 million (2022:
+RMB58,403 million), comprising RMB84,329 million (2022: RMB57,151 million) for sales of goods, RMB2,838 million (2022: RMB1,203 million)
+for interest income and RMB80 million (2022: RMB49 million) for agency commission income.
+18,291
+For the year ended 31 December 2023, 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 2023 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB7,637 million
+(2022: RMB7,811 million).
+29,830
+184,986
+3,693
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+58 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows:
+Sales of goods
+Purchases
+Transportation and storage
+Exploration and development services
+Production related services
+Agency commission income
+Interest income
+Interest expense
+Net deposits placed with related parties
+Net funds obtained from related parties
+Note
+The Group
+2023
+RMB million
+2022
+RMB million
+(i)
+408,554
+352,691
+(ii)
+218,974
+(iii)
+For the year ended 31 December 2023, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates
+and joint ventures for land, buildings and others are RMB10,931 million, RMB1,053 million and RMB273 million (2022: RMB11,051 million,
+RMB943 million and RMB352 million). Among them, according to the continuing connected transaction agreement signed in 2000, the sixth
+supplementary agreement for continuing connected transactions signed on August 27, 2021, 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 RMB10,926 million and RMB1,050 million respectively (2022: RMB11,046 million and RMB938 million).
+As at 31 December 2023 and 31 December 2022, 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:
+135
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+58 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 2023 and 31 December 2022
+are as follows:
+The ultimate holding company
+At 31 December
+2023
+RMB million
+At 31 December
+2022
+RMB million
+Other related companies
+At 31 December At 31 December
+2023
+Cash at bank and on hand
+Accounts receivable
+Receivables financing
+Other receivables
+Prepayments and other current assets
+Other non-current assets
+Bills payable
+Accounts payable
+Contract liabilities
+Other payables and other current liabilities
+Other non-current liabilities
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+(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".
+(e) The Company has entered into a service station franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+(d) The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+(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) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(vii) 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.
+134
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+58 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)
+Actual
+investment at
+31 December
+Notes (Continued):
+(ix) The Group obtained loans, discounted bills and issued the acceptance bills from Sinopec Group Company and fellow subsidiaries, etc.
+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 2023.
+The terms of these agreements are summarised as follows:
+(a) The Company has entered into a non-exclusive "“Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months' notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+the government-prescribed price;
+•
+where there is no government-prescribed price, the government-guidance price;
+•
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+(b) The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as agreed to in the above
+Mutual Provision Agreement.
+(c) The Company has entered into a number of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+(viii) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(56,057) (56,147) (11,583)
+268.231 270,023
+Percentage of
+equity interest/
+voting right
+held by the
+2023
+6,438
+(1,193)
+22,644
+23,260
+Total comprehensive income
+3.176
+106
+346
+1,169
+(1,925)
+(2,868) (1,196)
+(1,409)
+2,576
+3,208
+20,129
+22,418
+Net profit/(loss) for the year
+69,298
+60.156
+529
+549
+4,931
+4,556
+(1,363)
+82,518
+(2,690)
+(1,925)
+333
+548
+7
+3,453
+6,749
+Dividends paid to non-controlling interests
+1,431
+47
+291
+499
+(962)
+(598)
+(1,331)
+(676)
+2,659
+(861)
+8.224
+8,259
+Comprehensive income attributable to non-controlling interests
+3,181
+105
+734
+1,252
+(1,196)
+195
+93,014
+2,952
+2022
+SIPL
+Marketing Company
+2023
+Year ended 31 December
+Summarised consolidated statement of comprehensive income and cash flow
+10,296
+10,854
+7,670
+7,746
+9,508
+8,160
+24,604
+24,060
+977
+(2,600)
+(5,385)
+(4,050)
+(232)
+(255)
+(707)
+(702)
+(873)
+(143)
+2023
+3,308
+2022
+Fujian Petrochemical
+1,710,428
+1,814,710
+Turnover
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+Gaoqiao Petrochemical
+Sinopec Kantons
+Shanghai Petrochemical
+2023
+169
+895
+984
+100.00
+68
+Production and sale of polyester chips and polyester fibres
+Marketing and distribution of refined petroleum products
+Provision of pipeline transmission services
+RMB4,000
+RMB7,437
+100.00
+RMB28,403
+RMB20,000
+70.42
+82,330
+HKD248
+HKD3,952
+60.33
+5,437
+Manufacturing of synthetic fibres, resin and plastics, intermediate
+petrochemical products and petroleum products
+Manufacturing of plastics, intermediate petrochemical products
+and petroleum products
+RMB10,799
+RMB5,820
+50.55
+12,394
+RMB10,492
+RMB5,246
+50.00
+5,024
+RMB3,374
+Investment in exploration, production and sale of petroleum and
+natural gas
+RMB3,374
+petroleum products
+Group
+million
+million
+%
+2023
+RMB million
+RMB1,400
+RMB1,856
+100.00
+13
+Trading of crude oil and petrochemical products
+RMB5,000
+RMB6,585
+100.00
+5,820
+Production and sale of catalyst products
+RMB1,500
+RMB2,424
+100.00
+297
+Manufacturing of intermediate petrochemical products and
+RMB15,651
+RMB15,756
+100.00
+Production and sale of refined petroleum products, lubricant base
+oil, and petrochemical materials
+RMB8,250
+RMB8,250
+100.00
+85.00
+2,081
+Sinopec-SK (Wuhan) Petrochemical Company Limited
+("Sinopec-SK")
+Production, sale, research and development of ethylene and
+downstream byproducts
+RMB7,193
+RMB7,193
+59.00
+Financial Statements (PRC)
+139
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+(1,247)
+(1,507)
+133
+557
+2
+1.660
+(7,337)
+807
+1,458
+1,947
+43,408
+50.598
+Net cash generated from/(used in) operating activities
+RMB4,250
+RMB5,000
+Manufacturing of intermediate petrochemical products and
+petroleum products
+Sinopec Qingdao Refining and Chemical Company Limited
+6,204
+Investment holding of overseas business
+USD3,598
+USD3,598
+100.00
+Marketing and distribution of petrochemical products
+RMB1,000
+RMB1,165
+100.00
+140
+Coal chemical industry investment management, production and
+sale of coal chemical products
+Interests at
+31 December
+RMB22,761
+100.00
+23
+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
+143
+RMB6,397
+RMB5,776
+90.30
+2,360
+RMB26,055
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company Limited
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+44,739
+(ii) Refining
+which processes and purifies crude oil, which is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(iii) Marketing and distribution - which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(iv) Chemicals - which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external
+customers.
+(v) Corporate and others - which largely comprise the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and corporate and others businesses separately. The reportable segments are each managed separately because they manufacture
+and/or distribute distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for cash at bank and on hand, long-term equity investments, deferred tax assets and other
+unallocated assets. Segment liabilities exclude short-term loans, non-current liabilities due within one year, long-term loans, debentures payable,
+deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+142
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+63 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Reportable information on the Group's operating segments is as follows:
+Income from principal operations
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+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.
+External sales
+-
+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.
+1,701
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+140
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+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 2023 and 31 December 2022, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+Joint ventures(i)
+At 31 December At 31 December
+2023
+2022
+RMB million
+8,563
+RMB million
+8,927
+Notes:
+(i) Exploration and production
+(i) The Group provided a guarantee in respect to standby credit facilities granted to Zhongan United Coal Chemical Co., Ltd. ("Zhongan United") and Amur Gas
+Chemical Complex Limited Liability Company ("Amur Gas") by banks amount to RMB7,100 million (31 December 2022: RMB7,100 million) and RMB25,781 million
+(31 December 2022: RMB25,351 million) respectively. As at 31 December 2023, the amount withdrawn (the portion corresponding to the shareholding ratio of the
+Group) by Zhongan United from banks and guaranteed by the Group was RMB4,828 million (31 December 2022: RMB5,254 million). As at 31 December 2023,
+the amount withdrawn (the portion corresponding to the shareholding ratio of the Group) by Amur Gas from banks and guaranteed by the Group was RMB3,735
+million (31 December 2022: RMB3,673 million).
+Management monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
+guarantees are determined to be higher than the carrying amount in respect of the guarantees. At 31 December 2023 and 2022, 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 RMB19,156 million in the consolidated financial statements for the
+year ended 31 December 2023 (2022: RMB16,823 million).
+Legal contingencies
+The Group is defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business. Management
+has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any resulting
+liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 141
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+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.
+The Group provided a guarantee in respect to payment obligation under the raw material supply agreement of Amur Gas amount to RMB17,211 million (31
+December 2022: RMB16,924 million). As at 31 December 2023, Amur Gas has not yet incurred the relevant payment obligations and therefore the Group has no
+guarantee amount (31 December 2022: Nil).
+Inter-segment sales
+Corporate and others
+External sales
+449,911
+94,426
+80,328
+505,805
+530,239
+630,248
+759,352
+905,264
+1,028,800
+1,535,512
+1,788,152
+(2,489,646)
+(2,620,886)
+411,379
+3,146,873
+5,336
+5,169
+3,785
+3,875
+43,911
+39,529
+9,502
+9,913
+2,808
+2,326
+65,342
+3,212,215
+60,812
+3,318,168
+2023
+3,257,356
+2,356
+1,674,345
+17,943
+1,774,518
+Inter-segment sales
+Elimination of inter-segment sales
+Consolidated income from principal operations
+Income from other operations
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Consolidated income from other operations
+Consolidated operating income
+2023
+2022
+RMB million
+13,421
+RMB million
+192,330
+116,703
+121,912
+294,683
+314,242
+170,691
+194,839
+1,355,310
+1,376,425
+1,526,001
+1,571,264
+1,756,575
+1,660,924
+177,980
+RMB million
+857
+62
+30,457
+Non-current liabilities due within one year
+93,031
+93,031
+93.031
+Other payables
+229,878
+29,122
+60,230
+2,752
+29,122
+229,878
+229,878
+Accounts payable
+29,122
+Bills payable
+31,484
+59,815
+2,752
+Short-term loans
+RMB million
+five years
+More than
+RMB million RMB million
+two years five years
+two years
+but less than
+More than
+60,230
+2,752
+Within one
+year or on
+demand
+RMB million
+At 31 December 2023
+More than
+one year but
+less than
+Carrying undiscounted
+amount cash flow
+RMB million RMB million
+contractual
+Derivative financial liabilities
+Total
+31,484
+179,347
+Carrying undiscounted
+contractual
+Total
+At 31 December 2022
+Liquidity risk (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+258,938
+224,561
+5,709
+28,668
+Long-term loans
+92,601
+5,484
+35,821
+133,906
+451,133
+924,663
+796,779
+Total
+272,894
+163,864
+Lease liabilities
+314
+11,821
+8,513
+Debentures payable
+4,322
+193,451
+67,860
+314
+12,512
+80,686
+875
+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:
+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.
+261,914
+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) At 31 December 2023, the investment commitments of the Group is RMB5,856 million (2022: RMB1,751 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 RMB628 million for the year ended 31 December 2023 (2022: RMB270 million).
+Estimated future annual payments are as follows:
+At 31 December
+2023
+At 31 December
+2022
+94,407
+RMB million
+Within one year
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Total
+802
+369
+175
+152
+176
+146
+172
+115
+156
+RMB million
+At 31 December 2023, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to
+RMB416,358 million (2022: RMB454,857 million) on an unsecured basis, at a weighted average interest rate of 2.23% per annum (2022: 2.38%).
+At 31 December 2023, the Group's outstanding borrowings under these facilities were RMB59,815 million (2022: RMB21,313 million) and were
+included in loans.
+167,507
+2022
+Liquidity risk
+The Group's other receivables are considered to have low credit risk (Note 10), and the loss allowance recognised during the year was therefore
+limited to 12 months expected credit losses. The Group considers "low credit risk" for other receivables when they have a low risk of default and
+the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+The detailed analysis of accounts receivable and receivables financing is listed in Note 7 and Note 8.
+The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2023 or 31 December
+2022, respectively, and the corresponding historical credit losses experienced within this period and calculate expected credit losses for the
+above financial assets using an allowance matrix The historical loss rates are adjusted to reflect current and forward-looking information on
+macroeconomic factors affecting the ability of the customers to settle the accounts receivable and receivables financing.
+To measure the expected credit losses, accounts receivable and receivables financing have been grouped based on shared credit risk
+characteristics and the days past due.
+For accounts receivable and receivables financing, the Group applies the "No.22 Accounting Standards for Business Enterprises Financial
+instruments: recognition and measurement" simplified approach to measuring expected credit losses which uses a lifetime expected loss
+allowance for all accounts receivable and receivables financing.
+-
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+The Group's primary type of financial assets that are subject to the expected credit loss model is accounts receivable, receivables financing and
+other receivables.
+(ii) Impairment of financial assets
+Credit risk (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2023
+RMB million
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+146
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+61 COMMITMENTS
+Capital commitments
+At 31 December 2023 and 31 December 2022, capital commitments of the Group are as follows:
+At 31 December 2023
+Authorised and contracted for (i)
+Authorised but not contracted for
+Total
+At 31 December
+2023
+RMB million
+177,809
+61,951
+239,760
+At 31 December
+Financial Statements (PRC)
+amount
+2022
+RMB million
+By segment
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+78,596
+83,300
+22,899
+22,863
+15,735
+19,140
+55,038
+58,612
+Exploration and production
+4,485
+176,753
+189,096
+46,755
+45,321
+Refining
+20,386
+20,588
+Marketing and distribution
+23,995
+23,461
+Chemicals
+18,958
+17,716
+5,181
+Corporate and others
+Capital expenditure
+RMB million
+746,095
+772,484
+Short-term loans
+59,815
+21,313
+Non-current liabilities due within one year
+30,457
+62,844
+Long-term loans
+179,347
+94,964
+Debentures payable
+8,513
+RMB million
+12,997
+7,817
+7,256
+Other non-current liabilities
+13,133
+14,068
+Other unallocated liabilities
+Total liabilities
+22,842
+24,738
+1,068,019
+1,010,664
+2023
+2022
+Deferred tax liabilities
+Total segment liabilities
+3,656
+113,750
+2,824,140
+2,857,361
+157,113
+197,741
+3,212,215
+At 31 December
+2023
+RMB million
+263,087
+230,941
+3,318,168
+At 31 December
+2022
+RMB million
+1,426,377
+38,068
+1,464,445
+1,353,771
+Financial Statements (PRC)
+2022
+RMB million
+1,398,510
+Overview
+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.
+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 2023, 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, other receivables and long-term receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+64 FINANCIAL INSTRUMENTS
+2,820
+2023
+RMB million
+Non-current assets
+109,906
+Impairment losses on long-lived assets
+Exploration and production
+887
+2,891
+Refining
+191
+2
+Marketing and distribution
+278
+415
+Chemicals
+1,280
+Mainland China
+Others
+1,790
+571
+2,636
+5,669
+144
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+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.
+External sales
+Mainland China
+Singapore
+Others
+Corporate and others
+Operating profit/(loss)
+215,386
+82,826
+1,637
+(2,746)
+17,624
+4,140
+(7,697)
+Total segment investment income
+5,811
+14,462
+Less: Financial expenses
+9,922
+9,974
+Add: Other income
+10,905
+2,619
+8,219
+467
+(1,715)
+Asset disposal gains
+4,226
+672
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+86,744
+96,414
+1,970
+2,960
+2,598
+86,116
+Gains/(losses) from changes in fair value
+4,859
+(375)
+3,273
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Elimination
+Total segment operating profit
+Investment income
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(413)
+37,976
+19,358
+11,611
+25,531
+25,197
+(10,273)
+(14,256)
+1,915
+15,480
+750
+(1,820)
+75,257
+84,750
+2,211
+48,538
+196,226
+94,515
+143
+412,543
+331,084
+327,706
+387,557
+388,961
+255,409
+242,794
+153,674
+148,014
+1,572,209
+1,520,018
+164,960
+145,052
+444,485
+234,608
+20,110
+22,433
+34,787
+29,677
+2,026,674
+1,951,121
+181,002
+172,875
+53,000
+84,220
+226,798
+217,177
+89,069
+233,941
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Corporate and others
+Marketing and distribution
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+63 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+At 31 December
+2023
+RMB million
+At 31 December
+2022
+RMB million
+Assets
+Segment assets
+Chemicals
+Exploration and production
+Marketing and distribution
+Chemicals
+Corporate and others
+Total segment assets
+Cash at bank and on hand
+Long-term equity investments
+Deferred tax assets
+Other unallocated assets
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+Refining
+RMB million
+cash flow
+RMB million
+Short-term loans
+2,221
+2,221
+120
+6,065
+3,779
+330
+2,551
+450
+12,395
+Derivative financial liabilities
+367
+2,385
+367
+2,385
+148
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+2,752
+2,752
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2023
+64 FINANCIAL INSTRUMENTS (Continued)
+Fair values (Continued)
+(i) Financial instruments carried at fair value (Continued)
+9,721
+At 31 December 2022
+3,779
+3
+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 2023
+The Group
+Assets
+Financial assets held for trading:
+- Fund Investments
+Derivative financial assets:
+- Derivative financial assets
+Receivables financing:
+- Receivables financing
+Other equity instrument investments:
+- Other Investments
+Liabilities
+Derivative financial liabilities:
+Level 1
+RMB million
+Level 2
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+3
+5,942
+•
+The Group
+Financial assets held for trading:
+730
+11,478
+4,123
+23,574
+1,293
+1,293
+6,020
+6,020
+7,313
+7,313
+During the year ended 31 December 2023 and 2022, 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 receivables financing classified as Level 3 financial assets.
+(ii) Fair values of financial instruments carried at other than fair value
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially
+the same characteristic and maturities range from 2.69% to 5.47% (2022: from 2.66% to 4.35%). 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 2023 and 2022:
+Carrying amount
+Fair value
+At 31 December
+2023
+RMB million
+170,409
+167,014
+At 31 December
+2022
+RMB million
+130,282
+125,866
+The Group has not developed an internal valuation model necessary to estimate the fair value of loans from Sinopec Group Company and
+fellow subsidiaries as it is not considered practicable to estimate their fair value because the cost of obtaining discount and borrowing rates
+for comparable borrowings would be excessive based on the Reorganisation of the Group, its existing capital structure and the terms of the
+borrowings.
+Except for the above items, the financial assets and liabilities of the Group are carried at amounts not materially different from their fair values
+at 31 December 2023 and 2022.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+149
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+616
+Assets
+114
+7,973
+3,507
+- Fund Investments
+Derivative financial assets:
+- 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
+2
+2
+7,857
+11,478
+19,335
+3,507
+•
+145
+•
+64,111
+64,111
+Long-term loans
+94,964
+102,939
+2,149
+Debentures payable
+12,997
+16,657
+422
+12,960
+4,948
+76,473
+11,357
+5,669
+5,618
+Lease liabilities
+Total
+166,407
+282,477
+12,905
+36,984
+232,588
+62,844
+755,154
+Non-current liabilities due within one year
+119,892
+21,313
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+Derivative financial liabilities
+7,313
+Bills payable
+10,782
+Accounts payable
+258,642
+21,635
+7,313
+10,782
+258,642
+Within one
+year or on
+demand
+RMB million
+21,635
+More than
+one year but
+less than
+More than
+two years
+but less than
+five years
+RMB million
+More than
+five years
+RMB million
+7,313
+10,782
+258,642
+Other payables
+119,892
+119,892
+884,448
+two years
+RMB million
+30,813
+RMB million
+RMB million
+Beginning of the year
+3,079
+7,244
+Effective portion of changes in fair value of hedging instruments recognised during the year
+Reclassification adjustments for amounts transferred to the consolidated income statement
+Amounts transferred to initial carrying amount of hedged items
+7,420
+6,667
+(1,245)
+8,127
+2022
+(3,078)
+Related tax
+End of the year
+1,601
+5,758
+3,079
+The ineffective portion of cash flow hedge relationship is disclosed in Note 50 and Note 51.
+Fair values
+484,946
+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
+(20,560)
+The Group
+2023
+(418)
+(c) Commodity price risk and hedge accounting (Continued)
+Management believes that the Group's current cash on hand, expected cash flows from operations and available standby credit facilities from
+financial institutions will be sufficient to meet the Group's short-term and long-term capital requirements.
+For the hedge relationship with cash flow hedge accounting applied, the corresponding changes in cash flow hedge reserves are as follows:
+119,126
+Market risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured.
+The Group does not have significant financial instruments that are denominated in foreign currencies other than the functional currencies of
+respective entities as at 31 December, and consequently does not have significant exposure to foreign currency risk.
+(b) Interest rate risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term loans. Loans carrying interest at variable interest rates
+and at fixed interest rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates and
+terms of repayment of short-term and long-term loans of the Group are disclosed in Note 22 and Note 31, respectively.
+At 31 December 2023, 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 RMB1,353 million (2022: decrease/increase RMB524
+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 2022.
+(c) Commodity price risk and hedge accounting
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products
+and chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the
+Group. The Group uses derivative financial instruments, including commodity futures and swaps contracts, to manage a portion of such risk.
+Based on the dynamic study and judging of the market, combined with the resource demand and production and operation plan, the Group
+evaluate and monitor the market risk exposure caused by transaction positions, and continuously manage and hedge the risk of commodity price
+fluctuation caused by market changes.
+(a) Currency risk
+As at 31 December 2023, 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 2023, it is estimated that a general increase/decrease of USD10 per
+barrel in basic price of derivative financial instruments, with all other variables held constant, would impact the fair value of derivative financial
+instruments, which would decrease/increase the Group's net profit for the year by approximately RMB1,139 million (2022: decrease/increase
+RMB5,104 million), and decrease/increase the Group's other comprehensive income by approximately RMB4,537 million (2022: increase/
+decrease RMB192 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 2022.
+Market risk (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+249,563
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Financial Statements (PRC)
+147
+Foreign currency exchange gains, net
+6,828
+Interest income
+(18,069)
+9
+75,835
+86,828
+Interest expense
+Operating profit
+Total operating expenses
+1,084
+(14,779)
+(3,242,333)
+9,100
+(3,125,387)
+8
+243
+Finance costs
+Other operating income/(expenses), net
+829
+(16,769)
+6,266
+Income tax expense
+94,400
+Impairment reversals on trade and other receivables
+83,934
+Profit before taxation
+14,479
+6,199
+1,319
+21,22
+14,060
+10
+Investment income
+(9,974)
+(9,922)
+Net finance costs
+529
+Share of profits less losses from associates and joint ventures
+(263,991)
+3,257,356
+7
+3,146,873
+65,342
+3,212,215
+4
+Other operating revenues
+3
+Revenue from primary business
+Revenue
+2022
+RMB
+60,812
+3,318,168
+RMB
+Note
+(Amounts in million, except per share data)
+for the year ended 31 December 2023
+(B) FINANCIAL STATEMENTS PREPARED UNDER IFRS ACCOUNTING STANDARDS
+CONSOLIDATED INCOME STATEMENT
+Financial Statements (International)
+11
+Financial Statements (International)
+Year ended 31 December
+2023
+(272,921)
+Operating expenses
+(2,569,412)
+(103,585)
+(108,017)
+6
+Taxes other than income tax
+Personnel expenses
+(10,591)
+(11,055)
+Purchased crude oil, products and operating supplies and expenses
+Exploration expenses, including dry holes.
+(113,750)
+Depreciation, depletion and amortisation
+(55,809)
+(59,575)
+5
+Selling, general and administrative expenses
+(2,684,756)
+(109,906)
+(16,070)
+(4,287)
+Profit for the year
+6,078
+1,651
+Foreign currency translation differences
+329
+Cost of hedging reserve
+11,174
+5,145
+Cash flow hedges
+1,610
+153
+Share of other comprehensive income of associates and joint ventures
+Items that may be reclassified subsequently to profit or loss
+(65)
+(8)
+Changes in fair value of investments in other equity instruments
+Other comprehensive income (net of tax) attributable to non-controlling interests
+(1,912)
+2,703
+Total other comprehensive income net of tax
+Financial Statements (International)
+Financial Statements (International)
+155
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+The notes on pages 161 to 212 form part of these consolidated financial statements.
+12,269
+7,642
+19,126
+86,059
+Shareholders of the Company
+Non-controlling interests
+Attributable to:
+98,328
+68,453
+Total comprehensive income for the year
+21,829
+589
+60,811
+2,501
+Other comprehensive income (net of tax) attributable to shareholders of the Company
+Items that will not be reclassified to profit or loss
+15
+16
+16
+Diluted
+Basic
+Earnings per share:
+76,499
+9,566
+66
+9,554
+67,864
+Non-controlling interests
+66,933
+58,310
+Shareholders of the Company
+Attributable to:
+76,499
+67,864
+Profit for the year
+(17,901)
+(Amounts in million)
+0.487
+76,499
+67,864
+Other comprehensive income:
+Profit for the year
+RMB
+RMB
+2022
+0.487
+2023
+Note
+(Amounts in million)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2023
+attributable to the profit for the year are set out in Note 14.
+The notes on pages 161 to 212 form part of these consolidated financial statements. Details of dividends payable to shareholders of the Company
+154 Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+0.554
+0.554
+Year ended 31 December
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+The Key Audit Matter
+Central, Hong Kong
+68 EXTRAORDINARY GAINS AND LOSSES
+Pursuant to the resolutions of the 15th meeting of the 8th session of the Board of Directors held on 24 March 2023 and the 2022 Annual General
+Meeting of Shareholders held on 30 May 2023, and with the approval for registration by the China Securities Regulatory Commission in the Reply
+on Agreeing to the Registration of China Petroleum & Chemical Corporation to Issue Shares to Specific Targets (Zheng Jian Xu Ke [2024] No.
+110([2024] 110)), the Company was approved to issue 2,390,438,247 new shares to specific investors. Based on the actual issuance, the
+Company issued 2,390,438,247 ordinary shares (par value of RMB1.00 per share at an issue price of RMB5.02 per share) to Sinopec Corporation, a
+specific investor, raising a total of RMB12 billion, The above-mentioned raised funds has been received on 12 March 2024, and KPMG Huazhen LLP
+has performed the verification procedure on the above-mentioned raised funds and issued a Capital Verification Report No. 2400292.
+67 NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD
+0.479
+0.479
+7.40
+0.507
+0.507
+7.61
+0.555
+0.555
+8.57
+0.505
+0.505
+7.59
+Pursuant to "Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public-Extraordinary Gain
+and Loss" (2023), the extraordinary gains and losses of the Group are as follows:
+2023
+2022
+RMB million
+Total
+Tax effect
+(15,775)
+(1,628)
+5,955
+One-time impact on loss for the current period due to adjustments in laws and regulations
+Subtotal
+2,178
+per share
+per share
+(RMB/Share) (RMB/Share)
+(13,902)
+(4,226)
+310
+(3,533)
+(931)
+797
+Other non-operating losses, net
+Gain on holding and disposal of business and various investments
+Government grants
+Net gains on disposal of non-current assets
+Extraordinary (gains)/losses for the year:
+Donations
+(672)
+447
+(3,826)
+635
+(993)
+(%)
+Basic
+earnings
+0.505
+120,889
+119,811
+67,082
+2022
+2023
+60,463
+The calculation of the weighted average number of ordinary shares is as follows:
+Net profit attributable to equity shareholders of the Company (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+Basic earnings per share is calculated by the net profit attributable to equity shareholders of the Company and the weighted average number of
+outstanding ordinary shares of the Company:
+(i) Basic earnings per share
+65 BASIC AND DILUTED EARNINGS PER SHARE
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Note
+0.555
+2023
+119,896
+(85)
+2022
+121,071
+119,811
+Weighted
+average
+return on
+net assets
+Diluted
+earnings earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+net assets
+Basic
+Weighted
+average
+return on
+2022
+2023
+Diluted
+earnings
+Net profit deducted extraordinary gains and losses
+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 per share are calculated as follows:
+66 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+There are no potential dilutive ordinary shares, and diluted earnings per share are equal to the basic earning per share.
+(ii) Diluted earnings per share
+Weighted average number of outstanding ordinary shares of the Company at 31 December (million)
+Weighted average number of outstanding ordinary shares of the Company at 1 January (million)
+Impact of repurchasing shares (million shares)
+(182)
+120,889
+Net profit attributable to the Company's ordinary equity
+shareholders
+2,304
+(13,471)
+Attributable to:
+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.
+The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS
+Accounting Standards as issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance and for such internal control as
+the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether
+due to fraud or error.
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
+fact. We have nothing to report in this regard.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
+whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise
+appears to be materially misstated.
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+The directors are responsible for the other information. The other information comprises all the information included in the annual report, other than
+the consolidated financial statements and our auditor's report thereon.
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
+KPMG
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+152
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 151
+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.
+Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with HKSAS will always detect a
+material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
+could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
+As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
+Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform
+audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
+intentional omissions, misrepresentations or the override of internal control.
+10 Chater Road
+8th Floor, Prince's Building
+Certified Public Accountants
+KPMG
+The engagement partner on the audit resulting in this independent auditor's report is Ho Ying Man, Simon.
+From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated
+financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law
+or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
+communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and
+communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions
+taken to eliminate threats or safeguards applied.
+we 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 communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
+including any significant deficiencies in internal control that we identify during our audit.
+KPMG
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+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.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
+opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+we 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;
+畢馬威會計師事務所
+Fax +852 2845 2588
+Internet kpmg.com/cn
+Telephone +852 2522 6022
+G P 0 Box 50, Hong Kong
+Central, Hong Kong
+8th Floor, Prince's Building
+KPMG
+香港中環太子大廈8樓
+香港郵政總局信箱50號
++852 2522 6022
+KPMG
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+150
+(4,351)
+(9,120)
+229
+(1,222)
+Non-controlling interests
+Equity shareholders of the Company
+REPORT OF THE INTERNATIONAL AUDITOR
+22 March 2024
++852 2845 2588
+kpmg.com/cn
+to the shareholders of China Petroleum & Chemical Corporation
+(established in the People's Republic of China with limited liability)
+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;
+.
+The following are the primary procedures we performed to address this
+key audit matter:
+How the matter was addressed in our audit
+We identified assessment of impairment of property, plant and equipment
+relating to oil and gas producing activities as a key audit matter. The
+value in use amounts of these CGUS are sensitive to the changes to
+future selling prices and production costs for crude oil and natural gas,
+future production profiles, and discount rates. Therefore a higher degree
+of subjective auditor judgment was required to evaluate the Company's
+impairment assessment of property, plant and equipment relating to oil
+and gas producing activities.
+The Company groups property, plant and equipment relating to oil
+and gas producing activities into cash-generating units ("CGUS") for
+impairment assessment. The Company compares the carrying amount of
+individual CGU with its value in use, using a discounted cash flow forecast,
+which was prepared based on the future production profiles included in
+the oil and gas reserves reports, to determine the impairment loss to be
+recognised.
+The Company reported property, plant and equipment of Renminbi ("RMB")
+690,897 million as at 31 December 2023, a portion of which related to oil
+and gas producing activities. The Company reported impairment losses of
+RMB777 million for the property, plant and equipment relating to oil and
+gas producing activities for the year ended 31 December 2023.
+Independent auditor's report
+Refer to notes 2(g), 2(n), 8, 17 and 44 to the consolidated financial statements
+Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the
+current period. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
+thereon, and we do not provide a separate opinion on this matter.
+KEY AUDIT MATTER
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the Hong Kong Institute of Certified Public
+Accountants ("HKICPA"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the
+consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA's Code of Ethics for
+Professional Accountants ("the Code") together with any ethical requirements that are relevant to our audit of the consolidated financial statements in
+the People's Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code. We believe
+that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December
+2023 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting
+Standards as 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 154 to 212, which comprise the consolidated statement of financial position as at 31 December 2023, 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, comprising material accounting policy information and other explanatory information.
+OPINION
+Assessment of impairment of property, plant and equipment relating to oil and gas producing activities
+RMB million
+As at 31 December 2023
+Year ended 31 December
+2023
+334
+Transactions with owners, recorded directly in equity:
+Purchase of own shares (Note 37)
+Contributions by and distributions to owners:
+Final dividend for 2022 (Note 14)
+Interim dividend for 2023 (Note 14)
+Appropriation (Note (a))
+Distributions to non-controlling interests
+Contributions to subsidiaries from
+non-controlling interests
+Total contributions by and distributions to owners
+(547)
+(1,778)
+(2,325)
+(2,655)
+(2,325)
+(23,380)
+(23,380)
+(17,380)
+(17,380)
+(17,380)
+5,125
+(5,125)
+(8,573)
+(8,573)
+2,209
+2,209
+5.125
+(45,885)
+(40,760)
+(23,380)
+(6,364)
+(142)
+(2,513)
+equity
+RMB
+RMB
+RMB
+52,846
+101,009
+117,000
+6,407
+361,689
+787,600
+151,942
+939,542
+Profit for the year
+58,310
+(2,513)
+58,310
+67,864
+Other comprehensive income (Note 15)
+2,501
+2,501
+(1,912)
+589
+Total comprehensive income for the year
+2,501
+58,310
+60,811
+7,642
+68,453
+Amounts transferred to initial carrying amount
+of hedged items
+9,554
+(47,124)
+Transaction with non-controlling interests
+(213)
+(d) The capital reserve mainly represents (i) the difference between the total amount of the par value of shares issued and the amount of the net assets transferred from
+Sinopec Group Company in connection with the Reorganisation (Note 1); and (ii) the difference between the considerations paid over or received the amount of the net
+assets of entities and related operations acquired from or sold to Sinopec Group Company and non-controlling interests.
+(e) The application of the share premium account is governed by Sections 213 and 214 of the PRC Company Law.
+The notes on pages 161 to 212 form part of these consolidated financial statements.
+158
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2023
+(Amounts in million)
+Note
+2022
+RMB
+RMB
+Net cash generated from operating activities
+Investing activities
+(c) As at 31 December 2023, the amount of retained earnings available for distribution was RMB107,879 million (2022: RMB102,522 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 IFRS Accounting Standards.
+Capital expenditure
+Purchase of investments
+(a)
+161,475
+116,269
+(152,325)
+(19,168)
+(18,783)
+(5,892)
+(9,234)
+Payment for financial assets at fair value through profit or loss
+(26)
+(1,222)
+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
+1,220
+Exploratory wells expenditure
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+During the year ended 31 December 2023, the Company transferred RMB5,125 million (2022: RMB4,663 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.
+(213)
+Total transactions with owners
+(547)
+(1,778)
+5.125
+(45,885)
+(43,085)
+(6,577)
+(49,662)
+Other equity movements under the equity method
+Others
+220
+220
+220
+(44)
+(216)
+216
+(44)
+Notes:
+955,809
+152,820
+802,989
+374,330
+6,179
+interests
+117,000
+51,068
+28,929
+119,349
+Balance at 31 December 2023
+(89)
+(45)
+106,134
+(110)
+Total
+shareholders
+of the
+Company
+(15,363)
+(439)
+(15,802)
+Transactions with owners, recorded directly in equity:
+(1,175)
+(3,004)
+(4,179)
+(4,179)
+Final dividend for 2021 (Note 14)
+(37,532) (37,532)
+(37,532)
+Interim dividend for 2022 (Note 14)
+Appropriation (Note (a))
+Distributions to non-controlling interests
+(15,363)
+Contributions to subsidiaries from
+Other contributions
+Total contributions by and distributions to owners.
+Transaction with non-controlling Interests
+(19,371)
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+(19,371)
+(19,371)
+4,663
+(4,663)
+(6,691)
+(6,691)
+5,395
+5,395
+2.678
+non-controlling interests
+2,678
+Contributions by and distributions to owners:
+hedged items
+2,448
+Balance at 1 January 2022
+121,071
+27,062
+55,850
+96,346
+117,000
+2,495
+356,472
+776,296
+141,226
+917,522
+Profit for the year
+66,933
+Purchase of own shares (Note 37)
+66,933
+76,499
+Other comprehensive income (Note 15)
+19,126
+19,126
+2,703
+21,829
+Total comprehensive income for the year
+19.126
+66.933
+86,059
+12.269
+98,328
+----------
+Amounts transferred to initial carrying amount of
+9,566
+2,191
+4,869
+2,678
+939,542
+The notes on pages 161 to 212 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+157
+Financial Statements (International)
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+for the year ended 31 December 2023
+(Amounts in million)
+Total equity
+attributable to
+Share
+capital
+Capital
+Share
+surplus
+151,942
+Statutory Discretionary
+surplus
+Retained
+reserve
+RMB
+Balance at 1 January 2023
+119,896
+RMB
+28,753
+premium
+RMB
+reserve
+reserve
+reserves
+RMB
+RMB
+RMB
+earnings
+RMB
+Other
+787,600
+361,689
+6,407
+4,663
+(61,566)
+(54,225)
+895
+(53,330)
+(1,713)
+(1,713)
+Total transactions with owners
+(1,175)
+2,678
+(3,004)
+4,663
+(61,566)
+(58,404)
+(818)
+(59,222)
+Other equity movements under the equity method
+Others
+117,000
+101,009
+52,846
+(275)
+(296)
+21
+Non-
+controlling
+(150)
+22
+28,753
+119,896
+Balance at 31 December 2022
+(1,009)
+(1,009)
+(1,009)
+149
+(7,881)
+(153,744)
+10,801
+Income tax payable
+Other payables
+Contract liabilities
+Trade accounts payable and bills payable
+Derivative financial liabilities
+Lease liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term debts
+Current liabilities
+-----------
+Total current assets
+Prepaid expenses and other current assets
+Financial assets at fair value through other comprehensive income
+Inventories
+Trade accounts receivable
+Total current liabilities
+Derivative financial assets
+Time deposits with financial institutions
+Cash and cash equivalents
+Current assets
+Total non-current assets
+159,150
+163,066
+6,464
+6,472
+264,856
+264,054
+196,045
+180,250
+18
+630,700
+Financial assets at fair value through profit or loss
+69,564
+450
+20,110
+95,398
+1,490,261
+74,791
+730
+22,433
+72,812
+1,427,981
+259,000
+33
+7,313
+2,752
+24
+16,004
+17,536
+31
+1,580
+12,437
+30
+59,037
+58,534
+30
+523,140
+534,435
+64,639
+121,759
+41,778
+93,438
+51,614
+3
+2
+22222
+690,897
+9,721
+48,652
+46,364
+2,221
+250,898
+3,507
+244,241
+59,403
+19,335
+269,424
+782222222
+Long-term prepayments and other assets
+(9,679)
+Payments made to acquire non-controlling interests
+Cash payments to purchase own shares
+(203)
+(2,325)
+(4,179)
+Repayments of lease liabilities
+Proceeds from other financing activities
+Repayments of other financing activities
+(18,991)
+(18,672)
+420
+989
+(400)
+(94)
+Net cash generated from/(used in) financing activities
+(7,997)
+22,732
+Net increase/(decrease) in cash and cash equivalents
+28,342
+(18,440)
+Cash and cash equivalents at 1 January
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+93,438
+108,590
+(21)
+3,288
+121,759
+93,438
+The notes on pages 161 to 212 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+159
+Financial Statements (International)
+(39,699)
+(5,249)
+(7,977)
+(56,903)
+29
+26
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+Interest in joint ventures
+21
+Interest in associates
+20
+Goodwill
+19
+17
+Right-of-use assets
+Construction in progress
+Property, plant and equipment, net
+Non-current assets
+RMB
+2022
+RMB
+(40,760)
+3,946
+1,509
+564,417
+(514,275)
+699,410
+(599,954)
+(95,010)
+23
+(155,865)
+(1,515)
+13,969
+10,886
+6,918
+31 December
+2023
+31 December
+949
+34
+7,292
+125,444
+RMB
+equity
+interests
+RMB
+Total
+Non-
+controlling
+of the
+Company
+RMB
+earnings
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+reserves
+Balance at 31 December 2021
+reserve
+premium
+reserve
+Retained
+Other
+127,239
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+Share
+capital
+Total equity
+attributable to
+(Amounts in million)
+for the year ended 31 December 2022
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+reserve
+Chief Financial Officer
+121,071
+55,850
+Proceeds from disposal of property, plant, equipment and other non-current assets
+5,363
+212
+Increase in time deposits with maturities over three months
+Decrease in time deposits with maturities over three months
+Interest received
+Investment and dividend income received
+(Payments of)/proceeds from other investing activities
+Net cash used in investing activities
+Financing activities
+Proceeds from bank and other loans
+Repayments of bank and other loans
+Contributions to subsidiaries from non-controlling interests
+Dividends paid by the Company
+Distributions by subsidiaries to non-controlling interests
+Interest paid
+27,062
+(90,562)
+86,975
+93,455
+8,929
+2,114
+1,992
+122
+Adjustment for accounting policy changes (Note 1(a))
+915,074
+140,892
+774,182
+354,480
+2,495
+117,000
+96,224
+(31,670)
+Shou Donghua
+shareholders
+156
+7,256
+7,817
+29
+Deferred tax liabilities
+166,407
+163,864
+31
+Lease liabilities
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+24,811
+30
+Loans from Sinopec Group Company and fellow subsidiaries
+85,706
+163,049
+Provisions
+30
+Non-current liabilities
+1,283,736
+1,377,620
+Total assets less current liabilities
+144,245
+112,641
+Net current liabilities
+667,385
+647,076
+4,725
+1,454
+178,146
+168,124
+35
+Long-term debts
+Other long-term liabilities
+22,255
+Equity
+667,704
+802,989
+787,600
+152,820
+151,942
+955,809
+683,640
+939,542
+Total non-current liabilities
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The notes on pages 161 to 212 form part of these consolidated financial statements.
+Total equity
+119,896
+Approved and authorised for issue by the board of directors on 22 March 2024.
+37
+119,349
+36
+48,269
+47,587
+14,983
+421,811
+344,194
+14,001
+939,542
+Share capital
+Reserves
+Total equity attributable to shareholders of the Company
+955,809
+Non-controlling interests
+(249)
+(Gain)/loss on foreign currency exchange rate changes and derivative financial instruments
+(Gain)/loss on disposal of property, plant, equipment and other non-current assets, net
+16,769
+18,069
+(6,828)
+(14,060)
+3,064
+(14,479)
+(829)
+(6,266)
+(2,995)
+(1,084)
+Impairment losses on assets
+8,772
+12,009
+Impairment reversals on trade and other receivables
+(243)
+213,905
+207,397
+Net changes from:
+Accounts receivable and other current assets
+(6,199)
+722
+6,416
+Financial Statements (International)
+113,750
+6,723
+3,974
+Financial Statements (International)
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2023
+(Amounts in million)
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+31 December
+2023
+RMB million
+31 December
+2022
+109,906
+RMB million
+Profit before taxation
+Adjustments for:
+Depreciation, depletion and amortisation
+Dry hole costs written off
+Share of profits from associates and joint ventures
+Investment income
+Interest income
+Interest expense
+83,934
+94,400
+Operating activities
+1,974
+Attributable to:
+Accounts payable and other current liabilities
+776,296
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+655,225
+121,071
+Share capital
+Reserves
+917,522
+332,162
+19,243
+43,525
+141,226
+Equity
+Other long-term liabilities
+Provisions
+7,171
+Deferred tax liabilities
+170,233
+Lease liabilities
+13,690
+Loans from Sinopec Group Company and fellow subsidiaries
+78,300
+Total non-current liabilities
+Long-term debts
+Total equity
+917,522
+In the Company's statement of financial position, investments in subsidiaries are stated at cost less impairment losses (Note 2(n)).
+The particulars of the Group's principal subsidiaries are set out in Note 42.
+When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting
+gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised
+at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (Note 2(j)) or, when appropriate, the
+cost on initial recognition of an investment in an associate or joint venture (Note 2(a)(ii)).
+If a business combination involving entities not under common control is achieved in stages, the acquisition date carrying value of the
+acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising
+from such remeasurement are recognised in the consolidated income statement.
+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.
+164 Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(a) Basis of consolidation
+Key assumptions and estimation made by management in the application of IFRS Accounting Standards that have significant effect on the
+consolidated financial statements and the major sources of estimation uncertainty are disclosed in Note 44.
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
+which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
+current and future periods.
+The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards 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.
+A number of new accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods
+and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future
+reporting periods and on foreseeable future transactions.
+(b) New and amended standards and interpretations not yet adopted by the Group
+Accounting policy changes (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION, BASIS OF PREPARATION AND ACCOUNTING POLICY CHANGES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2 MATERIAL ACCOUNTING POLICIES
+Non-current liabilities
+1,249,684
+Total assets less current liabilities
+Financial assets at fair value through other comprehensive income
+Inventories
+34,861
+Trade accounts receivable
+18,371
+Derivative financial assets
+113,399
+Time deposits with financial institutions
+108,590
+Cash and cash equivalents
+5,939
+1,332,940
+Long-term prepayments and other assets
+21,098
+Current assets
+Total non-current assets
+Deferred tax assets
+767
+Financial assets at fair value through other comprehensive income
+60,450
+148,729
+70,030
+207,433
+69,431
+Total current assets
+83,256
+641,280
+4,809
+239,688
+124,622
+215,640
+3,223
+2,873
+15,173
+35,252
+558,024
+Net current liabilities
+Total current liabilities
+Income tax payable
+Other payables
+Contract liabilities
+Trade accounts payable and bills payable
+Derivative financial liabilities
+Lease liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term debts
+Current liabilities
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 165
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+168
+Financial Statements (International)
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, trade accounts receivable and bills receivable arising from sale of goods or rendering services, without significant
+financing component, are initially recognised based on the transaction price expected to be entitled by the Group.
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: a) financial assets measured at amortised cost, b) financial assets measured at
+fair value through other comprehensive income ("FVOCI"), c) financial assets measured at fair value through profit or loss. A contractual
+cash flow characteristic which could have only a de minimis effect on the contractual cash flows of the financial assets, or could have an
+effect that is more than de minimis but is not genuine, does not affect the classification of the financial asset.
+(i) Classification and measurement
+Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating
+unit, or groups of cash-generating units, that is expected to benefit the synergies of the combination and is tested annually for impairment
+(Note 2(n)). In respect of associates or joint ventures, the carrying amount of goodwill is included in the carrying amount of the interest in the
+associate or joint venture and the investment as a whole is tested for impairment whenever there is objective evidence of impairment (Note 2(n)).
+(j) Financial assets
+Prior to 1 January 2008, the acquisition of the non-controlling interests of a consolidated subsidiary was accounted for using the acquisition
+method whereby the difference between the cost of acquisition and the fair value of the net identifiable assets acquired (on a proportionate
+share) was recognised as goodwill. From 1 January 2008, any difference between the amount by which the non-controlling interest is adjusted
+(such as through an acquisition of the non-controlling interests) and the cash or other considerations paid is recognised in equity.
+for the year ended 31 December 2023
+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.
+No depreciation is provided in respect of construction in progress.
+Construction in progress is transferred to property, plant and equipment when the asset is substantially ready for its intended use.
+Items may be produced while bringing an item of property, plant and equipment to the location and condition necessary for it to be capable of
+operating in the manner intended by management. The proceeds from selling any such items and the related costs are recognised in profit or
+loss.
+Construction in progress represents buildings, oil and gas properties, various plant and equipment under construction and pending installation,
+and is stated at cost less impairment losses (Note 2(n)). Cost comprises direct costs of construction as well as interest charges, and foreign
+exchange differences on related borrowed funds to the extent that they are regarded as an adjustment to interest charges, during the periods of
+construction.
+(h) Construction in progress
+Management estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into
+consideration the anticipated method of dismantlement required in accordance with the industry practices and the future cash flows are adjusted
+to reflect such risks specific to the liability, as appropriate. These estimated future dismantlement costs are discounted at pre-tax risk-free rate
+and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs of the oil and gas properties.
+The Group uses the successful efforts method of accounting for its oil and gas producing activities. Under this method, costs of development
+wells, the related supporting equipment and proved mineral interests in properties are capitalised. The cost of exploratory wells is initially
+capitalised as construction in progress pending determination of whether the well has found proved reserves. The impairment of exploratory well
+costs occurs upon the determination that the well has not found proved reserves. The exploratory well costs are usually not carried as an asset
+for more than one year following completion of drilling, unless (i) the well has found a sufficient quantity of reserves to justify its completion
+as a producing well if the required capital expenditure is made; (ii) drilling of the additional exploratory wells is under way or firmly planned
+for the near future; or (iii) other activities are being undertaken to sufficiently progress the assessing of the reserves and the economic and
+operating viability of the project. All other exploration costs, including geological and geophysical costs, other dry hole costs and annual lease
+rentals to explore for or use oil and natural gas, are expensed as incurred. Capitalised costs of proved oil and gas properties are amortised on a
+unit-of-production method based on volumes produced and reserves.
+(g) Oil and gas properties
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+(i) Goodwill
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+(j) Financial assets (Continued)
+(i) Classification and measurement (Continued)
+169
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+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
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For trade accounts receivable and bills receivable and financial assets at FVOCI related to revenue, the Group measures the loss allowance
+at an amount equal to lifetime ECLs.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+For financial instruments that have low credit risk at the date of the statement of financial position, the Group assumes that there is no
+significant increase in credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month ECLs.
+The Group measures the ECLs of financial instruments on different stages at each the date of the statement of financial position. For
+financial instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the
+loss allowance at an amount equal to 12-month ECLs. If there has been a significant increase in credit risk since the initial recognition
+of a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance at an amount
+equal to lifetime ECLs. If credit impairment has occurred since the initial recognition of a financial instrument, on third stage, the Group
+recognises a loss allowance at an amount equal to lifetime ECLs.
+The Group measures and recognises ECLs, considering reasonable and supportable information about the relevant past events, current
+conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for ECLs on a financial asset that is measured at amortised cost and a debt instrument that is
+measured at FVOCI.
+(ii) Impairment
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at FVOCI, are presented
+in financial assets at FVOCI. The relevant dividends of these financial assets are recognised in profit or loss. When derecognised, the
+cumulative gain or loss previously recognised in other comprehensive income is transferred to retained earnings.
+Equity instruments that the Group has no power to control, jointly control or exercise significant influence over, are measured at fair value
+through profit or loss and presented in financial assets at fair value through profit or loss.
+Equity instruments
+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.
+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.
+Debt instruments held by the Group mainly includes cash and cash equivalents, time deposits with financial institutions, receivables.
+These financial assets are measured at amortised cost and FVOCI.
+•
+Debt instruments
+for the year ended 31 December 2023
+Interest in joint ventures
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 167
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+166
+Financial Statements (International)
+A uniform set of accounting policies is adopted by those entities. All intra-group transactions, balances and unrealised gains on
+transactions between combining entities or businesses are eliminated on consolidation. Transaction costs, including professional fees,
+registration fees, costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously
+separate businesses, etc., incurred in relation to the common control combination that is to be accounted for by using merger accounting
+is recognised as an expense in the period in which it is incurred.
+The consolidated income statement includes the results of each of the combining entities or businesses from the earliest date presented
+or since the date when the combining entities or businesses first came under the common control, where there is a shorter period,
+regardless of the date of the common control combination. The comparative amounts in the consolidated financial statements are
+presented as if the entities or businesses had been combined at the beginning of the earliest period presented or when they first came
+under common control, whichever is shorter.
+The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common
+control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the
+control of the controlling party. The net assets of the combining entities or businesses are combined using the existing book values from
+the controlling parties' perspective. No amount is recognised as consideration for goodwill or excess of acquirers' interest in the net fair
+value of acquiree's identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the
+extent of the continuation of the controlling party's interest.
+(iv) Merger accounting for common control combination
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+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.
+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.
+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.
+The Group's share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in the
+consolidated income statement, whereas the Group's share of the post-acquisition, post-tax items of the investees' other comprehensive
+income is recognised in the consolidated statement of comprehensive income.
+Investments in associates and joint ventures are accounted for in the consolidated and separate financial statements using the equity
+method from the date that significant influence or joint control commences until the date that significant influence or joint control ceases.
+Under the equity method, the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the
+Group's share of the investee's net assets and any impairment loss relating to the investment (Note 2(n)).
+The investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
+obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the
+parties that have joint control of the arrangement have rights to the net assets of the arrangement.
+An associate is an entity, not being a subsidiary, in which the Group exercises significant influence over its management. Significant
+influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over
+those policies.
+(ii) Associates and joint ventures
+(a) Basis of consolidation (Continued)
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+(iii)Transactions eliminated on consolidation
+(b) Translation of foreign currencies
+The presentation currency of the Group is Renminbi. Foreign currency transactions during the year are translated into Renminbi at the applicable
+rates of exchange quoted by the People's Bank of China ("PBOC") prevailing on the transaction dates. Foreign currency monetary assets and
+liabilities are translated into Renminbi at the PBOC's rates at the date of the statement of financial position.
+Exchange differences, other than those capitalised as construction in progress, are recognised as income or expense in the "finance costs"
+section of the consolidated income statement.
+Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis
+between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reassessed annually.
+3%
+3%
+residuals rate
+usage period
+12 to 50 years
+4 to 30 years
+Estimated
+Estimated
+Equipment, machinery and others
+Plants and buildings
+Depreciation is provided to write off the cost amount of items of property, plant and equipment, other than oil and gas properties, over its
+estimated useful life on a straight-line basis, after taking into account its estimated residual value, as follows:
+Gains or losses arising from the retirement or disposal of an item of property, plant and equipment, other than oil and gas properties, are
+determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised as income or expense
+in the consolidated income statement on the date of retirement or disposal.
+An item of property, plant and equipment is initially recorded at cost, less accumulated depreciation and impairment losses (Note 2(n)). The cost
+of an asset comprises its purchase price, any directly attributable costs of bringing the asset to working condition and location for its intended
+use. The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when
+that cost is incurred, when it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the
+item can be measured reliably. All other expenditure is recognised as an expense in the consolidated income statement in the year in which it is
+incurred.
+(f) Property, plant and equipment
+Inventories are stated at the lower of cost and net realisable value. Cost mainly includes the cost of purchase computed using the weighted
+average method and, in the case of work in progress and finished goods, direct labour and an appropriate proportion of production overheads.
+Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated
+costs necessary to make the sale.
+(e) Inventories
+Trade, bills and other receivables are recognised initially at their transaction price, unless they contain significant financing components when
+they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less 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.
+(d) Trade, bills and other receivables
+Cash equivalents consist of time deposits with financial institutions with an initial term of less than three months when purchased. Cash
+equivalents are stated at cost, which approximates fair value.
+(c) Cash and cash equivalents
+On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from
+equity to the consolidated income statement when the profit or loss on disposal is recognised.
+The results of foreign operations are translated into Renminbi at the applicable rates quoted by the PBOC prevailing on the transaction dates.
+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.
+Financial Statements (International)
+Interest in associates
+Goodwill
+8,594
+Income tax expense
+Profit before taxation
+856
+76,499
+The effects of the above changes in accounting policies on each item of the consolidated income statement for the year ended 31 December
+2022 are summarised as follows:
+917,522
+2,448
+939,542
+3,304
+The effects of the exemption of initial recognition not applicable to the deferred
+tax relating to assets and liabilities arising out of a single transaction
+Profit for the year or equity after adjustments
+Profit for the year
+1 January
+2022
+RMB million
+915,074
+75,643
+Profit for the year or equity before adjustments
+2022
+RMB million
+Equity as of
+Equity as of
+31 December
+the year ended
+31 December
+Profit for
+The effects of the above changes in accounting policies on the profit for the year ended 31 December 2022 and equity at the beginning and
+the end of 2022 are summarised as follows:
+(ii) The effects on the comparative financial statements
+2022
+RMB million
+936,238
+Attributable to :
+Shareholders of the Company
+Non-controlling interests
+75,643
+9,566
+76
+9,490
+66,933
+780
+66,153
+76,499
+856
+75,643
+94,400
+(17,901)
+2022 after
+adjustment
+RMB million
+Year ended
+31 December
+856
+Adjusted
+amount
+RMB million
+31 December
+2022 before
+adjustment
+RMB million
+94,400
+(18,757)
+Year ended
+Diluted earnings per share (RMB/Share)
+Basic earnings per share (RMB/Share)
+Earnings per share:
+Profit for the year
+(a) New and amended standards and interpretations adopted by the Group (Continued)
+856
+1 PRINCIPAL ACTIVITIES, ORGANISATION, BASIS OF PREPARATION AND ACCOUNTING POLICY CHANGES (Continued)
+Accounting policy changes (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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, BASIS OF PREPARATION AND ACCOUNTING POLICY CHANGES
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+160
+The notes on pages 161 to 212 form part of these consolidated financial statements.
+116,269
+Organisation
+161,475
+(14,189)
+133,587
+175,664
+(30,363)
+(29,489)
+(45,421)
+(12,726)
+Net cash generated from operating activities
+Income tax paid
+(17,318)
+The Company was established in the PRC on 25 February 2000 as a joint stock limited company as part of the reorganisation (the "Reorganisation")
+of China Petrochemical Corporation ("Sinopec Group Company"), the ultimate holding company of the Group and a ministry-level enterprise under
+the direct supervision of the State Council of the PRC. Prior to the incorporation of the Company, the oil and gas and chemical operations of the
+Group were carried on by oil administration bureaux, petrochemical and refining production enterprises and sales and marketing companies of
+Sinopec Group Company.
+As part of the Reorganisation, certain of Sinopec Group Company's core oil and gas and chemical operations and businesses together with the
+related assets and liabilities were transferred to the Company. On 25 February 2000, in consideration for Sinopec Group Company transferring such
+oil and gas and chemical operations and businesses and the related assets and liabilities to the Company, the Company issued 68.8 billion domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Sinopec Group Company. The shares issued to Sinopec Group Company on 25
+February 2000 represented the entire registered and issued share capital of the Company on that date. The oil and gas and chemical operations and
+businesses transferred to the Company were related to (i) the exploration, development and production of crude oil and natural gas, (ii) the refining,
+transportation, storage and marketing of crude oil and petroleum products, and (iii) the production and sales of chemicals.
+Basis of preparation
+Financial Statements (International)
+Financial Statements (International)
+161
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+The International Accounting Standards Board has amended IAS 12 and the scope of the exemption in paragraphs 15 and 24 of the previous
+standard is amended to “accounting treatment of deferred tax related to assets and liabilities arising from a single transaction for which
+initial recognition exemption does not apply", therefore, the Group needs to recognise deferred tax assets and deferred tax liabilities for
+temporary differences arising from these transactions. The amendment is effective for annual reporting periods beginning on or after 1
+January 2023, with earlier application permitted. The Group applies the amendments to transactions occurring on or after the beginning of
+the earliest comparative period listed, with any cumulative effect recognised as an adjustment to retained earnings and other related financial
+statement items at that date.
+(i) Accounting treatment of deferred tax related to assets and liabilities arising from a single transaction for which initial recognition
+exemption does not apply.
+Amendment to IAS 12, Deferred tax related to assets and liabilities arising from a single transaction:
+The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period. The adoption of the
+above amended IFRS Accounting Standards does not have a material impact on the Group except as discussed below:
+Amendment to IAS 12, International tax reform-Pillar two model rules
+•
+Amendment to IAS 12, Deferred tax related to assets and liabilities arising from a single transaction
+•
+Amendment to IAS 8, Accounting policies changes in accounting estimates and errors: Definition of accounting estimates
+•
+Amendment to IAS 1, Presentation of financial statements and IFRS Accounting Standards Practice Statement 2, Making materiality
+judgements: Disclosure of accounting policies
+•
+The IASB has issued the following amendments to IFRS Accounting Standards 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.
+Accounting policy changes
+The accompanying consolidated financial statements have been prepared in accordance with all applicable IFRS Accounting Standards as issued by
+the International Accounting Standards Board ("IASB"). IFRS Accounting Standards 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 material accounting policies adopted by the Group are set out
+in Note 2.
+for the year ended 31 December 2023
+Inventories
+76,499
+0.007
+0.007
+787,600
+2,894
+784,706
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+667,704
+2,894
+664,810
+Reserves
+Equity
+151,532
+344,194
+345,017
+Total non-current liabilities
+7,256
+(823)
+8,079
+1,283,736
+2,481
+1,281,255
+144,245
+(823)
+410
+151,942
+Total equity
+268,408
+155,939
+598,925
+Right-of-use assets
+Construction in progress
+Property, plant and equipment, net
+Non-current assets
+1 January
+2022
+RMB million
+(iii)After retrospective adjustment of the above accounting policy changes, the consolidated statement of financial position as at 1 January
+2022 is as follows:
+(a) New and amended standards and interpretations adopted by the Group (Continued)
+Accounting policy changes (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION, BASIS OF PREPARATION AND ACCOUNTING POLICY CHANGES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+163
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+939,542
+3,304
+936,238
+144,245
+0.547
+0.547
+667,385
+523,140
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+12,269
+76
+12,193
+86,059
+780
+85,279
+2022 after
+adjustment
+RMB million
+98,328
+1 PRINCIPAL ACTIVITIES, ORGANISATION, BASIS OF PREPARATION AND ACCOUNTING POLICY CHANGES (Continued)
+Accounting policy changes (Continued)
+Year ended
+31 December
+Adjusted
+amount
+RMB million
+31 December
+2022 before
+adjustment
+RMB million
+97,472
+Year ended
+162 Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shareholders of the Company
+Non-controlling interests
+Total comprehensive income for the year
+The effects of the above changes in accounting policies on each item of the consolidated statement of comprehensive income for the year
+ended 31 December 2022 are summarised as follows:
+0.554
+0.554
+856
+(a) New and amended standards and interpretations adopted by the Group (Continued)
+(ii) The effects on the comparative financial statements (Continued)
+The effects of the above changes in accounting policies on each item of the consolidated statement of financial position as at 31 December
+2022 are summarised as follows:
+523,140
+1,427,981
+2,481
+22,433
+2,481
+19,952
+1,425,500
+Deferred tax liabilities
+Non-current liabilities:
+Total assets less current liabilities
+Net current liabilities
+Total current liabilities
+Total current assets
+Total non-current assets
+Deferred tax assets
+Non-current assets:
+2022 after
+adjustment
+RMB million
+Adjusted
+amount
+RMB million
+31 December
+31 December
+2022 before
+adjustment
+RMB million
+As of
+As of
+667,385
+Prepaid expenses and other current assets
+Cai Hongbin
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+1,374
+(850)
+(399)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised and temporary differences
+(128)
+(846)
+Effect of income taxes at foreign operations
+(3,091)
+(3,117)
+Tax effect of preferential tax rate (i)
+(5,827)
+(3,577)
+Tax effect of non-taxable income
+3,653
+2,243
+3,049
+23,600
+20,984
+Expected PRC income tax expense at a statutory tax rate of 25%
+94,400
+83,934
+Profit before taxation
+RMB million
+RMB million
+2022
+2023
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+17,901
+16,070
+862
+Tax effect of non-deductible expenses
+2,442
+Write-down of deferred tax assets
+Adjustment of prior years
+(v) Mr. Qiu Fasen was elected to be supervisor from 18 May 2022; Mr. Wu Bo was elected to be supervisor from 18 May 2022; Mr. Zhai Yalin was elected to be
+supervisor from 18 May 2022.
+(vi) Due to change of working arrangement, Mr. Jiang Zhenying has tendered his resignation as supervisor from 18 May 2022.
+(vii) Mr. Li Defang ceased being supervisor from 18 May 2022. Mr. Lv Dapeng ceased being supervisor from 18 May 2022.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+179
+Financial Statements (International)
+Lv Lianggong(iii)
+Liu Hongbin(ii)
+Li Yonglin
+Ling Yiqun(i)
+Yu Baocai
+Zhao Dong
+Ma Yongsheng
+Directors
+Name
+72
+The emoluments of every director and supervisor is set out below:
+Independent non-executive directors
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+177
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+rate of 15%. According to Announcement [2020] No. 23 of the MOF "Announcement of the MOF, the State Taxation Administration and the National Development and
+Reform Commission on continuation of the income tax policy of western development enterprises", the preferential tax rate of 15% extends from 1 January 2021 to 31
+December 2030.
+(i) 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
+Note:
+17,901
+58
+(1,757)
+(1,470)
+16,070
+Actual income tax expense
+(a) Directors' and supervisors' emoluments
+(1,757)
+(1,470)
+18,796
+2022
+RMB million
+RMB million
+9,807
+2023
+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 36)
+Interest expense on lease liabilities
+Less: Interest expense capitalised*
+Interest expense incurred
+9 INTEREST EXPENSE
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+7,877
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(ii) Impairment losses on long-lived assets for the year ended 31 December 2023 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB887 million (2022: RMB2,891 million), the chemicals segment of RMB1,280 million (2022: RMB1,790 million), the refining segment of
+RMB191 million (2022: RMB2 million), and the marketing and distribution segment of RMB278 million (2022: RMB415 million). The impairment losses in the E&P
+segment were mainly the impairment losses of properties, plant and equipment relating to oil and gas producing activities. The primary factors resulting in the E&P
+segment impairment loss were downward revision of oil and gas reserve in certain fields and high extraction cost. E&P segment determines recoverable amounts of
+properties, plant and equipment relating to oil and gas producing activities, which include significant judgments and assumptions. The Group determines the crude
+oil and natural gas production for the forecast period and the number of years in the forecast period for impairment assessment based on the results of proved
+reserves. Meanwhile, the Group determines the sales prices of crude oil and natural gas for the forecast period, taking into account the analysis of the domestic and
+international economic situation as well as the relationship between energy supply and demand. 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 7.86% to 15.94% (2022: 8.17% to 14.86%). Further future downward revisions to
+the Group's oil or nature gas price outlook would lead to further impairments which, in aggregate, are likely to be material. It is estimated that a general decrease of
+5% in oil price, with all other variables held constant, would result in additional impairment loss on the Group's properties, plant and equipment relating to oil and
+nature gas producing activities by approximately RMB1,418 million (2022: RMB1,693 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 RMB634 million (2022: RMB1,508 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 RMB8 million (2022:
+RMB126 million). The impairment provisions for the chemical and refining divisions are related to the refining and chemical production equipment, mainly due to
+individual production units being shut down due to sustained lower than expected economic performance or having a clear shutdown plan in place, resulting in their
+book value being written down to their recoverable amount. The recoverable amount mainly considers the profit forecast approved by the management for a five-year
+period, which refers to the historical operating performance of relevant refining and chemical production facilities and is adjusted according to the development trends
+of the refining and chemical industry. The predicted cash flow after five years will remain stable, and the pre tax discount rate is calculated based on the weighted
+average cost of capital, which is 10.30%-16.50% (2022: 7.64%-18.68%).
+(i) Government grants for the years ended 31 December 2023 and 2022 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.
+(14,779)
+9,100
+(1,389)
+222
+(447)
+(310)
+(39)
+(43)
+(722)
+2,995
+(5,669)
+(2,636)
+176
+(1,788)
+(1,307)
+8,019
+15,098
+Deferred taxation (Note 29)
+- Adjustment of prior years
+- Provision for the year
+Current tax
+2022
+RMB million
+2023
+RMB million
+Income tax expense in the consolidated income statement represents:
+11 INCOME TAX EXPENSE
+Note:
+14,060
+829
+230
+516
+76
+10
+13,754
+6,570
+8,951
+9,096
+1,099
+1,103
+18,069
+(iv) Mr. Zhang Zhiguo ceased being supervisor from 19 May 2023.
+16,769
+1.89% to 4.25%
+2023
+2022
+RMB million
+RMB million
+303
+1.70% to 4.25%
+(15,535)
+(iii) Mr. Lv Lianggong was elected to be supervisor from 18 May 2022; Due to change of working arrangement, Mr. Lv Lianggong has tendered his resignation as
+supervisor on 17 October 2022. Mr. Lv Lianggong was elected to be director from 30 May 2023.
+(i) Mr. Ling Yiqun ceased being director from 26 April 2023.
+97
+1,001
+Guo Hongjin
+372
+1,072
+121
+1,565
+Chen Yaohuan
+384
+1,045
+121
+1,550
+Total
+1,582
+503
+3,375
+1,800
+7,269
+178
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+(a) Directors' and supervisors' emoluments (Continued)
+The emoluments of every director and supervisor is set out below: (Continued)
+Name
+Directors
+Ma Yongsheng
+Zhao Dong
+Yu Baocai
+512
+Ling Yiqun
+401
+450
+Johnny Karling Ng
+Shi Dan
+Bi Mingjian
+Supervisors
+Zhang Shaofeng
+Qiu Fasen
+Zhang Zhiguo(iv)
+Wu Bo
+Zhai Yalin
+Yin Zhaolin
+Emoluments paid or receivable in respect of
+director's other services in connection with
+the management of the affairs of the Company
+or its subsidiary undertaking
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+Salaries,
+allowances and
+benefits in kind
+RMB'000
+450
+Bonuses
+RMB'000
+Directors'/
+Supervisors' fee
+RMB'000
+Total
+RMB'000
+317 675 131 - 1
+1,123
+108
+80
+42
+230
+450
+450
+450
+450
+450
+450
+2023
+Retirement
+scheme
+contributions
+RMB'000
+Li Yonglin
+Liu Hongbin
+Independent non-executive directors
+450
+450
+450
+450
+450
+237
+140
+58
+356
+1,119
+113
+155
+858
+44
+450
+||||1110034
+1,588
+1,057
+31
+140
+9
+180
+375
+1,750
+1,196
+113
+1,684
+5,749
+566
+1,800
+9,865
+435
+450
+450
+1,416
+Cai Hongbin
+Johnny Karling Ng
+Shi Dan
+Bi Mingjian
+Supervisors
+Zhang Shaofeng
+Qiu Fasen(v)
+Jiang Zhenying(vi)
+Lv Lianggong(iii)
+Zhang Zhiguo(iv)
+Wu Bo(v)
+Zhai Yalin(v)
+Yin Zhaolin
+Guo Hongjin
+Li Defang(vii)
+Lv Dapeng(vii)
+Chen Yaohuan
+Total
+Notes:
+Emoluments paid or receivable in respect of
+director's other services in connection with
+the management of the affairs of the Company
+or its subsidiary undertaking
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+113
+1,005
+298
+1,705
+116
+1,291
+(ii) Mr. Liu Hongbin ceased being director from 16 May 2023.
+298
+Supervisors' fee
+RMB'000
+Directors'/
+2022
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+benefits in kind
+RMB'000
+Salaries,
+allowances and
+Total
+RMB'000
+(4,744)
+(i) The Company and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. ("Gaoqiao Petrochemical") and INEOS Investment (Shanghai) Company Limited ("INEOS
+Shanghai") entered into an equity transfer agreement on 28 July 2022. According to the agreement, the Company and Gaoqiao Petrochemical transferred 15% and
+35% equity interests in Shanghai SECCO Petrochemical Co., Ltd. ("Shanghai SECCO") to INEOS Shanghai respectively at a total consideration of RMB10,863 million.
+The above transactions were considered and approved by the 10th Session of 8th Directorate Meeting of the Company. The transactions were completed on 28
+December 2022 and the Company lost control over Shanghai SECCO. The Group accounted for its remaining 50% equity interest retained in Shanghai SECCO, at
+fair value upon initial recognition, as an interest in a joint venture from the date when control was lost. The investment income from disposal of Shanghai SECCO is
+RMB13,697 million.
+2,029
+Research and development expenditures that cannot be capitalised are expensed in the period in which they are incurred. Research and
+development expense amounted to RMB13,969 million for the year ended 31 December 2023 (2022: RMB12,773 million).
+(w) Research and development expense
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+Liabilities related to future remediation costs are recorded when environmental assessments and/or cleanups are probable and the costs can
+be reliably estimated. As facts concerning environmental contingencies become known to the Group, the Group reassesses its position both with
+respect to accrued liabilities and other potential exposures.
+(v) Environmental expenditures
+Repairs and maintenance expenditure is expensed as incurred.
+(u) Repairs and maintenance expenditure
+Borrowing costs are expensed in the consolidated income statement in the period in which they are incurred, except to the extent that they are
+capitalised as being attributable to the construction of an asset which necessarily takes a period of time to get ready for its intended use.
+(t) Borrowing costs
+Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are
+recognised to profit or loss on a straight-line basis over the expected lives of the related assets.
+Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs
+that they are intended to compensate.
+Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the
+Group will comply with all attached conditions.
+(s) Government grants
+The Group reserves the right to determine the price of the products it trades at its own discretion.
+The Group assumes the inventory risk of the goods before or after the transfer of the goods;
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+The Group bears the primary responsibility for the transfer of goods to customers;
+In determining whether the Group has control over the goods before the transfer of the goods to the customer, the Group takes into account all
+relevant facts and circumstances, including:
+After the Group acquires control of a product from a third party, it transfers the product to a customer by integrating the product with other
+products into a combination of products through the provision of significant services;
+The Group is able to lead third parties to provide services to customers on behalf of the Group;
+The Group acquires control of the goods or other assets from a third party and then transfers them to the customer;
+-
+(255)
+The Group determines whether it is a principal or an agent, based on whether it obtains control of the specified good or service before that
+good or service is transferred to a customer. The Group is a principal if it controls the specified good or service before that good or service is
+transferred to a customer, and recognises revenue in the gross amount of consideration which it has received (or which is receivable). Otherwise,
+the Group is an agent, and recognises revenue in the amount of any fee or commission to which it expects to be entitled. The fee or commission
+is the net amount of consideration that the Group retains after paying the other party the consideration, or is determined according to the
+established amount or proportion.
+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
+(r) Revenue recognition (Continued)
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+-
+173
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Revenue from primary business mainly represents revenue from the sales of refined petroleum products, chemical products, crude oil and natural
+gas, which are recognised at a point in time.
+3 REVENUE FROM PRIMARY BUSINESS
+Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the
+financial information provided regularly to the Group's chief operating decision maker for the purposes of allocating resources to, and
+assessing the performance of the Group's various lines of business.
+(bb) Segment reporting
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the date of
+statement of financial position, are not recognised as a liability at the date of statement of financial position and are separately disclosed in
+the notes to the financial statements. Dividends are recognised as a liability in the period in which they are declared.
+(aa) Dividends
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 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.
+for the year ended 31 December 2023
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+(x) Leases
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(i) As lessee
+The Group recognises a right-of-use asset at the date at which the leased asset is available for use by the Group, and recognises a lease
+liability measured at the present value of the remaining lease payments. The lease payments include fixed payments, the exercise price of
+a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease
+term reflects the Group exercising that option, etc. Variable payments that are based on a percentage of sales are not included in the lease
+payments, and should be recognised in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from the
+date of the statement of financial position is presented in current liabilities.
+172
+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.
+A lessee shall account for a lease modification as a separate lease if both: (1) the modification increases the scope of the lease by adding
+the right to use one or more underlying assets; and (2) the consideration for the lease increases by an amount commensurate with the stand-
+alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the articular
+contract.
+For a lease modification that is not accounted for as a separate lease, except for the practical expedient which applies only to rent
+concessions occurring as a direct consequence of the COVID-19 pandemic, the Group determine the lease term of the modified lease at the
+effective date of the modification, and remeasure the lease liability by discounting the revised lease payments using a revised discount rate.
+The Group decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications
+that decrease the scope or shorten the term of the lease, and shall recognise in profit or loss any gain or loss relating to the partial or full
+termination of the lease. The Group make a corresponding adjustment to the right-of-use asset for all other lease modifications.
+(ii) As lessor
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+(y) Employee benefits
+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.
+Gasoline
+Financial Statements (International)
+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.
+Cash flow hedges
+(m)Derivative financial instruments and hedge accounting (Continued)
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+170
+Financial Statements (International)
+(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.
+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.
+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.
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities or
+discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or loss.
+(I) Determination of fair value for financial instruments
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including trade accounts payable and bills payable,
+other payables, and loans, etc. These financial liabilities are initially measured at the amount of their fair value after deducting transaction costs
+and use the effective interest rate method for subsequent measurement.
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or financial
+liabilities at fair value through profit or loss.
+(k) Financial liabilities
+The Group monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
+guarantees are determined to be higher than the carrying amount in respect of the guarantees (i.e. the amount initially recognised, less
+accumulated amortisation).
+Subsequent to initial recognition, the amount initially recognised as deferred income is amortised in profit or loss over the term of the
+guarantee as income from financial guarantees issued.
+Financial guarantees issued are initially recognised at fair value, which is determined by reference to fees charged in an arm's length
+transaction for similar services, when such information is obtainable, or to interest rate differentials, by comparing the actual rates
+charged by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees
+not been available, where reliable estimates of such information can be made. Where consideration is received or receivable for the
+issuance of the guarantee, the consideration is recognised in accordance with the Group's policies applicable to that category of asset.
+Where no such consideration is received or receivable, an immediate expense is recognised in profit or loss.
+Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of
+the guarantee (the "holder") for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with
+the terms of a debt instrument.
+(iv) Financial guarantees issued
+(j) Financial assets (Continued)
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(m)Derivative financial instruments and hedge accounting
+As long as a cash flow hedge meets the qualifying criteria for hedge accounting, the separate component of equity associated with the hedged
+item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts):
+(i) The cumulative gain or loss on the hedging instrument from inception of the hedge; and
+(ii) The cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged
+expected future cash flows) from inception of the hedge.
+(r) Revenue recognition
+An onerous contract exists when the Group has a contract under which the unavoidable costs of meeting the obligations under the contract
+exceed the economic benefits expected to be received from the contract. Provisions for onerous contracts are measured at the present value
+of the lower of the expected cost of terminating the contract and the net cost of continuing with the fulfilling the contract. The cost of fulfilling
+the contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling that
+contract.
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+cost, is reflected as an adjustment to the provision and oil and gas properties.
+Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, a separate asset is recognised
+for any expected reimbursement that would be virtually certain. The amount recognised for the reimbursement is limited to the carrying amount
+of the provision.
+A provision is recognised for liability of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a
+past event, when it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made.
+When it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is
+disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only
+be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability
+of outflow of economic benefits is remote.
+(q) Provisions and contingent liability
+Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
+interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the
+consolidated income statement over the period of borrowings using the effective interest method.
+(p) Interest-bearing borrowings
+Trade, bills and other payables generally are financial liabilities and are initially recognised at fair value and thereafter stated at amortised cost
+unless the effect of discounting would be immaterial, in which case they are stated at invoice amounts.
+(o) Trade, bills and other payables
+Management assesses at each date of the statement of financial position whether there is any indication that an impairment loss recognised
+for an asset, except in the case of goodwill, in prior years may no longer exist. An impairment loss is reversed if there has been a favourable
+change in the estimates used to determine the recoverable amount. A subsequent increase in the recoverable amount of an asset, when the
+circumstances and events that led to the write-down or write-off cease to exist, is recognised as an income. The reversal is reduced by the
+amount that would have been recognised as depreciation had the write-down or write-off not occurred. An impairment loss in respect of goodwill
+is not reversed.
+The amount of the reduction is recognised as an expense in the consolidated income statement. Impairment losses recognised in respect of
+cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to reduce
+the carrying amount of the other assets in the unit on a pro rata basis, except that the carrying value of an asset will not be reduced below its
+individual fair value less costs to disposal, or value in use, if determinable.
+(n) Impairment of assets (Continued)
+2 MATERIAL ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast
+transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the
+entity removes that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or
+the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+For cash flow hedges, other than those covered by the preceding policy statements, that amount is reclassified from the cash flow hedge reserve
+to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit
+or loss.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss will not
+be recovered in one or more future periods, the Group immediately reclassifies the amount that is not expected to be recovered into profit or
+loss.
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (i.e. the
+entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised, or there is no
+longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value
+changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the Group discontinues prospectively
+the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that amount remains in the cash flow hedge
+reserve and is accounted for as cash flow hedges. If the hedged future cash flows are no longer expected to occur, that amount is immediately
+reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment. A hedged future cash flow that is no longer highly
+probable to occur may still be expected to occur, if the hedged future cash flows are still expected to occur, that amount remains in the cash
+flow hedge reserve and is accounted for as cash flow hedges.
+Fair value hedges
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+goods or services (assets), the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has
+a present right to payment for the assets; the Group has transferred physical possession of the assets to the customer; the customer has the
+significant risks and rewards of ownership of the assets; the customer has accepted the assets.
+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.
+Any adjustment to the carrying amount of a hedged item is amortised to profit or loss if the hedged item is a financial instrument (or a
+component thereof) measured at amortised cost. The amortisation is based on a recalculated effective interest rate at the date that amortisation
+begins.
+(n) Impairment of assets
+The carrying amounts of assets, including property, plant and equipment, construction in progress, right-of-use assets and other assets, are
+reviewed at each date of the statement of financial position to identify indicators that the assets may be impaired. These assets are tested for
+impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a
+decline has occurred, the carrying amount is reduced to the recoverable amount. For goodwill, the recoverable amount is estimated at each date
+of the statement of financial position.
+The recoverable amount is the greater of the fair value less costs to disposal and the value in use. In determining the value in use, expected
+future cash flows generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market
+assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent
+of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e.
+a cash-generating unit).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+171
+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.
+Diesel
+The circumstances in which the Group is able to control the goods before transferring them to customers include:
+Chemical feedstock
+5,248
+7,412
+8,752
+8,230
+12,337
+12,847
+13,874
+6,223
+17,081
+17,478
+206,838
+RMB million
+RMB million
+215,483
+2022
+5,109
+2023
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Notes:
+Others
+Levy for mineral rights concessions ()
+Resources tax
+Education surcharge (ii)
+City construction tax (ii)
+Special oil income levy
+Consumption tax (i)
+7 TAXES OTHER THAN INCOME TAX
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+175
+Products
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+272,921
+Gasoline
+9,277
+11,587
+RMB million
+RMB million
+2022
+2023
+Notes:
+Others
+Crude oil
+Gain/(loss) on disposal of property, plant, equipment and other non-current assets, net
+Fines, penalties and compensations
+Net realised and unrealised loss on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (ii)
+Ineffective portion of change in fair value of cash flow hedges
+Government grants (i)
+OTHER OPERATING INCOME/(EXPENSES), NET
+263,991
+8
+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.
+Jet fuel oil
+Fuel oil
+Lubricant oil
+Solvent oil
+Naphtha
+Diesel
+1,495.20
+13,190
+103,585
+Donations
+13,932
+38,039
+517,183
+412,488
+743,551
+722,307
+796,667
+861,453
+RMB million
+RMB million
+2022
+2023
+Contributions to retirement schemes (Note 40)
+Salaries, wages and other benefits
+6 PERSONNEL EXPENSES
+- Others
+- Audit services
+Auditor's remuneration:
+108,017
+Basic organic chemicals
+Synthetic resin
+Kerosene
+Natural gas
+Others (i)
+42,785
+Note:
+4
+OTHER OPERATING REVENUES
+Sale of materials and others
+Rental income
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+The following items are included in selling, general and administrative expenses:
+Variable lease payments, low-value and short-term lease payment
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products.
+210,216
+Synthetic fiber monomers and polymers
+132,625
+90,395
+223,679
+94,085
+RMB million
+2022
+2023
+3
+7
+66
+71
+2,205
+2022
+RMB million
+RMB million
+2,344
+2023
+59,590
+1,222
+60,812
+RMB million
+63,990
+1,352
+65,342
+168,017
+83,853
+34,059
+45,335
+439,549
+3,146,873
+79,681
+491,762
+2022
+RMB million
+144,524
+RMB million
+216,456
+2023
+3,257,356
+52,668
+Within one year
+31 December
+Between two and three years
+The ageing analysis of trade accounts receivable (net of loss allowance for expected credit losses) is as follows:
+46,364
+48,652
+(4,079)
+(4,016)
+50,443
+Between one and two years
+31 December
+2023
+RMB million
+40,588
+6,318
+7,261
+5,762
+38,942
+RMB million
+2022
+31 December
+RMB million
+31 December
+2023
+Less: Loss allowance for expected credit losses
+Over three years
+Amounts due from associates and joint ventures
+Amounts due from Sinopec Group Company and fellow subsidiaries
+4,240
+Loss allowance for expected credit losses are analysed as follows:
+46,364
+Provision for the year
+4,016
+Amounts due from third parties
+239
+64
+(49)
+(68)
+(561)
+(372)
+417
+313
+4,033
+4,079
+Balance at 1 January
+2022
+RMB million
+48,652
+85
+132
+88
+54
+152
+46,039
+48,187
+279
+2022
+RMB million
+Balance at 31 December
+Written off for the year
+Others
+Written back for the year
+2023
+RMB million
+25 TRADE ACCOUNTS RECEIVABLE
+(369)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2,301
+2,250
+24,077
+26,121
+54,130
+54,186
+(541)
+(543)
+880
+53,791
+54,130
+599
+24 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+(257)
+Net book value 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
+2022
+RMB million
+4,079
+Balance at 31 December
+28,002
+26,121
+26,184
+Financial Statements (International)
+Financial Statements (International)
+187
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+7,313
+19,335
+7,066
+247
+2,187
+17,148
+1,768
+984
+2,752
+6,838
+9,721
+2,883
+of liabilities
+of assets
+Fair value
+Fair value
+Fair value
+of liabilities
+of assets
+Fair value
+31 December 2023
+Other derivatives
+Cash flow hedge instruments
+RMB Million
+31 December 2022
+RMB Million
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 43.
+28,009
+for the year ended 31 December 2023
+As at 31 December 2023, the carrying amount of accounts receivable under factoring arrangement that are derecognised is RMB12,767 million.
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+Sinopec Group Company and fellow subsidiaries are repayable under the same terms.
+RMB million
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 43.
+(736)
+(22,341)
+(1,142)
+(26,669)
+85
+21,536
+17,965
+Property, plant and equipment
+(17)
+(20)
+2022
+RMB million
+2023
+RMB million
+31 December
+31 December
+Deferred tax liabilities
+Tax losses carried forward
+31 December
+2022
+RMB million
+4,271
+3,091
+Cash flow hedges
+Payables
+Receivables and inventories
+RMB million
+31 December
+2023
+Deferred tax assets
+64,639
+4,017
+25,355
+7,956
+27,311
+31 December
+2022
+RMB million
+3,721
+2,715
+16
+9,036
+Financial assets at fair value through other comprehensive income
+Intangible 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.
+As at 31 December 2023, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB24,783
+million (2022: RMB21,268 million), of which RMB5,496 million (2022: RMB8,972 million) was incurred for the year ended 31 December 2023,
+because it was not probable that the future taxable profits will be available. These deductible losses carried forward of RMB1,656 million, RMB3,349
+million, RMB5,310 million, RMB8,972 million and RMB5,496 million, will expire in 2024, 2025, 2026, 2027,2028 and after, respectively.
+7,256
+2022
+RMB million
+22,433
+31 December
+31 December
+2023
+RMB million
+20,110
+7,817
+Deferred tax assets
+Deferred tax liabilities
+59,354
+59,354
+31 December
+2022
+RMB million
+61,690
+61,690
+31 December
+2023
+RMB million
+Deferred tax assets and liabilities after the offsetting adjustments are as follows:
+Deferred tax liabilities
+Deferred tax assets.
+The offsetting amount between deferred tax assets and liabilities are as follows:
+(42,264)
+(1,161)
+(66,610)
+(40,422)
+(1,155)
+(69,507)
+(85)
+(6)
+(7)
+(92)
+4,643
+131
+1,067
+45,568
+1,395
+81,787
+81,800
+Deferred tax assets/(liabilities)
+137
+1,084
+44,334
+2,792
+Others
+Lease liabilities and right of use assets
+3,903
+59,403
+These receivables relate to a wide range of customers for whom there is no recent history of default.
+24,990
+25,443
+Finished goods
+Work in progress
+Crude oil and other raw materials
+27 INVENTORIES
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+188
+(i) As at 31 December 2023 and 2022, bills receivable were classified as financial assets at fair value through other comprehensive income, as relevant business model is
+achieved both by collecting contractual cash flows and selling of these assets.
+Note:
+4,237
+2,671
+Spare parts and consumables
+3,507
+616
+114
+330
+120
+RMB million
+2022
+31 December
+RMB million
+2023
+31 December
+Bills receivable (i)
+Unlisted equity instruments
+Listed equity instruments
+Current assets
+Non-current assets
+26 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
+2,221
+Less: Allowance for diminution in value of inventories
+31 December
+2023
+RMB million
+RMB million
+31 December
+2023
+Deferred tax assets and liabilities before offset are attributable to the items detailed in the table below:
+29 DEFERRED TAX ASSETS AND LIABILITIES
+Prepaid income tax
+Value-added input tax to be deducted
+Advances to suppliers
+Receivables
+28 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB2,663,323 million for the year ended 31
+December 2023 (2022: RMB2,774,951 million). It includes the write-down of inventories of RMB6,300 million mainly related to finished goods and
+raw materials (2022: RMB6,407 million mainly related to finished goods).
+244,241
+250,898
+(6,583)
+(5,841)
+250,824
+256,739
+2,987
+2,994
+93,994
+95,227
+14,536
+20,375
+139,307
+138,143
+RMB million
+2022
+31 December
+5,067
+2023
+31,525
+Note:
+57,643
+274,231
+Balance at 31 December 2023
+(9,501)
+(4,233)
+(5,268)
+Decreases
+20,448
+10,076
+10,372
+Additions
+320,927
+51,800
+269,127
+331,874
+Balance at 1 January 2023
+51,800
+269,127
+(9,839)
+(4,229)
+(5,610)
+20,089
+9,108
+10,981
+310,677
+46,921
+263,756
+Balance at 31 December 2022
+Decreases
+Additions
+320,927
+Accumulated depreciation
+Balance at 1 January 2022
+27,122
+Net book value
+67,820
+25,793
+42,027
+Balance at 31 December 2023
+(6,804)
+(3,225)
+(3,579)
+Decreases
+18,553
+8,211
+10,342
+Additions
+56,071
+20,807
+35,264
+Balance at 1 January 2023
+15,147
+42,269
+Additions
+10,045
+7,519
+17,564
+Balance at 1 January 2022
+Decreases
+(1,859)
+(3,762)
+Balance at 31 December 2022
+35,264
+20,807
+56,071
+(1,903)
+Balance at 1 January 2022
+Cost
+RMB million
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2023 and 31 December 2022, the Group had no individual significant fully depreciated property, plant and equipment which were
+still in use.
+At 31 December 2023 and 31 December 2022, the Group had no individual significant property, plant and equipment which were temporarily idle
+or pending for disposal.
+At 31 December 2023 and 31 December 2022, the Group had no individual significant property, plant and equipment which had been pledged.
+The addition to oil and gas properties of the Group for the year ended 31 December 2023 included RMB1,681 million (2022: RMB4,277 million) of
+estimated dismantlement costs for site restoration.
+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 RMB777 million (2022: RMB2,891 million) for the year
+ended 31 December 2023.
+690,897
+442,056
+166,907
+81,934
+Balance at 31 December 2023
+630,700
+407,956
+143,107
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+79,637
+598,925
+391,719
+132,207
+74,999
+Balance at 1 January 2022
+Net book value:
+788
+1,535,305
+729,308
+729,546
+76,451
+Balance at 31 December 2023
+39
+730
+19
+Balance at 31 December 2022
+for the year ended 31 December 2023
+18 CONSTRUCTION IN PROGRESS
+Balance at 1 January
+Additions
+RMB million
+Others
+Land
+19 RIGHT-OF-USE ASSETS
+As at 31 December 2023, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB18,704 million (2022: RMB17,062 million). The geological and geophysical costs paid during the year ended 31
+December 2023 were RMB3,728 million (2022: RMB3,478 million).
+196,045
+Balance at 31 December
+Exchange adjustments
+180,250
+61
+(240)
+(17,575)
+1
+(581)
+(116)
+(11,492)
+(24,372)
+(121,967)
+Dry hole costs written off
+Transferred to property, plant and equipment
+Reclassification to other long-term assets
+Impairment losses for the year
+Disposals and others
+2023
+2022
+Total
+RMB million
+RMB million
+196,045
+155,939
+184,350
+180,741
+(6,723)
+(6,416)
+(151,360)
+RMB million
+Exchange adjustments
+236,634
+268,408
+Sinopec Finance
+PipeChina
+31
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+21 INTEREST IN ASSOCIATES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+184
+(i) The Group has a member in the Board of Directors of PipeChina and has substantive participation in decision-making, so the Group can exercise significant influence
+on PipeChina.
+PRC
+PRC
+Equity method
+PRC
+PRC
+December
+Mining coal and manufacturing of coal- Equity method
+chemical products
+Wholesale of gasoline, kerosene, and
+diesel within the civil aviation system
+Limited ("Zhongtian Synergetic Energy")
+China National Aviation Fuel Supply Co.,
+Ltd. ("Aviation Fuel")
+38.75
+Zhongtian Synergetic Energy Company
+management
+consulting, self-owned equity
+investment management, investment
+("Sinopec Capital")
+PRC
+PRC
+Equity method
+Project and equity investment,
+49.00
+Sinopec Capital Company Limited
+services
+29.00
+2023
+RMB million
+31
+December
+2022
+RMB million
+57,394
+66,093
+816,301
+20,380
+25,394
+3,212
+3,672
+14,444
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+31
+December
+2022
+2023
+Aviation Fuel
+31
+December
+31
+December
+2022
+31
+December
+2023
+RMB million
+31
+December
+2022
+RMB million
+Current assets
+Non-current assets
+118,631
+821,864
+104,889
+("Sinopec Finance")
+148,026
+Sinopec Capital
+31
+December
+2023
+RMB million
+15,098
+Zhongtian Synergetic Energy
+31
+December
+2022
+31
+December
+2023
+212,850
+31,774
+PRC
+Equity method
+14,333
+RMB million
+2022
+31 December
+RMB million
+31 December
+2023
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Principal activities
+Other units allocated
+Sinopec Zhenhai Refining and Chemical Branch
+The name of the investee and the composition of
+the asset group
+Goodwill is allocated to the following Group's cash-generating units:
+Impairment tests for cash-generating units containing goodwill
+Less: Accumulated impairment losses
+14,325
+Cost
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+183
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+264,054
+31,850
+232,204
+Balance at 31 December 2023
+264,856
+30,993
+233,863
+Balance at 31 December 2022
+20 GOODWILL
+(7,861)
+6,472
+(7,861)
+6,464
+Provision of non-banking financial
+49.00
+Sinopec Finance Company Limited
+Principal place
+incorporation of business
+PRC
+PRC
+Equity method
+Operation of natural gas pipeline and
+auxiliary facilities
+Co., Ltd. (PipeChina)
+14.00 (i)
+National Petroleum Pipe Network Group
+Country of
+Measurement
+method
+Principal activities
+interests
+Name of company
+ownership
+% of
+31 December
+2023
+RMB million
+31 December
+2022
+RMB million
+4,043
+4,043
+PRC
+2,429
+6,472
+6,464
+The Group's goodwill impairment assessment is carried out in conjunction with its related asset group or combination of asset groups, and the
+recoverable amounts of goodwill are estimated annually based on value in use calculations, which is consistent with prior years. These calculations
+use cash flow projections based on five-year financial budgets approved by management for a goodwill-related asset group or a combination of
+asset groups, with cash flow remaining stable after five years. The cash flow forecasts use sales volumes, selling price and discount rates as key
+assumptions, with sales volumes based on production capacity and/or actual sales volumes for periods prior to the budget period, selling prices
+based on management's expectations of future international crude oil and petrochemical price trends, and pre-tax discount rates based on weighted
+average cost of capital, which ranged from 11.26% to 13.1% (2022: 10.1% to 12.2%). Based on the result of the impairment assessment of
+goodwill, no impairment loss was recognised.
+21 INTEREST IN ASSOCIATES
+The Group's investments in associates are with companies primarily engaged in the oil and gas, petrochemical, and marketing and distribution
+operations in the PRC.
+The Group's principal associates are as follows:
+2,421
+409
+(6)
+(1,357)
+(22,899)
+(294)
+Foreign currency translation differences
+2,856
+2,856
+(6,683)
+(6,683)
+Share of other comprehensive income of associates and
+joint ventures
+149
+149
+Cost of hedging reserve
+(67)
+12
+(79)
+(8)
+5
+1,946
+(13)
+Net movement during the year recognised in other
+(67)
+12
+(79)
+(8)
+5
+(13)
+through other comprehensive income
+Changes in the fair value of instruments at fair value
+11,637
+(3,157)
+14,794
+5,334
+(841)
+comprehensive income
+1,946
+7,254
+7,254
+Invest into the joint ventures and associated companies
+Reclassifications
+Transferred from construction in progress
+Additions
+Balance at 1 January 2022
+Cost:
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+properties
+RMB million
+Oil and gas,
+Plants and
+buildings
+RMB million
+17 PROPERTY, PLANT AND EQUIPMENT
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+182
+Financial Statements (International)
+Financial Statements (International)
+Other comprehensive income
+1,425
+(836)
+589
+24,974
+(3,145)
+6,175
+21,829
+(i) As at 31 December 2023, cash flow hedge reserve amounted to a gain of RMB5,758 million (31 December 2022: a gain of RMB3,079 million), of which a gain of
+RMB5,656 million was attributable to shareholders of the Company (31 December 2022: a gain of RMB3,024 million).
+16 BASIC AND DILUTED EARNINGS PER SHARE
+The calculation of basic earnings per share for the year ended 31 December 2023 is based on the profit attributable to ordinary shareholders
+of the Company of RMB58,310 million (2022: RMB66,933 million) and the weighted average number of shares of 119,810,619,257 (2022:
+120,889,248,735) during the year.
+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 2023
+181
+Note:
+Reclassification to other long-term assets
+Net movement during the year recognised in other
+comprehensive income (i)
+(1,482)
+RMB million
+2022
+2023
+Dividends payable to shareholders of the Company attributable to the previous financial year, approved during the year represent:
+Pursuant to a resolution passed at the director's meeting on 22 March 2024, final dividends in respect of the year ended 31 December 2023 of
+RMBO.200 (2022: RMBO.195) per share totaling RMB23,870 million (2022: RMB23,380 million) based on share number at 31 December 2023
+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 25 August 2023, the interim dividends for the year ended 31 December 2023
+of RMBO.145 (2022: RMB0.16) per share totaling RMB17,380 million (2022: RMB19,371 million) were approved. Dividends were paid on 15
+September 2023.
+42,751
+41,250
+23,380
+23,870
+2022
+RMB million
+19,371
+17,380
+RMB million
+2023
+RMB million
+Dividends declared and paid during the year of RMBO.145 per share (2022: RMBO.16 per share)
+Dividends declared after the date of the statement of financial position of RMBO.200 per share
+(2022: RMBO.195 per share)
+14 DIVIDENDS
+During 2023 and 2022, the Company did not incur any emoluments paid or receivable in respect of a person accepting office as a director, or any
+payments to any director for loss of office.
+5
+1
+4
+HKD2,000,001 to HKD2,500,000
+HKD1,000,001 to HKD1,500,000
+HKD1,500,001 to HKD2,000,000
+Emoluments
+2022
+Number of individuals
+2023
+For the year ended 31 December 2023, the five highest paid individuals in the Company included one director, two supervisors and two senior
+management. The total salaries, wages and other benefits was RMB6,872 thousand, and the total amount of their retirement scheme contributions
+was RMB615 thousand. For the year ended 31 December 2022, the five highest paid individuals in the Company included one director and four
+senior management.
+13 SENIOR MANAGEMENT'S EMOLUMENTS
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Dividends payable to shareholders of the Company attributable to the year represent:
+Final cash dividends in respect of the previous financial year, approved during the year of RMBO.195 per
+share (2022: RMBO.31 per share)
+37,532
+23,380
+8,127
+(1,011)
+234
+(1,245)
+4,992
+(1,675)
+6,667
+6,345
+(1,075)
+7,420
+Reclassification adjustments for amounts transferred to
+the consolidated income statement
+Effective portion of changes in fair value of hedging
+instruments recognised during the year
+Cash flow hedges:
+amount
+RMB million
+RMB million
+effect
+Net of tax
+Pursuant to the shareholders' approval at the Annual General Meeting on 30 May 2023, a final dividend of RMBO.195 per share totaling RMB23,380
+million according to total shares on 20 June 2023 was approved. All dividends have been paid in the year ended 31 December 2023.
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2022, a final dividend of RMBO.31 per share totaling RMB37,532
+million according to total shares on 9 June 2022 was approved. All dividends have been paid in the year ended 31 December 2022.
+180
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+6,645
+15 OTHER COMPREHENSIVE INCOME
+2022
+Before tax
+amount
+RMB million
+Tax
+effect
+RMB million
+Net of tax
+amount
+RMB million
+Before tax
+amount
+RMB million
+Tax
+2023
+(20,969)
+Disposals
+8,832
+(12,605)
+(11,465)
+(406)
+(734)
+Written back on disposals
+(225)
+(160)
+(40)
+(25)
+Reclassification to other long-term assets
+(80)
+(60)
+(20)
+Invest into the joint ventures and associated companies
+Exchange adjustments
+(50)
+259
+Reclassifications
+5,082
+2,016
+2,754
+312
+Impairment losses for the year
+1,385,512
+86,178
+50,383
+31,059
+4,736
+Depreciation for the year
+656,508
+660,838
+(209)
+101
+3,616
+197
+(1,636)
+Written back on disposals
+(925)
+(396)
+(36)
+Reclassification to other long-term assets
+(6)
+Invest into the joint ventures and associated companies
+176
+(406)
+230
+Reclassifications
+88,512
+2,491
+1,567
+775
+149
+Impairment losses for the year
+3,914
+Balance at 31 December 2022
+72,795
+697,612
+697,369
+1,467,776
+68,166
+Balance at 1 January 2023
+697,612
+697,369
+1,467,776
+Depreciation for the year
+4,930
+52,057
+72,795
+143,165
+146
+Balance at 1 January 2022
+849
+2,226,202
+840,719
+152,432
+2,098,476
+4,296
+(18,428)
+(17,169)
+321
+1,105,325
+840,719
+152,432
+Balance at 31 December 2022
+3,768
+207
+Balance at 1 January 2023
+Exchange adjustments
+(429)
+1,105,325
+(830)
+(1,417)
+(50)
+(66)
+(214)
+(150)
+(64)
+(753)
+(289)
+1,042
+121,967
+72,738
+1,984,437
+7,951
+1,048,227
+3,528
+793,045
+4,277
+40,397
+(1,533)
+2,098,476
+Additions
+250
+1,171,364
+896,453
+158,385
+Balance at 31 December 2023
+60
+751
+38
+Exchange adjustments
+(19)
+(2,495)
+(26,248)
+(23,745)
+(257)
+(2,246)
+Disposals
+(2,027)
+(399)
+(69)
+Reclassification to other long-term assets
+1,681
+2,348
+4,279
+Transferred from construction in progress
+6,163
+54,374
+Accumulated depreciation and impairment losses:
+90,823
+Reclassifications
+1,817
+(416)
+(1,401)
+Invest into the joint ventures and associated companies
+(19)
+151,360
+(i) Others mainly comprise catalyst expenditures, time deposits with maturities over one year 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:
+249
+51,035
+Carrying Amounts
+10,863
+9,909
+6,133
+5,429
+10,751
+6,876
+6,353
+5,422
+6,497
+6,062
+ventures
+Share of net assets from joint
+650
+6,062
+400
+Net assets attributable to non-
+21,726
+19,817
+12,266
+10,857
+21,941
+14,034
+15,883
+13,555
+12,993
+12,124
+owners of the company
+Net assets attributable to
+21,726
+controlling interests
+6,497
+5,422
+6,353
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+6,876
+10,751
+5,429
+6,133
+9,909
+10,863
+19.817
+Summarised statement of comprehensive income
+FREP
+BASF-YPC
+Taihu
+Sinopec SABIC Tianjin
+SECCO (1)
+2023
+Shanghai
+million
+12,266
+22,591
+Non-current financial liabilities
+Non-current liabilities
+(8,977)
+(5,838)
+(6,232)
+(6,162)
+(2,782)
+(2,285)
+(2,308)
+(1,988)
+(10,780)
+(12,942)
+Total current liabilities
+(2,368)
+(2,738)
+(2,256)
+(2,262)
+(2,727)
+(2,243)
+(2,245)
+(1,963)
+(9,951)
+(12,115)
+Other current liabilities
+(6,609)
+(3,582)
+(2,950)
+(3,900)
+(55)
+(42)
+(3,282)
+(3,742)
+(139)
+(157)
+14,434
+15,883
+13,555
+12,993
+12,124
+Net assets
+(944)
+(5,400)
+(7,028)
+(5,755)
+(2,009)
+(1,053)
+(107)
+(123)
+(3,979)
+(2,961)
+Total non-current liabilities
+(5,152)
+(6,393)
+(4,303)
+Other non-current liabilities
+(223)
+(237)
+10,857
+(123)
+(914)
+(1,852)
+(603)
+(635)
+(1,097)
+(944)
+(107)
+(63)
+million
+million
+660
+1,063
+129
+(713)
+(435)
+Share of net (loss)/profit from joint ventures
+454
+2,462
+1,060
+910
+Dividends declared by joint ventures
+(1,909)
+(1,793)
+(1,409)
+703
+8,600
+2,657
+322
+(1,426)
+(869)
+Total comprehensive income
+7,144
+(9,531)
+Other comprehensive income
+(1,909)
+(1,793)
+(1,409)
+1,456
+1,374
+2,657
+(8,157)
+(704)
+(897)
+(955)
+72,812
+95,398
+34,063
+63,282
+7,505
+4,198
+3,235
+1,734
+28,009
+26.184
+RMB million
+31 December
+2022
+RMB million
+2023
+31 December
+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
+Share of other comprehensive income from
+joint ventures
+(4,535)
+3,422
+(i) The Company and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. ("Gaoqiao Petrochemical") and INEOS Investment (Shanghai) Company Limited ("INEOS
+Shanghai") entered into an equity transfer agreement on 28 July 2022. According to the agreement, the Company and Gaoqiao Petrochemical transferred 15% and
+35% equity interests in Shanghai SECCO to INEOS Shanghai respectively. The transactions were completed on 28 December 2022, and Shanghai SECCO was changed
+from a subsidiary to a joint venture after the completion of the transaction.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+322
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+22 INTEREST IN JOINT VENTURES (Continued)
+Summarised statement of comprehensive income (Continued)
+The share of profit and other comprehensive income for the year ended 31 December 2023 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was loss RMB4,274 million (2022: RMB18 million) and loss RMB544 million (2022: loss RMB376 million)
+respectively. As at 31 December 2023, the carrying amount of all individually immaterial joint ventures accounted for using equity method in
+aggregate was RMB35,866 million (2022: RMB34,194 million).
+Impairment test
+As at 31 December 2023, there are indicators of impairment in the long-term equity investment in Shanghai SECCO. The recoverable amount of
+this long-term equity investment is estimated based on a value-in-use calculation. The projected future cash flows primarily take into account the
+five-year profit forecast for Shanghai SECCO approved by the management, which is adjusted based on the historical performance of Shanghai
+SECCO and relevant industry trends, with cash flows remaining stable after five years. The pre-tax discount rate of 11.29% is calculated based
+on the weighted average cost of capital. The result of value-in-use calculation indicates that there is no impairment loss in this long-term equity
+investment as at 31 December 2023.
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+for the year ended 31 December 2023
+million
+(1,426)
+Net (loss)/profit for the year
+116
+67
+107
+136
+Interest income
+(539)
+(1,270)
+(1,699)
+(882)
+(784)
+(1,431)
+(1,355)
+(1,822)
+(1,575)
+720
+Depreciation, depletion and amortisation
+24,294
+22,915
+19,542
+14,090
+25,076
+19,381
+59,347
+60,091
+Revenue
+million
+million
+million
+million
+million
+17,426
+975
+113
+144
+642
+603
+423
+(201)
+(292)
+(885)
+(108)
+578
+346
+Income tax expense
+(2,551)
+(2,396)
+(1,832)
+1,657
+1,666
+3,542
+430
+72
+Interest expense
+(315)
+(338)
+(4)
+(7)
+(869)
+(61)
+(204)
+(111)
+(199)
+(Loss)/profit before taxation
+(1,215)
+(2,004)
+(274)
+48,615
+(25)
+(827)
+5
+4
+5,636
+5,988
+112,832
+120,943
+Revenue
+RMB million
+2022
+2023
+RMB million
+2022
+RMB million
+Aviation Fuel
+Zhongtian Synergetic Energy
+2023
+RMB million
+2022
+RMB million
+15,676
+2023
+RMB million
+Sinopec Capital
+Sinopec Finance
+2023
+RMB million
+RMB million
+RMB million
+2022
+2023
+PipeChina
+Year ended 31 December
+Summarised statement of comprehensive income
+5,344
+5,362
+10,463
+10,563
+6,665
+2022
+RMB million
+17,551
+181,290
+105,162
+2,019
+2,306
+associates
+Dividends declared by
+3,026
+2,515
+4,562
+2,752
+1,213
+940
+2,427
+2,023
+31,908
+34,054
+Total comprehensive income
+(68)
+52
+Profit for the year
+34,054
+31,908
+2,205
+2,338
+888
+6,937
+1,281
+4,562
+2,515
+3,026
+Other comprehensive income
+(182)
+89
+2,752
+490
+16.038
+73,533
+27,260
+13,602
+14,158
+32,731
+33,754
+589,249
+584,868
+Net assets
+(1,561)
+(1,533)
+(23,435)
+(17,563)
+(990)
+(1,275)
+27,001
+(673)
+(225,296) (199,675)
+Non-current liabilities
+(11,932)
+(17,200)
+(3,811)
+(7,464)
+(101)
+(74)
+(236,840)
+(179,459)
+(130,331) (132,266)
+Current liabilities
+13,617
+14,158
+(906)
+20,819
+20,504
+Net assets attributable to
+75,125
+Carrying Amounts
+5,344
+5,362
+10,463
+10,563
+6,665
+6,937
+16,038
+16,539
+73,533
+75,125
+associates
+Share of net assets from
+2,075
+2,331
+64,014
+owners of the Company
+536,607
+525,235
+33,754
+32,731
+14,158
+16,539
+13,602
+27,001
+18,488
+18,429
+Net assets attributable to
+non-controlling interests
+48,261
+27,260
+(829)
+319
+73
+1,323
+1,563
+4,506
+2,974
+1,625
+654
+3,061
+2,051
+3,733
+3,258
+Cash and cash equivalents
+Current assets
+2022
+RMB million
+RMB million
+Other current assets
+2022
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+31 December
+31 December 31 December
+2023
+31 December
+2022
+31 December
+Taihu
+Shanghai SECCO (i)
+31 December
+2023
+Sinopec SABIC Tianjin
+BASF-YPC
+RMB million
+13,017
+11,311
+4,615
+Current financial liabilities
+Current liabilities
+26,677
+26,386
+18,466
+17,345
+10,488
+12,254
+9,244
+9,000
+12,708
+11,752
+Total non-current assets
+4,970
+4,669
+7,060
+5,429
+5,993
+4,864
+15,269
+2,455
+2,554
+3,106
+Summarised statement of financial position and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+3,647
+16,275
+15,044
+6,666
+9,054
+5,518
+16,894
+Total current assets
+188
+2022
+31 December
+22 INTEREST IN JOINT VENTURES
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+186
+Financial Statements (International)
+Financial Statements (International)
+185
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+The share of profit and other comprehensive income for the year ended 31 December 2023 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB4,506 million (2022: RMB6,386 million) and loss RMB1,540 million (2022: loss RMB201 million)
+respectively. As at 31 December 2023, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate
+was RMB48,540 million (2022: RMB47,107 million).
+(33)
+25
+44
+(89)
+income from associates
+The Group's principal interests in joint ventures are as follows:
+Share of other comprehensive
+656
+1,768
+1,066
+627
+435
+1.145
+1,080
+3,670
+4,035
+Share of profit from associates
+626
+638
+632
+966
+745
+% of
+ownership
+Name of entity
+Fujian Refining & Petrochemical Company
+31 December
+31 December
+2022
+2023
+31 December
+FREP
+PRC
+Equity method PRC
+Russia
+PRC
+Equity method Cyprus
+Equity method PRC
+Crude oil and natural gas extraction
+Manufacturing and distribution of
+petrochemical products
+Manufacturing and distribution of
+petrochemical products
+Limited. ("Shanghai SECCO")
+50.00
+Shanghai SECCO Petrochemical Company
+Company Limited ("Sinopec SABIC Tianjin")
+49.00
+50.00
+Sinopec SABIC Tianjin Petrochemical
+Taihu Limited ("Taihu")
+interests
+50.00
+Principal activities
+Manufacturing refining oil products
+Measurement
+method
+Equity method
+Country of
+Principal place
+incorporation of business
+2023
+PRC
+Limited ("FREP")
+BASF-YPC Company Limited ("BASF-YPC")
+40.00
+Manufacturing and distribution of
+petrochemical products
+Equity method PRC
+PRC
+PRC
+2023
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 189
+(12.9)
+8,256
+China
+Net
+Gross
+Net
+Gross
+2022
+2023
+Natural gas productive wells
+As of 31 December
+2,302
+56,402
+5,430
+59,549
+2,303
+57,862
+61,024
+5,446
+11
+30
+11
+30
+2,313
+5,460
+2,314
+8,186
+7,779
+7,719
+Consolidated companies
+8,186
+8,256
+6,751
+6,811
+7,077
+7,147
+886
+886
+1,019
+1,019
+5,476
+82
+90
+90
+7,719
+7,779
+8,186
+8,256
+Others
+Fuling
+Puguang
+Total
+82
+7,779
+18,918
+19,524
+Shengli
+Consolidated companies
+China
+Oil productive wells
+208
+1
+0
+1
+146
+61
+Others
+207
+103
+Net
+jgg&s°°°g
+103
+209
+103
+188
+81
+192
+81
+207
+Overseas
+Consolidated companies
+Equity accounted entities
+19,524
+35,171
+35,171
+36,024
+36,024
+54,089
+54,089
+55,548
+55,548
+54,089
+54,089
+55,548
+55,548
+Net
+Gross
+Net
+Gross
+2022
+2023
+As of 31 December
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+12
+Total
+18,918
+7,719
+Unit: Square kilometers
+As of 31 December
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+Business Review and Prospects
+13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+oil products for the year was 239 million
+tonnes, up by 15.6%, of which total
+domestic sales volume accounted for 188
+million tonnes, up by 15.8%.
+sulfur bunker fuel market both home
+and abroad and became the world's
+second largest bunker fuel supplier.
+We continued to enrich the Easy Joy
+service ecosystem with the quality and
+profitability both boosted for the non-fuel
+business. Total sales volume of refined
+and the retail volume of vehicle LNG
+was up by 85%. We fully leveraged our
+strength in existing end-market network,
+stepped up efforts in developing EV
+battery charging and swapping business
+and demonstrating application scenarios
+of hydrogen mobility, and transforming to
+an integrated energy service provider of
+fuel, gas, hydrogen, electricity and non-
+fuel services. We vigorously expanded
+our global business, explored the low-
+0.02 percentage points
+94.65
+Summary of Operations for the Marketing and Distribution Segment
+94.96
+0.73 percentage points
+73.83
+74.06
+74.79
+1.5
+45.41
+42.65
+43.29
+60.7
+21.15
+94.98
+Change from
+2023
+2022
+3,470
+3,880
+22.3
+57.01
+55.65
+68.05
+Direct sales and distribution (million tonnes)
+Annual average throughput per station (tonne/station)
+12.4
+114.30
+106.91
+120.12
+15.8
+171.31
+162.55
+188.17
+Total domestic sales volume of refined oil products (million tonnes)
+Retail sales (million tonnes)
+15.6
+220.79
+206.74
+239.05
+Total sales volume of refined oil products (million tonnes)*
+2022 to 2023 (%)
+2021
+18.01
+28.95
+2.3
+59.85
+Refinery throughput
+Change from
+2022 to 2023 (%)
+Unit: million tonnes
+were proceeding in an orderly manner.
+In 2023, the Company processed 258
+million tonnes of crude, up by 6.3% and
+produced 156 million tonnes of refined
+oil products, up by 11.3% with kerosene
+output up by 60.7% year on year.
+production to reduce procurement cost.
+Closely following the market demand, we
+flexibly adjusted the utilisation rate and
+product slate. We optimised the rhythm
+of carrying forward the "oil to chemicals"
+and "oil to specialties" projects, and
+increased production of market-oriented
+products such as refined oil products and
+lubricating grease. We scaled up export
+volume and optimised arrangement for
+exports. Structural adjustment projects
+Summary of Operations for the Refining Segment
+In 2023, the Company actively
+addressed the challenges brought by
+the wide fluctuation of oil prices and
+the significant narrowing of margins for
+some refining products, and insisted
+on optimisation and integration of
+production and marketing. Annual crude
+throughput hit new high. We enhanced
+coordination among procurement,
+storage and transportation as well as
+(2) Refining
+Overseas
+Acreage with development licenses
+China
+China
+Acreage with exploration licenses
+5,680
+5,971
+38,937
+41,596
+44,617
+47,567
+372,078
+365,219
+2022
+372,078
+365,219
+2023
+Gasoline, diesel and kerosene production
+Total
+Gasoline
+Kerosene
+63.09
+64.54
+5.9
+65.21
+59.05
+62.51
+11.3
+146.21
+140.15
+156.00
+6.3
+255.28
+242.27
+257.52
+2021
+2022
+2023
+In 2023, by seizing the opportunity of
+rebounded market demand, the Company
+brought the advantages in integrated
+business into full play to expand the
+market and improve profit. Domestic
+refined oil products sales volume realised
+a record high. We focused on client
+demand and carried forward targeted
+and differentiated marketing tactics. The
+sales volume of gasoline rose by 15.9%
+(3) Marketing and Distribution
+Note: Includes 100% of the production from domestic joint ventures.
+Refinery yield (%)
+Light product yield (%)
+Light chemical feedstock production
+Diesel
+2
+0
+4
+Productive
+Development
+Exploratory
+Development
+Exploratory
+Wells drilled
+2022
+2023
+As of 31 December
+1
+Dry
+0
+0
+1
+0
+1,568
+1,669
+99
+113
+1,667
+1,782
+1,667
+0
+Productive
+Dry
+Productive
+127
+Shengli
+3
+1,958
+111
+364
+6
+2,312
+105
+343
+Consolidated companies
+3
+1,958
+111
+364
+6
+2,312
+105
+343
+China
+Dry
+Productive
+Dry
+1,782
+29
+1,668
+3
+China
+Proved undeveloped reserves
+Consolidated companies
+Equity accounted entities
+Overseas
+Others
+Puguang
+Fuling
+Consolidated companies
+China
+Proved developed reserves
+Proved reserves
+Consolidated companies
+Fuling
+Items
+Business Review and Prospects
+Business Review and Prospects
+11
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+63312303
+43
+འབ
+34
+3
+43
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Others
+Overseas
+Consolidated companies
+4
+0
+0
+3
+4
+4,086
+4,611
+1,632
+1,701
+1,417
+1,213
+7,135
+7,525
+7,135
+7,525
+7,138
+7,529
+8,806
+9,311
+31 December 2023 31 December 2022
+Natural gas reserves (bcf)
+Exploration and Production Activities
+Equity accounted entities
+1,782
+3,720
+1,379
+159
+60
+19
+60
+19
+Shengli
+207
+103
+184
+80
+184
+29
+80
+207
+103
+184
+80
+184
+80
+China
+Exploratory Development Exploratory Development
+Exploratory Development
+Exploratory Development
+Consolidated companies
+61
+Others
+61
+1
+8
+1
+Equity accounted entities
+0
+0
+0
+0
+0
+0
+Consolidated companies
+2
+0
+4
+1
+8
+1
+Overseas
+146
+74
+124
+61
+124
+Gross
+3
+Net
+Wells drilling
+Consolidated companies
+0
+200
+1
+5
+0
+144
+0
+0
+Overseas
+0
+1
+63
+205
+3
+933
+76
+216
+Others
+2
+1,029
+48
+929
+0
+0
+0
+2022
+2023
+As of 31 December
+0
+3
+2,158
+112
+369
+6
+105
+343
+Total
+200
+1
+5
+0
+144
+0
+0
+Equity accounted entities
+0
+0
+0
+0
+Gross
+37
+11.8
+the end of the
+previous year to
+Exploration expenses was RMB11.1
+billion, representing an increase of 4.4%
+compared with 2022. That was mainly due
+to the Company's increased investment in
+exploration to consolidate the foundation of
+oil and gas resource base.
+Depreciation, depletion and amortisation
+was RMB113.8 billion, representing an
+increase of 3.5% over the same period of
+2022. This was mainly due to the increased
+scale of assets.
+Selling, general and administrative
+expenses was RMB59.6 billion, representing
+an increase of 6.7% over 2022, mainly
+due to the increased marketing expenses
+resulting from the increased sales volume of
+refined oil products.
+The Company's other purchasing expenses
+was RMB1,625.2 billion, representing a
+decrease of 3.5% over the same period of
+2022. This was mainly attributable to the
+decreased prices in outsourced chemical
+raw materials including naphtha and traded
+crude oil and refined oil products.
+Crude oil purchasing expenses was
+RMB944.2 billion, representing a decrease of
+5.6% over the same period of 2022. Crude
+oil purchased externally used for processing
+in 2023 was 212.61 million tonnes (excluding
+the volume processed for third parties),
+representing an increase of 5.3% over the
+same period of 2022. The average cost of
+processing crude oil purchased externally
+was RMB4,441 per tonne, representing a
+decrease by 10.3% over 2022.
+Purchased crude oil, products and operating
+supplies and expenses was RMB2,569.4
+billion, representing a decrease of 4.3% over
+the same period of 2022, accounting for
+82.2% of the total operating expenses, of
+which:
+In 2023, the Company's operating expenses
+was RMB3,125.4 billion, decreased by 3.6%
+compared with that of 2022. The operating
+expenses mainly consisted of the following:
+(2) Operating expenses
+The Company's external sales revenue of
+chemical products was RMB411.4 billion
+(accounting for 12.8% of the Company's
+total revenue), representing a decrease of
+8.6% over 2022. This was mainly due to
+decrease in sales volume and price of most
+chemical products.
+In 2023, 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
+RMB1,927.3 billion (accounting for 60.0% of
+the Company's revenue and other operating
+revenues), representing an increase of 3.9%
+over 2022, mainly due to the increase in
+sales volume of refinery products, such
+as gasoline, diesel and kerosene, which
+effectively offset the impact of decrease in
+price. The sales revenue of gasoline, diesel
+and kerosene was RMB1,608.7 billion
+(accounting for 83.5% of the total sales.
+revenue of petroleum products), representing
+an increase of 7.3% over 2022. Sales
+revenue of other refined petroleum products
+was RMB318.6 billion (accounting for 16.5%
+of the total sales revenue of petroleum
+products), representing a decrease of 10.7%
+compared with that of 2022.
+Personnel expenses was RMB108.0 billion,
+representing an increase of 4.3% over 2022.
+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 2023, the turnover
+from crude oil, natural gas and other
+upstream products sold externally amounted
+to RMB178.0 billion (accounting for 5.5% of
+the Company's revenue and other operating
+revenues), down by 7.5% year-on-year. The
+change was mainly due to decreases in
+crude oil and natural gas prices.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Management's Discussion
+17
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+(12.6)
+3,015
+2,636
+་་་་་་ ༦
+Taxes other than income tax was RMB272.9
+billion, representing an increase of 3.4% over
+the same period of 2022. That was mainly
+because the consumption tax increased by
+RMB8.7 billion resulting from the increased
+sales volume of domestic refined oil products
+in the refining segment, provision for levy for
+mineral rights concessions of RMB7.4 billion
+and the special oil gain levy decreased by
+RMB7.7 billion resulting from the decreased
+crude oil price.
+Other operating income/(expenses), net was
+RMB9.1 billion, representing an increase
+of RMB23.9 billion over the same period of
+2022. It was mainly attributable to increase
+in the income from the hedging business
+of commodity derivatives, income from
+the disposal of land and equipment from
+the relocation of Hunan Petrochemical and
+increase in the disposal income of some gas
+stations and depots, as well as the year-on-
+year decrease in the impairment of long-term
+assets.
+(3) Operating profit was RMB86.8 billion,
+representing an increase of 14.5% over
+the same period of 2022. That was mainly
+because that the Company seized the
+opportunity of market demand recovery,
+actively expanded the throughput and sales
+volume based on profit, and achieved a
+significant increase in operating profit year-
+on-year.
+Exploration and Production Segment
+(%)
+2022
+Year ended 31 December
+2023
+RMB million
+2022
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+2023
+2022
+of inter-segment sales
+Year ended 31 December
+2023
+revenue before elimination
+As a percentage of
+consolidated operating
+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.
+revenues.
+The Company manages its operations through four business segments, namely exploration and production segment, refining segment, marketing
+and distribution segment and chemicals segment, and corporate and others. Unless otherwise specified, the inter-segment transactions have not
+been eliminated from financial data discussed in this section. In addition, the operating revenue data of each segment includes other operating
+2 RESULTS OF SEGMENT OPERATIONS
+(8) Profit attributable to shareholders of the
+Company was RMB58.3 billion, representing
+a year-on-year decrease of 12.9%.
+(7) Profit attributable to non-controlling
+shareholders was RMB9.6 billion,
+representing a decrease of 0.1% over the
+same period of 2022.
+year.
+(6) Income tax expense was RMB16.1 billion,
+representing a decrease of 10.2% year-on-
+(5) Profit before taxation was RMB83.9 billion,
+representing a decrease of 11.1% compared
+with 2022.
+(4) Investment income and share of profits or
+losses from associates and joint ventures
+was RMB7.0 billion, down by 75.4% year-on-
+year. It was mainly attributable to the gains
+from Company's sale of Shanghai SECCO's
+equity of RMB13.7 billion last year, and the
+operating profit of some chemical associates
+and joint ventures decreased significantly,
+resulting from the weak market.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+18
+(3.3)
+External sales*
+779
+Chemical fertiliser
+Monomer and polymer for synthetic fibre
+(7.4)
+6,204
+5,743
+1.5
+36,053
+36,605
+Basic chemical feedstock
+(9.1)
+6,545
+6,297
+5,948
+17,361
+25,962
+Kerosene
+(7.2)
+7,738
+7,182
+6.4
+81,657
+86,866
+Diesel
+49.5
+7,412
+(15.0)
+5,409
+(7.2)
+11,363
+10,545
+6.7
+1,364
+1,455
+Synthetic rubber
+(4.2)
+8,119
+7,779
+(1.8)
+1,193
+1,172
+Synthetic fibre
+(10.6)
+8,272
+7,393
+2.7
+17,471
+17,938
+Synthetic resin
+(11.6)
+6,116
+753
+(3.6)
+Inter-segment sales
+197,499
+11.1
+761,678
+633,056
+External sales*
+Corporate and Others
+9.1
+1.4
+13.8
+13.1
+7.7
+12.8
+474
+540,152
+515,307
+1.7
+80,328
+94,426
+7.4
+459,824
+420,881
+Operating revenues
+Inter-segment sales
+9.1
+19.7
+23.0
+Inter-segment sales
+and Analysis
+Management's Discussion
+19
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+* Other operating revenues are included.
+100.0
+100.0
+100.0
+100.0
+5,701,861
+5,939,054
+(2,489,646) (2,620,886)
+3,212,215
+3,318,168
+Revenue
+Elimination of inter-segment sales
+inter-segment sales
+Operating revenue before elimination of
+30.1
+27.0
+1,790,478
+1,538,320
+Operating revenues
+17.3
+15.9
+1,028,800
+905,264
+External sales*
+183,316
+Chemicals Segment
+31.9
+3.3
+3.1
+198,714
+174,476
+External sales*
+Refining Segment
+5.4
+2.1
+6.0
+5.7
+5.4
+(%)
+325
+314
+5.2
+319,411
+300,019
+Operating revenues
+2.0
+121,912
+116,703
+3.2
+3.3
+6.0
+Inter-segment sales
+1,355,310
+1,713,874
+0.2
+0.3
+13,421
+17,943
+1,818,429
+Operating revenues
+Inter-segment sales
+51.2
+56.1
+28.6
+31.6
+1,700,453
+1,800,486
+External sales*
+Marketing and Distribution Segment
+26.6
+26.8
+1,575,139
+1,529,786
+Operating revenues
+23.3
+23.7
+1,376,425
+28.8
+9,319
+8,980
+14.3
+Business Review and Prospects
+15
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+E&P: The Company will strengthen risk
+exploration, intensify efforts in the "Deep
+Earth Project", shale oil and gas, and
+other fields to increase high-quality and
+large-scale reserves; enhance profitable
+development and stabilize oil production
+while increasing gas production and
+reducing costs. In crude development, we
+will accelerate the production capacity
+building in Jiyang, Tahe and Junggar,
+strengthen the fine-tuned development
+of mature fields, continue to improve the
+reserve development ratio and recovery
+rate, and stabilize conventional oil
+production and increase the profitable
+production of shale oil. In natural gas
+development, the Company will accelerate
+the capacity building in western Sichuan
+and Shunbei and drive up the natural gas
+profitable output; diversify and expand
+the channels of natural gas resources,
+focus on reducing resource costs,
+and continue to improve the natural
+gas production, supply, storage and
+marketing system. The planned annual
+production of crude is 279.06 million
+barrels, of which 26.65 million barrels
+from overseas. The planned annual
+natural gas production is 1,379.7 billion
+cubic feet.
+In 2024, the Company will put more
+focus on value creation with priority given
+to profit generation, transition, upgrading,
+reform, innovation, and risk control.
+Production & Operation
+2
+Looking forward to 2024, as China's
+economy maintains the sustainable trend
+of recovery, domestic demand for natural
+gas, refined oil products and chemicals
+is expected to maintain growth. Due to
+changes in global supply and demand,
+geopolitics and inventory levels,
+international oil prices are expected to
+fluctuate at medium to high levels.
+Market Outlook
+1
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+BUSINESS OUTLOOK
+In 2023, focused on the quality and
+return of investments, the Company
+continued to optimise the management
+of invested projects, with a capital
+expenditure of RMB176.8 billion for the
+whole year. The capital expenditure of
+the E&P segment was RMB78.6 billion,
+mainly for the crude production capacity
+building in Tahe and Shengli Offshore,
+natural gas production capacity building
+in Shunbei, Western Sichuan, Fuling and
+Weirong, the development of the Shengli
+(7) Capital Expenditure
+In 2023, the Company continued to
+improve the HSE management system
+with professional management further
+strengthened. We enhanced employee
+health and safety management,
+fully implemented grassroots safety
+responsibility management, carried
+out health management services for all
+employees, improved working conditions
+and enhanced personal protective
+equipment, thus the occupational,
+physical and psychological health
+of employees at home and abroad
+were safeguarded. We implemented
+the all-staff work safety responsibility
+mechanism, launched the scheme of the
+Safety Management Enhancement Year,
+I made every effort to promote risk control
+and incident prevention, and continued to
+reinforce process safety management, so
+that the operations safety was achieved.
+(6) HSE
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+14
+and development of technologies for
+the whole hydrogen value chain and
+independently developed key materials for
+fuel cells. Demonstration projects such
+as "Industrial Internet+" and "Artificial
+Intelligence Infrastructure Project" are
+progressing smoothly. In 2023, the
+Company filed 9,601 patent applications
+at home and abroad with 5,483 granted.
+The Company also won one silver award
+and four excellent awards in China's
+Patent Award competition.
+gas as well as continental facies shale
+oil and gas. In refining, we successfully
+started up world's first 3 mtpa catalytic
+cracking unit for heavy oil RTC. A full
+range of bio fuel products successfully
+passed the RSB (Roundtable on
+Sustainable Biomaterials) certification.
+In chemicals, the first epoxy butane unit
+using CHP process and the industrial
+unit for high-performance liquid rubber
+were put into operation successfully.
+In addition, we accelerated research
+In 2023, the Company enhanced
+investment in science and technology
+innovation, sought breakthrough in key
+and core technologies, beefed up front-
+end basic research and further deepened
+the reform of the science and technology
+system and mechanism, all contributing
+to the progress made in innovation. In
+upstream, breakthroughs were made in
+the exploration and development theory
+and technologies for ultra-deep oil and
+(5) Science and Technology Innovation
+Jiyang Shale Oil National Demonstration
+Zone, as well as the oil and gas storage
+and transportation facilities. The capital
+expenditure of the refining segment was
+RMB22.9 billion, mainly for Zhenhai
+Expansion, Yangzi Refining Restructuring,
+etc. The capital expenditure of the
+marketing and distribution segment
+of RMB15.7 billion, mainly for the
+development of the "petro, gas,
+hydrogen, power and service" integrated
+energy station network, the revamping of
+the existing marketing network, non-fuel
+business and other projects. The capital
+expenditure of the chemical segment was
+RMB55.1 billion, mainly for the ethylene
+units in the second phase of Zhenhai,
+Tianjin Nangang, Hainan and Maoming,
+Baling caprolactam unit relocation,
+coal chemical projects, etc. The capital
+expenditure of corporate and others was
+RMB4.5 billion, mainly for R&D and IT,
+etc.
+Refining: Efficiency and profitability
+oriented, the Company will coordinate
+production and marketing, and
+improve the operating efficiency of the
+value chain. We will optimise crude
+procurement to reduce costs; adjust
+crude throughput, facility utilization and
+product slate to improve profitability;
+optimise the structure and pace of export
+products; carry forward the adjustment to
+increase the yield of chemical feedstock
+in an orderly and cost effective manner,
+and enhance the efforts on shifting
+from refined products to chemical
+feedstock and refining specialties such
+as lubricating grease and needle coke.
+The annual plan is to process 260 million
+tonnes of crude and produce 159 million
+tonnes of refined oil products.
+Marketing and Distribution: The
+Company will give full play to its
+advantages in integration, strengthen
+digital intelligence empowerment,
+and expand its market share. We will
+improve our market monitoring system,
+dynamically optimise marketing strategy,
+and consolidate the retail market
+share; develop high-quality outlets and
+continuously optimise the network layout;
+strengthen the development of Sinopec-
+brand products, diversify services,
+and build a high-value ecosystem of
+"customers-vehicles-life", so as to
+improve the quality and profitability
+of our non-fuel business; strengthen
+international operations and expand
+the overseas retail market; enhance
+advantages in the low-sulphur bunker
+fuel market, and improve the quality of
+operations; promote the development of
+charging network and the demonstration
+application of hydrogen-powered mobility,
+and accelerate the building-up of the
+Company into an integrated energy
+provider covering “petro, gas, hydrogen,
+power and service". The planned annual
+domestic sales volume of refined oil
+products is 191 million tonnes.
+Chemicals: The Company will closely
+track changes in the chemical market,
+improve production and marketing
+synergies and scheduling, adhere to
+"basic high-end" strategy, and cultivate
+new advantages in "low-cost + value.
+added green and low-carbon". We
+will continue to diversify feedstock and
+reduce costs; dynamically optimise
+product slates and facility utilization,
+keep profitable facilities running at high
+Revenue
+RMB million
+Year ended 31 December
+2023
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements in relevant period:
+In 2023, facing the condition that international crude oil price fluctuated widely, refined oil products demand rebounded, and petrochemical market
+was weak, the Company vigorously expanded market, actively deepened optimisation of production and operation with the oil and gas equivalent
+production, refinery throughput, ethylene production, and domestic refined oil products sales volume hitting a record high, and the Company
+realised operating profit of RMB86.8 billion, increased by 14.5% year-on-year. Due to the decrease in crude oil prices, revenue was RMB3,212.2
+billion, decreased by 3.2% year-on-year.
+CONSOLIDATED RESULTS OF OPERATIONS
+1
+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 ACCOUNTING STANDARDS. THE
+PRICES IN THE FOLLOWING DISCUSSION DO NOT INCLUDE VALUE-ADDED TAX.
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+16
+Business Review and Prospects
+H₂
+氢能
+中国石化 SINOPEC
+Capital Expenditure: In 2024, the
+planned capital expenditure for the
+Company is RMB173 billion, of which
+RMB77.8 billion will be spent in E&P,
+mainly for the crude capacity building in
+Jiyang and Tahe, natural gas production
+capacity build-up in western Sichuan, and
+the construction of oil and gas storage
+and transportation facilities; RMB24.8
+billion will be spent in refining, mainly
+for the Zhenhai refining expansion, the
+technological upgrading of Guangzhou
+and Maoming companies; RMB18.4
+billion will be spent in marketing and
+distribution, mainly for the development
+of the integrated energy station network,
+the revamping of the existing marketing
+network, and the non-fuel business;
+RMB45.8 billion will be spent in
+chemicals, mainly for the construction of
+the Zhenhai Phase II ethylene, Maoming
+ethylene, and Jiujiang aromatics projects;
+and RMB6.2 billion will be spent in
+corporate and others, mainly for R&D
+and IT.
+on diversified and green basic chemical
+production technologies and accelerate
+the breakthrough of key technologies
+for the production of high value-added
+synthetic materials. We will promote
+the transformation and upgrading of
+digital intelligence, give full play to
+the role of data, and strengthen the
+research of new technologies, digital
+intelligence application scenarios and the
+commercialisation of pilot projects.
+IN
+BJ6906FCEVCH
+BEIJING 2022 BEING 2022
+CCUS. Based on the upgrading needs of
+chemicals and materials, we will focus
+R&D: The Company will firmly
+implement the innovation-driven strategy,
+promote the deep integration of the
+innovation chain, value chain, capital
+chain and talent chain, make every
+effort to develop key technologies, and
+give full play to the supporting and
+leading role of science and technology
+innovation to development. Focusing on
+stabilising oil production, increasing gas
+output, reducing costs and improving
+profitability, the Company will promote
+oil and gas exploration and development
+technology research to increase reserves
+and production; optimise the structure
+of products in refining and enhance the
+clean, efficient and low-carbon utilisation
+of resources; carry out research
+and application of key technologies
+relating to "oil to chemicals" and "oil
+to specialties", hydrogen energy and
+loads, and improve profit from high-
+quality assets; continue to intensify the
+development of new materials and high
+value-added products, seize the market
+demand, and create more value; and
+promote the construction of new capacity
+with high-quality. At the same time,
+we will enhance the efforts in meeting
+differentiated and customised needs,
+continuously increase the proportion of
+sales to strategic customers, intensify the
+export of market-favoured products, and
+improve international operations. For the
+whole year, we plan to produce 14.35
+million tonnes of ethylene.
+Note: Includes 100% of the production of domestic joint ventures.
+3,212,215
+0.1
+1,112
+Unit: thousand tonnes
+Annual ethylene production was 14.31
+million tonnes. We actively explored
+domestic and global market, international
+business volume grew rapidly. Total
+chemical sales volume reached 83 million
+tonnes, up by 1.7%.
+30,725
+30,725
+and EVA, and reduced production or shut
+down units of products with no marginal
+contribution, thus responding to market
+demand. We reinforced cost control to
+bring down cost throughout the chemical
+value chain. Integration of production,
+marketing, research and application was
+further cemented to steadily increase the
+proportion of high value-added products.
+Summary of Operations for the Chemicals Segment
+In 2023, in the face of the tough
+external environment of the significantly
+increased domestic chemicals supply
+and narrowed chemical margins, the
+Company optimised the structure of
+feedstock, facilities and products,
+maintained high utilisation rate in
+profitable facilities such as aromatics
+(4) Chemicals
+Note: The total sales volume of refined oil products includes the amount of refined oil marketing and trading sales volume.
+30,808
+30,958
+30,958
+Change from
+0.5
+30,808
+(%)
+2021
+2022
+2023
+the end of the
+reporting period
+31 December
+31 December
+31 December
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+0.5
+Ethylene
+Synthetic resin
+Synthetic rubber
+1,113
+(11.5)
+9,201
+8,886
+7,866
+10.9
+1,252
+1,284
+1,424
+10.9
+18,999
+18,544
+20,574
+6.5
+13,380
+13,437
+14,314
+2022 to 2023 (%)
+2021
+2022
+2023
+Synthetic fiber
+Synthetic fiber monomer and polymer
+1,357
+2022
+RMB million
+3,318,168
+Change (%)
+(3.2)
+(1) Revenue
+(0.1)
+9,566
+9,554
+Non-controlling interests
+66,933
+58,310
+Shareholders of the Company
+Attributable to:
+(11.3)
+In 2023, the Company's revenue from primary business was RMB3, 146.9 billion, representing a decrease of 3.4% year-on-year. This was mainly
+due to the decreased prices in products including crude oil, refined oil products and chemical products.
+76,499
+Profit for the year
+(10.2)
+(17,901)
+(16,070)
+Income tax expense
+(11.1)
+94,400
+83,934
+Profit before taxation
+(75.4)
+67,864
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2023 and 2022:
+Sales volume (thousand tonnes)
+Year ended 31 December
+80,884
+92,483
+Gasoline
+(2.1)
+1,808
+1,770
+4.5
+30,845
+32,223
+Natural gas (million cubic meters)
+(10.9)
+4,449
+3,962
+(11.4)
+8,171
+7,237
+Crude oil
+2022
+2023
+2022
+2023
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters)
+Year ended 31 December
+Change (%)
+Change (%)
+28,539
+7,028
+Investment income and share of profits less losses from associates and joint ventures
+(0.5)
+(109,906)
+(113,750)
+Depreciation, depletion and amortisation
+6.7
+(55,809)
+(59,575)
+Selling, general and administrative expenses
+(4.3)
+(2,684,756)
+(2,569,412)
+Purchased crude oil, products and operating supplies and expenses
+(3.6)
+(3,242,333)
+(3,125,387)
+Operating expenses
+7.4
+60,812
+65,342
+Other operating revenues
+(3.4)
+3,257,356
+3,146,873
+Revenue from primary business
+3.5
+Change from
+Exploration expenses, including dry wells
+(10,591)
+(9,974)
+(9,922)
+Net finance costs
+14.5
+75,835
+86,828
+Operating profit
+(14,779)
+9,100
+Other operating income/(expenses), net
+(77.6)
+1,084
+243
+Impairment reversals on trade and other receivables
+3.4
+(263,991)
+(272,921)
+Taxes other than income tax
+4.3
+(103,585)
+(108,017)
+Personnel expenses
+4.4
+(11,055)
+112
+2,456
+41
+2 PRODUCTION & OPERATIONS REVIEW
+(1) Exploration and Production
+In 2023, the Company made
+breakthroughs in increasing reserve,
+production and profit as well as cutting
+cost. In terms of exploration, we spared
+no efforts in seeking new discoveries and
+reserves and obtaining more exploration
+rights. We strengthened risk exploration,
+trap pre-exploration and integrated
+evaluation exploration, and achieved
+a number of oil and gas discoveries,
+including breakthroughs in Tarim Basin,
+deep coal-bed methane in Ordos Basin,
+continental tight oil and gas in Sichuan
+Basin and deep shale gas of Permian
+marine facies in Puguang. We continued
+to efficiently promote the "Deep Earth
+Project" and construction of the Shengli
+Jiyang Shale Oil National Demonstration
+Zone. Domestic oil and gas reserve
+replacement ratio amounted to 131%.
+In terms of crude oil development, we
+accelerated the capacity building of
+major oilfields, such as Jiyang, Tahe and
+West Junggar, and strengthened fine-
+tuned development of mature oil fields.
+In natural gas development, we actively
+promoted the capacity building of key
+blocks in Shunbei Zone Two and marine
+facies gas in West Sichuan, scaled up
+mid and long term LNG contracts, and
+further optimised integrated gas system
+covering production, supply, storage and
+sales, with profitability greatly enhanced
+for the whole natural gas business chain.
+The Company's production of oil and
+gas in 2023 was 504.09 million barrels
+of oil equivalent, up by 3.1%, among
+which, domestic crude production totaled
+251.63 million barrels, and natural gas
+production reached 1,337.8 billion cubic
+feet, up by 7.1%.
+Summary of Operations for the Exploration and Production Segment
+Oil and gas production (mmboe)
+Crude oil production (mmbbls)
+China
+Overseas
+Natural gas production (bcf)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Summary of Reserves of Crude Oil and Natural Gas
+Proved reserves
+Proved developed reserves
+China
+Consolidated companies
+Shengli
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+Proved undeveloped reserves
+China
+Items
+10
+Domestic demand for chemicals picked
+up in 2023. Based on our statistics,
+domestic consumption of ethylene
+equivalent was up by 8.2% from
+the previous year, and the apparent
+consumption of synthetic resin, synthetic
+fibre and synthetic rubber rose by 6.2%,
+7.8% and 6.6% respectively. Affected
+by newly-released production capacity,
+domestic chemical product prices down
+by 7.0% with chemical margin at a low
+level.
+(3) Chemical Products Market
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS
+BUSINESS REVIEW
+In 2023, global economy recorded slow growth.
+China's economy picked up, registering a GDP
+growth of 5.2% year on year. International oil
+prices fluctuated widely. Domestic demand for
+refined oil products rebounded. Demand for
+natural gas kept growing and that for chemical
+products was improving.
+USD/Barrel
+160
+Movement of International Crude Oil Prices
+WTI-NYMEX
+BRENT DTD
+BRENT ICE
+DUBAI
+120
+122
+The Company carried out in-depth high-
+quality development actions, fully leveraged its
+integration advantages, optimised production
+and operation on all fronts, and pressed
+ahead to generate profit, which helped achieve
+favorable operating results.
+40
+0
+Jan-2022 Apr-2022 Jul-2022
+Oct-2022
+Jan-2023
+Apr-2023 Jul-2023 Oct-2023 Jan-2024
+1 MARKET REVIEW
+(1) Crude Oil & Natural Gas Market
+In 2023, international crude oil prices
+fluctuated in a wide range. The spot price
+of Platt's Brent for the year averaged
+USD82.6 per barrel, down by 18.4%
+year on year. Based on the statistics of
+NDRC, domestic apparent consumption
+of natural gas reached 394.5 billion cubic
+meters, up by 7.6% year on year.
+(2) Refined Oil Products Market
+In 2023, domestic demand for refined
+oil products rebounded. According to the
+statistics released by NDRC, domestic
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) was 385 million tonnes, up
+by 11.8% from the previous year, with
+gasoline up by 10.1%, diesel up by 5.3%
+and kerosene up by 90.3%.
+Consolidated companies
+Shengli
+80
+Overseas
+2,003
+1,962
+1,777
+1,766
+1,507
+1,489
+1,507
+1,489
+1,119
+1,105
+388
+384
+270
+277
+17
+17
+253
+260
+226
+189
+153
+189
+153
+67
+Others
+31 December 2022
+31 December 2023
+196
+11311
+Consolidated companies
+Crude oil reserves (mmbbls)
+Equity accounted entities
+Change from
+2022
+2021 2022 to 2023 (%)
+504.09
+488.99
+479.74
+3.1
+281.12
+280.86
+2023
+0.1
+279.76
+(1.9)
+7.1
+30.07
+1,248.75
+1,337.82
+30.16
+29.49
+0.3
+249.60
+250.79
+251.63
+1,199.44
+187,860
+31 December
+2023
+Non-current
+Lease liabilities
+Current
+31 LEASE LIABILITIES
+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.
+107,961
+RMB million
+Less: Current portion
+24,811
+(440)
+(3,797)
+22,695
+28,608
+Interest rates ranging from 1.08% to 4.99% per annum at 31
+December 2023 with maturities through 2038
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+31 December
+2022
+RMB million
+85,706
+22,255
+17,536
+163,864
+Others
+182,411
+163,049
+RMB million
+Total
+Other long-term
+liabilities-loans
+from other
+related parties
+RMB million
+5,180
+174,290
+RMB million
+fellow
+subsidiaries
+and debts
+Loans from
+Sinopec Group
+Company and
+At 31 December 2023
+Interest costs (including capitalised interest costs)
+Other changes:
+Total changes from financing cash flows
+Interest paid
+Repayment of bank and other loans
+Proceeds from bank and other loans
+Changes from financing cash flows:
+At 1 January 2023
+181,400
+32 RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES (EXCLUDING LEASE LIABILITIES)
+16,004
+166,407
+(44,576)
+Long-term debts represent:
+130,282
+31 December
+2023
+Interest rate and final maturity
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+190
+The Group's weighted average interest rates on short-term loans were 2.23% (2022: 2.63%) per annum at 31 December 2023. The above
+borrowings are unsecured.
+66,329
+70,971
+7,292
+12,437
+440
+3,797
+440
+3,797
+35
+906
+1,012
+RMB million
+(7,359)
+31 December
+2022
+RMB million
+USD denominated
+170,408
+Total third parties' long-term debts
+Less: Current portion
+43,697
+13,059
+12,163
+3,518
+31,534
+9,541
+Fixed interest rates ranging from 2.50% to 3.20% per annum at
+31 December 2023 with maturities through 2026
+Fixed interest rate of 4.25% per annum at 31 December 2023
+with maturities through 2043
+USD denominated
+RMB denominated
+Corporate bonds
+53
+86,585
+157,349
+51
+Interest rates at 0.00% per annum at 31 December 2023 with
+maturities through 2038
+86,532
+157,298
+Interest rates ranging from 1.08% to 4.80% per annum at 31
+December 2023 with maturities through 2035
+Third parties' debts
+Long-term bank loans
+RMB denominated
+698,936
+(599,954)
+34 CONTRACT LIABILITIES
+699,410
+(599,954)
+13,941
+13,617
+31 December
+2022
+RMB million
+31 December
+2023
+RMB million
+Taxes other than income tax
+Other payables
+Payables for constructions
+Interest payable
+Salaries and welfare payable
+35 OTHER PAYABLES
+As at 31 December 2023 and 2022, 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.
+5,911
+269,424
+259,000
+19,789
+26,724
+43,310
+51,035
+206,325
+145
+181,241
+549
+68,492
+(1,195)
+1,103
+4,277
+40,495
+2022
+RMB million
+RMB million
+43,599
+1,681
+1,099
+2023
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+192
+Balance at 31 December
+Balance at 1 January
+Provision for the year
+Accretion expenses
+Decrease for the year
+Exchange adjustments
+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:
+36 PROVISIONS
+178,146
+168,124
+23,655
+38,554
+71,833
+48,556
+66,928
+474
+RMB million
+Within 1 month or on demand
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+191
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+9,807
+(16,772)
+263,964
+5,133
+258,831
+(570)
+(16,202)
+333
+9,474
+91,459
+190
+91,269
+(7,997)
+(284)
+(7,713)
+33 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+Between 1 month and 6 months
+Over 6 months
+Amounts due to third parties
+Amounts due to associates and joint ventures
+31 December
+2022
+RMB million
+31 December
+2023
+10,782
+269,424
+258,642
+229,878
+29,122
+259,000
+8,290
+8,755
+4,276
+224,994
+25,358
+RMB million
+2022
+31 December
+216,847
+RMB million
+31 December
+2023
+The ageing analysis of trade accounts payable and bills payable is as follows:
+Trade accounts payable and bills payable measured at amortised cost
+Bills payable
+Amounts due to Sinopec Group Company and fellow subsidiaries
+7,628
+992
+8,640
+3,304
+856
+2,448
+982
+386
+80
+516
+Net deferred tax assets/(liabilities)
+Lease liabilities and right of use assets
+Others
+Intangible assets
+125
+12
+(5)
+118
+Financial assets at fair value through other
+comprehensive income
+4,643
+(631)
+525
+4,749
+186
+Tax losses carried forward
+73
+234
+4,254
+Receivables and inventories
+RMB million
+RMB million
+RMB million
+income
+in other
+comprehensive
+income
+statement
+1 January
+2023
+consolidated
+Balance at
+Recognised
+Recognised in
+15,177
+4,767
+490
+(3,145)
+(862)
+13,927
+(25)
+(568)
+(805)
+(3,341)
+RMB million
+2022
+31 December
+from
+reserve
+Others
+income
+comprehensive
+income
+statement
+Balance at
+Transferred
+Recognised
+in other
+consolidated
+Recognised in
+Balance at
+1 January
+2022
+Movements in the deferred tax assets and liabilities are as follows:
+29 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+RMB million
+796
+RMB million
+RMB million
+1,740
+Property, plant and equipment
+(651)
+4,767
+(13)
+(3,157)
+203
+(2,451)
+Cash flow hedges
+3,091
+233
+2,858
+Payables
+4,254
+(23)
+514
+3,763
+Receivables and inventories
+RMB million
+RMB million
+Others
+RMB million
+15
+Transferred
+from
+reserve
+RMB million
+Balance at
+Current portion of long-term corporate bonds
+USD denominated
+RMB denominated
+Current portion of long-term bank loans
+USD denominated
+RMB denominated
+Short-term bank loans
+Third parties' debts
+RMB million
+31 December
+2022
+2023
+RMB million
+31 December
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Short-term debts represent:
+12,293
+422
+(28)
+(836)
+(2,442)
+RMB denominated
+15,177
+Loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+59,037
+58,534
+30,700
+4,546
+30,700
+4,546
+1
+13,875
+2,813
+13,876
+2,813
+136
+14,461
+14,325
+51,175
+51,175
+RMB denominated
+Current portion of long-term loans
+Euro denominated
+USD denominated
+Short-term loans
+Net deferred tax assets/(liabilities)
+1,637
+(12)
+(7,873)
+(805)
+Property, plant and equipment
+(1,126)
+422
+(5)
+(841)
+(51)
+(651)
+Cash flow hedges
+2,715
+-
+(376)
+3,091
+Payables
+3,701
+RMB million
+2023
+31 December
+(26)
+(8,704)
+Tax losses carried forward
+4,643
+1,415
+234
+Others
+3,912
+608
+3,304
+Lease liabilities and right of use assets
+(2,438)
+(1)
+6,852
+11
+Intangible assets
+130
+5
+125
+comprehensive income
+Financial assets at fair value through other
+9,036
+1
+4,392
+982
+38
+179,470
+162
+43,599
+39 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+197
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+As at and for the year ended 31 December 2023, and as at and for the year ended 31 December 2022, no individually significant loss allowance
+for expected credit losses were recognised in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates and joint
+ventures.
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 30.
+272,649
+246,857
+Total
+156,537
+154,051
+22,255
+24,811
+7,292
+12,437
+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)
+(b) Key management personnel emoluments
+5,180
+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:
+(c) Contributions to defined contribution retirement plans
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+uses of public utilities.
+•
+depositing and borrowing money; and
+•
+lease of assets;
+.
+rendering and receiving services;
+•
+sales and purchases of goods and ancillary materials;
+•
+Apart from transactions with Sinopec Group Company and fellow subsidiaries, the Group has transactions with other state-controlled entities,
+include but not limited to the followings:
+The Group is a state-controlled energy and chemical enterprise and operates in an economic regime currently dominated by entities directly
+or indirectly controlled by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively
+referred as “state-controlled entities”).
+(d) Transactions with other state-controlled entities in the PRC
+The Group participates in various defined contribution retirement plans organised by municipal and provincial governments for its staff. The
+details of the Group's employee benefits plan are disclosed in Note 40. As at 31 December 2023 and 2022, the accrual for the contribution to
+post-employment benefit plans was not material.
+9,865
+RMB'000
+9,299
+566
+2022
+2023
+RMB'000
+6,757
+512
+7,269
+Short-term employee benefits
+Retirement scheme contributions
+state-controlled.
+5,133
+38,312
+31 December
+31 December
+2023
+RMB million
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Sixth Supplementary Agreement on 27 August 2021, which took effect on 1 January 2022 and made adjustment to "Mutual
+Supply Agreement" and "Buildings Leasing Contract", etc.
+The Company has entered into a service stations franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+The Company has entered into a series of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+(4) where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(2) where there is no government-prescribed price, the government-guidance price;
+(1) the government-prescribed price;
+The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+•
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2023.
+The terms of these agreements are summarised as follows:
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+39 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+2022
+RMB million
+Other long-term liabilities
+11,480
+Financial assets at fair value through other comprehensive income
+26,052
+Other payables
+4,736
+4,402
+Contract liabilities
+38,337
+19,971
+Trade accounts payable and bills payable
+31,084
+36,135
+Total
+8,633
+9,025
+Long-term prepayments and other assets
+10,375
+14,953
+Prepaid expenses and other current assets
+596
+12,056
+101
+Trade accounts receivable
+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 2023 were RMB13,932 million (2022:
+RMB13,190 million).
+41 SEGMENT REPORTING
+905,264
+759,352
+630,248
+530,239
+505,805
+80,328
+94,426
+449,911
+411,379
+1,660,924
+13,421
+1,674,345
+17,943
+1,774,518
+45,222
+1,571,264
+1,526,001
+1,376,425
+1,355,310
+194,839
+170,691
+314,242
+1,028,800
+294,683
+1,535,512
+(2,489,646)
+Financial Statements (International)
+199
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+3,318,168
+60,812
+65,342
+3,212,215
+2,326
+2,808
+9,913
+9,502
+39,529
+43,911
+3,875
+3,785
+5,169
+5,336
+3,257,356
+3,146,873
+(2,620,886)
+1,788,152
+121,912
+116,703
+192,330
+External sales
+Exploration and production
+Revenue from primary business
+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:
+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 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+198
+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.
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+177,980
+2022
+RMB million
+RMB million
+2023
+Other operating revenues
+Revenue
+Corporate and others
+Marketing and distribution
+Chemicals
+Exploration and production
+Refining
+Other operating revenues
+196
+Revenue from primary business
+Inter-segment sales
+External sales
+Corporate and others
+Inter-segment sales
+External sales
+Chemicals
+Inter-segment sales
+External sales
+Marketing and distribution
+Elimination of Inter-segment sales
+(ix) The Group obtained loans, discounted bills and issued the acceptance bills from Sinopec Group Company and fellow subsidiaries.
+1,756,575
+(vii) 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 2023 was RMB65,967 million (2022: RMB65,064 million).
+Estimated future annual payments are as follows:
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB628 million for the year ended 31 December 2023 (2022: RMB270 million).
+Exploration licenses for exploration activities are registered with the Ministry of Natural Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual minimum exploration investment relating to the exploration blocks in respect of which the license
+is issued. The Ministry of Natural Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+Exploration and production licenses
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint
+ventures based on market prices.
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB5,856 million (2022: RMB1,751 million).
+Note:
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+261,914
+239,760
+RMB million
+167,507
+94,407
+177,809
+61,951
+Authorised but not contracted for
+Authorised and contracted for (i)
+RMB million
+2022
+2023
+31 December
+Within one year
+31 December
+Between one and two years
+Between three and four years
+Between four and five years
+Thereafter
+857
+875
+62
+156
+115
+172
+146
+176
+152
+175
+369
+802
+RMB million
+RMB million
+2022
+31 December
+31 December
+2023
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+194
+Between two and three years
+2,356
+At 31 December 2023 and 2022, capital commitments of the Group are as follows:
+38 COMMITMENTS AND CONTINGENT LIABILITIES
+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.
+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).
+119,896
+119,349
+24,781
+24,377
+95,115
+94,972
+RMB million
+RMB million
+2022
+31 December
+31 December
+2023
+94,971,971,046 listed A shares (2022: 95,115,471,046) of RMB1.00 each
+24,377,280,600 listed H shares (2022: 24,780,936,600) of RMB1.00 each
+Registered, issued and fully paid
+37 SHARE CAPITAL
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(viii) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+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.
+Capital commitments
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+During the year ended 31 December 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.
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 38, respectively.
+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 2023, the debt-to-capital ratio
+and the liability-to-asset ratio of the Group were 19.0% (2022: 12.1%) and 52.8% (2022: 51.8%), respectively.
+Capital management
+37 SHARE CAPITAL (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+193
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+All A shares and H shares rank pari passu in all material aspects.
+During the year ended 31 December 2023, the Company repurchased 143,500,000 listed A shares and 403,656,000 listed H shares respectively at
+a price of RMB5.29 per share to RMB6.17 per share for the repurchase of listed A shares, with a total amount of RMB816,009,269.44, and a price
+of HKD3.78 per share to HKD4.56 per share for the repurchase of listed H shares, with a total amount of HKD1,646,392,242.20, which had been
+cancelled in the year ended 31 December 2023.
+During the year ended 31 December 2022, the Company repurchased 442,300,000 listed A shares and 732,502,000 listed H shares respectively
+at a price of RMB4.06 per share to RMB4.50 per share for the repurchase of listed A shares, with a total amount of RMB1,888,163,981.61, and a
+price of HKD3.06 per share to HKD3.75 per share for the repurchase of listed H shares, with a total amount of HKD2,499,261,860.00, which had
+been cancelled in the year ended 31 December 2022.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+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 the share premium for every 10 existing shares.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB1.00 each at the Placing Price
+of HKD8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD23,970,100,618.00.
+During the year ended 31 December 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.
+1,701
+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.
+for the year ended 31 December 2023
+2,838
+(vii)
+173
+179
+(vi)
+48,465
+43,361
+(v)
+37,317
+41,783
+(iv)
+18,291
+29,830
+(iii)
+184,986
+218,974
+(ii)
+352,691
+408,554
+1,203
+(i)
+(viii)
+541
+(vi) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management,
+environmental protection and management services.
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Notes:
+The directors of the Company are of the opinion that the above transactions with related parties were conducted in the ordinary course of
+business and on normal commercial terms or in accordance with the agreements governing such transactions, and this has been confirmed by
+the independent non-executive directors.
+As at 31 December 2023 and 2022, 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 38. Guarantees given to banks by
+the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 38.
+For the year ended 31 December 2023, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates and
+joint ventures for land, buildings and others are RMB10,931 million, RMB1,053 million and RMB273 million (2022: RMB11,051 million, RMB943
+million and RMB352 million), including pursuant to the continuing connected transaction agreements signed in 2000, the Sixth Supplementary
+Agreement on 27 August 2021, the amount of rental the Group paid to Sinopec Group Company for land and buildings are RMB10,926 million
+and RMB1,050 million (2022: RMB11,046 million and RMB938 million).
+For the year ended 31 December 2023, 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 2023 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB7,637 million
+(2022: RMB7,811 million).
+The amounts set out in the table above in respect of the year ended 31 December 2023 and 2022 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+36,608
+(3,382)
+Net funds obtained from related parties
+43,621
+(ix)
+(903)
+(vii)
+1,283
+2022
+RMB million
+Included in the transactions disclosed above, for the year ended 31 December 2023 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB200,604 million (2022: RMB158,874 million) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB187,117 million
+(2022: RMB146,114 million), lease charges for land, buildings and others paid by the Group of RMB10,926 million, RMB1,050 million and
+RMB228 million (2022: RMB11,046 million, RMB938 million and RMB235 million), respectively and interest expenses of RMB1,283 million
+(2022: RMB541 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB87,247 million (2022:
+RMB58,403 million), comprising RMB84,329 million (2022: RMB57,151 million) for sales of goods, RMB2,838 million (2022: RMB1,203 million)
+for interest income and RMB80 million (2022: RMB49 million) for agency commission income.
+2023
+39 RELATED PARTY TRANSACTIONS
+The Group is defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business. Management
+has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any resulting
+liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+Legal contingencies
+The Group paid normal routine pollutant discharge fees of approximately RMB19,156 million in the consolidated financial statements for the year
+ended 31 December 2023 (2022: RMB16,823 million).
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect management's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature
+and extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development
+areas, whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv)
+changes in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is
+indeterminable due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective
+actions that may be required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot
+reasonably be estimated at present, and could be material.
+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 2023 and 2022, 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
+The Group provided a guarantee in respect to payment obligation under the raw material supply agreement of Amur Gas amount to RMB17,211 million (31 December
+2022: RMB16,924 million). As at 31 December 2023, Amur Gas has not yet incurred the relevant payment obligations and therefore the Group has no guarantee
+amount (31 December 2022: Nil).
+(i) The Group provided a guarantee in respect to standby credit facilities granted to Zhongan United Coal Chemical Co., Ltd. ("Zhongan United") and Amur Gas Chemical
+Complex Limited Liability Company ("Amur Gas") by banks amounting to RMB7,100 million (31 December 2022: RMB7,100 million) and RMB25,781 million (31
+December 2022: RMB25,351 million) respectively. As at 31 December 2023, the amount withdrawn (the portion corresponding to the shareholding ratio of the Group)
+by Zhongan United from banks and guaranteed by the Group was RMB4,828 million (31 December 2022: RMB5,254 million). As at 31 December 2023, the amount
+withdrawn (the portion corresponding to the shareholding ratio of the Group) by Amur Gas from banks and guaranteed by the Group was RMB3,735 million (31
+December 2022: RMB3,673 million).
+Note:
+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.
+8,927
+RMB million
+Joint ventures (i)
+RMB million
+31 December
+2022
+31 December
+2023
+At 31 December 2023 and 2022, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+38 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+RMB million
+Contingent liabilities
+8,927
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+8,563
+8,563
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Interest expense
+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.
+Interest income
+Agency commission income
+Production related services
+Net deposits placed with related parties
+Notes
+Transportation and storage
+Purchases
+Sales of goods
+Exploration and development services
+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:
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+39 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+195
+Financial Statements (International)
+109,906
+113,750
+2,820
+3,656
+17,716
+18,958
+20,588
+23,995
+189,096
+20,386
+45,321
+5,181
+46,755
+176,753
+23,461
+887
+1,790
+191
+Others
+Non-current assets
+Mainland China
+Others
+Singapore
+4,485
+2023
+RMB million
+Mainland China
+External sales
+The following tables set out information about the geographical information of the Group's external sales and the Group's non-current assets,
+excluding financial instruments and deferred tax assets. In presenting information on the basis of geographical segments, segment revenue is
+based on the geographical location of customers, and segment assets are based on the geographical location of the assets.
+5,669
+2,636
+571
+1,280
+415
+278
+2
+2,891
+58,612
+Chemicals
+19,140
+Exploration and production
+Depreciation, depletion and amortisation
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Capital expenditure
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+41 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2023
+2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+200
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refining
+55,038
+Marketing and distribution
+Impairment losses on long-lived assets
+15,735
+22,863
+22,899
+83,300
+78,596
+RMB million
+RMB million
+2022
+2023
+(2) Geographical information
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Corporate and others
+RMB million
+Production Limited ("SIPL")
+2,857,361
+157,113
+197,741
+RMB1,595
+Sinopec Qingdao Petrochemical Company Limited
+100.00
+RMB5,000
+China International United Petroleum and Chemical
+Company Limited
+100.00
+RMB3,374
+Sinopec Lubricant Company Limited
+100.00
+RMB4,000
+Sinopec Yizheng Chemical Fibre Limited Liability
+Company
+Investment in exploration, production and sale of
+petroleum and natural gas
+100.00
+RMB8,250
+Sinopec International Petroleum Exploration and
+100.00
+Investment holding of overseas business Sinopec
+International Petroleum Exploration
+Sinopec Catalyst Company Limited
+100.00
+1.02
+98.98
+1,011,579
+RMB5,294
+Sinopec Beihai Refining and Chemical Limited Liability
+Company
+100.00
+RMB9,606
+Sinopec Hainan Refining and Chemical Company
+Limited
+100.00
+RMB1,000
+Sinopec Chemical Sales Company Limited
+Trading of petrochemical products
+100.00
+RMB1,400
+China Petrochemical International Company Limited
+RMB1,500
+2,824,140
+Coal chemical industry investment management,
+production and sale of coal chemical products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+interests %
+Financial Statements (International)
+Financial Statements (International)
+201
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+1,398,510
+44,739
+1,353,771
+RMB million
+31 December
+2022
+263,087
+230,941
+3,318,168
+1,426,377
+38,068
+1,464,445
+RMB million
+2023
+31 December
+3,212,215
+202
+Principal activities
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+42 PRINCIPAL SUBSIDIARIES
+Interests held by
+non-controlling
+100.00
+USD3,598
+Sinopec Overseas Investment Holding Limited ("SOIH")
+100.00
+RMB15,651
+Sinopec Yangzi Petrochemical Company Limited
+100.00
+Company %
+(million)
+RMB22,761
+Interests
+held by the
+Particulars of
+issued capital
+Sinopec Great Wall Energy & Chemical Company
+Limited
+Name of company
+As at 31 December 2023, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+for the year ended 31 December 2023
+1,068,887
+5,734
+15,838
+Profit before taxation
+Aggregate investment income
+Net finance costs
+- Corporate and others.
+- Chemicals
+- Marketing and distribution
+- Refining
+(750)
+- Exploration and production
+share of profits from associates and joint ventures
+- Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+Aggregate
+Investment income
+(645)
+3,383
+3,142
+(9,922)
+83,934
+14,060
+829
+(264)
+832
+14,258
+(33)
+31
+35
+30
+14,479
+6,199
+5,209
+3,365
+(4,704)
+2,883
+3,061
+- Exploration and production
+Share of /(loss) from associates and joint ventures
+- Refining
+- Exploration and production
+By segment
+Operating profit/(loss)
+Result
+2022
+RMB million
+RMB million
+2023
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+41 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Production and sale of polyester chips and
+Production and sale of refined petroleum
+- Marketing and distribution
+(9,974)
+- Chemicals
+53,716
+75,835
+86,828
+(1,820)
+750
+Total seperating profit
+- Elimination
+1,318
+604
+- Corporate and others
+(14,127)
+(6,036)
+24,537
+25,939
+12,211
+20,608
+44,963
+94,400
+31 December
+2023
+RMB million
+31 December
+84,472
+90,489
+237,534
+246,586
+Short-term debts
+Total segment liabilities
+- Corporate and others.
+- Chemicals
+- Marketing and distribution
+86,428
+179,151
+187,385
+55,095
+· Exploration and production
+- Refining
+Segment liabilities
+Liabilities
+206,674
+28,947
+1,951,121
+221,885
+809,470
+14,556
+Other unallocated liabilities
+7,256
+7,817
+29,547
+37,248
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+85,706
+163,049
+Long-term debts
+4,725
+1,454
+Income tax payable
+59,037
+58,534
+786,229
+Total liabilities
+2,024,696
+34,337
+327,706
+331,116
+412,543
+445,556
+Interest in associates and joint ventures
+Total segment assets
+Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+- Exploration and production
+Segment assets
+Assets
+RMB million
+2022
+387,643
+Total assets
+388,961
+242,794
+145,052
+163,537
+Cash and cash equivalents, time deposits with financial institutions and other bank balances
+Other unallocated assets
+22,433
+20,110
+Deferred tax assets
+730
+450
+Financial assets at fair value through other comprehensive income
+233,941
+232,630
+1,520,018
+1,573,632
+148,014
+153,740
+255,577
+polyester fibres
+products, lubricant base oil, and petrochemical
+materials
+for the year ended 31 December 2023
+Impairment
+provision
+on individual
+Weighted.
+basis
+average
+Impairment
+provision
+Loss
+allowance
+RMB million
+loss rate
+RMB million
+RMB million
+Carrying
+amount
+RMB million
+Current and within 1 year past due
+1 to 2 years past due
+216
+2 to 3 years past due
+Over 3 years past due
+Total
+269
+7,014
+29
+193
+2
+0.1%
+56
+46,097
+58
+amount
+RMB million
+Gross carrying
+74
+139
+1
+24.6%
+46
+47
+34
+25
+45.1%
+37
+31 December 2022
+62
+3,599
+12,730
+3,467
+3,497
+100.0%
+366
+3,833
+519
+4,016
+Impairment provision on
+individual basis
+Impairment provision
+on provision matrix basis
+3,965
+52,668
+25
+20.9%
+39
+Carrying
+amount
+contractual
+undiscounted
+RMB million
+cash flow
+RMB million
+Within
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+More than
+5 years
+RMB million
+Total
+Short-term debts
+58,964
+58,964
+Long-term debts
+163,049
+177,294
+3,958
+59,114
+89,223
+24,999
+Loans from Sinopec Group Company and
+58,534
+31 December 2023
+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:
+As at 31 December 2023, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB416,358
+million (2022: RMB454,857 million) on an unsecured basis, at a weighted average interest rate of 2.23% per annum (2022: 2.38%). As at 31
+December 2023, the Group's outstanding borrowings under these facilities were RMB59,815 million (2022: RMB21,313 million) and were included
+in debts.
+64
+148
+43.4%
+33
+181
+3,861
+50,443
+3,487
+10,723
+3,405
+3,580
+99.2%
+371
+3,776
+499
+4,079
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+205
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Liquidity risk
+Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing
+liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
+conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Management prepares monthly cash flow budget
+to ensure that the Group will always have sufficient liquidity to meet its financial obligations as they fall due. The Group arranges and negotiates
+financing with financial institutions and maintains a certain level of standby credit facilities to reduce the Group's liquidity risk.
+70
+fellow subsidiaries
+0.2%
+8,958
+160
+1,059
+2
+15
+18
+246
+Cash and cash equivalents
+at 31 December
+14,569
+13,204
+271
+14,262
+4,906
+889
+15
+27
+1,665
+2,224
+2
+3
+*
+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.
+20,040
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 203
+87
+Effect of foreign currency exchange
+(5,938) 11,913
+4,015
+(4,238)
+(12)
+(27)
+(577)
+(1,454)
+(1)
+2
+Cash and cash equivalents
+rate changes
+at 1 January
+8,999 20,040
+7,068
+889
+5,112
+27
+54
+2,224
+3.432
+3
+1
+13,204
+Financial Statements (International)
+204
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The following table provides information about the exposure to credit risk and ECLs for accounts receivable as at 31 December 2023 and 2022.
+amount
+Impairment provision on
+individual basis
+Impairment
+provision
+on individual
+basis
+Impairment provision
+on provision matrix basis
+Weighted-
+average
+Gross carrying
+31 December 2023
+Current and within 1 year past due
+(ii) Impairment of financial assets (Continued)
+1 to 2 years past due
+Carrying
+amount
+RMB million
+Impairment
+provision
+Loss
+allowance
+RMB million
+loss rate
+RMB million
+RMB million
+2 to 3 years past due
+Over 3 years past due
+Total
+48,261
+326
+116
+RMB million
+Credit risk (Continued)
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2023
+for the year ended 31 December 2023
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+Overview
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through profit
+or loss, derivative financial assets, trade accounts receivable, amounts due from Sinopec Group Company and fellow subsidiaries, amounts due from
+associates and joint ventures, financial assets at FVOCI and other receivables. Financial liabilities of the Group include short-term debts, loans from
+Sinopec Group Company and fellow subsidiaries, derivative financial liabilities, trade accounts payable and bills payable, amounts due to Sinopec
+Group Company and fellow subsidiaries, amounts due to associates and joint ventures, other payables, long-term debts and lease liabilities.
+The Group has exposure to the following risks from its uses of financial instruments:
+credit risk;
+liquidity risk; and
+market risk.
+The Board of Directors has overall responsibility for the establishment, oversight of the Group's risk management framework, and developing and
+monitoring the Group's risk management policies.
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management controls and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+Credit risk
+(i) Risk management
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
+obligations, and arises principally from the Group's deposits placed with financial institutions (including structured deposits) and receivables
+from customers. To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large financial
+institutions in the PRC with acceptable credit ratings. The majority of the Group's trade accounts receivable relate to sales of petroleum and
+chemical products to related parties and third parties operating in the petroleum and chemical industries. No single customer accounted for
+greater than 10% of total trade accounts receivable at 31 December 2023, except the amounts due from Sinopec Group Company and fellow
+subsidiaries. Management performs ongoing credit evaluations of the Group's customers' financial condition and generally does not require
+collateral on trade accounts receivable. The Group maintains a loss allowance for expected credit losses and actual losses have been within
+management's expectations.
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through profit or loss,
+derivative financial assets, trade accounts receivable, financial assets at FVOCI and other receivables, represent the Group's maximum exposure
+to credit risk in relation to financial assets.
+(ii) Impairment of financial assets
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivable, financial assets at
+FVOCI and other receivables.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+For trade accounts receivable and financial assets at FVOCI, the Group applies the IFRS 9 simplified approach to measuring ECLs which uses a
+lifetime expected loss allowance for all trade accounts receivable and financial assets at FVOCI.
+To measure the ECLs, trade accounts receivable and financial assets at FVOCI have been grouped based on shared credit risk characteristics and
+the days past due.
+The ECLs were calculated based on historical actual credit loss experience. The rates were considered the differences between economic
+conditions during the period over which the historical data has been collected, current conditions and the Group's view of economic conditions
+over the expected lives of the receivables. The Group performed the calculation of ECL rates by the operating segment.
+Financial Statements (International)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+4
+3,934
+37,248
+13,305
+3
+5,942
+3,779
+9,721
+120
+6,065
+3,779
+330
+2,221
+2,551
+450
+2,221
+12,395
+Derivative financial liabilities:
+3
+Derivative financial liabilities
+367
+2,385
+367
+2,385
+2,752
+2,752
+Level 1
+RMB million
+Level 2
+RMB million
+Level 3
+RMB million
+Total
+At 31 December 2022
+RMB million
+Liabilities
+Financial assets at fair value through other comprehensive income:
+- Equity instruments
+6,667
+(1,245)
+8,127
+(3,078)
+(20,560)
+(418)
+1,601
+5,758
+3,079
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Trade accounts receivable and bills receivable
+207
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+RMB million
+RMB million
+Assets
+Financial assets at fair value through profit or loss:
+- Fund Investments
+Derivative financial assets:
+- Derivative financial assets
+Financial Statements (International)
+Assets
+Financial assets at fair value through profit or loss:
+- Fund Investments
+for the year ended 31 December 2023
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values (Continued)
+(ii) Fair values of financial instruments carried at other than fair value
+The disclosures of the fair value estimates, and their methods and assumptions of the Group's financial instruments, are made to comply
+with the requirements of IFRS 7 and IFRS 9 and should be read in conjunction with the Group's consolidated financial statements and related
+notes. The estimated fair value amounts have been determined by the Group using market information and valuation methodologies considered
+appropriate. However, considerable judgement is required to interpret market data to develop the estimates of fair value. Accordingly, the
+estimates presented herein are not necessarily indicative of the amounts the Group could realise in a current market exchange. The use of
+different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially
+the same characteristic and maturities range from 2.69% to 5.47% (2022: 2.66% to 4.35%). 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
+2023 and 2022:
+Carrying amount
+Fair value
+31 December
+2023
+RMB million
+170,409
+167,014
+2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+130,282
+125,866
+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 2023 and 2022.
+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
+material accounting policies are set forth in Note 2. Management believes the following critical accounting policies involve the most significant
+judgements and estimates used in the preparation of the consolidated financial statements.
+Oil and gas properties and reserves
+The accounting for the exploration and production's oil and gas activities is subject to accounting rules that are unique to the oil and gas industry.
+There are two methods to account for oil and gas business activities, the successful efforts method and the full cost method. The Group has elected
+to use the successful efforts method. The successful efforts method reflects the volatility that is inherent in exploring for mineral resources in that
+costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include dry hole costs, seismic costs
+and other exploratory costs. Under the full cost method, these costs are capitalised and written-off or depreciated over time.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated at least
+annually and take into account recent production and technical information about each field. In addition, as prices and cost levels change from
+year to year, the estimates of proved and proved developed reserves also change. This change is considered a change in estimate for accounting
+purposes and is reflected on a prospective basis in relation to depreciation rates. Oil and gas reserves have a direct impact on the assessment of
+the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves estimates are revised
+downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration the
+anticipated method of dismantlement required in accordance with industry practices in similar geographic area, including estimation of economic
+life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are capitalised as oil and
+gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment loss
+and future dismantlement costs. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes
+produced and reserves.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 209
+Financial Statements (International)
+The Group has not developed an internal valuation model necessary to estimate the fair values of loans from Sinopec Group Company and
+fellow subsidiaries as it is not considered practicable to estimate their fair values because the cost of obtaining discount and borrowing rates for
+comparable borrowings would be excessive based on the Group's existing capital structure and the terms of the borrowings.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+208
+Management of the Group uses discounted cash flow model with inputted interest rate, which were influenced by historical fluctuation and the probability of market
+fluctuation, to evaluate the fair value of trade accounts receivable and bills receivable classified as Level 3 financial assets.
+2
+2
+Derivative financial assets:
+- Derivative financial assets
+7,857
+11,478
+19,335
+Financial assets at fair value through other comprehensive income:
+- Equity instruments
+114
+616
+- Trade accounts receivable and bills receivable
+7,973
+11,478
+3,507
+4,123
+730
+3,507
+23,574
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+1,293
+1,293
+6,020
+6,020
+7,313
+7,313
+During the years ended 31 December 2023 and 2022, there was no transfer between instruments in Level 1 and Level 2.
+7,420
+40,605
+7,244
+RMB million
+3,079
+Total
+Carrying
+amount
+contractual
+undiscounted
+RMB million
+cash flow
+RMB million
+31 December 2022
+Within
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+than 2 years
+258,938
+RMB million
+More than
+5 years
+RMB million
+Short-term debts
+59,037
+59,774
+Long-term debts
+85,706
+94,823
+59,774
+2,207
+13,620
+68,180
+More than 2
+years but less
+than 5 years
+RMB million
+10,816
+133,906
+451,133
+9,060
+Lease liabilities
+181,400
+291,252
+18,358
+12,512
+8,862
+35,821
+9,378
+224,561
+Derivative financial liabilities
+2,752
+80,686
+2,752
+Trade accounts payable and bills payable
+259,000
+259,000
+259,000
+Other payables
+94,796
+94,796
+94,796
+796,779
+924,663
+2,752
+Loans from Sinopec Group Company and
+fellow subsidiaries
+29,547
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Market risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+(a) Currency risk
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured.
+The Group does not have significant financial instruments that are denominated in foreign currencies other than the functional currencies of
+respective entities as at 31 December, and consequently does not have significant exposure to foreign currency risk.
+(b) Interest rate risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts and loans from Sinopec Group Company and
+fellow subsidiaries. Debts bearing interest at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value
+interest rate risk respectively. The interest rates and terms of repayment of short-term and long-term debts, and loans from Sinopec Group
+Company and fellow subsidiaries of the Group are disclosed in Note 30.
+As at 31 December 2023, 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 RMB1,353 million (2022: decrease/increase by
+approximately RMB524 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 2022.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(c) Commodity price risk and hedge accounting
+Based on the dynamic study and judging of the market, combined with the resource demand and production and operation plan, the Group
+evaluate and monitor the market risk exposure caused by transaction positions, and continuously manage and hedge the risk of commodity price
+fluctuation caused by market changes.
+As at 31 December 2023, 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 2023, 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 RMB1,139 million (2022: decrease/increase
+RMB5,104 million), and decrease/increase the Group's other reserves by approximately RMB4,537 million (2022: increase/decrease RMB192
+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 2022.
+For the hedge relationship with cash flow hedge accounting applied, the corresponding changes in cash flow hedge reserves are as follows:
+Beginning of the year
+Effective portion of changes in fair value of hedging instruments recognised during the year
+Reclassification adjustments for amounts transferred to the consolidated income statement
+Amounts transferred to initial carrying amount of hedged items
+Related tax
+End of the year
+The ineffective portion of cash flow hedge relationship is disclosed in Note 8.
+2023
+2022
+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.
+206
+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.
+249,563
+32,222
+7,813
+Lease liabilities
+182,411
+299,176
+16,699
+4,288
+12,905
+13,962
+36,984
+6,159
+232,588
+Derivative financial liabilities
+7,313
+7,313
+Trade accounts payable and bills payable
+Other payables
+269,424
+269,424
+121,716
+121,716
+755,154
+884,448
+7,313
+269,424
+121,716
+484,946
+30,813
+119,126
+RMB million
+1,278
+31 December
+Net increase/(decrease) in cash
+million
+million
+Current assets
+202,333 190,697
+19,529
+25,677
+15,455
+15,766
+3,729
+1,901
+million
+6,118
+23,991
+Current liabilities
+(217,315) (212,593)
+(936)
+(9,468) (14,573)
+(13,998)
+(1,841)
+(169)
+(207)
+Net current (liabilities)/assets
+5,436 18,521
+(14,982) (21,896)
+million
+million
+Gaoqiao Petrochemical
+At 31 At 31
+December
+December
+2023
+2022
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+million
+million
+million
+RMB
+18,593
+16,209
+882
+24,587
+8,160
+9,508
+7,746
+7,670
+10,854 10,296
+17,186
+24,929
+26,355
+10,048
+24,047
+11,240
+12,897
+22,268
+24,125
+Attributable to owners of the
+Company
+170,919 167,747
+9,789
+10,121
+12,542
+13,229
+5,024
+13,657
+977
+(232) (4,050) (5,385)
+(255)
+1,768
+1.888
+1,732
+5,911
+Non-current assets
+Non-current liabilities
+Net non-current assets/(liabilities)
+Net assets
+324,288 326,170
+(56,057) (56,147) (11,583)
+268,231 270,023 (2,600)
+253,249 248,127 15,993
+8,983
+12,869
+24,110
+25,370
+8,862
+10,215
+8,001
+11,414
+7,902 14,904 15,681
+(209) (7,107) (10,162)
+5,227
+13,829
+(11,892)
+(63)
+(783)
+(702)
+(707)
+Sinopec Kantons
+At 31
+At 31
+December December
+2023
+2022
+5,620
+2022
+2022
+90.30
+9.70
+Crude oil processing and petroleum products
+manufacturing
+Sinopec Qingdao Refining and Chemical Company
+Limited
+RMB5,000
+85.00
+15.00
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Zhongguo Petroleum & Chemical Sales Company
+Limited
+RMB6,397
+RMB28,403
+29.58
+Marketing and distribution of refined petroleum
+products
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+HKD248
+60.33
+39.67
+Provision of crude oil pipeline transportation
+services
+Sinopec-SK (Wuhan) Petrochemical Company Limited
+("Sinopec-SK")
+RMB7,193
+59.00
+70.42
+41.00
+ZhongKe (Guangdong) Refinery & Petrochemical
+Company Limited
+products and petroleum products
+and cash equivalents
+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 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 2023
+Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+Level 1
+Level 3
+Total
+RMB million
+Trading of crude oil and petrochemical products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of catalyst products
+Marketing and distribution of petrochemical
+products
+Manufacturing of intermediate petrochemical
+Level 2
+Sinopec Shanghai Gaoqiao Petrochemical Company
+RMB10,000
+55.00
+for the year ended 31 December 2023
+42 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material non-controlling interests
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary that has non-
+controlling interests that are material to the Group.
+Summarised consolidated statement of financial position
+Marketing Company
+At 31
+At 31
+December
+December
+2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2022
+Shanghai Petrochemical
+At 31
+December
+At 31
+December
+At 31
+December
+Fujian Petrochemical
+At 31
+At 31
+December
+December
+2022
+2023
+SIPL*
+At 31
+December
+2023
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(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.
+Notes:
+45.00
+Limited ("Gaoqiao Petrochemical")
+Sinopec Hunan Petrochemical Co., Ltd.
+RMB3,000
+55.00
+45.00
+("Hunan Petrochemical")
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+RMB10,799
+50.55
+49.45
+Fujian Petrochemical Company Limited ("Fujian
+Petrochemical") (i)
+RMB10,492
+50.00
+50.00
+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.
+2023
+8,220
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+12,248
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+2023
+2022
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+Gaoqiao Petrochemical
+Fujian Petrochemical
+499
+69
+291
+47
+7
+1,436
+Dividends paid to non-controlling
+interests
+6,749
+3,453
+Sinopec Kantons
+7
+333
+195
+169
+895
+984
+Summarised statement of cash flows
+Year ended 31 December
+Marketing Company
+SIPL*
+Shanghai Petrochemical
+548
+million
+million
+million
+509
+11,824
+1,973
+4,390
+(1,644)
+653
+(633) (1,153)
+4,735
+4,235
+Net cash (used in)/generated from
+(23,490)
+financing activities
+(15,984) (8,394)
+(1,369)
+1,378
+(1,169)
+(28)
+(501)
+(434)
+(3,229)
+7,764
+(2,986)
+(27,172)
+(22,148)
+investing activities
+Net cash (used in)/generated from
+million
+million
+million
+million
+million
+Million
+million
+Million
+million
+Net cash generated from/(used in)
+operating activities
+50,598
+43,408
+1,947
+1,458
+664
+(7,459)
+1,660
+2
+557
+133
+(1,507)
+(1,247)
+(962)
+(598)
+(682)
+2,659
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+RMB
+RMB
+RMB
+2023
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+RMB
+million
+2022
+2022
+(646) (1,318)
+interests
+82,330 80,380
+13,269
+7,065
+12,387
+13,126
+5,024
+5,620
+5,437
+2023
+5,133
+10,856
+Summarised consolidated statement of comprehensive income
+Year ended 31 December
+Marketing Company
+SIPL*
+Shanghai Petrochemical
+Fujian Petrochemical
+Sinopec Kantons
+Gaoqiao Petrochemical
+2023
+10,020
+million
+6,204
+million
+346
+106
+3,176
+Total comprehensive income
+23,260
+22,644
+(1,193)
+6,438
+(1,304)
+(2,665)
+1,169
+(1,196)
+1,252
+734
+105
+3,181
+Comprehensive income attributable
+to non-controlling interests
+8,259
+8,224
+million
+(861)
+(1,925)
+(1,925)
+Attributable to non-controlling
+(2,842)
+(1,196)
+Million
+million
+million
+million
+Revenue
+1,814,710
+1,710,428
+2,952
+3,308
+92,932
+82,443
+million
+3,208
+20,129
+2,576 (1,349)
+4,556
+Profit/(loss) for the year
+69,298
+22,418
+529
+549
+4,931
+60,156
+Proved undeveloped reserves
+Beginning of the year
+43
+43
+End of the year
+34
+34
+46
+43
+46
+6
+Proved developed and undeveloped reserves of
+associates and joint ventures (gas)
+260
+Beginning of the year
+Revisions of previous estimates
+Improved recovery
+Extensions and discoveries
+Production
+End of the year
+Proved developed reserves
+43
+(billion cubic feet)
+263
+253
+Extensions and discoveries
+5
+5
+4
+4
+Production
+End of the year
+(24)
+(24)
+(25)
+260
+(25)
+287
+Beginning of the year
+End of the year
+303
+Proved developed reserves
+Beginning of the year
+260
+260
+263
+End of the year
+253
+287
+303
+(3)
+Beginning of the year
+(million barrels)
+Beginning of the year
+1,962
+1,642
+320
+1,749
+1,416
+333
+End of the year
+2,003
+1,696
+307
+1,962
+1,642
+320
+Proved developed and undeveloped reserves (gas)
+(billion cubic feet)
+Beginning of the year
+6
+8,806
+8,802
+Proved developed and undeveloped reserves (oil)
+1
+1
+1
+End of the year
+Total of the Group and its equity method investments
+43
+4
+3
+7
+(3)
+(3)
+(3)
+4
+Proved undeveloped reserves
+4
+4
+3
+3
+6
+6
+4
+4
+3
+3
+1
+4
+1
+7,525
+2
+20
+17
+17
+Extensions and discoveries
+819
+819
+664
+664
+Production
+(1,214)
+(1,214)
+(1,134)
+(1,134)
+End of the year
+9,307
+9,307
+8,802
+8,802
+Proved developed reserves
+Beginning of the year
+7,135
+20
+Improved recovery
+806
+806
+Beginning of the year
+153
+4
+153
+125
+125
+End of the year
+192
+189
+3
+7,135
+153
+Proved developed and undeveloped reserves (gas)
+(billion cubic feet)
+Beginning of the year
+8,802
+8,802
+8,449
+8,449
+Revisions of previous estimates
+880
+880
+153
+2
+6,734
+End of the year
+2022
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+Equity method investments
+Proved developed and undeveloped reserves of
+associates and joint ventures (oil) (million barrels)
+Beginning of the year
+303
+303
+309
+309
+Revisions of previous estimates
+1
+1
+9
+9
+Improved recovery
+2023
+Table II: Reserve quantities information (Continued)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+216
+7,525
+7,135
+7,135
+Proved undeveloped reserves
+Beginning of the year
+1,667
+1,667
+1,715
+1,715
+End of the year
+6,734
+1,782
+1,667
+1,667
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2023
+215
+Financial Statements
+Supplemental Information
+on Oil and Gas Producing Activities (Unaudited)
+Financial Statements Supplemental Information
+on Oil and Gas Producing Activities (Unaudited)
+1,782
+8,456
+RMB million
+7
+Net changes in prices and production costs
+(6,646)
+3,301
+Net changes in estimated future development cost
+335
+(694)
+Net changes due to extensions, discoveries and improved recoveries
+329
+562
+Revisions of previous quantity estimates
+Accretion of discount
+Net changes in income taxes
+94
+505
+Previously estimated development costs incurred during the year
+343
+311
+1,411
+1,388
+1,107
+(647)
+(2,018)
+(1,443)
+Sales and transfers of oil and gas produced, net of production costs
+Equity method investments
+Net changes in estimated future development cost
+(121,932)
+(137,885)
+(75,738)
+185,589
+(21,664)
+(22,685)
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+58,610
+40,389
+Net changes for the year
+78,310
+21,883
+11,885
+52,985
+32,342
+Net changes in income taxes
+10,690
+(51,700)
+Net changes for the year
+(31,488)
+154,466
+Previously estimated development costs incurred during the year
+Accretion of discount
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+(4,470)
+Total of the Group's and its equity method investments' results of net changes for the year
+Tel.
+Fax
+Website
+: 100728
+: 86-10-59960028
+: 86-10-59960386
+http://www.sinopec.com
+E-mail addresses : ir@sinopec.com
+REGISTERED ADDRESS CHANGE
+INFORMATION
+No change during the reporting period
+PLACE OF BUSINESS IN HONG KONG
+20th Floor, Office Tower
+Convention Plaza
+1 Harbour Road
+Wanchai
+Hong Kong
+CHANGES IN THE PLACES FOR INFORMATION
+DISCLOSURE AND THE PROVISION OF
+REPORTS
+No change during the reporting period
+LEGAL ADVISORS
+Proved undeveloped reserves
+Domestic China:
+Postcode
+Beijing, PRC
+No.22 Chaoyangmen North Street,
+Chaoyang District
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+(35,958)
+157,174
+218
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+CORPORATE INFORMATION
+STATUTORY NAME
+中國石油化工股份有限公司
+ENGLISH NAME
+China Petroleum & Chemical Corporation
+CHINESE ABBREVIATION
+2,708
+中國石化
+Sinopec Corp.
+LEGAL REPRESENTATIVE
+Mr. Ma Yongsheng
+AUTHORISED REPRESENTATIVES
+Mr. Yu Baocai
+Mr. Huang Wensheng
+SECRETARY TO THE BOARD
+Mr. Huang Wensheng
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zhang Zheng
+ENGLISH ABBREVIATION
+8,449
+The Group
+2022
+Undiscounted future net cash flows
+1,365,530
+1,354,246
+(576,620) (571,451)
+(105,071) (102,896)
+(172,520) (169,975)
+511,319 509,924
+10% annual discount for estimated timing of cash flows
+Standardised measure of discounted future net cash flows
+(146,846)
+(146,599)
+364,473
+363,325
+11,284
+(5,169)
+(2,175)
+(2,545) (190,893)
+1,395 566,087
+(247) (170,126)
+1,148 395,961
+1,490,949
+(635,757)
+(98,212)
+1,479,098
+11,851
+(630,922)
+(4,835)
+(96,575)
+(1,637)
+(187,900)
+(2,993)
+563,701
+2,386
+(169,810)
+Future income tax expenses
+Future production costs
+Future cash flows
+The Group
+End of the year
+9,311
+9,307
+4
+8,806
+8,802
+4
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table III: Standardised measure of discounted future net cash flows
+(316)
+The following table represents the standardised measure of discounted future net cash flows related to the above proved oil and gas reserves. 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.
+2023
+RMB million
+2022
+RMB million
+Total
+China
+Other
+countries
+Other
+Total
+China
+countries
+Future development costs
+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
+2023 and 2022 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.
+RMB million
+393,891
+Equity method investments
+(7,656)
+(7,656) (13,015)
+8,387
+8,387
+12,857
+(13,015)
+12,857
+372,860
+363,325
+9,535
+408,818
+393,891
+14,927
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+217
+Financial Statements
+Supplemental Information
+on Oil and Gas Producing Activities (Unaudited)
+Financial Statements Supplemental Information
+on Oil and Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table IV: Changes in the standardised measure of discounted cash flows
+2023
+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
+25,872
+25,872
+16,043
+Future cash flows
+42,746
+42,746
+57,107
+57,107
+Future production costs
+(16,828)
+(16,828)
+(18,011)
+(18,011)
+2,070
+Future development costs
+(6,449)
+(7,393)
+(7,393)
+Future income tax expenses
+(3,426)
+(3,426)
+(5,831)
+(5,831)
+Undiscounted future net cash flows
+16,043
+(6,449)
+17
+8,303
+(1,265)
+1,506
+Total non-current liabilities
+Equity
+Share capital
+Reserves
+Total equity
+107,484
+54,859
+5,936
+11,433
+86,399
+91,878
+40,077
+38,298
+2,495
+2,954
+242,391
+199,422
+513,738
+505,794
+119,349
+119,896
+Other long-term liabilities
+(a)
+Provisions
+Loans from Sinopec Group Company and fellow subsidiaries
+4,299
+Trade accounts payable and bills payable
+86,642
+111,143
+Contract liabilities
+Other payables
+9,079
+9,769
+284,311
+269,684
+Total current liabilities
+Net current liabilities
+433,338
+438,204
+184,381
+210,574
+Total assets less current liabilities
+756,129
+705,216
+Non-current liabilities
+Long-term debts
+Lease liabilities
+394,389
+385,898
+513,738
+Other reserves
+Balance at 1 January
+Changes in the fair value of investments in other equity instruments, net of deferred tax
+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
+Profit for the year
+Distribution to owners (Note 14)
+Appropriation
+Special reserve
+Others
+Balance at 31 December
+47 NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD
+The Company
+2023
+RMB million
+2022
+RMB million
+7,038
+(36)
+7,002
+7,038
+Balance at 31 December
+Balance at 1 January
+Discretionary surplus reserve
+Balance at 31 December
+505,794
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+211
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+(a) RESERVES MOVEMENT OF THE COMPANY
+The reconciliation between the opening and closing balances of each component of the Group's consolidated reserves is set out in the
+consolidated statement of changes in equity. Details of the change in the Company's individual component of reserves between the beginning
+and the end of the year are as follows:
+251
+Capital reserve
+Other equity movements under the equity method
+Others
+Balance at 31 December
+Share premium
+Balance at 1 January
+Purchase of own shares
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+Balance at 1 January
+Derivative financial liabilities
+6,682
+6,420
+2023
+2022
+RMB
+RMB
+Non-current assets
+Property, plant and equipment, net
+305,439
+296,480
+Construction in progress
+Right-of-use assets
+70,306
+81,501
+90,705
+97,656
+Deferred tax assets
+Total non-current assets
+Current assets
+Investment in subsidiaries
+Interest in associates
+Interest in joint ventures
+Financial assets at fair value through other comprehensive income
+31 December
+31 December
+Note
+STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Amounts in million)
+Haiwen & Partners
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+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.
+Accordingly, the Group determines the recoverable amount based on the present value in use.
+The projected future cash flows of an asset are based on data from the most recent financial budget approved by management, as well as on a
+stabilized growth rate for the years following the period of that budget. In appropriate and reasonable circumstances, the growth rate can be zero
+or negative. Projected cash flows based on budgets usually cover five years, or longer periods if that is reasonable. When projecting cash flows for
+years beyond the budgeted period, the growth rate used does not exceed the long-term average growth rate of the business or markets in which
+products are located, or the long-term average growth rate of the market in which the asset is located, except where a higher growth rate can be
+justified. In determining the discount rate, the weighted average cost of capital is usually used as the basis.
+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
+Long-term prepayments and other assets
+Property, plant and equipment, other than oil and gas properties, are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. Management reviews the estimated useful lives of the assets at least annually in order
+to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Group's historical
+experience with similar assets and take into account anticipated technological changes. The depreciation expense for future periods is adjusted if
+there are significant changes from previous estimates.
+The Group measures and recognises ECLs using readiness matrix, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for
+estimating ECLs.
+Allowance for diminution in value of inventories
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised. Net
+realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated
+costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of the finished
+goods, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were to be higher than estimated, the
+actual allowance for diminution in value of inventories could be higher than estimated.
+45 PARENT AND ULTIMATE HOLDING COMPANY
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2023 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+210
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2023
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+Measurement of expected credit losses
+52,846
+312,553
+77,415
+367
+703
+1,644
+1,977
+Inventories
+67,922
+70,376
+Prepaid expenses and other current assets.
+85,840
+62,261
+Total current assets
+248,957
+227,630
+Current liabilities
+Short-term debts
+40,545
+35,954
+Loans from Sinopec Group Company and fellow subsidiaries
+6,090
+673
+Lease liabilities
+Financial assets at fair value through other comprehensive income
+Dividends receivable
+3,892
+33,841
+27,878
+Trade accounts receivable
+75,449
+23,604
+17,239
+14
+201
+6,567
+9,487
+53,907
+47,586
+940,510
+290,191
+915,790
+64,471
+23,228
+Time deposits with financial institutions
+350
+31,350
+Financial assets at fair value through profit or loss
+3
+2
+Derivative financial assets
+482
+Cash and cash equivalents
+55,850
+(1,778)
+(3,004)
+76,253
+1,796
+Table II: 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 2023 and 2022 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.
+214
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table II: Reserve quantities information (Continued)
+2023
+2022
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+The Group
+Proved developed and undeveloped reserves (oil)
+78,049
+863
+80,296
+1,796
+Total
+China
+2022
+RMB million
+Other
+countries
+23,514
+23,514
+23,269
+23,269
+56,940
+80,454
+56,782
+80,296
+(million barrels)
+158
+52,984
+158
+76,253
+76,253
+Share of costs of exploration and development
+of associates and joint ventures
+Total of the Group's and its equity method investments'
+705
+81,159
+705
+1,796
+52,984
+countries
+Beginning of the year
+1,642
+(248)
+(243)
+(5)
+1,716
+1,696
+20
+1,659
+1,642
+17
+Proved developed reserves
+Beginning of the year
+1,506
+1,489
+17
+1,315
+1,291
+24
+End of the year
+1,524
+1,507
+17
+(5)
+(245)
+(250)
+End of the year
+17
+1,440
+1,416
+24
+Revisions of previous estimates
+88
+80
+8
+275
+277
+1,659
+(2)
+89
+89
+84
+84
+Extensions and discoveries
+130
+130
+108
+108
+Production
+Improved recovery
+1,489
+China
+Other
+46,417
+(40,760)
+(56,903)
+(5,125)
+(4,663)
+72
+(87)
+(1)
+242
+109,030
+394,389
+103,651
+385,898
+Pursuant to the resolutions of the 15th meeting of the 8th session of the Board of Directors held on 24 March 2023 and the 2022 Annual General
+Meeting of Shareholders held on 30 May 2023, and with the approval for registration by the China Securities Regulatory Commission in the Reply on
+Agreeing to the Registration of China Petroleum & Chemical Corporation to Issue Shares to Specific Targets (Zheng Jian Xu Ke [2024] No. 110 (
+[2024]110)), the Company was approved to issue 2,390,438,247 new shares to specific investors. Based on the actual issuance, the Company
+issued 2,390,438,247 ordinary shares (par value of RMB1.00 per share at an issue price of RMB5.02 per share) to Sinopec Group Company, a
+specific investor, raising a total of RMB12 billion. The above-mentioned raised funds has been received on 12 March 2024, and KPMG Huazhen LLP
+has performed verification procedure on the above-mentioned raised funds and issued a Capital Verification Report No. 2400292.
+212
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH CASS AND IFRS ACCOUNTING STANDARDS (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 Accounting Standards. 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 Accounting
+Standards, 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 Accounting Standards, payments are expensed as incurred, or capitalised as fixed assets and depreciated according to applicable
+depreciation methods.
+51,193
+118,645
+103,651
+4,354
+51,068
+52,846
+101,009
+96,346
+5,125
+4,663
+106,134
+101,009
+117,000
+117,000
+(iii) CAPITALISATION OF EXCHANGE DIFFERENCE OF SPECIFIC LOANS
+117,000
+4,354
+9,464
+2
+(63)
+10
+(66)
+(5,207)
+(72)
+87
+4,155
+117,000
+Total
+Under CASS, exchange difference arising on translation of specific loans and related interest denominated in a foreign currency should be capitalised
+as part of the cost of qualifying assets. Under IFRS Accounting Standards, such exchange difference is recognised in income statement unless the
+exchange difference represents an adjustment to interest.
+Notes
+Profit for the year under IFRS Accounting Standards*
+47
+(248)
+(1,978)
+(3)
+67,864
+52
+179
+(346)
+76,499
+*
+The figures are extracted from the consolidated financial statements prepared in accordance with the accounting policies complying with IFRS Accounting Standards
+during the year ended 31 December 2022 and 2023 which have been audited by KPMG.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023 213
+Differences between Consolidated Financial Statements Prepared in Accordance with
+the Accounting Policies Complying with CASS and IFRS Accounting Standards (Unaudited)
+Financial Statements Supplemental Information
+on Oil and Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+This section provides supplemental information on oil and gas exploration and producing activities of the Group and its equity method investments
+at 31 December 2023 and 2022, and for the years then ended in the following four separate tables. Table I provides costs incurred in oil and gas
+exploration and development. Table II through IV provide 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.
+Table 1: Costs incurred in oil and gas exploration and development
+The Group
+Exploration
+Development
+Total costs incurred
+Equity method investments
+2023
+RMB million
+Others
+(iii)
+Capitalisation of exchange difference of specific loans
+(ii)
+31 December
+2023
+RMB million
+Shareholders' equity under CASS
+Adjustments:
+958,655
+Government grants
+Capitalisation of exchange difference of specific loans
+Total equity under IFRS Accounting Standards*
+(i)
+(iii)
+(868)
+(1,978)
+955,809
+31 December
+2022
+RMB million
+940,457
+Effects of major differences between the shareholders' equity under CASS and the total equity under IFRS Accounting Standards are analysed as
+follows:
+(915)
+Effects of major differences between the net profit under CASS and the profit for the year under IFRS Accounting Standards are analysed as follows:
+Notes
+2023
+Net profit under CASS
+RMB million
+70,046
+2022
+RMB million
+76,614
+Adjustments:
+Government grants
+(i)
+Safety production fund
+939,542
+20th Floor, Fortune Financial Centre
+61,899
+Chaoyang District
+: 100738
+No. 1, Jian Guo Men Wai Avenue,
+Overseas
+Beijing, PRC
+Auditors
+REGISTRARS
+A Shares:
+Company Limited Shanghai Branch Company
+188 Yanggao South Road
+Shanghai Pilot Free Trade Zone, PRC
+H Shares:
+Hong Kong Registrars Limited
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+The PRC:
+China Petroleum & Chemical Corporation
+Board Secretariat
+No.22 Chaoyangmen North Street,
+Chaoyang District
+Beijing, PRC
+Address
+: KPMG
+Public Interest Entity Auditor
+registered in accordance with
+the Accounting and Financial
+Reporting Council Ordinance
+8th Floor, Prince's Building
+10 Chater Road Central,
+Hong Kong
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+219
+Corporate Information
+No.5, Dong San Huan Central Road
+Postcode
+Skadden, Arps, Slate, Meagher & Flom LLP
+30/F, China World Office 2
+China Securities Registration and Clearing
+Central, Hong Kong
+Beijing PRC
+Postcode: 100020
+Hong Kong, China:
+Zhong Lun Law Firm LLP
+4th Floor, Jardine House
+PLACES OF LISTING OF SHARES, STOCK
+U.S.A.:
+A Shares:
+Shanghai Stock Exchange
+Stock short name : SINOPEC CORP
+Stock code
+H Shares:
+: 600028
+Hong Kong Stock Exchange
+Stock short name : SINOPEC CORP
+NAMES AND STOCK CODES
+: 00386
+Stock code
+1 Connaught Plaza
+1 East Chang An Avenue,
+Beijing, PRC
+Oriental Plaza
+: 8th Floor
+China
+Certified Public Accountants in
+KPMG Tower
+Address
+Auditors
+Domestic
+SINOPEC CORP.
+NAMES AND ADDRESSES OF AUDITORS OF
+KPMG Huazhen LLP
+Beijing, China
+Ma Yongsheng
+22 Chaoyangmen North Street, Chaoyang District,
+中國北京市朝陽區朝陽門北大街 22 號
+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, 22 March 2024
+Chairman
+By Order of the Board.
+220
+c) The above original auditors' reports signed
+by the auditors; and
+b) The original copies of the audited financial
+statements and consolidated financial
+statements as of 31 December 2023
+prepared under CASS and IFRS Accounting
+Standards, 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.;
+a) The original copies of the 2023 annual report
+signed by Mr. Ma Yongsheng, the Chairman;
+The Company's 2023 annual report is disclosed
+on the website of the SSE (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
+22 March 2024 at the registered address of
+Sinopec Corp. upon requests by the relevant
+regulatory authorities and shareholders in
+accordance with the Articles of Association and
+the laws and regulations of PRC:
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+DOCUMENTS FOR INSPECTION
+Documents for Inspection
+www.sinopec.com
+d) Copies of the documents that Sinopec Corp.
+has published during the reporting period.
+Printed on environmentally friendly paper
+SINOPEC CORP.
+Year ended 31 December
+2023
+161,475
+(155,865)
+22,732
+Exploration and Production Segment
+Refining Segment
+Marketing and Distribution Segment
+Chemicals Segment
+For the year ended 31 December
+2023
+RMB million
+300,019
+1,529,786
+Operating income
+1,818,429
+2022
+RMB million
+319,411
+1,575,139
+1,713,874
+540,152
+1,790,478
+Corporate and Others
+Elimination of inter-segment sales
+Consolidated operating income
+515,307
+Operating profit/(loss)
+(1) Under CASs, the operating income and operating profit or loss by segments were as follows:
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+16,261
+450
+9,643
+(13)
+(2,714)
+7,407
+(800)
+(8,958)
+The major differences between the Company's financial statements prepared under CASS and IFRS Accounting Standards are set out in Section C of
+the financial statements of the Company on page 213 of this report.
+48,330
+28
+(298)
+3
+48,358
+(50,714)
+(8,955)
+Derivatives investment:
+In 2023, the Company traded in commodity and currency derivatives according to the Annual Business Plan for Financial Derivatives approved by
+the Board. Such business met the regulatory requirements of financial derivatives, operated in a standardized manner, and achieved the goals of
+suppressing price fluctuation, stabilising operating profit, and preventing market risks.
+(49,616)
+730
+Exploration and Production Segment
+Marketing and Distribution Segment
+(1,820)
+11,487
+11,664
+86,744
+96,414
+60,463
+67,082
+750
+Operating profit: In 2023, the operating profit of the Company was RMB86.7 billion, representing a decrease of RMB9.7 billion as compared
+Iwith that of 2022.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+25
+Management's Discussion
+and Analysis
+26
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Net profit: In 2023, the net profit attributable to the equity shareholders of the Company was RMB60.5 billion, representing a decrease of
+RMB6.6 billion or 9.9% compared with 2022.
+Refining Segment
+15,480
+(14,256)
+Chemicals Segment
+Corporate and Others
+Elimination of inter-segment sales
+Financial expenses, investment income and losses/gains from changes in fair value
+Consolidated operating profit
+Net profit attributable to equity shareholders of the Company
+1,538,320
+(2,489,646)
+3,212,215
+(2,620,886)
+1,915
+3,318,168
+48,538
+19,358
+11,611
+23
+25,531
+25,197
+(10,273)
+37,976
+Other equity instrument investments
+Total
+2,221
+3,507
+Impairment
+variation of
+loss
+Sale or
+redemption
+Amount at
+the beginning
+Amount at
+the end of
+Accumulated
+fair values
+fair values
+recorded
+(5) Research & Development and
+Environmental Expenditures
+Please refer to "Capital Expenditure" in
+the "Business Review and Prospects"
+section of this report.
+(4) Capital Expenditure
+Please refer to "Material Guarantee
+Contracts and their Performance" in the
+"Significant Events" section of this report
+(3) Contingent Liabilities
+(2) Financial data prepared under CASS
+in the
+At the end of 2023, the cash and cash
+equivalents were RMB121.8 billion.
+Unit: RMB million
+Profits and
+losses from
+2022
+116,269
+(95,010)
+(39,699)
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2023, the Company paid
+environmental expenditures of RMB19.2
+billion.
+(6) Measurement of fair values of derivatives
+and relevant system
+The Company has established and
+continued improving decision-making
+mechanism, business process and
+internal control systems relevant to
+financial instrument accounting and
+information disclosure. The following
+table sets out the items relevant to
+measurement of fair values.
+24
+variation of
+24
+【中国石化:
+A21 A22 A23 A24 A25 126 127 1
+易提环运旗航店
+anza
+A20 A19
+A
+Items relevant to measurement of fair values
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2023, the Company's net cash
+generated from financing activities was
+RMB22.7 billion, representing an increase
+of RMB62.4 billion year-on-year. This was
+mainly due to a year-on-year increase
+of RMB49.3 billion of cash inflow in net
+interest-bearing debt, and a decrease of
+RMB16.1 billion of cash outflow in cash
+dividends distribution.
+In 2023, the Company's net cash used in
+investing activities was RMB155.9 billion,
+representing an increase of cash outflow
+RMB60.9 billion year-on-year. This was
+mainly due to a RMB58.9 billion year-
+on-year increase in time deposits with
+maturities over three months.
+In 2023, the net cash generated from
+operating activities of the Company
+was RMB161.5 billion, representing an
+increase of RMB45.2 billion over 2022.
+This was mainly due to the decrease of
+occupation in working capital.
+current year
+Other
+changes
+Financial assets held for trading
+Fund
+2
+3
+1
+2
+in the
+3
+Derivative financial instruments
+and cash flow hedges
+12,022
+6,969
+(2,715)
+7,420
+Receivables financing
+1
+amount
+Purchase
+Funding amount in the
+current year
+source
+Net cash generated from/(used in) financing activities
+Net cash used in investing activities
+Net cash generated from operating activities
+Major items of cash flows
+Unit: RMB million
+The following table sets forth the major items in the consolidated cash flow statements for 2023 and 2022.
+(2) Cash Flow
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Management's Discussion
+and Analysis
+and Analysis
+Management's Discussion
+Items
+of the year
+the year
+current year
+as equity
+provision
+of the
+current year
+R&D expenditures include expenses and
+investment cost in relation to R&D of
+the Company. In 2023, the expenditures
+for R&D were RMB23.2 billion, of which
+expense was RMB14.0 billion, and
+investment cost was RMB9.2 billion.
+Total assets
+B.1Board composition, succession and
+evaluation
+Change analysis:
+Corporate Governance
+CORPORATE GOVERNANCE
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+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(27) to the financial statements prepared in accordance with CASS and Note 1 to the financial statements prepared
+in accordance with IFRS Accounting Standards.
+* Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+0.0
+(3.9)
+1 IMPROVEMENTS IN CORPORATE
+(3.2)
+N/A
+N/A
+N/A
+N/A
+(2,490,395)
+2,709,656
+(0.4)
+(13.7)
+7.1
+(14.1)
+GOVERNANCE DURING THE REPORTING
+PERIOD
+organized investor reverse roadshow
+covering the whole industry chain business
+and received positive market feedback. It
+strengthened ESG management, carried out
+the annual safety management strengthen
+campaign, enhanced the ecological
+environmental protection, steadily advanced
+the Action Plan for Carbon Dioxide Peaking,
+contributed to rural revitalization, to actively
+fulfill corporate social responsibility. It
+boosted the staff morale and enhanced the
+discipline inspection and supervision through
+continuously improving the quality of Party
+building, which contributed to the effective
+implementation of the Board resolutions
+and the high-quality development of the
+Company.
+6 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+5 COMPETITION BETWEEN SINOPEC CORP.
+AND ITS CONTROLLING SHAREHOLDER
+Please refer to "Performance of the
+Undertakings by China Petrochemical
+Corporation" under the section "Significant
+Events" for details.
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+28
+27
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+During the reporting period, Sinopec Corp.
+complied with the Articles of Association
+as well as domestic and overseas laws
+and regulations, adhered to the standard
+operation, operated in compliance with laws,
+continuously improved the level of corporate
+governance. The Board strengthened
+strategic planning, and promoted the
+implementation of the strategy. The Board.
+attached great importance to shareholder
+returns, and the cash dividend amount
+maintained at a high level, and repurchased
+shares again both domestically and overseas
+to maintain the Company's value and
+shareholders' interests. The Independent
+Directors conscientiously fulfilled their
+duties, played a positive role in "participation
+in decision-making, supervision checks
+and balances, professional consultation",
+reviewed proposals with due care, listened
+to the reports on significant decisions,
+conducted research on a regular basis,
+and offered advice and suggestions on
+Company's reforms and development. The
+Company followed the latest regulatory
+requirements, and revised governance rules
+and regulations of the Company in a timely
+manner, such as Terms of Reference of the
+Independent Non-Executive Directors, Terms
+of Reference of the Audit Committee etc., to
+strengthen the corporate governance basis.
+It improved the internal control system,
+and promoted the effectiveness of the
+implementation of internal control system
+continuously. It improved the Company's
+transparency by focusing on high-quality
+information disclosure, and continuously
+obtained A-level rating of SSE in the
+assessment of information disclosure. It
+strengthened communication with investors,
+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 well-integrated independent
+businesses 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.
+As required under the Hong Kong Listing
+Rules, Sinopec Corp. has formulated Rules
+Governing Shares and Changes in Shares
+Held by Company Directors, Supervisors and
+Senior Management and Rules on Insider
+Registration and Management (collectively,
+Rules) to regulate securities transactions
+by relevant personnel. The standards of the
+Rules above-mentioned are no less strict
+than those set out in the Model Code. Upon
+the specific inquiries made by Sinopec Corp.,
+all the Directors confirmed that they had
+complied with the required standards in the
+Model Code as well as those set out in the
+Rules during the reporting period.
+Save as disclosed above, as of 31 December
+2023, none of the Directors, Supervisors and
+senior management of Sinopec Corp. and
+their respective associates had any interests
+or short positions (including any interests
+or short positions that are regarded or
+treated as being held in accordance with the
+Securities and Futures Ordinance (SFO)) in
+any shares, underlying shares or debentures
+of Sinopec Corp. or any associated
+corporations (as defined in Part XV of the
+SFO), as recorded in the registry pursuant
+to Section 352 of the SFO or as otherwise
+notified to Sinopec Corp. and the Hong Kong
+Stock Exchange pursuant to the Model Code
+for Securities Transactions by Directors of
+Listed Companies (Model Code) contained in
+the Hong Kong Listing Rules.
+As of 31 December 2023, Mr. Ling Yiqun,
+former Executive Director, Senior Vice
+President, held 13,000 A shares of Sinopec
+Corp.
+3 EQUITY INTERESTS HELD BY DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+During the reporting period, Sinopec Corp.
+convened 2022 Annual General Meeting,
+First A Shareholders Class Meeting for 2023,
+and First H Shareholders Class Meeting
+for 2023 on 30 May 2023, in accordance
+with the required procedures of noticing,
+convening and holding the general meetings
+pursuant to the relevant laws and regulations
+and the Articles of Association. For details
+of the meetings, please refer to the poll
+results announcements published on 31 May
+2023 on China Securities Journal, Shanghai
+Securities News, Securities Times and the
+website of SSE, as well as those published
+on 30 May 2023 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
+Supervisory Committee 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 controller of Sinopec Corp.
+were under the investigation by the CSRC
+or received any regulatory sanction or was
+criticised publicly by the CSRC, the Hong
+Kong Securities and Futures Commission
+or received any public censure from SSE or
+Hong Kong Stock Exchange.
+4 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+1.4
+1,516,294
+1,538,320
+(2,489,646)
+3,212,215
+1,253,956
+(2.3)
+(3.4)
+(6.1)
+22.1
+207,573
+300,019
+1,529,786
+2.4
+Exploration and Production
+Refining
+gross profit
+margin on a
+Increase/
+(decrease) of
+basis (%)
+Increase/
+(decrease) of
+operation
+cost on a
+year-on-year
+Increase/
+(decrease) of
+operation
+income on a
+year-on-year
+basis (%)
+Gross profit
+margin* (%)
+Operation
+cost
+RMB million
+year-on-year
+basis (%)
+(2.9)
+(4.8)
+0.7
+Total
+Elimination
+Corporate and Others
+0.6
+(5.1)
+(4.6)
+1.8
+502,009
+515,307
+Chemicals
+(0.2)
+6.3
+6.1
+5.2
+1,720,219
+1,818,429
+Marketing and Distribution
+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.
+Non-current liabilities
+Shareholder's equity
+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 acquire any
+subsidiaries that met material criteria.
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, incentive and restrictive
+mechanisms for Directors, Supervisors and
+other Senior Management. Sinopec Corp.
+has implemented incentive policies including
+the Measures of Sinopec Corp. for the
+Management of Performance Evaluations.
+b. 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
+a. Sinopec Corp. engages professional
+consultants to prepare detailed
+materials for newly elected Directors,
+to notify them of the regulations of
+each listing place of Sinopec Corp.
+and to remind them of their rights,
+responsibilities, and obligations
+as Directors. Sinopec Corp. has
+purchased liability insurance for all
+Directors to minimize the potential
+risks that might arise from the
+adequate performance of their duties.
+C.1 Responsibility of Directors
+c. During the reporting period, the
+Nomination Committee held two
+meetings (please refer to "The Board
+Committees Meetings and the Special
+Meeting of Independent Directors"
+under the section "Report of the
+Board of Directors" in this annual
+report).
+b. The members of the Nomination
+Committee can engage professionals
+when performing their duties.
+Reasonable costs arising from
+such consultations are borne by
+Sinopec Corp. In the meantime, the
+Nomination Committee has also
+appointed consultant members and
+can require such members to provide
+advice. The working expenses of the
+Nomination Committee are included
+in the budget of Sinopec Corp.
+The Board established the
+Nomination Committee, consisting
+of the Independent Non-executive
+Director, Ms. Shi Dan, who serves
+as the chairman, and the Chairman
+of the Board, Mr. Ma Yongsheng,
+and the Independent Non-executive
+Director, Mr. Ng, Kar Ling Johnny,
+who serve as members. The principal
+responsibilities of the Nomination
+Committee are to provide suggestions
+to the Board on Board's size and
+composition, the selecting standards
+and procedures, and candidates for
+Directors and Senior Management.
+When recommending candidates
+for Directors, the Nomination
+Committee mainly considers the
+skills, knowledge, experience and
+qualifications of the candidates, and
+also evaluates the time and energy
+they can devote as well as the Board
+Diversity Policy. Procedures for
+Nomination of Director of Sinopec
+Corp. and Terms of Reference of the
+Nomination Committee are published
+on Sinopec Corp.'s website at
+http://www.sinopec.com.
+a.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+B.3Nomination Committee
+c. Each of the Directors was able to
+devote sufficient time and efforts to
+handling the affairs of Sinopec Corp.
+b. All Directors of Sinopec Corp. must
+be elected at the general meeting
+of shareholders. The Board has no
+power to appoint temporary Directors.
+B.2Appointment, re-election and removal
+a. The term of office for each Director
+is three years, and the consecutive
+terms of office of any Independent
+Non-executive Director cannot exceed
+six years. During the reporting period,
+Mr. Lv Lianggong was nominated
+by the Board as a candidate for
+Executive Director of Sinopec Corp.
+and elected as an Executive Director
+of Sinopec Corp. by the general
+meeting. For details about the tenure
+of each Director, please refer to the
+item 11 under this section.
+Sinopec Corp. has always devoted
+to establishing a workplace with
+diversity and equal opportunities,
+recruited female employees actively
+to increase the diversity of the team,
+and provided equal employment
+opportunities and environment for all
+employees, so as to offer them career
+development spaces to give full play
+to their personal characteristics and
+values. In 2023, female employees in
+the Company account for 30.3% of
+the total staff number. The Company
+adhered to the doctrine of gender
+equality, ensuring female employees
+have equal labor and social security
+rights as the males. For details,
+please refer to the sustainability
+report of Sinopec Corp. for the year
+2023.
+terms of gender, culture, educational
+background and professional
+expertise. The Directors come from
+different industries domestically and
+abroad with rich working experience.
+Professional backgrounds of Directors
+include petroleum and petrochemical
+corporate management, as well as
+economics, accounting, finance, and
+industry and energy economy, which
+are conductive to strategic planning
+and scientific decision-making. In
+terms of the candidates of Directors,
+the Board and the Nomination
+Committee will, as and when
+necessary, look for potential female
+director candidates through self-
+regulatory organizations, professional
+recommendation and other channels
+to achieve gender diversity of the
+Board. Currently, female Director
+accounts for 11% of the Board
+members, and has achieved the
+numerical targets of at least one
+female Director.
+d. The Board established the Board
+Diversity Policy which stipulates that
+the members of the Board shall be
+nominated and appointed based
+on the skills and experience for the
+overall optimum operation of the
+Board, while taking into account
+the targets and requirements of the
+Board diversity. When deciding the
+composition of the Board, Sinopec
+Corp. shall consider factors in relation
+to the diversity of the Board, including
+but not limited to professional
+experience, skills, knowledge,
+term of office, regions, culture and
+educational backgrounds, gender, and
+age. The provisions of the Articles
+of Association concerning the term
+of office of directors help to ensure
+that the Board has a proper balance
+between continuous experience and
+new thinking, and enhance the level
+of diversity. Sinopec Corp. annually
+evaluates the implementation of the
+Board Diversity Policy. Currently,
+the Board achieved the diversity in
+c. Each of the Independent Non-executive
+Directors has conducted independence
+self-examination and submitted a
+letter of confirmation to the Company,
+regarding their compliance with
+relevant independence requirements
+set out in Rule 3.13 of the Hong Kong
+Listing Rules. The Board considers
+that each of the Independent Non-
+executive Directors is independent.
+The composition and operational
+mechanism of the Board ensure
+that independent and objective
+views and input are available to the
+Board of Sinopec Corp. For instance,
+the Company has established the
+mechanism of the Special Meeting of
+Independent Directors, and stipulates
+that matters such as connected
+transactions that subject to be
+disclosed, shall be submitted to the
+Board for consideration after approval
+by a majority of all the Independent
+Directors. The Board reviews and
+evaluates the effectiveness of such
+operational mechanism on an annual
+basis.
+с
+three Executive Directors and six Non-
+executive Directors. Among the Non-
+executive Directors, there are four
+Independent Non-executive Directors,
+accounting for approximately 44% of
+the total number of the Board.
+29
+At the end of 2023, total shareholders' equity of the Company was RMB958.7 billion, representing an increase of RMB18.2 billion compared
+with that of the end of 2022.
+As of 31
+As of 31
+December 2023
+RMB million
+2,026,674
+420,943
+958,655
+December 2022
+Change
+(3) The results of the principal operations by segments
+RMB million
+75,553
+343,279
+77,664
+940,457
+18,198
+At the end of 2023, the Company's total assets were RMB2,026.7 billion, representing an increase of RMB75.6 billion compared with that of the
+end of 2022. This was mainly due to the increased investment in transformation and upgrading, resulting in fixed assets increasing by RMB60.2
+billion after construction, derivative financial assets decreased by RMB9.6 billion, and cash at bank and on hand increased by RMB19.9 billion.
+At the end of 2023, the Company's non-current liabilities was RMB420.9 billion, representing an increase of RMB77.7 billion compared with that
+of the end of 2022. This was mainly because the low-interest long-term domestic loans increased by RMB84.4 billion resulting from meeting the
+capital needs of investment, production and operation activities, and bond payable decreased by RMB4.5 billion.
+1,951,121
+b. The Board currently consists of nine
+members, among whom there are
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Name
+Research
+Reading materials
+Accounting/finance/operational management
+Laws and regulations update
+Reading materials Training and lectures
+The Directors' attendance to the trainings is as follows:
+b. The Board arranged training sessions
+for Directors, Supervisors and Senior
+Management, and made relevant
+records. During the reporting period,
+the Directors, Supervisors and
+Senior Management of Sinopec Corp.
+actively participated in the trainings
+and attached great importance to
+continuing professional development
+to ensure that their contribution to
+the Sinopec Corp. remains informed
+and relevant.
+Ma Yongsheng
+A.2 Corporate Governance Functions
+a. The Board of Sinopec Corp. is
+responsible for performing duties of
+corporate governance, formulating
+and approving related corporate
+governance rules, adhering to the
+standard operation, improving the
+corporate governance, ensuring that
+the Company complies with domestic
+and overseas laws and regulations,
+and disclosing the Company's
+compliance with the Corporate
+Governance Code in the Corporate
+Governance Report.
+b. Sinopec Corp. attaches great
+importance to the construction
+of corporate culture. In the long
+process of reform and development,
+the Company has cultivated and
+formed its corporate culture,
+comprising the enterprise spirit of
+"loving China, strengthening the
+petrochemical industry", as well
+a. The Board has always adhered to
+the underlying principle of pursuing
+progress while ensuring stability,
+applied the new development
+philosophy fully, accurately and
+comprehensively, scientifically
+formulated the medium-term and
+long-term development strategy,
+facilitated the implementation of the
+strategy, actively promoted the high-
+quality development, and continuously
+created value for the stakeholders.
+A.1 Corporate strategy, business model and
+culture
+A CORPORATE PURPOSE, STRATEGY AND
+GOVERNANCE
+During the reporting period, Sinopec
+Corp. complied with all code provisions
+of the Corporate Governance Code set out
+in Appendix C1 of the Hong Kong Listing
+Rules.
+(1) Compliance with the Corporate
+Governance Code
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+as such fine traditions as being
+hardworking, meticulous and
+rigorous. The Company strives to
+provide cutting-edge technologies,
+premium products and quality
+services. The relevant content
+is published on Sinopec Corp.'s
+website at http://www.sinopec.com.
+Zhao Dong
+Yu Baocai
+Li Yonglin
+B BOARD COMPOSITION AND NOMINATION
+Corporate Governance
+V
+V
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+V
+ฟ
+Independent Non-executive Director
+Independent Non-executive Director
+V
+Independent Non-executive Director
+V
+Independent Non-executive Director
+Positions
+Chairman, Non-executive Director
+Non-executive Director
+Executive Director, President
+Executive Director, Senior Vice President
+Executive Director, Senior Vice President
+Bi Mingjian
+Ng, Kar Ling Johnny
+Shi Dan
+Cai Hongbin
+Lv Lianggong
+8 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+IIIIII
+667,385
+TK-02
+1.0
+6,872
+7,376
+(6.8)
+23,097
+14,782
+56.3
+5,884
+6,468
+(9.0)
+42,035
+41,470
+1.4
+4,473
+5,016
+(10.8)
+67,321
+61,169
+61,807
+(5.3)
+8,967
+The sales revenue of diesel was
+RMB424.7 billion, representing a
+decrease of 5.9% over 2022.
+The sales revenue of kerosene was
+RMB135.9 billion, representing an
+increase of 42.1% over 2022.
+The sales revenue of chemical feedstock
+was RMB188.0 billion, representing a
+decrease of 9.6% over 2022.
+The sales revenue of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock was
+RMB259.8 billion, representing a
+decrease of 13.5% over 2022.
+In 2023, the segment's operating expense
+was RMB1,509.2 billion, representing
+a decrease of 3.4% over 2022 which
+was mainly attributable to a decrease
+in the crude oil and refining feedstock
+procurement cost.
+In 2023, the average processing cost
+for crude oil was RMB4,475 per tonne,
+representing a decrease of 9.8% over
+2022. Total crude oil processed was
+Sales Volume (thousand tonnes)
+Year ended 31 December
+Change (%)
+65,945
+Average realised price (RMB/tonne)
+Year ended 31 December
+2023
+2022
+2023
+2022
+60,926
+57,562
+5.8
+8,494
+Change (%)
+In 2023, sales revenue of gasoline was
+RMB517.5 billion, representing an
+increase of 0.3% over 2022.
+2.1
+4,553
+(3.7)
+Retail
+65,833
+56,989
+15.5
+9,453
+9,938
+(4.9)
+Direct sales and distribution
+26,762
+23,968
+11.7
+7,808
+7,845
+(0.5)
+Diesel
+87,141
+9,318
+8,978
+14.4
+80,957
+(15.2)
+262.52 million tonnes (excluding volume
+processed for third parties), representing
+an increase of 6.0% over 2022. The
+total cost of crude oil processed was
+RMB1,174.8 billion, representing a
+decrease of 4.4% over 2022.
+In 2023, refining margin was RMB353
+per tonne, representing an increase
+of RMB9 per tonne compared with
+that of the same period of 2022. This
+was mainly attributable to increase of
+domestic gasoline and diesel processing
+margin, resulting from the significant
+decrease in international crude oil price.
+and overseas freight and insurance cost
+year-on-year, but partially offset by the
+significant decrease in inventory gain
+year on year.
+In 2023, 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 RMB212.3
+per tonne, representing a decrease of
+4.8% over 2022, which was mainly
+attributable to the increase of processing
+volume as well as the decrease in
+costs of fuels and power resulting from
+enhanced efforts to reduce cost.
+In 2023, the segment brought synergy
+advantages in integrated business
+chain into full play, flexibly adjusted the
+utilisation rate and product structure
+following the market demand, increased
+exports of refined oil products when
+appropriate, and realised an operating
+profit of RMB20.6 billion, increased by
+RMB8.4 billion or 68.8% year-on-year.
+(3) Marketing and Distribution Segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from the
+refining segment and the third parties,
+conducting direct sales and wholesale
+to domestic customers and retailing,
+distributing oil products through the
+segment's retail and distribution network
+as well as providing related services.
+In 2023, the operating revenues of this
+segment was RMB1,818.4 billion, up
+by 6.1% year-on-year. This was mainly
+attributable to an increased demand for
+refined oil products and an increase in
+the Company's sales volume of refined oil
+products year-on-year. The sales revenues
+of gasoline totalled RMB831.3 billion, up
+by 10.2% year-on-year; the sales revenues
+of diesel were RMB625.8 billion, down by
+1.3% year-on-year; the sales revenues of
+kerosene were RMB154.7 billion, up by
+35.3% year-on-year.
+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 2023 and 2022, including detailed information about retail, direct sales and distribution of gasoline and diesel:
+3,859
+Sales volume (thousand tonnes)
+Year ended 31 December
+Average realised price (RMB/tonne)
+Year ended 31 December
+Change (%)
+2023
+2022
+2023
+2022
+Gasoline
+92,595
+Change (%)
+Other refined petroleum products
+Chemical feedstock
+Kerosene
+In 2023, the operating expenses of
+this segment was RMB255.1 billion,
+representing a decrease of 4.0% over
+2022. That was mainly due to the
+following: Procurement cost decreased
+by RMB11.0 billion year on year resulting
+from decline in import LNG price;
+Provision for impairment of oil and gas
+assets decreased by RMB2.0 billion
+year on year; Depreciation, depletion
+increased by RMB1.4 billion year on year;
+Exploration expense increased by RMBO.5
+billion year on year.
+In 2023, the oil and gas lifting cost was
+RMB755.2 per tonne, representing a
+decrease of 2.3% year on year. That was
+mainly attributable to the increase in
+the Company's oil and gas production
+year-on-year, as well as a decrease of
+outsourced material and fuel costs,
+resulting from the enhanced efforts in
+cost control.
+Year ended 31 December
+2023
+2022
+Change
+RMB million
+(%)
+300,019
+319,411
+(6.1)
+255,056
+265,695
+(4.0)
+44,963
+53,716
+(16.3)
+thousand cubic meters, and RMB4, 135
+per tonne, respectively, representing a
+decrease of 11.1%, a decrease of 2.3%,
+an increase of 0.7%, and a decrease of
+27.6% respectively over 2022.
+In 2023, the segment sold 34.37 million
+tonnes of crude oil, representing an
+increase of 0.3% over 2022. Natural
+gas sales volume was 33.4 billion cubic
+meters (bcm), representing an increase
+of 4.9% over 2022. Regasified LNG sales
+volume was 17.1 bcm, representing
+a decrease of 20.7% over 2022. LNG
+sales volume was 1.41 million tonnes,
+representing a decrease of 0.8% over
+2022. Average realised prices of crude
+oil, natural gas, regasified LNG, and LNG
+were RMB3,833 per tonne, RMB1,774 per
+thousand cubic meters, RMB3,561 per
+In 2023, the operating revenue of
+this segment was RMB300.0 billion,
+representing a decrease of 6.1% over
+2022. This was mainly attributable to
+the decrease in prices of crude oil and
+natural gas.
+(1) Exploration and Production Segment
+Most crude oil and a small portion of the
+natural gas produced by the exploration
+and production segment were used for
+the Company's refining and chemical
+production. Most of the natural gas and
+a small portion of crude oil were sold
+externally to other customers.
+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 2023 compared to 2022.
+Exploration and Production Segment
+Operating revenues
+Operating expenses
+Operating profit
+Refining Segment
+Operating revenues
+Operating expenses
+Operating profit
+1,529,786
+Marketing and Distribution Segment
+Operating expenses
+Operating profit
+Chemicals Segment
+Operating revenues
+Operating expenses
+Operating loss
+Corporate and Others
+Operating revenues
+Operating expenses
+Operating profit
+Elimination of inter-segment loss/(profit)
+Operating revenues
+1,575,139
+(2.9)
+1,509,178
+20,608
+1,790,478
+(14.1)
+1,537,716
+1,789,160
+(14.1)
+604
+750
+1,318
+(1,820)
+(54.2)
+1,538,320
+In 2023, the exploration and production
+segment seized the opportunity of
+relative high crude oil prices, spared
+no efforts to increase reserves, boost
+production, cut cost, and achieved good
+performance, but impact by decrease in
+crude oil price year on year and provision
+for levy for mineral rights concessions
+of RMB7.4 billion. The operating profit
+of the segment was RMB45.0 billion,
+representing a decrease of RMB8.8
+billion and 16.3% over the same period
+of 2022.
+Business activities of the refining segment
+include purchasing crude oil from
+third parties and the exploration and
+production segment of the Company, as
+well as processing crude oil into refined
+petroleum products. Most of gasoline,
+diesel and kerosene were sold internally
+to the marketing and distribution
+segment of the Company; part of the
+chemical feedstock was sold internally to
+the chemicals segment of the Company;
+and other refined petroleum products
+were sold externally to both domestic and
+overseas customers.
+20
+20
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2023, the operating revenue of this segment was RMB1,529.8 billion, representing a decrease of 2.9% over 2022. This was mainly
+attributable to the decreases in prices of products including refined oil products.
+The following table sets forth the sales volumes, average realised prices and the respective changes of the refined oil products
+of the segment in 2023 and 2022.
+Gasoline
+Diesel
+(2) Refining Segment
+81,932
+(14,127)
+(5.9)
+1,562,928
+(3.4)
+12,211
+68.8
+1,818,429
+1,792,490
+25,939
+1,713,874
+1,689,337
+24,537
+(6,036)
+695
+6.1
+5.7
+117
+515,307
+540,152
+(4.6)
+521,343
+554,279
+6.1
+(天津LNG
+TK-01
+6.4
+7,737
+Current assets
+Non-current assets
+Total liabilities
+Current liabilities
+Non-current liabilities
+Total equity attributable to shareholders of the Company
+Share capital
+Reserves
+Non-controlling interests
+Total equity
+As of 31 December 2023, the Company's
+total assets were RMB2,024.7 billion,
+representing an increase of RMB73.6
+billion compared with that of the end of
+2022, of which:
+Current assets were RMB534.4 billion,
+representing an increase of RMB11.3
+billion compared with that of the end
+of 2022, mainly because the cash and
+deposit increased by RMB18.5 billion,
+international crude oil price decreased
+year on year resulting in derivative
+financial assets decreasing by RMB9.6
+billion, and inventories increased by
+RMB6.7 billion as a result of operation
+volume increase due to market recovery.
+Unit: RMB million
+As of
+31 December
+2023
+As of
+31 December
+2,024,696
+Total assets
+The major funding sources of the Company are its operating activities and short-term and long-term loans. The major use of funds includes
+operating expenses, capital expenditures, and repayment of the short-term and long-term debts.
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+(1) Assets, liabilities and equity
+800
+812
+(1.5)
+2,619
+2,988
+(12.4)
+Chemical fertiliser
+In 2023, the operating expenses of
+the chemicals segment was RMB521.3
+billion, representing a decrease of 5.9%
+over 2022, mainly due to decreased
+procurement cost of chemical feedstock
+including naphtha, etc.
+2022
+1,951,121
+In 2023, facing the tough market
+situation of oversupply and weak margin
+in the chemical market, the segment
+focused on promoting quality and
+increasing profitability, dynamically
+adjusted production and operation
+strategies, continuously promoted
+structure optimization, and vigorously
+reduced costs and expenses, with an
+operating loss of RMB6.0 billion and
+reduced losses of RMB8.1 billion year-on-
+year.
+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 2023, the operating revenue
+generated from corporate and others.
+was approximately RMB1,538.3 billion,
+representing a decrease of 14.1% over
+2022. This was mainly attributed to the
+year-on-year decrease in the trading
+prices of crude oil and refined oil
+products.
+In 2023, the operating expense of
+corporate and others was RMB1,537.7
+billion, representing a decrease of 14.1%
+over 2022.
+In 2023, the operating profit from
+corporate and others was RMBO.6 billion,
+representing a decrease of RMBO.7 billion
+over the same period of 2022.
+22
+22
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(5) Corporate and Others
+(7.2)
+Change
+534,435
+15,936
+152,820
+151,942
+878
+955,809
+939,542
+16,267
+Non-current assets were RMB1,490.3
+billion, representing an increase of
+RMB62.3 billion as compared with that
+of the end of 2022. This was mainly
+because net value of property, plant
+and equipment increased by RMB60.2
+billion, resulting from the increased
+investments in refining and chemical
+bases construction, structural adjustment
+and new chemical materials business.
+The Company's total liabilities were
+RMB1,068.9 billion, representing an
+increase of RMB57.3 billion compared
+with that of the end of 2022, of which:
+Current liabilities were RMB647.1 billion,
+representing a decrease of RMB20.3
+billion as compared with that of the end
+of 2022. This was mainly due to decrease
+in derivative margin.
+Non-current liabilities were RMB421.8
+billion, representing an increase of
+RMB77.6 billion compared with that
+of the end of 2022. This was mainly
+because the low-interest long-term
+domestic loans increased.
+Total equity attributable to owners of
+the Company was RMB803.0 billion,
+representing an increase of RMB15.4
+billion compared with that of the end of
+2022.
+天然气 天津LNG
+④天然气 天津LNG
+TK-03
+667,704
+683,640
+(547)
+119,896
+523,140
+11,295
+1,490,261
+1,427,981
+62,280
+1,068,887
+1,011,579
+57,308
+73,575
+647,076
+(20,309)
+421,811
+344,194
+77,617
+802,989
+787,600
+15,389
+119,349
+Operation
+income
+RMB million
+11,369
+10,551
+6.5
+Fuel oil
+31,996
+26,162
+22.3
+3,985
+4,817
+(17.3)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+21
+Management's Discussion
+and Analysis
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+In 2023, the operating expenses of the
+segment were RMB1,792.5 billion, up by
+6.1% year-on-year. This was mainly due
+to the rising procurement costs resulting
+from the increase in sales volume of
+refined oil products.
+In 2023, 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 RMB193.4 per tonne, down by 7.3%
+year on year. This was mainly due to
+the increase in refined oil products sales
+volume, and the Company continuously
+improved competitiveness in cost and
+effectively reduced various circulation
+expenses.
+In 2023, the operating revenues of non-
+fuel business was RMB42.0 billion, up by
+RMB3.9 billion year-on-year and the profit
+of non-fuel business was RMB4.6 billion,
+up by RMBO.3 billion. This was mainly
+because the Company actively explored
+new retail marketing models, proactively
+promoted the sales volume of Sinopec-
+branded products, continuously expanded
+new business models and marketing
+activities, and promoted quality of non-
+fuel business.
+(9.2)
+6,546
+5,941
+49.0
+(7.2)
+Retail
+36,772
+34,481
+6.6
+7,673
+8,176
+(6.1)
+In 2023, the segment seized
+opportunities of rebounded refined oil
+products demand, actively expanded
+total sales volume, accurately carried
+out various marketing activities,
+enhanced efforts in expanding market
+and promoting profitability, and realised
+an operating profit of RMB25.9 billion,
+representing an increase of RMB1.4
+billion year-on-year, up by 5.7% year-on-
+year.
+Direct sales and distribution
+47,451
+6.1
+6,822
+7,419
+(8.0)
+Kerosene
+26,045
+17,474
+50,368
+(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 2023, the operating revenue of this
+segment was RMB515.3 billion, down
+by 4.6% year-on-year. This was mainly
+due to the decrease in prices of major
+chemical products year on year.
+(15.3)
+5,416
+6,140
+(11.8)
+17,941
+17,475
+2.7
+7,393
+7,496
+8,272
+1,172
+1,193
+(1.7)
+7,779
+8,122
+(4.2)
+1,456
+1,367
+(10.6)
+7,181
+6,350
+6,192
+In 2023, 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 approximately RMB476.0 billion,
+down by 6.5% year-on-year, accounting
+for 92.4% 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 2023 and 2022.
+Basic organic chemicals
+Synthetic fibre monomer and polymer
+Synthetic resin
+Synthetic fibre
+Synthetic rubber
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+(7.3)
+Change (%)
+2023
+2022
+2023
+2022
+49,202
+46,972
+4.8
+5,740
+Average realised price (RMB/tonne)
+Year ended 31 December
+Change (%)
+Segments
+DIRECTORS' RESPONSIBILITIES,
+DELEGATION AND BOARD PROCEEDINGS
+Management's Discussion
+No
+58
+Non-executive Director
+Executive Director, President
+Executive Director, Senior Vice President
+Executive Director, Senior Vice President
+Tenure
+2016.2-2024.5
+2021.5-2024.5
+before tax)
+2023
+2023
+2022
+Yes
+0
+0
+Yes
+0
+0
+2018.10-2024.5
+2021.5-2024.5
+1,123.4
+No
+0
+0
+Yes
+0
+0
+2023.5-2024.5
+Yes
+0
+0
+Cai Hongbin
+Male
+56
+Male
+Lv Lianggong
+57
+Male
+LIST OF MEMBERS OF THE BOARD
+Remuneration
+paid by
+Sinopec Corp.
+in 2023
+Whether
+paid by the
+shareholders
+of the
+Company or
+Equity interests
+their related
+in Sinopec Corp.
+(RMB1,000,
+entities in
+(as at 31 December)
+Name
+Gender
+Age
+Position in Sinopec Corp.
+Ma Yongsheng
+Male
+62
+Chairman of the Board, Non-executive Director
+Zhao Dong
+Male
+53
+Yu Baocai
+Male
+59
+Li Yonglin
+Ng, Kar Ling Johnny
+Male
+63
+Independent Non-Executive Director
+Independent Non-Executive Director
+(RMB1,000,
+entities in
+(as at 31 December)
+Name
+Ling Yiqun
+Liu Hongbin
+Gender
+Male
+Age
+Position in Sinopec Corp
+61
+Male
+61
+Former Executive Director, Senior Vice President
+Former Executive Director, Senior Vice President
+Tenure
+2018.5-2023.4
+2020.5-2023.5
+before tax)
+Equity interests
+in Sinopec Corp.
+2023
+2022
+Yes
+13,000
+13,000
+229.7
+No
+0
+0
+38
+38
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Zhang Shaofeng
+Qiu Fasen
+2023
+paid by the
+shareholders
+of the
+Company or
+their related
+in 2023
+2018.5-2024.5
+450.0
+No
+0
+0
+2018.5-2024.5
+450.0
+No
+0
+0
+Shi Dan
+Female
+62
+Bi Mingjian
+Male
+68
+Independent Non-Executive Director
+Independent Non-Executive Director
+2021.5-2024.5
+450.0
+0
+0
+2021.5-2024.5
+450.0
+No
+0
+0
+LIST OF FORMER MEMBERS OF THE BOARD OF DIRECTORS
+Whether
+Remuneration
+paid by
+Sinopec Corp.
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+Corporate Governance
+37
+D.1Financial 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 2023 and
+warranted that the annual report
+contained no false representations,
+no material omissions or misleading
+statements and jointly and severally
+accepted full responsibility for
+the authenticity, accuracy, and
+completeness of the content.
+b. The Management of Sinopec Corp.
+provides Directors with information
+about the financial, production and
+operating data of the Company,
+capital market updates, and securities
+regulatory developments every month
+to ensure that the Directors can learn
+about the latest developments of the
+Company and regulatory changes in a
+timely manner.
+c. Sinopec Corp. has adopted an
+internal control mechanism to ensure
+that the Management and relevant
+departments have provided the
+Board and the Audit Committee with
+sufficient financial data and related
+explanations and materials.
+d. The external auditors of Sinopec Corp.
+made a statement on their audit
+responsibilities in the auditor's report
+contained in the financial report.
+D.2Internal Control and Risk Management
+a. Sinopec Corp. has formulated and
+implemented its internal control
+and risk management system. The
+Board as a decision-making body
+is responsible for evaluating and
+reviewing the effectiveness of its
+internal control and risk management.
+The Board and the Audit Committee
+periodically (at least annually) receive
+reports of the Company regarding
+internal control and risk management
+information from the Management.
+All major internal control and risk
+management issues are reported to
+the Board and the Audit Committee.
+Sinopec Corp. has set up its internal
+control and risk management
+department and internal auditing
+departments, which are equipped with
+sufficient staff, and these departments
+periodically (at least twice per year)
+report to the Audit Committee. The
+internal control and risk management
+system of the Company are designed
+to manage rather than eliminate all
+the risks of the Company.
+b. In terms of internal control,
+Sinopec Corp. adopted the internal
+control framework prescribed
+in the internationally accepted
+report of Committee of Sponsoring
+Organisations of the Treadway
+Commission (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.
+The Board attaches great importance
+to the ESG management approach
+and strategy, optimises ESG
+mechanism, strengthens the Board's
+role in supervising and participation
+in ESG related issues, and integrates
+ESG considerations into the
+Company's development strategy,
+major decision-making processes
+and production and operation. The
+Company keeps strictly to the anti-
+corruption laws and regulations of
+China, as well as anti-corruption and
+anti-bribery laws applicable in the
+country (region) where the business
+is conducted. The Company fully
+supports the UN Convention against
+Corruption, the UN Global Compact
+and other relevant initiatives, abides
+by the rules and commitments of the
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+MANAGEMENT
+31
+32
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Company and business partners on
+clean practices and anti-corruption,
+and strengthens the construction of
+a culture of integrity. The Company
+has continuously improved the
+organizational and institutional
+systems of anti-corruption, organized
+and carried out anti-corruption
+training, and attached importance to
+risk assessment of anti-corruption.
+The Board has reviewed and evaluated
+the adequacy of resources, staff
+qualifications and experience, training
+programmes and budget of ESG
+performance and reporting during the
+reporting period. For details, please
+refer to the Report of Sustainable
+Development of Sinopec Corp. for the
+year 2023.
+d. Based upon the review and
+evaluation of internal control and risk
+management in the reporting period,
+the Board is of the view that the
+internal control and risk management
+of the Company are effective.
+D.3Audit Committee
+a. The Board has established an Audit
+Committee, formulated the Terms
+of Reference of the Audit Committee
+which included the scope of
+responsibility of the Audit Committee.
+The Audit Committee is responsible
+for supervising and evaluating internal
+and external audit work, reviewing
+and commenting on the financial
+reports of the Company, monitoring
+and evaluating the effectiveness
+of risk management and internal
+control system, and coordinating
+the communication between external
+auditor and management, internal
+auditor and related departments.
+The Audit Committee consists of
+Independent Non-executive Director,
+Mr. Ng, Kar Ling Johnny, who serves
+as the Chairman, and Independent
+Non-executive Directors, Mr. Cai
+Hongbin, Ms. Shi Dan, and Mr. Bi
+Mingjian, who serve as members.
+b. During the reporting period, the Audit
+Committee held five meetings (please
+refer to the "The Board Committees
+Meetings and the Special Meeting
+of Independent Directors" 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
+professionals when performing its
+duties. Reasonable costs arising
+from such consultations are borne
+by Sinopec Corp. In the meantime,
+the Audit Committee has appointed
+consultant members and can request
+such members to provide advice.
+The working expenses of the Audit
+Committee are included in the budget
+of Sinopec Corp. In accordance with
+the policies of Sinopec Corp., the
+Senior Management and relevant
+departments of Sinopec Corp. shall
+actively cooperate with the Audit
+Committee.
+d. The Audit Committee has reviewed
+the adequacy and sufficiency of the
+resources for accounting, internal
+audit, financial reporting functions
+and the qualifications and experience
+of the relevant employees as well as
+the sufficiency of the training courses
+and the budget thereof. The Audit
+Committee is of the view that the
+Management has fulfilled the duties to
+establish an effective internal control
+system. The Company established
+a whistle-blowing policy in its
+internal control system reviewed and
+approved by the Audit Committee,
+providing several channels, including
+online reporting, reporting by letters,
+appeals and complaint mailbox, etc.,
+to employees and others who have
+dealings with the Company (such as
+suppliers and customers) to raise
+concerns on improper matters of the
+Company secretly and anonymously.
+The Audit Committee has established
+an internal procedure, which contains
+receiving, retaining and handling
+complaints or anonymous reports
+concerning accounting, internal
+control or audit matters.
+E. REMUNERATION
+E.1 The level and make-up of remuneration
+and disclosure
+32
+D. AUDIT, INTERNAL CONTROL AND RISK
+c. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training for more than 15 training
+hours.
+b. The Secretary to the Board assists
+the Directors in handling the
+day-to-day work of the Board,
+continuously informs the Directors
+of the regulations, policies or other
+requirements of domestic or overseas
+regulatory authorities in relation to
+corporate governance and ensures
+that the Directors comply with
+domestic and overseas laws and
+regulations when performing their
+duties and responsibilities.
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+powers. The Articles of Association
+and the Rules and Procedures for
+Board of Directors' Meetings clearly
+prescribe the duties and powers
+of Directors, and Non-executive
+Directors including Independent
+Non-executive Directors, which are
+published on the Sinopec Corp.'s
+website at http://www.sinopec.com.
+c. Each of the Directors confirmed that
+he/she has complied with the Model
+Code during the reporting period.
+Meanwhile, Sinopec Corp. formulated
+the Rules Governing Shares Held
+by Company Directors, Supervisors
+and Senior Managers and Changes
+in Shares and the Rules on Insider
+Registration and Management, which
+is no less exacting than the Model
+Code, to further regulate the dealings
+of Sinopec Corp.'s securities by
+relevant personnel.
+d. All the Independent Non-executive
+Directors and other Non-executive
+Directors of the Sinopec Corp.
+regularly attended the Board
+meetings and the meetings held by
+the Board Committees they served,
+paid attention to production and
+operational status of the Company,
+and offered constructive suggestions
+on the Company's reforms and
+development based on their skills and
+professional knowledge. For details
+about each Director's attendance at
+relevant meetings, please refer to
+the section "Report of the Board of
+Directors" in this annual report.
+C.2Chairman and President
+a. Mr. Ma Yongsheng, elected by all
+Directors, serves as Chairman of the
+Board. Mr. Yu Baocai, nominated
+and appointed by the Board, serves
+as President of Sinopec Corp.
+The respective main duties and
+responsibilities of the Chairman
+and the President are clearly
+distinguished from each other, and
+the scope of their respective duties
+and responsibilities are set out in the
+Articles of Association.
+b. The Chairman of the Board ensure
+that all the Directors could receive
+full, clear and complete information
+in time, and be informed of proposals
+of the Board meetings.
+c. The Chairman of the Board places
+great emphasis on communication
+with the Independent Non-
+executive Directors. The Chairman
+independently communicated with
+the Independent Non-executive
+Directors in respect of development
+strategy, medium-term and long-
+term development plans, corporate
+governance, and operational
+management, etc.
+d. The Chairman of the Board
+encourages open and active
+discussions. The Directors fully and
+deeply participated in the discussions
+of significant decisions in the Board
+meetings.
+C.3 Management functions
+a. The Board and the Management have
+clear duties and responsibilities under
+written rules. The Articles of Association
+and the Rules and Procedures of
+Shareholders' General Meetings and
+the Rules and Procedures for Board
+of Directors' Meetings clearly set
+forth the scope of duties, powers, and
+delegation of power of the Board and
+Management, which are published on
+the website of Sinopec Corp. at
+http://www.sinopec.com.
+C.4 Board Committees
+a. In addition to the Audit Committee,
+the Remuneration and Appraisal
+Committee and the Nomination
+Committee, the Board had
+established the Strategy Committee
+and the Sustainable Development
+Committee. The Strategy Committee
+is responsible for overseeing long-
+term development strategies and
+significant investment decisions of the
+Company. The Strategy Committee
+consists of seven Directors, including
+the Chairman of the Board, Mr.
+Ma Yongsheng, who serves as
+Chairman, Executive Directors,
+Mr. Yu Baocai, Mr. Li Yonglin, Mr.
+Lv Lianggong, and Independent
+Non-executive Directors, Mr. Cai
+Hongbin, Ms. Shi Dan, and Mr. Bi
+Mingjian, who serve as members. The
+Sustainable Development Committee
+is responsible for preparing policies,
+governance, strategies and plans
+for sustainable development of the
+Company, which consists of four
+Directors, including the Chairman
+of the Board, Mr. Ma Yongsheng,
+who serves as Chairman, the Non-
+executive Director, Mr. Zhao Dong, the
+Executive Director, Mr. Lv Lianggong,
+and the Independent Non-executive
+Director, Mr. Cai Hongbin, who serve
+as members.
+b. Each Board Committee shall report its
+decisions and recommendations to the
+Board and has formulated its terms of
+references. Terms of Reference of the
+Audit Committee, Terms of Reference
+of the Remuneration and Appraisal
+Committee, Terms of Reference of the
+Sustainable Development Committee
+and Terms of Reference of the
+Nomination Committee are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com.
+C.5 Board proceedings and supply of and
+access to information
+a. The Articles of Association and the
+Rules and Procedures for Board of
+Directors' Meetings of Sinopec Corp.
+clearly prescribe the proceedings of
+Board meetings, which are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com.
+b. The Board of Sinopec Corp. held its
+meetings at least once a quarter.
+The Board will usually communicate
+the time and proposals of the Board
+meeting 14 days before convening
+the meeting. The relevant documents
+and materials for Board meetings
+and for the Board Committees are
+usually delivered to each Director
+10 days in advance. Before the
+meetings were held, assigned persons
+were responsible for answering the
+possible questions raised by the
+Directors, ensuring the Directors
+could participate in the proceedings
+of the Board meetings effectively
+and positively, and fully understand
+the proposals to make decisions. In
+2023, Sinopec Corp. held six Board
+meetings. For details about each
+Director's attendance at the meetings,
+please refer to the section "Report of
+the Board of Directors" in this annual
+report.
+c. Each Director of the Board can
+submit proposals to be included in
+the agenda of Board meetings, and
+each Director is entitled to request
+other related information. 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.
+d. Each Director can obtain all related
+information in a comprehensive and
+timely manner. The Secretary to the
+Board is responsible for organising
+and preparing the materials for the
+Board meetings, including preparation
+of explanations for each proposal
+to ensure fully understanding by
+the Directors. The Management is
+responsible for providing the Directors
+with necessary information and
+materials. The Directors can require
+the Management, or require relevant
+departments via the Management
+to provide necessary information or
+explanations. The Directors can seek
+advice from professional consultants
+when necessary.
+30
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+e. Resolutions and minutes of Board
+meetings and the meetings held by
+the Board Committees were recorded
+and archived by designated recorders,
+and were reviewed and confirmed by
+the Directors attending the relevant
+meetings. All the matters and final
+decisions were recorded fully and
+accurately in the meeting minutes.
+f. The Board has reviewed and evaluated
+its performance in 2023 and is of the
+view that the Board made decisions
+in compliance with domestic and
+overseas regulatory authorities'
+requirements and the Company's
+internal rules; that the Board has
+fully communicated, and considered
+the suggestions from the Party
+organisation, Supervisory Committee
+and Management during its decision-
+making process; and that the Board
+safeguarded the legitimate rights and
+interests of Sinopec Corp. and its
+shareholders.
+C.6Company Secretary
+a. The Hong Kong Stock Exchange
+recognised the Secretary to the Board
+as having the relevant qualifications
+as Company Secretary. The Secretary
+to the Board, nominated by the
+Chairman of the Board and appointed
+by the Board, is a senior management
+officer of Sinopec Corp. He reports
+to the Chairman and the President
+and is responsible for the Company
+and the Board. The Secretary to the
+Board gives opinions on corporate
+governance to the Board and arranges
+orientation training and professional
+development for the Directors.
+a. The remuneration policy of the
+Director is stipulated in Director's
+service contracts approved at the
+general meeting. Remuneration of
+Executive Directors is determined
+according to the relevant regulations
+of the country and the Implementation
+Rules of the Remuneration of Senior
+Management of Sinopec Corp.; Non-
+executive Directors do not receive
+remuneration in the Company.
+Remuneration of Independent Non-
+executive Directors is approved at
+the general meeting, and the level
+is determined with comprehensively
+consideration of industry conditions,
+company size and other factors. For
+details about the annual remuneration
+of Directors, Supervisors, and other
+Senior Management, please refer to
+page 38 to page 45 in this annual
+report.
+b. The Board established Remuneration
+and Appraisal Committee, consisting
+of Independent Non-executive
+Director, Mr. Bi Mingjian, who serves
+as the Chairman, and the Chairman of
+the Board, Mr. Ma Yongsheng and the
+Independent Non-executive Director,
+Mr. Ng, Kar Ling Johnny, who serve as
+the members. The Remuneration and
+Appraisal Committee is responsible
+for reviewing the implementation of
+the annual remuneration plans for
+Directors, Supervisors, and other
+Senior Management as approved
+at the general meeting of the
+shareholders, and reporting to the
+Board.
+c. The Remuneration and Appraisal
+Committee always consults the
+Chairman of the Board and the
+President about the remuneration
+plans for other Executive Directors.
+After the Remuneration and Appraisal
+Committee's review, it is of the view
+that all the Executive Directors of
+Sinopec Corp. have fulfilled the duty
+clauses in their service contracts in
+2023.
+(1) Directors
+Ma Yongsheng, aged 62, Chairman
+of the Board of Sinopec Corp. Mr. Ma
+is a professor level senior engineer
+with a Ph.D. degree. Mr. Ma is a
+member of the 13th and 14th National
+Committee of Chinese People's Political
+Consultative Conference ("CPPCC") and
+an academician of the Chinese Academy
+of Engineering. In April 2002, he was
+appointed as Chief Geologist of Sinopec
+Southern Exploration and Production
+Company; in April 2006, he was
+appointed as Executive Deputy Manager
+(in charge of overall management),
+Chief Geologist of Sinopec Southern
+Exploration and Production Company;
+in January 2007, he was appointed as
+General Manager and Party Secretary
+of CPC Committee of Sinopec Southern
+Exploration and Production Company;
+in March 2007, he served as General
+Manager and Deputy Party Secretary of
+CPC Committee of Sinopec Exploration
+Company; in May 2007, he was appointed
+as Deputy Commander of Sichuan-East
+China 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 53, Director of Sinopec
+Corp. Mr. Zhao is a professor level
+senior accountant with a Ph.D. degree.
+Mr. Zhao is an alternate member of the
+20th Central Committee of the Party. In
+July 2002, he was appointed as Chief
+Accountant and General Manager of
+Financial Assets Department of CNPC
+International (Nile) Ltd.; in January
+2005, he was appointed as Deputy
+Chief Accountant and Executive Deputy
+Director of Financial and Capital
+Operation Department of China National
+Oil and Gas Exploration and Development
+Corporation; in April 2005, he was
+appointed as Deputy Chief Accountant
+and General Manager of Financial and
+Capital Operation Department of China
+National Oil and Gas Exploration and
+Development Corporation; in June 2008,
+he was appointed as Chief Accountant of
+China National Oil and Gas Exploration
+and Development Corporation; in
+October 2009, he was appointed as Chief
+Accountant of China National Oil and Gas
+Exploration and Development Corporation
+and Chief Financial Officer of PetroChina
+International Investment Company
+Limited; in September 2012, he was
+appointed as Deputy General Manager
+of CNPC Nile Company; in August 2013,
+he was appointed as General Manager of
+CNPC Nile Company; in November 2015,
+he was appointed as Chief Financial
+Officer of PetroChina Company Limited.
+In November 2016, he was appointed as
+a Member of the Leading Party Member
+Group and Chief Accountant of China
+Petrochemical Corporation; in May
+2020, he was appointed as Director and
+Deputy Secretary of the Leading Party
+Member Group of China Petrochemical
+Corporation; in June 2022, he was
+appointed as Director, President and
+Vice Secretary of the Leading Party
+Member Group of China Petrochemical
+Corporation. In June 2017, he was
+elected as Chairman of Supervisory
+Committee of Sinopec Corp.; in May
+2021, he was elected as Director of
+Sinopec Corp.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Yu Baocai
+Li Yonglin
+Lv Lianggong
+Yu Baocai, aged 59, 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 and Member of
+the CPC Committee of PetroChina
+Daqing Petrochemical Company; in
+December 2001, he was appointed as
+General Manager and Deputy Secretary
+of CPC Committee of PetroChina
+Daqing Petrochemical Company; in
+September 2003, he was appointed
+as General Manager and Secretary of
+CPC Committee of PetroChina Lanzhou
+Petrochemical Company; in June 2007,
+he was appointed as General Manager
+and Deputy Secretary of CPC Committee
+of PetroChina Lanzhou Petrochemical
+Company and General Manager of
+Lanzhou Petroleum & Chemical Company;
+in September 2008, he was appointed as
+a member of the Leading Party Member
+Group and Deputy General Manager of
+China National Petroleum Corporation
+("CNPC") and since May 2011, he acted
+concurrently as Director of PetroChina
+Company Limited; in June 2018, he was
+appointed as a Member of the Leading
+Party Member Group and Vice President
+of China Petrochemical Corporation;
+in September 2020, he was appointed
+as Senior Vice President of Sinopec
+Corp. Mr. Yu was elected as Director of
+Sinopec Corp. in October 2018, and was
+appointed as President of Sinopec Corp.
+in November 2021.
+Li Yonglin, aged 57, 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
+of Sinopec Corp.; 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 Head of
+Organizational Department of the Leading
+Party Member Group, General Manager
+of Human Resources Department, and
+General Manager of Human Resources
+Department of Sinopec Corp.; 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.
+Lv Lianggong, aged 58, Director and
+Senior Vice President of Sinopec Corp.
+Mr. Lv is a professor level senior engineer
+with a master's degree. In December
+2001, he was appointed as Deputy
+Manager of Sinopec Jinan Company;
+in August 2008, he was appointed
+as Manager and Deputy Secretary of
+the CPC Committee of Sinopec Jinan
+Company; in December 2008, he was
+appointed as General Manager and
+Deputy Secretary of the CPC Committee
+of Sinopec Jinan Company; in December
+2016, he was appointed as General
+Manager and Deputy Secretary of the
+CPC Committee of Anqing Petrochemical
+General Plant of China Petrochemical
+Corporation and General Manager of
+Sinopec Corp. Anqing Company; in
+July 2017, he was appointed to serve a
+temporary position as a member of the
+Standing Committee of the CPC Anqing
+Municipal Committee; in September
+2018, he was appointed as the General
+Manager and Deputy Secretary of the
+CPC Committee of Sinopec Zhenhai
+Refining & Chemical Company; in
+December 2019, he was appointed as
+Representative and Secretary of the CPC
+Committee of Sinopec Zhenhai Refining
+& Chemical Company; in December
+2020, he was appointed as Deputy
+Chief Economist, Director General of
+Organization Department of Leading Party
+Member Group and General Manager of
+Human Resources Department of China
+Petrochemical Corporation. and General
+Manager of Human Resource Department
+of Sinopec Corp.; in June 2021, he
+was appointed as Director General
+of the Office of the Organizational
+Structure Establishment Committee of
+Leading Party Member Group of China
+Petrochemical Corporation; in August
+2022, he was appointed as a Member
+of the Leading Party Member Group
+and Deputy General Manager of China
+Petrochemical Corporation. In October
+2022, he concurrently served as Chief
+Security Officer of China Petrochemical
+Corporation; in May 2022, he was elected
+as Supervisor of Sinopec Corp., and
+in October 2022, he was appointed as
+Senior Vice President of Sinopec Corp.
+and in May 2023, he was elected as
+Director of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+35
+Corporate Governance
+36
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Cai Hongbin
+Ng, Kar Ling Johnny
+Shi Dan
+Cai Hongbin, aged 56, Independent
+Director of Sinopec Corp. Mr. Cai is the
+Dean and chair professor of Business
+School 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 served as Director of the Applied
+Economics Department, Assistant to the
+Dean and Vice Dean of Guanghua School
+of Management of Peking University.
+From December 2010 to January 2017,
+he served as Dean of Guanghua School
+of Management at Peking University. In
+June 2017, he joined Business School
+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, Vice
+Chairman of Beijing Municipal Committee
+of China Democratic League and a
+Chartered Auditor of the National Audit
+Office of China. He currently serves as an
+Independent Director of CCB International
+(Holdings) Limited, China Merchants
+Finance Holdings Company Limited and
+Ping An Bank Co., Ltd. In May 2018, he
+was elected as Independent Director of
+Sinopec Corp.
+Ng, Kar Ling Johnny, aged 63,
+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
+Director of Metallurgical Corporation
+of China Ltd. and China Telecom
+Corporation Limited. In May 2018, he
+was elected as Independent Director of
+Sinopec Corp.
+Shi Dan, aged 62, 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 (CASS); in August 2010,
+Ms. Shi was appointed as a Research
+Fellow and Deputy Dean of National
+Academy of Economic Strategy of CASS;
+in November 2013, she was appointed
+as a Research Fellow and Secretary of
+CPC Committee (Deputy Dean) of the
+Institute of Industrial Economics of CASS;
+from November 2017 to August 2021,
+she served concurrently as External
+Director of China Energy Investment
+Corporation Limited. In March 2019,
+she was appointed as Dean of Institute
+of Industrial Economics of CASS. In May
+2021, she was elected as Independent
+Director of Sinopec Corp.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Bi Mingjian
+Bi Mingjian, aged 68, 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 a member and 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 World Bank project office of China
+Rural Trust and Investment Corporation
+from June 1988 to October 1988; he
+served as Project Economist and Advisor
+of the World Bank from October 1988 to
+January 1994; he served as a cadre at
+People's Construction Bank of China from
+January 1994 to July 1995; he served as
+Senior Manager, Deputy Chief Executive
+Officer, member and Acting Chairman of
+the Management Committee, Co-Chief
+Operating Officer and Co-Head of the
+Investment Banking Department of China
+International Capital Corporation Limited
+("CICC") from August 1995 to February
+2006; he served as a Senior Advisor to
+CICC from March 2006 to November
+2012; he served as a Managing Partner
+of HOPU Investment Management Co.,
+Ltd. from November 2012 to March
+2015; he served as a non-executive
+director for China Investment Securities
+Co., Ltd. (currently known as China CICC
+Wealth Management Securities Company
+Limited) from March 2017 to January
+2020; from March 2015 to December
+2019, he served as Chief Executive Officer
+and Chairman of Management Committee
+of CICC; from May 2015 to February
+2020, he served as Executive Director of
+CICC. In May 2021, he was elected as
+Independent Director of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+11 BIOGRAPHICAL DETAILS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+Wu Bo
+Zhao Dong
+CORPORATE GOVERNANCE (CONTINUED)
+d. The members of the Remuneration
+and Appraisal Committee can engage
+independent professionals when
+performing its duties. Reasonable
+costs arising from such consultations
+are borne by Sinopec Corp. In
+the meantime, the Remuneration
+and Appraisal Committee has also
+appointed consultant members
+and can require such members
+to provide advice. The working
+expenses of the Remuneration and
+Appraisal Committee are included
+in the budget of Sinopec Corp.
+According to the policies of Sinopec
+Corp., the Senior Management and
+relevant departments of Sinopec
+Corp. shall actively cooperate with
+the Remuneration and Appraisal
+Committee.
+e. During the reporting period, the
+Remuneration and Appraisal
+Committee held one meeting (please
+refer to "The Board Committees
+Meetings and the Special Meeting
+of Independent Directors" under the
+section of "Report of the Board of
+Directors" in this annual report).
+F. SHAREHOLDERS ENGAGEMENT
+F.1 Effective communication
+a. In accordance with the actual
+situation on shares repurchase and
+cancellation of the repurchased
+shares, Sinopec Corp. revised the
+relevant provisions of equity structure
+and registered capital in the Articles
+of Association, which was reviewed
+and approved by the Annual General
+Meeting of 2022. 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 SSE on 27 March and 31 May
+2023, respectively, and on the website
+of Hong Kong Stock Exchange on 26
+March and 30 May 2023, respectively.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+b. The policy on payment of dividends
+of Sinopec Corp. is disclosed in the
+Report of the Board of Directors in
+this annual report, please refer to
+page 62 in this annual report.
+c. Sinopec Corp. attaches considerable
+significance to investor relations.
+The Chairman of the Board
+attended annual and interim results
+conferences, and the Management
+attends road shows to answer
+questions on subjects of concern
+to investors, such as introducing
+the development strategies and the
+production and business performance
+of the Company. The Independent
+Director, Mr. Bi Mingjian, attended the
+annual and interim online performance
+meetings. The Board Secretariat
+of Sinopec Corp. is responsible
+for organizing the communication
+with investors. In compliance with
+regulatory provisions, Sinopec
+Corp. enhances communication
+with investors by holding meetings
+with institutional investors, reverse
+roadshow, setting up an investor
+hotline, and communicating through
+internet platform, etc.
+d. According to relevant rules of Sinopec
+Corp., the Secretary to the Board
+is responsible for establishing an
+effective communication channel
+between Sinopec Corp. and its
+shareholders, for setting up special
+departments to communicate with
+the shareholders and for passing
+the opinions and proposals of the
+shareholders to the Board and
+Management in a timely manner.
+Contact details of Sinopec Corp. can
+be found in the "Investor Centre"
+column on Sinopec Corp.'s website,
+ensuring that shareholders can get
+in touch with the Company at any
+time. During this year, Sinopec Corp.
+kept on monitoring and evaluating
+the implementation and effectiveness
+of the Shareholders' Communication
+Policy, in order to ensure its
+effectiveness.
+F.2 General meeting
+a. During the reporting period, separate
+resolutions were proposed for each
+substantially separate issue at the
+general meeting of shareholders.
+All resolutions were voted by poll
+in protection of the interest of
+all shareholders. Notices of the
+general meeting were dispatched
+to shareholders 45 days (excluding
+the date of the general meeting) in
+advance.
+b. The Chairman of the Board hosted
+the Annual General Meeting for 2022
+(AGM), the First A Shareholders
+Class Meeting for 2023, and the
+First H Shareholders Class Meeting
+for 2023. Several members of the
+Board of Directors, the Supervisory
+Committee, and Senior Management
+attended the meetings and conducted
+in-depth communication with the
+investors. Some members of the
+Audit Committee, the Nomination
+Committee, the Remuneration and
+Appraisal Committee, the Strategy
+Committee, and the Sustainable
+Development Committee attended
+the AGM. The external auditors of the
+Company attended the AGM. During
+the AGM, specially-assigned person
+of the Company recorded questions
+raised by investors as well as the
+feedback, which were related to each
+Board Committee. In the meetings,
+investors did not raise questions that
+need to be answered or matters that
+need to be paid attention to by each
+Board Committee. After the AGM, the
+Company communicated specially
+with investors.
+c. Shareholders who individually or
+collectively hold 10% of the total
+voting shares of Sinopec Corp.
+may request the Board in writing
+to convene the general meeting of
+shareholders. If the Board fails to
+approve the request to convene
+the meeting according to the Rules.
+and Procedures of Shareholders'
+General Meetings, the shareholders
+may convene and hold the meeting
+at their discretion according to
+applicable laws, and reasonable
+expenses incurred will be borne by
+Sinopec Corp. These aforementioned
+provisions are subject to the following
+conditions: the proposals at the
+general meeting of shareholders must
+fall within the responsibilities of the
+general meeting of shareholders, with
+specific proposals and resolutions
+and in compliance with relevant laws,
+administrative regulations and the
+Articles of Association. When Sinopec
+Corp. holds the general meeting
+of shareholders, shareholders who
+individually or collectively hold 3%
+of the total voting shares of Sinopec
+Corp. may propose a supplemental
+proposal 10 days before the date of
+the general meeting.
+d. The eligibility for attending the general
+meeting, the rights of shareholders,
+the resolutions at the meeting and
+the voting procedures are clearly set
+out in the notice and circular of the
+general meeting of Sinopec Corp.
+dispatched to the shareholders.
+e. Sinopec Corp. has established a
+special department for communication
+with shareholders and publishes
+relevant contact details to facilitate
+shareholders to make enquiries to the
+Board in accordance with Articles of
+Association.
+H. AUDITORS
+The re-appointment of KPMG Huazhen
+LLP and KPMG as the external auditors of
+Sinopec Corp. for the year 2023 and the
+authorisation of the Board to determine
+their remunerations were approved at
+Sinopec Corp.'s Annual General Meeting
+on 30 May 2023. The audit fee for 2023
+is RMB39.862 million (including audit fee
+of internal control), which was approved at
+the 21st Meeting of the Eighth Session of
+the Board. The annual financial statements
+of the year ended 31 December 2023
+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.
+KPMG Huazhen LLP and KPMG have served
+Sinopec Corp. since 2021. For details of the
+number of consecutive years in which the
+current engagement partners and certified
+public accountants who have served the
+Company, please refer to the announcement
+on re-appointment of the external auditors
+published on China Securities Journal,
+Shanghai Securities News, Securities Times
+and the website of SSE on 27 March 2023,
+and on the website of Hong Kong Stock
+Exchange on 26 March 2023. 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 RMB7.45 million.
+(2) Other information about Sinopec Corp.'s
+corporate governance
+Except for their working relationships
+with Sinopec Corp., none of the Directors,
+Supervisors or other Senior Management
+has any financial, business or family
+relationship or any relationship in other
+material aspects with one another. For
+information about shareholdings of
+substantial shareholders and changes in
+share capital, please refer to page 70 to
+page 71; for information about meetings
+of the Board, please refer to page 59 to
+page 60; for information about meetings
+held by Board Committees, please
+refer to page 61; for information about
+tenure of Non-executive Directors, please
+refer to page 38; for information about
+equity interests of Directors, Supervisors
+and other Senior Management, please
+refer to page 27; for biographies of
+Directors, Supervisors and other Senior
+Management, please refer to page 34 to
+page 44.
+10 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME
+The Company did not implement any share
+incentive scheme during the reporting period.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+33
+Corporate Governance
+34
+Corporate Governance
+Ma Yongsheng
+(2) Supervisors
+Zhang Shaofeng, aged 52, Chairman
+of Supervisory Committee of Sinopec
+Corp. Mr. Zhang is a professor level
+Qiu Fasen, aged 58, Supervisor of
+Sinopec Corp. Mr. Qiu is a professor
+level senior auditor with a master's
+degree. In December 2001, he was
+appointed as the Deputy Director General
+of Audit Bureau of China Petrochemical
+Corporation and Deputy Director General
+of Audit Department of Sinopec Corp.;
+in January 2007, he was appointed as
+the Director General of Beijing branch
+of Audit Bureau (Department) of China
+Petrochemical Corporation; in November
+2010, he was appointed as the Deputy
+Director General of Audit Bureau of
+China Petrochemical Corporation;
+Limited; in December 2017, he was
+appointed as General Manager of Finance
+Department of CNPC(中國石油天然氣集
+團有限公司) and 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 was
+elected as Chairman of Supervisory
+Committee of Sinopec Corp.
+he was appointed as General Manager of
+in May 2014, he was appointed as
+Secretary of CPC Committee and Deputy
+General Manager of Sinopec Xinjiang Oil
+Products Company; in March 2015, he
+was appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Sinopec Xinjiang Oil Products Company;
+in December 2018, he was appointed
+as Director General of Mineral Acreage
+(Community) Management Department
+of China Petrochemical Corporation;
+in December 2019, he was appointed
+as Deputy General Manager of Audit
+Department and Deputy Director General
+(Director General Level) of the Office
+of Audit Committee of Leading Party
+Member Group of China Petrochemical
+Corporation and Deputy General Manager
+of Audit Department of Sinopec Corp.;
+in April 2021, he was appointed as
+General Manager of Audit Department
+and Director General of the Office of
+Audit Committee of Leading Party
+Member Group of China Petrochemical
+Corporation and General Manager of
+Audit Department of Sinopec Corp.; in
+July 2021, he was appointed as Secretary
+of the CPC Committee of the Audit Centre
+of China Petrochemical Corporation.
+In May 2022, he was appointed as
+Chief Auditor of China Petrochemical
+Corporation. In May 2022, he was elected
+as Supervisor of Sinopec Corp.
+Wu Bo, aged 50, Supervisor of Sinopec
+Corp. Mr. Wu is a senior economist with
+a bachelor's degree. In May 2012, he
+was appointed as Chief Accountant and
+Member of CPC Committee of Sinopec
+Hainan Refining and Chemical Company.
+Limited; in August 2017, he was
+appointed as Deputy General Manager
+and Chief Accountant and Member of
+CPC Committee of Sinopec Chemical
+Sales Company Limited; in December
+2018, he was appointed as Deputy
+General Manager and Chief Accountant
+and Member of CPC Committee of China
+International United Petroleum and
+Chemical Company Limited; in December
+2019, he was appointed as General
+Manager of Finance Department of China
+Petrochemical Corporation; in July 2021,
+he was also appointed as Chairman
+of Sinopec Century Bright Capital
+Investment Limited. In May 2022, he was
+elected as Supervisor of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+39
+然氣集團公司)and PetroChina Company
+Corporate Governance
+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 CNPC; in July 2017,
+Finance Department of CNPC (
+During the reporting period, there are no
+significant changes of core technical team or
+key technicians in the Company.
+18 CHANGES OF CORE TECHNICAL TEAM OR
+KEY TECHNICIANS
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+48
+Corporate Governance
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Sales
+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
+Accounting Standards of this annual report.
+As at 31 December 2023, the Company
+had a total of 296,762 retired employees.
+All of them participated in the basic
+pension schemes administered by provincial
+governments (or those of autonomous
+regions or municipalities). Government-
+administered pension funds are responsible
+for the payments of basic pensions.
+20 REMUNERATION POLICY
+Based on a relatively unified basic
+remuneration system, Sinopec Corp. has
+established its remuneration system based
+on the value of positions, performance
+& contribution, with an aim at improving
+employee capabilities, and has constantly
+improved employee performance evaluation
+and incentive & discipline mechanisms.
+21 TRAINING PROGRAMS
+During the reporting period, the Company
+strengthened coordination and the top-level
+design for training programs, improved the
+high-quality training system, and conducted
+training programs for all types of talents.
+The headquarter trained 5,139 key talents.
+The training for managers, experts, technical
+personnel, and international talents improved
+the comprehensive quality and performance
+ability of all kinds of talents. The Company
+enhanced the intelligent and accurate level
+of training by promoting the application of
+training online through which over 50 million
+hours were trained online this year.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+ENVIRONMENT AND SOCIAL RESPONSIBILITIES
+Guo Xusheng
+CORPORATE GOVERNANCE (CONTINUED)
+51 and above
+Corporate Governance
+41-50
+21-30
+1,000
+1,500
+2,000
+2,271
+2,500
+3,000
+500
+R&D PERSONNEL EDUCATIONAL STRUCTURE: (INCLUDING PHD, MASTER'S DEGREE, UNDERGRADUATE AND BELOW)
+27,315
+Technical secondary school
+23.4%
+86,290
+Junior college
+29.2%
+7.4%
+2,842
+1,393
+0
+0
+1,374
+1,783
+2,137
+500
+1,000
+1,212
+1,500
+2,000
+2,500
+R&D PERSONNEL AGE STRUCTURE:
+or below
+Undergraduate
+Master's Degree
+PHD
+31-40
+44
+Shou Donghua
+43
+Actual annual
+average
+concentration
+5-50 mg/m³
+Permitted
+concentration limit
+35-200 mg/m³
+continuous Discharge Standards for Air Pollutants from Thermal Power Plants (GB 13223-2011)
+Discharge Standards for Air Pollutants from Boilers (GB13271-2014)
+1,251
+discharge Discharge standards implemented4
+Ways of
+vents
+involved²
+Pollutant
+type
+SO₂
+1
+No.
+Number of
+4,661 tonnes The compliance rate is 99.99%,
+the details of which are
+amount Discharge compliance
+(https://permit.mee.gov.cn/permitExt/
+defaults/default-index!getInformation.
+action) and the local government website.
+(1) Pollutant discharge information
+In the reporting period, certain
+subsidiaries of Sinopec Corp. listed
+as major pollutant discharge units
+announced by national or local ecological
+and environmental authorities have
+acquired their pollutant discharge license
+in accordance with the requirements
+of the national list of fixed pollution
+source emission permit classification
+management and disclosed environmental
+information as required by the relevant
+authorities and local government.
+The details of such information were
+published on national pollutant discharge
+license management information platform
+2023
+DEPARTMENTS
+BY ENVIRONMENTAL PROTECTION
+SOLUTIONS OF COMPANIES AND THEIR
+SUBSIDIARIES AS MAJOR POLLUTANT
+DISCHARGING COMPANIES IDENTIFIED
+4 ENVIRONMENTAL PROTECTION
+(a) Discharge of air pollutants¹
+Discharge information summarized by category is as follows:
+During the reporting period, the Company
+orderly promoted the adjustment and
+optimization of industrial structure and
+energy consumption structure, strengthened
+the development and application of key
+low-carbon technologies, strengthened the
+management and control of emission of CO2
+and methane and achieved good results in
+carbon emission reduction. In 2023, the
+Company decreased GHG emissions by 2.24
+million tonnes of CO2 equivalent through
+energy conservation and consumption
+reduction, 1.749 million tonnes of CO2 were
+recycled, used 0.847 million tons of carbon
+dioxide for EOR, 874 million cubic meters
+of methane were recovered which was
+equivalent to reducing 13.00 million tonnes
+of CO2 emissions.
+3 MEASURES TAKEN TO MITIGATE CARBON
+EMISSION AND ITS EFFECT
+In the reporting period, the Company
+deepened the campaign of pollution
+prevention, built the country's first pilot of
+"no waste group", persistently focused on
+ecological and environmental protection
+in the Yangtze and Yellow River basins,
+promoted energy conservation and carbon
+reduction actions, persistently carried out
+Green Enterprise Action. The sewage COD
+and sulphur dioxide emissions decreased by
+4.3% and 5.0% respectively, and the solid
+waste was 100% properly disposed.
+Approved
+actual
+discharge
+2
+NOX
+1,243
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Huang Wensheng, aged 57, 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 of the
+General Office of China Petrochemical
+Corporation, and 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 as Director General of
+Department of Capital Management
+and Financial Services of Sinopec
+Corp.; in July 2018, he was appointed
+as Chairman, General Manager and
+Secretary of CPC Committee of Sinopec
+Capital Co., Ltd.; in December 2019, he
+was appointed as General Manager of
+Department of Capital Management and
+Financial Services of Sinopec Corp. In
+May 2012, he was appointed as Secretary
+to the Board of Directors of Sinopec
+Corp.; in May 2014, he was appointed as
+Vice President of Sinopec Corp.
+Shou Donghua, aged 55, Chief Financial
+Officer of Sinopec Corp. Ms. Shou is
+a professor level senior accountant
+with a Master's degree of business
+administration. In July 2010, she was
+appointed as the Chief Financial Officer
+of Sinopec Zhenhai Refining & Chemical
+Company; in October 2014, she was
+appointed as Deputy Director General of
+Human Resource Department of China
+Petrochemical Corporation and Deputy
+Director General of Human Resource
+Department of Sinopec Corp.; in August
+2017, she was appointed as the Secretary
+of CPC Committee and Deputy General
+Manager of Sinopec Zhenhai Refining
+& Chemical Company; in September
+2018, she was appointed as the Director
+General of Finance Department of China
+Petrochemical Corporation; in December
+2019, she was appointed as General
+Manager of Finance Department of
+Sinopec Corp.; in January 2020, she was
+appointed as Chief Financial Officer of
+Sinopec Corp.
+(3) Other Members of Senior Management
+Niu Shuanwen, aged 49, Senior Vice
+President of Sinopec Corp. Mr. Niu is
+a professor level senior engineer with a
+doctor's degree. In October 2018, he was
+appointed as Deputy General Manager
+of Sinopec Shengli Oilfield Company; in
+May 2020, 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 January 2022, he
+was appointed as Executive Director and
+Secretary of CPC Committee of Sinopec
+Shengli Petroleum Administrative Bureau
+Co., Ltd., and Representative of Sinopec
+Shengli Oilfield Company; in June
+2023, he was appointed as Member of
+the Leading Party Member Group and
+Vice President of China Petrochemical
+Corporation. In July 2023, he was
+appointed as Senior Vice President of
+Sinopec Corp.
+Huang Wensheng
+107,365
+Niu Shuanwen
+0
+2022
+0
+Environment and Social Responsibilities
+49
+Corporate Governance
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Note 5: The permitted concentration limit is major industrial discharge standard limit. The limit of other standards implemented by each company can be found in
+the public information of the ecological authorities.
+Note 4: The discharge standards implemented are the major industrial discharge standards. Other standards such as local emission standards implemented by
+each company can be found in the public information of the ecological authorities.
+Note 3: Intermittent discharge from some vents.
+Note 2: Count the number of organized vents involved for this pollutant.
+Note 1: This report discloses the discharge of the Company's oilfield, refining and chemical companies and specialized companies that are included in the key
+management of emission permits. The data is calculated by self-monitoring data and is ultimately subject to the data published by the local ecological
+authorities.
+by the ecological authorities.
+19,984 tonnes The compliance rate is 99.99%,
+the details of which are
+subject to the announcement
+by the ecological authorities.
+subject to the announcement
+20-100 mg/m³
+50-240 mg/m³
+Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+continuous Discharge Standards for Air Pollutants from Thermal Power Plants (GB 13223-2011)
+Discharge Standards for Air Pollutants from Boilers (GB13271-2014)
+Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+Note 6: The actual annual average concentration of the main discharge outlets is within the corresponding disclosure range, and the public information of the
+ecological and environmental department can be consulted for details.
+Undergraduate
+8.5%
+31,199
+1,617.0
+No
+0
+0
+No
+0
+0
+Whether paid
+Name
+Yu Xizhi
+Zhao Rifeng
+12 INFORMATION ON APPOINTMENT
+Gender
+Age
+Male
+Male
+61
+61
+OR TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR MANAGEMENT
+On 6 January 2023, Mr. Ng, Kar Ling Johnny
+served as the Independent Director of China
+Telecom Corporation Limited.
+On 9 March 2023, Mr. Yu Xizhi resigned as
+Vice President of Sinopec Corp. due to his
+age.
+On 6 April 2023, Mr. Ling Yiqun resigned as
+Executive Director, member of the Strategy
+Committee of the Board, Senior Vice
+President of Sinopec Corp. due to his age.
+Position in Sinopec Corp.
+Former Vice President
+Former Vice President
+On 16 May 2023, Mr. Liu Hongbin resigned
+as Executive Director, member of the
+Strategy Committee of the Board, Senior Vice
+President of Sinopec Corp. due to his age;
+Mr. Zhao Rifeng resigned as Vice President
+of Sinopec Corp. due to his age.
+On 19 May 2023, Mr. Zhang Zhiguo resigned
+as Supervisor of Sinopec Corp. due to his
+age.
+On 30 May 2023, Mr. Lv Lianggong was
+elected as Executive Director of the eighth
+session of the Board of Sinopec Corp.
+Remuneration
+paid by Sinopec
+Corp. in 2023
+(RMB1,000,
+before tax)
+411.4
+525.8
+by the
+shareholders of
+Sinopec Corp.
+Equity interests
+in Sinopec Corp.
+(as at 31 December)
+or their related
+entities in 2023
+No
+No
+0
+0
+No
+1,632.3
+Name
+Niu Shuanwen
+Shou Donghua
+Huang Wensheng
+Guo Xusheng
+Gender
+Age
+Male
+49
+Female
+55
+Male
+57
+Male
+2023
+58
+Position in Sinopec Corp.
+Senior Vice President
+Chief Financial Officer
+Vice President, Board Secretary
+Remuneration
+paid by Sinopec
+Corp. in 2023
+(RMB1,000,
+before tax)
+Chief Geologist
+Whether paid
+by the
+shareholders of
+Sinopec Corp.
+or their related
+entities in 2023
+Equity interests
+in Sinopec Corp.
+(as at 31 December)
+2023
+2022
+Yes
+0
+0
+LIST OF FORMER MEMBERS OF THE SENIOR MANAGEMENT
+2 WORK CONDUCTED IN ECOLOGICAL
+PROTECTION, POLLUTION PREVENTION
+AND ENVIRONMENTAL RESPONSIBILITIES
+PERFORMANCE BY THE COMPANY IN THE
+REPORTING PERIOD
+2022
+0
+15%
+Chemicals
+65,198 17.7%
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS: (INCLUDING PRODUCTION, SALES, TECHNOLOGY, FINANCE, ADMINISTRATION AND
+OTHERS)
+46
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Technology
+86,257
+23.4%
+Finance
+8,016
+2.2%
+Administration
+26,554
+7.2%
+Others
+6,157
+1.7%
+Production
+134,314
+36.5%
+Guo Xusheng, aged 58, Chief Geologist
+of Sinopec Corp. Mr. Guo is a professor
+level senior engineer with a doctor's
+degree and an academician of the
+Chinese Academy of Engineering. In
+January 2007, he was appointed as
+the deputy manager, Member of CPC
+Committee, Commander of Sichuan-North
+China Exploration Headquarter, Secretary
+of CPC Committee of Sinopec Southern
+Exploration and Production Company; in
+March 2007, he was appointed as the
+Manager of Sinopec Southern Exploration
+and Production Company; in December
+2008, he was appointed as General
+Manager of Sinopec Southern Exploration
+and Production Company. In September
+2014, he was appointed as General
+Manager and Member of CPC Committee
+of Sinopec Exploration Company; in
+November 2020, he was appointed
+as Deputy Chief Geologist of Sinopec
+Corp.; in July 2022, he was appointed
+as Dean and Deputy Party Secretary of
+CPC Committee of Sinopec Petroleum
+Exploration and Production Research
+Institute, and Executive Director and
+General Manager of Sinopec Petroleum
+Exploration and Production Research
+Institute Co. Ltd. In January 2024, he
+was appointed as Chief Geologist of
+Sinopec Corp.
+106,711
+29%
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS: (INCLUDING MASTER'S DEGREE AND ABOVE, UNDERGRADUATE,
+JUNIOR COLLEGE, SENIOR HIGH SCHOOL AND TECHNICAL SCHOOL DEGREES OR BELOW)
+Senior high school and
+technical school degrees or below
+115,840
+31.5%
+Master's degree or above
+55,357
+Refining
+117,344 31.9%
+Exploration and Production
+0
+0
+On 30 June 2023, Mr. Ng, Kar Ling Johnny
+ceased to be the Independent Non-Executive
+Director of China Vanke Co., Ltd.
+On 25 July 2023, Mr. Niu Shuanwen was
+appointed as Senior Vice President of
+Sinopec Corp.
+On 22 January 2024, Mr. Guo Xusheng was
+appointed as Chief Geologist of Sinopec
+Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+45
+Corporate Governance
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+13 CHANGE OF SHAREHOLDING OF
+DIRECTORS, SUPERVISORS, AND THE
+SENIOR MANAGEMENT
+There is no change in shareholdings of
+Sinopec Corp. of Directors, Supervisors
+and other senior managements during the
+reporting period.
+14 CONTRACTUAL INTERESTS OF DIRECTORS
+AND SUPERVISORS
+0
+As of 31 December 2023 or any time
+during the reporting period, no Director or
+Supervisor entered into any agreement with
+Sinopec Corp., its controlling shareholder,
+any subsidiary or related subsidiary which
+shall substantially benefit such Director or
+Supervisor.
+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 14
+Directors, Supervisors and other senior
+managers received remuneration from
+Sinopec Corp. with a total amount of
+RMB11.4545 million.
+17 THE COMPANY'S EMPLOYEES
+As at 31 December 2023, the Company
+has a total of 368,009 employees. There
+are a total of 296,762 retired employees
+to be reimbursed by the Company.
+Sinopec Marketing Co. Limited and China
+International United Petroleum & Chemicals
+Co. Limited, the principal subsidiaries of
+Sinopec Corp., have 119,212 and 568
+employees respectively. The male and female
+ratio of all employees is 2.3:1, achieved
+the Company's target for the female
+representation, and the male and female
+ratio of the members of senior management
+is 13.6:1.
+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
+119,212
+32.4%
+R&D
+6,506
+1.8%
+Other Segments
+4,392
+1.2%
+15 CONTRACTS WITH DIRECTORS AND
+SUPERVISORS
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+Sinopec Corp. established the HSE
+management system since 2001 and
+continued to improve it. During the reporting
+period, Sinopec Corp. has formulated or
+revised 2 environmental management
+policies, and formed the environmental
+protection system consisting of 16 core
+policies as the main body.
+Equity interests
+in Sinopec Corp.
+(as at 31 December)
+their related
+in Sinopec Corp.
+(RMB1,000,
+entities in
+(as at 31 December)
+Name
+Gender
+Age
+Position in Sinopec Corp.
+Tenure
+before tax)
+2023
+2023
+2022
+Zhang Shaofeng
+Male
+52
+Qiu Fasen
+Male
+58
+Wu Bo
+Male
+50
+Chairman of the Supervisory Committee 2021.5-2024.5
+Supervisor 2022.5-2024.5
+Supervisor 2022.5-2024.5
+Yes
+in 2023
+Equity interests
+Corp. or
+Sinopec Corp.
+1 ENVIRONMENTAL INFORMATION
+40
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Zhai Yalin
+Guo Hongjin
+Yin Zhaolin
+Zhai Yalin, aged 60, Supervisor of
+Sinopec Corp. Mr. Zhai is a professor
+level senior economist with a bachelor's
+degree. In December 2001, he was
+appointed as Deputy Director General
+of Audit Bureau of China Petrochemical
+Corporation and Deputy Director General
+of Audit Department of Sinopec Corp.; in
+April 2018, he was appointed as Director
+General of the Inspection Team of
+Leading Party Member Group and Deputy
+Director General of Audit Bureau of China
+Petrochemical Corporation and Deputy
+Director General of Audit Department
+of Sinopec Corp; in October 2020, he
+was appointed as Executive Director
+and Secretary of the CPC Committee
+of Sinopec Baichuan Economic and
+Trade Co., Ltd.; in May 2022, he was
+appointed as General Manager of Sinopec
+Logistics Service Center. In May 2023,
+he was appointed as General Manager of
+Retired Personnel Service Center of China
+Petrochemical Corporation and General
+Manager of Retired Personnel Service
+Center of Sinopec Corp. In May 2022,
+he was elected as Supervisor of Sinopec
+Corp.
+Guo Hongjin, aged 58, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Guo is a professor level senior
+engineer with a Ph.D. degree. In July
+2013, he was appointed as Deputy
+General Manager of Sinopec Shengli
+Oilfield Company; in March 2018, he
+was appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Sinopec Shengli Petroleum Administrative
+Bureau Co., Ltd. and General Manager
+of Sinopec Shengli Oilfield Company;
+in December 2018, he was appointed
+as Executive Director, General Manager
+and Deputy Secretary of CPC Committee
+of Sinopec Jianghan Petroleum
+Administrative Bureau Co., Ltd. and
+General Manager of Sinopec Jianghan
+Oilfield Company; in July 2019, he was
+appointed as Executive Director and
+Secretary of CPC Committee of Sinopec
+Jianghan Petroleum Administrative
+Bureau Co., Ltd. and the representative
+of Sinopec Jianghan Oilfield Company; in
+April 2020, he was appointed as General
+Manager of the Petroleum Exploration
+& Development Department of Sinopec
+Corp.; in May 2021, he was elected
+as Supervisor of Sinopec Corp. In May
+2022, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Yin Zhaolin, aged 58, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Yin is a professor level senior
+engineer with a master's degree in
+engineering. In April 2010, he was
+appointed as Deputy General Manager of
+Sinopec Maoming Company; in January
+2017, he was appointed as Executive
+Deputy General Manager of Sinopec
+Maoming Company (administrated as a
+General Manager of a Level-1 Largescale
+Enterprise); in April 2017, he was
+appointed as General Manager and
+Deputy Secretary of CPC Committee
+of Sinopec Maoming Petrochemical
+Company and General Manager of
+Sinopec Maoming Company; in July
+2017, he was appointed to serve a
+temporary position as a member of the
+Standing Committee of the CPC Maoming
+Municipal Committee; in October 2020,
+he was appointed as Executive Director
+and Secretary of CPC Committee of
+the Sinopec Maoming Petrochemical
+Company and the representative of the
+Sinopec Maoming Company, head of
+Maoming-Zhanjiang Integration Leading
+Group; in May 2021, he was elected
+as Supervisor of Sinopec Corp. In May
+2022, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+0
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Chen Yaohuan, aged 60, 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 Group Asset
+Management Co., Ltd; 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.,
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+41
+Corporate Governance
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+LIST OF MEMBERS OF THE SUPERVISORY COMMITTEE
+Remuneration
+Whether
+paid by the
+shareholders
+of Sinopec
+paid by
+Chen Yaohuan
+0
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+0
+0
+2021.1-2024.5
+1,549.7
+No
+0
+0
+LIST OF FORMER MEMBERS OF THE SUPERVISORY COMMITTEE
+Whether
+Remuneration
+paid by
+paid by the
+shareholders
+of Sinopec
+Sinopec Corp.
+Corp. or
+Name
+Zhang Zhiguo
+Age
+61
+Position in Sinopec Corp.
+Former Supervisor
+Tenure
+2021.5-2023.5
+in 2023
+(RMB1,000,
+before tax)
+their related
+entities in
+2023
+Yes
+42
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Yes
+0
+No
+Gender
+Male
+2022.5-2024.5
+0
+1,000.6
+0
+0
+Zhai Yalin
+Male
+Supervisor
+Guo Hongjin
+Male
+58
+Yin Zhaolin
+Male
+60
+Chen Yaohuan
+0
+0
+58
+No
+1.564.6
+0
+0
+Yes
+Yes
+2022.5-2024.5
+2022.5-2024.5
+Employee's Representative Supervisor
+Employee's Representative Supervisor
+Employee's Representative Supervisor
+60
+Male
+50
+50
+During the reporting period, the Company
+implemented 226 donations with an
+expenditure over RMBO.3 billion, mainly
+focusing on expanding achievements in
+poverty-alleviation and rural revitalization
+and public welfare programs, including
+RMB156 million used in rural revitalization.
+For details, please refer to the 2023 Sinopec
+Corp. Sustainability Report.
+DONATION AND INVESTMENT IN PUBLIC
+WELFARE PROJECT
+to disclose in accordance with the
+requirements of national and local
+ecological environment authorities.
+In the reporting period, for subsidiaries
+not listed as major pollution units,
+the Company has acquired related
+permissions from national and local
+government, and enforced environmental
+protection measures. The above.
+mentioned subsidiaries are not obliged
+5
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(4) Contingent scheme for sudden
+environmental incident
+In the reporting period, to the knowledge
+of the Company, Sinopec Corp. and
+its subsidiaries were subject to the
+environmental administrative penalty
+of RMB1.7355 million. The details of
+administrative penalties were published
+on the websites of local ecological and
+environmental authorities.
+(6) Administrative penalties due to
+environmental problems in the reporting
+period
+(5) Scheme for environmental self-
+monitoring
+In the reporting period, the Company
+complied with the requirements for
+environmental incident contingent scheme
+by the State and persistently improved
+its contingent scheme against sudden
+environmental incidents of enterprises
+and weather with severe pollution.
+(7) Other environmental information to be
+disclosed
+In the reporting period, the Company
+continuously improved its self-monitoring
+scheme in accordance with the industry
+guideline, enforced the requirements for
+sewage, flue gas and noise monitoring,
+and disclosed the monitor information as
+required.
+The project mainly consists of a wharf,
+terminal and power plant warm drainage
+and water intake. The designed LNG
+capacity in the first phase is 6 million
+tons per year. One LNG berth with 0.266
+million cubic meters will be modified
+and four 0.22 million cubic meter
+storage tanks will be newly built up. The
+project started in November 2021 and is
+expected to put into operation by the end
+of 2024. The project investment consists
+of the self-owned fund and bank loan.
+As of 31 December 2023, the aggregate
+amount invested was RMB4.5 billion.
+1 MAJOR PROJECTS
+In the reporting period, the Company
+strictly standardized environmental
+protection management for construction
+projects, enforced whole process
+environmental protection management
+on construction and operation, with
+measures of the "simultaneous three"
+of the environmental protection
+implemented, all new projects have
+acquired approval for environmental
+evaluation from government.
+Industry Cluster Project
+(8) Zhenhai 1,500,000 tpa Ethylene and
+Downstream High-end New Material
+The project mainly launches shale oil
+exploration and development in Jiyang
+depression, planning to build a new
+production capacity of 1 million tonnes
+per year in the 14th Five Year Plan. The
+project started in 2019, has built 113
+wells and generated production capacity
+of 509 thousand tonnes. The project
+investment consists of the self-owned
+fund and bank loan. As of 31 December
+2023, the aggregate amount invested was
+RMB9.7 billion.
+(7) Shengli Shale Oil project
+(6) Chuanxi natural gas project (phase 1)
+The project mainly consists of 1.77
+billion cubic meter per year purified gas
+capacity and 16 wells. The project started
+in 2019 and is expected to put into
+operation in January 2024. The project
+investment consists of the Company's
+self-owned fund, joint stock company's
+fund and bank loan. As of 31 December
+2023, the aggregate amount invested was
+RMB5.8 billion.
+(5) Longkou LNG Project
+SIGNIFICANT EVENTS
+The project mainly consists of the
+construction of a new wharf, and five
+new 220,000-cubic-meter storage tanks
+etc. LNG capacity will reach 10.8 million
+tons per year after phase 2 expansion is
+completed. The project started in January
+2019 and was put into operation by end
+of 2023. The project investment consists
+of the self-owned fund and bank loan.
+As of 31 December 2023, the aggregate
+amount invested was RMB4.6 billion.
+The Yizheng 3,000,000 tpa PTA project
+mainly consists of oxidation units,
+purification units and auxiliary units, etc.
+The project started in July 2021 and the
+mechanical completion is expected to
+be achieved in March 2024. The project
+investment consists of the self-owned
+fund and bank loan. As of 31 December
+2023, the aggregate amount invested was
+RMB4.7 billion.
+(3) Yizheng PTA Project
+The project mainly consists of 1,200,000
+tpa ethylene units and downstream
+processing units, etc. The project began
+in May 2021 and mechanical completion
+was achieved in the end of 2023. The
+project investment consists of the self-
+owned fund and bank loan. As of 31
+December 2023, the aggregate amount
+invested was RMB14.5 billion.
+Downstream High-end New Material
+Industry Cluster Project
+(2) Tianjin Nangang Ethylene and
+The project mainly consists of building
+11,000,000 tpa refinery project and
+600,000 tpa propane dehydrogenation
+and downstream processing units, etc.
+The project began in June 2022 and
+mechanical completion is expected to be
+achieved in December 2024. The project
+investment consists of the self-owned
+fund and bank loan. As of 31 December
+2023, the aggregate amount invested was
+RMB17.9 billion.
+(1) Zhenhai Refining & Chemical Expansion
+Project (phase 2)
+(4) Tianjin LNG Project (phase 2)
+(3) Environmental influence evaluation
+for construction projects and other
+administrative permit for environmental
+protection
+type
+prevention facilities
+COD
+1
+discharge Discharge standards implemented³
+involved
+The project mainly consists of 1,500,000
+tpa ethylene units, downstream
+processing units, supporting utilities
+and auxiliary facilities, etc. The project
+began in November 2023 and mechanical
+completion is expected to finish in
+December 2025. The project investment
+consists of the self-owned fund and
+bank loan. As of 31 December 2023, the
+aggregate amount invested was RMB2.7
+billion.
+No.
+Permitted
+Ways of
+vents
+Pollutant
+actual
+Actual annual
+Number of
+Environment and Social Responsibilities
+ENVIRONMENT AND SOCIAL RESPONSIBILITIES (CONTINUED)
+76
+continuous
+2
+Ammonia
+and nitrogen
+(2) Construction and operation of pollution
+Note 5: The actual annual average concentration of the main discharge outlets is within the corresponding disclosure range, and the public information of the
+ecological and environmental department can be consulted for details.
+Note 4: The permitted concentration limit is major industrial discharge standard limit. The limit of other standards implemented by each company can be found in
+the public information of the ecological authorities.
+Note 3: The discharge standards implemented are the major industrial discharge standard. Other standards such as local emission standards implemented by
+each company can be found in the public information of the ecological authorities.
+Note 2: Intermittent discharge from some vents.
+Note 1: This report discloses the discharge of the Company's oilfield, refining and chemical companies and specialized companies that are included in the key
+management of discharge permits. The data is calculated by self-monitoring data and is ultimately subject to the data published by the local ecological
+authorities.
+71 tonnes Daily average data has 100%
+compliance rate.
+In the reporting period, the Company
+built prevention and control facilities for
+sewage, flue gas, solid waste and noise in
+accordance with the requirements of the
+national and local pollution prevention
+and environmental protection standards,
+maintained effective and stable operation
+of pollution prevention and control
+facilities. For details, please refer to the
+2023 Sinopec Corp. Sustainability Report.
+0.5-4 mg/L
+Daily average data has 100%
+compliance rate.
+amount Discharge compliance
+4,550 tonnes
+discharge
+average
+concentration³
+10-50 mg/L
+concentration limit
+40-60 mg/L
+Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+continuous Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+75
+5-8 mg/L
+(9) Maoming ethylene upgrading project
+The project mainly consists of 3,000,000
+tpa RTC united plant, 1,000,000 tpa
+ethylene unit, supporting utilities and
+auxiliary facilities, etc. The project began
+in June 2023 and mechanical completion
+is expected to finish in December 2026.
+The project investment consists of the
+self-owned fund and bank loan. As of 31
+December 2023, the aggregate amount
+invested was RMB1.8 billion.
+Party
+51
+Yes
+Within 10 years after 29 April 2014
+China Petrochemical
+Corporation
+Other
+Other undertakings
+Abandonment of business competition and conflicts of
+interest with Sinopec Corp.
+6.
+Avoiding competition within the same industry;
+5.
+Granting licenses for intellectual property rights;
+4.
+the H share prospectus of Sinopec Corp.);
+refer to the definition of Reorganisation Agreement in
+3. Implementation of the Reorganisation Agreement (please
+certificates within a specified period of time;
+Yes
+use rights certificates and property ownership rights
+Restricted sale of
+No reduction
+In the reporting period, no significant sale of assets or equity occurred by the Company.
+8 SIGNIFICANT SALE OF ASSETS OR EQUITY
+For details, please refer to item 4 "CAPITAL INCREASE IN HUNAN PETROCHEMICAL" of the section "Significant Events".
+7 SIGNIFICANT EQUITY INVESTMENT
+As of the date of this report, Sinopec Corp. had no undertakings in respect of financial performance, asset injections or asset restructuring that had
+not been fulfilled, nor has Sinopec Corp. made any profit forecast in relation to any asset or project.
+Yes
+Yes
+Yes
+The commitment time is March 2023, and Yes
+the commitment period is 36 months from
+the completion date of the issuance
+The commitment time is March 2023,
+and the commitment period is within
+six months after the completion of this
+issuance
+or the date when China Petrochemical
+Corporation acquires the assets
+China Petrochemical Corporation promises that within
+six months after the completion of this issuance, China
+Petrochemical Corporation and its controlled enterprises will
+not reduce their holdings of Sinopec stocks.
+China Petrochemical Corporation promises not to transfer its
+subscribed A-shares within 36 months from the completion of
+this issuance.
+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.
+China Petrochemical
+Corporation
+China Petrochemical
+Corporation
+shares
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+performed or not
+Yes
+From 22 June 2001
+5. THE ISSUANCE OF A SHARES BY SINOPEC
+CORP. TO THE TARGET SUBSCRIBER
+(CHINA PETROCHEMICAL CORPORATION)
+On 24 March 2023, the 15th meeting of
+the eighth session of the Board of Sinopec
+Corp. considered and approved resolutions
+regarding the issuance of A Shares to China
+Petrochemical Corporation, the controlling
+Shareholder of the Company (the "Issuance").
+On 30 May 2023, the annual general meeting
+of Sinopec Corp. for 2022 considered and
+approved the above resolutions. The plan
+of the Issuance is to fully issue A Shares
+to China Petrochemical Corporation, the
+controlling Shareholder of Sinopec Corp. The
+Issue Price is the average trading price of A
+Shares of Sinopec Corp. in the 20 trading
+days preceding the Pricing Benchmark
+Date. The A Shares to be subscribed by
+China Petrochemical Corporation shall not
+be transferred within thirty-six (36) months
+from the completion date of the Issuance.
+The total gross proceeds to be raised from
+the Issuance shall be no more than RMB12
+billion (inclusive), and all of the net proceeds
+(after deducting the issuance expenses) will
+be used for the construction of projects in
+relation to clean energy and high value-added
+materials. On 18 March 2024, Sinopec Corp.
+completed the Issuance and the registration
+of new Shares.
+For details and definitions, please refer to
+the announcements published by Sinopec
+Corp. on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of SSE on 27 October 2023
+and 3 January 2024, respectively, and on
+the website of Hong Kong Stock Exchange
+on 26 October 2023 and 2 January 2024,
+respectively.
+1); the Assets Company
+shall make a capital contribution to Hunan
+Petrochemical with the net assets relating
+to the production and operation of oil
+refining and petrochemical of the Assets
+Company Changling Branch and the Assets
+Company Baling Branch, which were
+equivalent to RMB1,077.5839 million. On
+1 January 2024, Sinopec Corp. and the
+Assets Company have transferred the Capital
+Contribution Assets to Hunan Petrochemical
+in accordance with the relevant provisions of
+the Transaction Agreements, and all rights,
+obligations, liabilities and risks of the Capital
+Contribution Assets have been transferred to
+Hunan Petrochemical.
+On 26 October 2023, Sinopec Corp., the
+Assets Company and Hunan Petrochemical
+entered into the Capital Increase Agreement.
+Pursuant to the Capital Increase Agreement,
+Sinopec Corp. shall make a capital
+contribution to Hunan Petrochemical with
+the net assets relating to the production and
+operation of oil refining and petrochemical
+of Sinopec Corp. Changling Branch, which
+were equivalent to RMB5,600.3328 million,
+and cash of RMB4.3 billion, which was
+intended to be used for the construction of
+Hunan Petrochemical's Ethylene Refining
+and Petrochemical Integration Project (Z
+PETROCHEMICAL
+4. CAPITAL INCREASE IN HUNAN
+Sinopec Corp. has filed a Form 15F with
+the United States Securities and Exchange
+Commission on 8 December 2023 (EST)
+to deregister its American depositary
+shares (the "ADSS") and the underlying H
+shares of Sinopec Corp., and terminated
+its information disclosure obligations
+under section 13(a) and section 15(d) of
+U.S. Securities Exchange Act of 1934 (as
+amended, the "Exchange Act") pursuant
+to Rule 12h-6 under the Exchange Act.
+Deregistration and termination of Sinopec
+Corp.'s information disclosure obligations
+under the Exchange Act have become
+effective on 7 March 2024 (EST).
+3. SINOPEC CORP. HAS DEREGISTERED
+IN THE U.S. AND TERMINATED ITS
+INFORMATION DISCLOSURE OBLIGATIONS
+UNDER THE EXCHANGE ACT
+The actual executed amount of the daily
+related transactions of Sinopec Marketing
+Company Limited and China Oil & Gas
+Pipeline Network Corporation regarding
+refined oil pipeline transportation services
+from 1 January 2023 to 31 December 2023
+was RMB5.355 billion.
+For details, please refer to the
+announcements published by Sinopec Corp.
+on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of SSE on 14 January 2023 and
+on the website of Hong Kong Stock Exchange
+on 13 January 2023.
+On 13 January 2023, the Board of Sinopec
+Corp. approved the daily related transaction
+cap in relation to refined oil pipeline
+transportation services between Sinopec
+Marketing Company Limited and China Oil
+& Gas Pipeline Network Corporation for the
+period from 1 January 2023 to 31 December
+2023.
+2. ACTUAL DAILY RELATED TRANSACTIONS
+ENTERED INTO BY THE COMPANY AND
+CHINA OIL & GAS PIPELINE NETWORK
+CORPORATION DURING THE REPORTING
+PERIOD
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+Significant Events
+For details and definitions, please refer
+to the announcements and/or circulars
+published by Sinopec Corp. on China
+Securities Journal, Shanghai Securities
+News, Securities Times and on the website
+of SSE on 27 March 2023, 31 May 2023, 16
+March 2024 and 20 March 2024 and on the
+website of Hong Kong Stock Exchange on 26
+March 2023, 12 April 2023, 30 May 2023,
+15 March 2024 and 19 March 2024.
+No
+52
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Compliance with the connected transaction agreements;
+Solving the issues regarding the legality of land-
+2.
+1.
+China Petrochemical
+Corporation
+IPOs
+Undertakings related to Initial Public
+Offerings (IPOs)
+deadline or not
+Term for performance
+Contents
+Undertaking
+Background
+Whether strictly
+Whether bears
+Type of
+6 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+42
+Commitment related to refinancing
+No
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Related party
+Century Bright
+Sinopec Finance
+Unit: RMB million
+(2) LOAN
+Note: generally, the deposit interest rate at Sinopec Finance and Century Bright is no lower than that of the same type of deposits for the same period from major
+commercial banks.
+time deposit: 0.5%-6.39%
+Corporation 100%
+58,474
+(2,221)
+564,294
+572,524
+52,465
+current: 0%-0.5%;
+RMB80 billion by Sinopec
+Finance and Century Bright
+China Petrochemical
+Century Bright
+7,493
+(5,456)
+Unit: RMB million
+Balance
+Related party
+Sinopec Finance
+Related party relationship
+China Petrochemical
+Corporation 51%; Sinopec
+Corp. 49%
+Daily Cap
+Interest rate range
+current: 0.35%-1.725%;
+time deposit: 1.35%-7.4%
+Related party relationship
+at beginning
+12,599
+Transaction amount
+Time
+deposit
+withdrawn
+9,049
+Net changes
+in current
+Balance
+deposit
+in the end
+Time
+deposit
+9,399
+Annual
+credit line
+Interest
+Sinopec Group 100%
+Transaction
+Related party
+Sinopec Finance
+Balance
+Related party relationship
+Business nature
+Credit
+Unit: RMB million
+in the end
+Discounted bills
+14,145
+0
+Note: the occurred amount includes the newly issued bills and discounts in the year
+In order to regulate connected
+transactions between the Company
+and Sinopec Finance Co. (Sinopec
+Corp.'s domestic settlement center)
+and to ensure the safety and liquidity
+of the deposits of the Company at
+Sinopec Finance Co., Sinopec Corp.
+and the Finance Company formulated
+the Risk Control System on Connected
+Transactions between China Petroleum
+& Chemical Corporation and Sinopec
+Finance Co., Ltd., which covers the risk
+control system and the risk management
+plan of the Company to prevent financial
+risks, ensuring the Company's discretion
+to use and control its deposits with
+Sinopec Finance Co.. At the same time,
+as the controlling shareholder of Sinopec
+Finance Co., China Petrochemical
+Corporation undertook that in case of
+an emergency when Sinopec Finance
+Co. has difficulty in making payments,
+China Petrochemical Corporation would
+increase the capital of Sinopec Finance
+Co. to meet the need for the purpose of
+making payment.
+In order to regulate connected
+transactions between the Company
+and Century Bright (Sinopec Corp.'s
+overseas settlement center), Century
+Bright ensures the safety of the
+deposits of the Company at Century
+Bright by strengthening internal risk
+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
+regarding the provision of overseas
+financial services. Century Bright
+has also established the Rules for
+the Implementation of the Internal
+Control System, which ensures the
+standardisation and safety of its
+corporate deposits business. At the
+same time, as the wholly controlling
+shareholder of Century Bright, China
+Petrochemical Corporation entered into a
+keep-well agreement with Century Bright
+in 2013, in which China Petrochemical
+Corporation undertakes that when Century
+Bright has difficulty in making payments,
+China Petrochemical Corporation will
+ensure that Century Bright will fulfill its
+repayment obligation through various
+channels.
+Sinopec Group 51%; Sinopec Corp. 49%
+0
+(3) CREDIT OR OTHER FINANCIAL BUSINESS
+Significant Events
+Sinopec Group 51%; Sinopec Corp. 49%
+345,673
+96,690
+in the end
+1,424
+35,824
+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.
+rate range
+103,326 1.72%-6.39%
+73,793 1.08%-4.99%
+SIGNIFICANT EVENTS (CONTINUED)
+Balance at
+beginning
+1,498
+28,049
+Total
+repayment
+345,747
+88,915
+Balance
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+55
+Significant Events
+56
+Transaction amount
+Total
+withdrawal
+The deposits of the Company at Sinopec
+Finance Co. and Century Bright during the
+reporting period are in strict compliance
+with the relevant caps as approved at the
+general meeting of Sinopec Corp. During
+daily operations, the Company can
+withdraw the full amount of its deposits
+at the Sinopec Finance Co. and Century
+Bright.
+7,288
+Undue
+amount
+0
+8,563
+0
+1.5%
+12,104
+3,541
+0
+Statement of guarantee status
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Total amount of the above three guarantee items (C+D+E)
+The amount of guarantees in excess of 50% of the net assets (E)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+Among which:
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets (%)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantees (A+B)
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+No
+No
+No
+No
+No
+No
+8,563
+No
+62
+8,563
+Total amount of guarantees provided during the reporting period"4
+Total amount of guarantees outstanding at the end of reporting period" (A)
+Guarantees by the Company to the controlled subsidiaries
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+performance
+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.
+During the reporting period, the Company
+was not involved in any entrusted
+financing.
+(2) ENTRUSTED LOAN
+During the reporting period, the Company
+was not involved in any entrusted loan.
+(3) OTHER LOAN
+Type
+Project construction loan
+(1) ENTRUSTED FINANCING
+(4) OTHER FINANCING AND DERIVATIVE INVESTMENT
+Fund sources
+Self-owned fund
+amount
+662
+During the reporting period, the Company was not involved in other financing or derivative investment.
+16 BUSINESS WITH SINOPEC FINANCE AND CENTURY BRIGHT
+(1) DEPOSIT
+Unit: RMB million
+Transaction
+Overdue
+15 ENTRUSTED FINANCING AND LOAN
+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.
+* 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.
+54
+54
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+10 SIGNIFICANT LITIGATION AND
+14 TRUSTEESHIP, CONTRACTING AND LEASES
+During the reporting period, the Company
+was not involved in any events relating to
+significant trusteeship, contracting or leases
+for the assets of any other company, nor has
+it placed its assets with any other company
+under a trust, contracting or lease agreement
+subject to disclosure obligations.
+ARBITRATION
+11 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+12 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.
+13 CREDIBILITY FOR THE COMPANY,
+CONTROLLING SHAREHOLDERS AND DE
+FACTO CONTROLLER
+No significant litigation or arbitration
+relating to the Company occurred during the
+reporting period.
+Joint and several liability Normal
+guarantee
+performance
+Joint and several liability Normal
+guarantee
+17 APPROPRIATION OF NON-OPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+amount
+Zhong An United Coal
+4,828
+Apr-18
+April 2018-December 2031
+itself
+Chemical Co., Ltd.
+Sinopec Corp.
+The listed company
+itself
+Russian Amur Natural Gas 3,7353
+Dec-21
+Chemical Integrated LLC
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+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.
+(6) The 19th meeting of the eighth session
+of the Board was held through electronic
+means of communication on 26 October
+2023, whereby the proposals in relation
+to the following matters were approved:
+(i) Third Quarterly Report for 2023; (ii)
+Terms of Reference of the Independent
+Non-executive Directors; (iii) Terms of
+Reference of the Audit Committee under
+the Board of Directors; (iv) reform plan of
+refining and petrochemical integration in
+Yueyang area.
+(5) The 18th meeting of the eighth session of
+the Board was held by on-site meeting on
+25 August 2023, whereby the proposals
+in relation to the following matters were
+approved: (i) Report on the Fulfillment of
+the Key Targets for the first half of the
+year 2023 and the Work Arrangements
+for the second half of the year 2023; (ii)
+profit distribution plan for the first half
+of the year 2023; (iii) the Continuous
+Risk Assessment Report of Connected
+Transactions between Sinopec Corp. and
+Sinopec Finance Co. and Century Bright
+for the first half of the year 2023; (iv)
+Financial Statements for the first half
+of the year 2023; (v) Interim Report for
+2023; (vi) the member adjustment of
+the Board committees; (vii) the plan on
+share buy-back by centralized bidding;
+(viii) Management Regulations of Investor
+Relations of Sinopec Corp.
+(4) The 17th meeting of the eighth session
+of the Board was held through electronic
+means of communication on 25 July
+2023, whereby the proposal in relation to
+the appointment of Senior Vice President
+of Sinopec Corp. was approved.
+the end
+of the year
+17,417
+5,759
+23,176
+Loans and other accounts receivable and payable
+No material negative impact
+REPORT OF THE BOARD OF DIRECTORS
+The listed company
+Report of the Board of Directors
+1 MEETINGS OF THE BOARD
+During this reporting period, Sinopec Corp.
+held six (6) Board meetings. The details are
+as follows:
+(1) The 14th meeting of the eighth session
+of the Board was held by written
+resolution on 13 January 2023, whereby
+the proposals in relation to the following
+matters were approved: (i) the continuing
+related transactions with China Oil & Gas
+Pipeline Network Corporation for the year
+2023; (ii) Internal Control Manual (2023).
+(2) The 15th meeting of the eighth session
+of the Board was held by on-site meeting
+and video conference on 24 March 2023,
+whereby the proposals in relation to the
+following matters were approved: (i) Work
+Report of the Board for the year 2022;
+(ii) Report on the Fulfillment of the Key
+Targets for the year 2022 and the Work
+Arrangements for the year 2023; (iii)
+The report on the financial results and
+business performance of the Company
+for the year 2022; (iv) provision for
+impairment for the year 2022; (v) the
+related transactions for the year 2022;
+(vi) Continuous Risk Assessment Report
+of Connected Transactions between
+Sinopec Corp. and Sinopec Finance Co.
+and Century Bright; (vii) Report on the
+Implementation of Derivatives Business
+for the year 2022 and the Work Plan for
+the year 2023; (viii) profit distribution
+plan for the year 2022; (ix) audit costs
+for the year 2022; (x) Internal Control
+Assessment Report of Sinopec Corp. for
+the year 2022; (xi) Financial Statements
+of Sinopec Corp. for the year 2022; (xii)
+Annual Report of the Company for the
+year 2022; (xiii) Sustainability Report of
+Sinopec Corp. for the year 2022; (xiv) the
+reappointment of KPMG as the external
+auditors of Sinopec Corp. for the year
+2023 and the authorization of the Board
+to determine their remunerations; (xv)
+the resolution in relation to reduction of
+the registered capital and amendments
+to the Articles of Association; (xvi) the
+nomination of Mr. Lv Lianggong as
+candidate for Executive Director; (xvii)
+to authorize the Board to determine
+the interim profit distribution plan of
+Sinopec Corp. for the year 2023; (xviii)
+to authorize the Board to determine the
+issuance of debt financing instrument(s);
+(xix) to grant to the Board a general
+mandate to issue new domestic shares
+and/or overseas-listed foreign shares of
+Sinopec Corp.; (xx) to grant to the Board
+a mandate to buy back domestic shares
+and/or overseas-listed foreign shares of
+Sinopec Corp.; (xxi) the satisfaction of the
+conditions of the issuance of A Shares
+to target subscribers by Sinopec Corp.;
+(xxii) the resolutions regarding the Plan
+of the Proposed Issuance of A Shares:
+(xxii.i) type and par value of shares to
+be issued, (xxii.ii) manner and timing
+of issuance, (xxii.iii) subscriber and
+manner of subscription; (xxii.iv) pricing
+benchmark date, issue price and pricing
+principles, (xxii.v) number of shares to
+be issued, (xxii.vi) lock-up period, (xxii.
+vii) amount and use of proceeds, (xxii.viii)
+place of listing, (xxii.ix) arrangement of
+accumulated undistributed profits, (xxii.
+x) validity period; (xxiii) the Proposal of
+the Proposed Issuance of A Shares; (xxiv)
+the Demonstration and Analysis Report
+on the Plan of the Proposed Issuance of
+A Shares; (xxv) the resolution regarding
+the connected transaction involved in the
+Proposed Issuance of A Shares; (xxvi)
+the conditional Subscription Agreement
+entered into between Sinopec Corp.
+and China Petrochemical Corporation;
+(xxvii) the Feasibility Report on the Use
+of Proceeds Raised from the Proposed
+Issuance of A Shares; (xxviii) the dilution
+of current returns by the Proposed
+Issuance of A Shares, remedial measures
+and the commitments of related entities;
+(xxix) the Dividend Distribution and
+Return Plan for Shareholders for the
+Next Three Years (2023-2025); (xxx) the
+resolution regarding the authorisation to
+the Board with full power to deal with
+all matters relating to the Proposed
+Issuance of A Shares; (xxxi) the resolution
+regarding the authorisation to the Board
+to amend the Articles of Association
+in accordance with the situation of the
+Proposed Issuance of A Shares; (xxxii)
+Management Measures on Raising
+Funds; (xxxiii) Notice of Annual General
+Meeting for 2022, First A Shareholders
+Class Meeting for 2023, and First H
+Shareholders Class Meeting for 2023.
+(3) The 16th meeting of the eighth session
+of the Board was held through electronic
+means of communication on 27 April
+2023, whereby the proposals in relation
+to the following matters were approved: (i)
+First Quarterly Report for 2023; (ii) Form
+20-F of the Company for the year 2022.
+The Board is pleased to present the report of
+the Board of Directors for the year ended 31
+December 2023 for the shareholders' review.
+Sinopec Corp.
+guarantee guaranteed (yes or no)*2
+or not
+Principal
+debt
+Transaction date
+Name of
+guaranteed
+Relationship
+for
+guaranteed
+Whether
+Whether
+External guarantees (excluding guarantees for controlled subsidiaries)
+9 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+Significant Events
+53
+Unit: RMB million
+Amount
+incurred
+(15,359)
+(204)
+(15,563)
+Approved
+Amount of
+or not
+condition guaranty
+Type
+Period of guarantee
+(date of signing)
+Amount*1
+Whether
+company
+Guarantor
+parties
+overdue Counter-
+overdue
+completed
+connected
+with the Company
+18 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+Balance at
+at the
+beginning
+The above-mentioned connected transactions
+between the Company and Sinopec Group
+were approved at the 2nd meeting of the
+eighth session of the Board and have
+complied with the requirements under
+Chapter 14A of the Hong Kong Listing Rules.
+Related party transactions with the
+Sinopec Group that occurred during the
+year, as set out in Note 39 to the financial
+statements prepared under the IFRS
+Accounting Standards in this annual report,
+also fall under the definition of connected
+transactions under Chapter 14A of the Hong
+Kong Listing Rules.
+The continuing connected transaction
+agreements were entered into in the ordinary
+course of the Company's business and in
+accordance with normal commercial terms
+that are fair and reasonable to the Company
+and its shareholders. The Company,
+according to its internal control procedures,
+adjusts the scope and the relevant caps of
+continuing connected transactions every
+three years, and will announce and execute
+upon the approval of the Board and/
+or independent shareholders. For other
+connected transactions, Sinopec Corp.,
+in strict compliance with domestic and
+overseas regulatory rules, will publish the
+announcement and execute the transactions
+only after submitting the relevant proposals
+of connected transactions to the Board and/
+or the general meeting of shareholders for
+consideration and approval according to
+internal control procedures.
+Decision-making procedures:
+CONNECTED TRANSACTIONS (CONTINUED)
+Connected Transactions
+5
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+For details of the pricing principle, please
+refer to relevant announcements published
+on 30 August 2021 in China Securities
+Journal, Shanghai Securities News and
+Securities Times and on the website of the
+Shanghai Stock Exchange and on 29 August
+2021 the website of the Hong Kong Stock
+Exchange.
+(d) where none of the above is applicable,
+the price for the provision of the products
+or services is to be agreed between
+the relevant parties, which shall be the
+reasonable cost incurred in providing the
+same plus 6% or less of such cost.
+(c) where there is neither a government-
+prescribed price nor a government.
+guidance price, the market price will
+apply; or
+(b) where there is no government-prescribed
+price but where there is a government-
+guidance price, the government-guidance
+price will apply;
+(a) The government-prescribed price;
+The continuing connected transactions shall
+be priced in accordance with the following
+terms:
+The actual 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.
+for the reporting period, including sales of
+products of RMB133.579 billion, agency
+commission income of RMB81 million,
+and interest income of RMB2.842 billion.
+Entrusted loan provided by the Company
+to the Connected Subsidiaries was RMB1
+million. For definitions, please refer to
+relevant announcements published on 30
+August 2021 in China Securities Journal,
+Shanghai Securities News and Securities
+Times and on the website of the Shanghai
+Stock Exchange, and the website of the Hong
+Kong Stock Exchange on 29 August 2021
+and 3 September 2021.
+25,015
+5,809
+19 INFLUENCE ON THE INDUSTRY FROM
+NEWLY-ENFORCED LAW, ADMINISTRATIVE
+RULES, REGULATIONS AND INDUSTRY
+POLICIES
+On 13 January 2023, the General Office
+of the State Council issued the "Guiding
+Opinions on Deepening Cross-departmental
+Comprehensive Supervision", clarifying
+that a cross-departmental comprehensive
+regulatory list management and dynamic
+update mechanism shall be established by
+the end of 2023, and the competent industry
+authorities, together with relevant regulatory
+departments, shall actively carry out cross-
+departmental comprehensive supervision of
+key matters such as hazardous chemicals,
+gas, special equipment, and construction
+project quality. On 1 August 2023, the
+CSRC promulgated the Measures for the
+Administration of Independent Directors of
+Listed Companies, which came into effect on
+4 September 2023, to continue to strengthen
+the supervision of independent directors of
+listed companies and supervise and protect
+independent directors to play their due roles.
+In addition, the relevant government
+departments have also issued other
+policies and guidance related to ecological
+and environmental protection, carbon
+neutrality, carbon peaking, personal
+information protection, hazardous chemicals
+management, intellectual property
+protection, etc., emphasizing the need to
+strengthen compliance management in terms
+of sustainable development, energy supply
+security, and Internet information protection,
+while focusing on promoting sustainable
+development and promoting the construction
+of energy infrastructure suitable for green
+and low-carbon transformation.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONNECTED TRANSACTIONS
+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.
+Connected Transactions
+Prior to Sinopec Corp.'s overseas listing, in
+order to ensure the smooth continuation of
+production and business of the Company
+and Sinopec Group, the two parties entered
+into the agreements on continuing connected
+transactions.
+On 27 August 2021, Sinopec Corp. and its
+controlling shareholder, China Petrochemical
+Corporation, entered into the sixth
+supplemental agreement on continuing
+connected transactions. The resolution
+relating to continuing connected transactions
+for three years from 2022 to 2024 was
+approved at the first extraordinary general
+meeting of Sinopec Corp. for the year of
+2021 held on 20 October 2021. For details of
+the above continuing connected transactions,
+please refer to relevant announcements
+published on 30 August 2021 in China
+Securities Journal, Shanghai Securities News
+and Securities Times and on the website
+of the SSE and on 29 August 2021 on the
+website of the Hong Kong Stock Exchange.
+The capitalised terms used in this section
+shall have the same meaning as that used in
+the above-mentioned announcements.
+2 COMPLIANCE OF DISCLOSURE AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH THE HONG
+KONG LISTING RULES AND THE SHANGHAI
+LISTING RULES
+Pursuant to the Hong Kong Listing Rules and
+the Shanghai Listing Rules, the continuing
+connected transactions between the
+Company and Sinopec Group are subject
+to disclosure, independent non-executive
+directors' approval and/or independent
+shareholders' approval (if needed) based on
+the nature and the value of the transactions.
+Sinopec Corp. has fully complied with the
+above requirements of the listing rules
+in relation to the continuing connected
+transactions between the Company and
+Sinopec Group.
+The aggregated amount of the continuing
+connected transactions for 2023 of the
+Company is in compliance with the relevant
+requirements of the Hong Kong Listing Rules
+and the Shanghai Listing Rules. For actual
+performance details of continuing connected
+transaction agreements, please refer to Item
+3 below.
+3 ACTUAL PERFORMANCE OF CONTINUING
+CONNECTED TRANSACTIONS ENTERED
+INTO BY THE COMPANY DURING THE YEAR
+In the reporting period, purchases expenses
+of the continuing connected transactions
+of the Company was RMB264.294 billion,
+representing 8.22% of the total amount of
+this type of transactions for the reporting
+period, including purchases of products
+and services (procurement, storage,
+transportation, exploration and production
+services, and production-related services) of
+RMB251.007 billion, payment of property
+rent of RMB1.050 billion (annual value
+of right-of-use assets for property leasing
+included in continuing connected transactions
+of RMB1.958 billion), payment of land rent
+of RMB10.926 billion (annual value of right-
+of-use assets for lands leasing included
+in continuing connected transactions of
+RMB20.389 billion), and interest expenses
+of RMB1.311 billion. The sales income of
+the continuing connected transactions of the
+Company during the reporting period was
+RMB136.502 billion, representing 4.15% of
+the total amount of this type of transactions
+1 AGREEMENTS ON CONTINUING
+CONNECTED TRANSACTIONS
+BETWEEN SINOPEC CORP. AND CHINA
+PETROCHEMICAL CORPORATION
+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:
+Amount
+incurred
+3,662
+647
+4,309
+Balance
+at the end
+of the year
+12,776
+8,242
+21,018
+December 2021-December 2035
+(the mature date is estimated)
+16,709
+Reason for provision of funds between related parties
+* affiliated companies include subsidiaries, associates and joint ventures.
+58
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Unit: RMB million
+Funds from related parties
+Balance
+Impacts on the Company
+of the year
+32,776
+5,963
+38,739
+Total
+9,114
+i normal commercial terms; or
+ii
+terms not less favorable than those
+available from or to independent third
+parties, where there is no available
+comparison to determine whether
+such terms are on normal commercial
+terms; and
+(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.
+4 OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURRED THIS YEAR
+For details, please refer to item 2 "ACTUAL
+DAILY RELATED TRANSACTIONS ENTERED
+INTO BY THE COMPANY AND CHINA OIL &
+GAS PIPELINE NETWORK CORPORATION
+DURING THE REPORTING PERIOD",
+item 4 "CAPITAL INCREASE IN HUNAN
+PETROCHEMICAL" and item 5 "THE
+ISSUANCE OF A SHARES BY SINOPEC
+CORP. TO THE TARGET SUBSCRIBER (CHINA
+PETROCHEMICAL CORPORATION)" in the
+Chapter "Significant Events".
+FUNDS PROVIDED BETWEEN RELATED PARTIES
+7,595
+Funds to related parties
+Related Parties
+Relations
+of the year
+Sinopec Group
+Other related parties
+Parent company and affiliated companies*
+Associates and joint ventures
+Balance
+at the
+beginning
+(b) Discharge of water pollutants¹
+16 DONATIONS
+3
+(RMB/share)
+Repurchase Amount
+Highest
+Price per share
+H Share Repurchase
+11
+10
+9
+Month
+A Share Repurchase
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+64
+19
+As of 31 December 2023, Sinopec Corp.
+has repurchased 143.50 million A shares,
+accounting for 0.12% of the total issued
+shares of Sinopec Corp. on 31 December
+2023, the highest and lowest repurchase
+prices were RMB6.17 and RMB5.29 per
+share respectively, and the total amount
+paid was RMB816,009,269 (exclusive of
+transaction fees). For details, please refer
+to the Announcement on the Results of
+the Implementation of Share Repurchase
+disclosed by Sinopec Corp. on the
+website of the SSE on 25 November
+2023. Sinopec Corp. has repurchased
+403.656 million H Shares, accounting
+for approximately 0.34% of the total
+issued shares of Sinopec Corp. on 31
+December 2023, and the total amount
+paid was HK$1,646,392,242 (exclusive of
+transaction fees).
+On 28 August 2023, Sinopec Corp.
+commenced the repurchase of A shares
+and H shares. Sinopec Corp. has
+finished the repurchase of A shares on
+24 November 2023, and completed the
+cancellation of all repurchased A shares
+on 25 December 2023. For details,
+please refer to the announcements
+disclosed by Sinopec Corp. on the
+website of the Shanghai Stock Exchange
+on 25 November 2023 and 23 December
+2023. Sinopec Corp. completed the
+cancellation of repurchased H shares on 8
+September 2023 and 22 December 2023
+respectively. For details, please refer to
+the related announcements disclosed by
+Sinopec Corp. on the website of the Hong
+Kong Stock Exchange on 22 December
+2023.
+On 25 August 2023, to preserve the
+value of both Company and shareholders'
+equity interests, the 12th meeting of the
+eighth session of the Board considered
+and approved the Plan on Repurchasing
+the Company's Shares by Centralized
+Bidding Transactions. For details, please
+refer to the announcement disclosed
+by Sinopec Corp. on the website of the
+Shanghai Stock Exchange on 28 August
+2023.
+On 30 May 2023, the Annual General
+Meeting for 2022, the First A
+Shareholders Class Meeting for 2023 and
+the First H Shareholders Class Meeting
+for 2023 of Sinopec Corp. considered and
+approved the Resolution to Grant to the
+Board a Mandate to Buy Back Domestic
+Shares and/or Overseas-listed Foreign
+Shares of Sinopec Corp., authorizing the
+Board (or the director authorised by the
+Board) to buy back A Shares or H Shares
+not exceeding 10% of the issued number
+of A Shares or H Shares of Sinopec Corp.
+in issue.
+(1) Progress in the implementation of share
+repurchase of Sinopec Corp.
+18 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+Lowest
+(RMB/share)
+Total Amount
+(RMB)
+19,600,015
+As at the end of the reporting period, the
+Company has resolved its competition with
+Sinopec Group in the chemical business. For
+details for the positions held by the Directors
+(excluding Independent Non-executive
+Directors) of Sinopec Corp. in the Sinopec
+Group during the reporting period, please
+refer to the section “Corporate Governance"
+of this annual report.
+19 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+Save as disclosed above, 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.
+During the reporting period, Sinopec
+Shanghai Petrochemical Company
+Limited, as a subsidiary of the Sinopec
+Corp. repurchased its H share. For
+details, please refer to the related
+announcements disclosed by Sinopec
+Shanghai Petrochemical Company
+Limited on the website of the SSE and
+the Hong Kong Stock Exchange.
+(2) Progress in the implementation of share
+repurchase of subsidiaries
+11
+12
+10
+9
+8
+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.
+Month
+5.29
+5.60
+54,180,452
+5.37
+6.02
+69,719,533
+120,230,857.40
+6.08
+6.17
+400,969,699.42
+294,808,712.62
+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.
+17 PRE-EMPTIVE RIGHTS
+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
+Accounting Standards in this annual report.
+71,716
+67,082
+60,463
+consolidated statement for the dividend year (in accordance with CASS, RMB million)
+Ratio of the dividends to the net profit attributed to the shareholders of
+the listed company in the consolidated statement (%)
+Net profits attributed to the shareholders of the listed company shown in the
+56,903
+46,930
+43,575
+Total amount of cash dividends (including dividends paid in other ways)
+(RMB million, tax inclusive)
+0
+4,179
+2,325
+(RMB million, tax inclusive)
+Cash dividends paid in other ways (such as repurchase of shares)
+0.47
+0.355
+0.345
+Cash dividends (RMB/Share, tax inclusive)
+2021
+72.1
+70.0
+79.3
+Note: The final cash dividend for 2023 is subject to the approval at the 2023 annual general meeting.
+15 RESERVES
+During the reporting period, changes to
+the fixed assets of the Company are set
+out in Note 17 to the financial statements
+prepared in accordance with IFRS Accounting
+Standards in this annual report.
+14 FIXED ASSETS
+13 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of the Company as of 31 December 2023
+are set out in Note 30 to the financial
+statements prepared in accordance with IFRS
+Accounting Standards in this annual report.
+During the reporting period, other than
+disclosed above, to the best knowledge of the
+Board of the Directors of the Company, none
+of the Directors of the Company, their close
+associates, and shareholders holding more
+than 5% of the shares of the Company had
+any interest in the top five suppliers or the
+top five customers of the Company. There
+were no suppliers, customers, employees
+or others on which the Company's success
+depends.
+The total revenue from the five largest
+customers of the Company in 2023 was
+RMB243.892 billion, accounting for 7.59%
+of the total revenue of the Company, among
+which the sales value to the connected
+party Sinopec Group among the five
+largest customers was RMB87.761 billion,
+accounting for 2.73% of the total revenue for
+the year.
+12 MAJOR SUPPLIERS AND CUSTOMERS
+The Company maintained a stable
+cooperation relationship with major suppliers
+and customers. During the reporting period,
+the total value of the purchasing from the top
+five suppliers accounted for 39.38% of the
+total value of purchasing by the Company,
+among which, the purchasing value of the
+largest supplier accounted for 9.63% of the
+total annual purchasing value and the total
+value of the purchasing from the connected
+party Sinopec Group among the five largest
+supplier was RMB189.671 billion, accounted
+for 7.00% of the total value of purchasing by
+the Company.
+11 DURING THE REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS OR
+REGULATIONS WHICH HAVE A MATERIAL
+IMPACT ON THE COMPANY
+10 DURING THE REPORTING PERIOD, THE
+COMPLIANCE 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 environmental policies and
+performances are provided in the section
+"Environmental and Social Responsibilities"
+in this annual report as well as the 2023
+Sustainability Report of Sinopec Corp.
+During the reporting period, the amount of
+charity donations made by the Company
+amounted to approximately RMB310 million.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+63
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+2023 Internal Control Assessment Report of
+Sinopec Corp. was reviewed and approved at
+the 21st meeting of the eighth session of the
+Board on 22 March 2024, and all members
+of the Board warrant that the contents of
+the report are true, accurate and complete,
+and there are no false representations,
+misleading statements or material omissions
+contained in the report.
+The Board is fully responsible for establishing
+and maintaining the internal control system
+related to the financial statements as well
+as ensuring its effective implementation. In
+2023, 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 defect in relation to the internal
+control system as of 31 December 2023.
+The internal control system of Sinopec Corp.
+related to the financial statements is sound
+and effective.
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2021
+to 2023 is RMB1.17 per share, with a total
+amount of RMB140.904 billion, the total
+paid amount for repurchase of shares was
+RMB6.504 billion, and the aggregate amount
+with cash dividend was RMB147.408 billion.
+The total dividend payment from 2021 to
+2023 as a percentage of average net profit
+attributed to the shareholders of the listed
+company in the three years is 221.93%.
+INTERNAL CONTROL
+RESPONSIBILITIES FOR THE COMPANY'S
+9
+Report of the Board of Directors
+2022
+Price per share
+Repurchase Amount
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Beijing, China, 22 March 2024
+By Order of the Board
+Ma Yongsheng
+Chairman
+Cyber-security risks: The Company has a
+well-established network safety system. The
+Company establishes an emergency response
+mechanism in relation to network security
+operation and information system, builds
+an information platform of network security
+risk management and control, operated by
+a professional network security team, and
+devotes significant resources to protecting
+the digital infrastructure and data of the
+Company against cyber-attacks. However,
+continuous attention should be paid to the
+coverage and efficiency of these protection
+measures. If our systems against cyber-
+security risk are proved to be insufficient or
+ineffective, the Company could be adversely
+affected by, among other things, disruptions
+to our business operations, and loss of
+key information, thus causing harm to
+our personnel, property, environment and
+reputation. As cyber-security attacks continue
+to evolve, the Company may be required to
+expend additional resources to enhance our
+protective measures against cyber-security
+breaches, in particular increase investment
+in new solutions and technologies such as
+data security solution, business security
+solution, cloud computing, and Internet of
+Things devices to improve the cyber-security
+protection level.
+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.,
+the fluctuation of the Renminbi exchange
+rate will still have an effect on the income of
+the upstream sector.
+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
+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 and countries overseas. The
+Company's overseas businesses and assets
+are subject to the jurisdiction of the host
+country's laws and regulations. In light of
+the complicated factors such as changes
+in international geopolitics, uncertainty of
+economic recovery, imbalance of global
+and regional 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,
+and political, economic, social, safety, legal,
+environmental and other risks in the country
+where overseas business and assets are
+located, including sanctions, barriers to
+entry, instability in the financial and taxation
+policies, contract defaults, tax dispute, the
+Company's risks with regard to overseas
+business development and management
+could be increased.
+Investment risks: Petroleum and chemical
+sector is a capital-intensive industry.
+Although the Company has adopted a
+prudent investment strategy, executed the
+investment management rules and negative
+investment lists effectively, conducted
+rigorous feasibility study and risk evaluation
+on each investment project, and organized
+special verifications in raw material market,
+technical scheme, profitability, safety and
+environmental protection, legal compliance,
+etc on major structural adjustment and
+layout projects to ensure making decision
+rigorously and scientifically, certain
+investment risks will still exist due to
+major changes in factors such as market
+environment, industrial policies, prices of
+commodities, and construction period during
+the implementation of the projects.
+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
+emergencies.
+Risks with regard to the operation and
+natural disasters: The petroleum and
+petrochemical industry is exposed to the
+high risks of inflammation, explosion,
+toxicity, harm and environmental pollution
+and is vulnerable to natural disasters such
+as extended weather. Such emergencies may
+cause impacts to the society, financial losses
+to the Company and grievous injuries to
+people. The Company has always been laying
+great emphasis on the safety production, and
+has implemented a strict HSE management
+system as an effort to avoid such risks as
+far as possible. Meanwhile, the main assets
+and inventories of the Company as well as
+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 mismatch between
+supply and demand of crude oil, volatile
+geopolitics, slow global economic recovery
+and other factors, the prices of crude oil
+fluctuate sharply. Additionally, the supply
+of crude oil may even be interrupted due
+to some extreme major incidents in certain
+regions. Although the Company has taken
+flexible countermeasures, it may not fully
+avoid risks associated with any significant
+fluctuation of international crude oil prices
+and sudden disruption of supply of crude oil
+from certain regions.
+Risks from the uncertainties of obtaining
+additional oil and gas resources: The future
+sustainable development of the Company is
+dependent on our abilities in continuously
+discovering or acquiring additional oil and
+natural gas resources to a certain extent.
+To obtain oil and natural gas resources,
+the Company faces some inherent risks
+associated with exploration and development
+and/or with acquisition activities of oil and
+gas resources, and the Company has to
+invest a large amount of money with no
+guarantee of certainty. If the Company fails
+to increase the reserves of crude oil and
+natural gas through further exploration,
+development and acquisition, 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.
+protection standards. Under such situations,
+the Company may increase expenses in
+relation to the environment protection
+accordingly.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+66
+Risks with regard to the changes from
+environmental legislation requirements:
+The Company's production activities
+generate waste water, gases, solids and
+noise. The Company has built up the
+corresponding pollution prevention and risk
+control facilities to prevent and reduce the
+pollution. However, the relevant government
+authorities may issue and implement much
+stricter environmental protection laws and
+regulations, adopt much stricter environment
+Risks from the macro 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 exploration
+and mining permits in relation to 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 refined 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, environmental protection and quality
+standards and the formulation of energy.
+conservation policies, restrictions on high
+energy consumption and high pollution
+projects, etc. In addition, the changes which
+have occurred or might occur in macro and
+industry policies such as further opening up
+of crude oil import licenses and the right of
+tenure and the continuous control of export
+quota of refined oil; deepening the reform
+and improvement in pricing mechanism of
+natural gas, accelerating the exploration of
+upstream and downstream price linkage
+mechanisms, cost supervision of gas
+pipeline and equal access to third party and
+accelerating the establishment of a uniform
+gas energy metering and pricing system;
+affected by the continuous increase in the
+penetration rate of new energy vehicles, the
+scale of substitution of refined oil products
+has expanded; reforming in resource tax
+and environmental tax; and the introduction
+of measures for energy conservation and
+carbon reduction in key areas to improve
+energy efficiency; and the introduction of
+transforming policy from "double control"
+of energy consumption to "double control"
+of carbon emissions and intensity, etc. Such
+factors might further impact the industry
+development and market environment
+and the operations and profitability of the
+Company.
+Risks with regard to the cyclical effects
+from the industry: The majority of the
+Company's operating income comes
+from the sales of refined oil products and
+petroleum 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, industry polices, 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.
+Report of the Board of Directors
+68
+REPORT OF THE SUPERVISORY COMMITTEE
+Dear Shareholders:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+22 March 2024
+Chairman of the Supervisory Committee
+Zhang Shaofeng
+In 2024, the Supervisory Committee and
+each supervisor will continue to follow the
+principle of due diligence and integrity,
+earnestly perform the duties of supervision
+as delegated by the shareholders, strictly
+review the significant decisions, strengthen
+the process control and supervision, increase
+the strength of inspection and supervision
+on subsidiaries and protect Sinopec Corp.'s
+benefit and its shareholders' interests.
+Fifthly, all connected transactions of the
+Company were in compliance with the
+relevant rules and regulations of domestic
+and overseas listing exchanges. The pricing
+of all the connected transactions 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 inside trading,
+damage to shareholders' interest nor losses
+of corporate assets were discovered.
+Thirdly, the positions in Sinopec Corp.'s
+internal control have clear responsibilities
+and duties, and the internal control system
+was effective. No material defect of internal
+control system of the Company was found.
+Secondly, the annual reports and financial
+statements prepared by Sinopec Corp. for
+2023 complied with the relevant regulation of
+domestic and overseas securities regulators,
+the disclosed information truly, accurately,
+completely and fairly reflected Sinopec
+Corp.'s financial results and operation
+performance. The dividend distribution plan.
+was made after comprehensive consideration
+of the long-term interests of Sinopec Corp.
+and the interests of the shareholders. No
+violation of confidential provisions by persons
+who prepared and reviewed the financial
+report was found.
+Risks with regard to the variations from
+macroeconomic situation: The business
+results of the Company are closely related
+to macroeconomic situation. The global
+economy experienced insufficient driving
+force and more uncertainty. The development
+of economy is increasingly constrained by
+climate change and environmental issues.
+The Company's business could also be
+adversely affected by other factors such
+as the impact on export due to carbon
+tariffs and trade protectionism from certain
+countries, and impact on the return of the
+investment of upstream projects and refining
+and storage projects which results from the
+uncertainty of geopolitics, international crude
+oil price and etc.
+Firstly, the Board and the senior
+management of Sinopec Corp. performed
+their responsibilities and duties pursuant
+to relevant laws and regulations 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, planned overall layout, fully
+implemented high-quality development
+actions, optimized production and operation
+organization in all aspects, and fully
+promoted quality improvement, efficiency
+enhancement, and stable growth, resulting in
+giving full play to achieve the annual target
+of business operations set by the Board.
+During the reporting period, the Supervisor
+Committee did not discover any behavior
+of any director or senior management
+which violated laws, regulations, the
+Articles of Association, or was detrimental
+to the interests of Sinopec Corp. or its
+shareholders.
+Report of the Supervisory Committee
+In 2023, the world economic recovery
+continued to be under pressure, and
+China's economy came out of a recovery
+curve with a positive recovery despite the
+continued pressure. Through supervision
+and inspection on the production and
+operation management as well as financial
+management, the Supervisory Committee
+and all the supervisors concluded that
+facing the complex and changeable severe
+environment, Sinopec Corp. fully executed
+the management plan of the Board, gave full
+play to the advantages of integration, made
+every effort to expand the market, increase
+sales volume and profitability, steadily
+promoted transformation and upgrading,
+focused on scientific and technological
+innovation and empowerment, deepened the
+reform of systems and mechanisms, adhered
+to the bottom line of compliant operation,
+coordinated and promoted all aspects of
+work, and achieved high-quality results. The
+Supervisor Committee had no objection to
+the supervised issues during the reporting
+period.
+In addition, the Company organised the
+supervisors to attend the general meetings of
+shareholders and meetings of the Board. The
+company organized some supervisors to go
+to the Hong Kong Stock Exchange and the
+SSE in May and September 2023 to conduct
+communication and research. Through in-
+depth communication with regulators on
+ESG construction, private placement, market
+value management and other matters of
+concern to the Company, providing solid
+foundation for supervisors' performance of
+its responsibilities and duties according to
+laws and regulations.
+On 26 October 2023, the 11th meeting
+of the eighth session of the Supervisory
+Committee was held, and the Third Quarterly
+Report of Sinopec Corp. for the three months
+ended 30 September 2023 was reviewed and
+approved at the meeting.
+On 25 August 2023, the 10th meeting of
+the eighth session of Supervisory Committee
+was held, the Interim Financial Statements
+of Sinopec Corp. for 2023, and the Interim
+Report of Sinopec Corp. for 2023 were
+reviewed and approved at the meeting.
+On 27 April 2023, the 9th meeting of the
+eighth session of the Supervisory Committee
+was held, and the proposal in relation to the
+First Quarterly Report of Sinopec Corp. for
+the three months ended 31 March 2023 and
+20-F Report of Sinopec Corp. for 2022 were
+reviewed and approved at the meeting.
+On 24 March 2023, the 8th meeting of the
+eighth session of the Supervisory Committee
+was held, and the proposals in relation to
+the Financial Statements of Sinopec Corp.
+for 2022, Annual Report of Sinopec Corp. for
+2022, Sustainability Report of Sinopec Corp.
+for 2022, Internal Control Assessment Report
+of Sinopec Corp. for 2022, Work Report of
+the Supervisory Committee of Sinopec Corp.
+for 2022, Work Plan of the Supervisory
+Committee of Sinopec Corp. for 2023, and
+proposals regarding the issuance of A Shares
+to China Petrochemical Corporation were
+reviewed and approved at the meeting.
+During the reporting period, the Supervisory
+Committee held five (4) meetings in total,
+and mainly reviewed and approved the
+proposals in relation to the Company's
+annual report, financial statements,
+sustainability report, internal control
+assessment report and working report of the
+Supervisory Committee etc. Details are as
+below:
+In 2023, the Supervisory Committee 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.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Highest
+In the course of its production and
+operations, Sinopec Corp. will actively take
+various measures to circumvent operational
+risks. However, in practice, it may not be
+possible to prevent the occurrence of all
+risks and uncertainties described below.
+The Company formulated a strategy and
+plan for future green transformation and
+development, accelerating the development
+of new energy with hydrogen energy as the
+core and high-end chemical materials, and
+focusing on building a globally leading clean
+energy and chemical company.
+3.98
+4.24
+184,120,000
+152,980,647.20
+4.00
+4.15
+37,744,000
+139,652,255.20
+4.24
+4.38
+32,582,000
+147,866,412.80
+4.48
+4.56
+32,688,000
+(HK$)
+Total Amount
+Lowest
+(HK$/share)
+(HK$/share)
+4.04
+3.78
+116,522,000
+21 MANAGEMENT CONTRACTS
+The Company always attaches great
+importance to the fulfilment of corporate
+social responsibilities and carries out the
+green and clean development strategy to
+pursue a sustainable development. Moreover,
+the Company enjoys an outstanding
+"Sinopec" brand name, plays an important
+role in the national economy and is a
+renowned and reputable company in China.
+The Company has formulated a well-
+established technology system and
+mechanism, and owns competent teams
+specialised in R&D covering a wide range of
+subjects; the five platforms for technology
+advancement are taking shape, which
+includes exploration and development of
+oil and gas, refining, petrochemicals, utility
+and strategic emerging technology. With its
+overall technologies reaching state of the
+art level in the global arena, and certain
+technologies taking the lead globally, the
+Company enjoys a strong technical strength.
+The Company owns a team of professionals
+with expertise in the production of oil and
+gas, operation of refineries and chemical
+plants, as well as marketing activities.
+The Company applies outstanding fine
+management measures with its remarkable
+capabilities in management of operations
+and enjoys an operational cost advantage in
+its downstream businesses.
+The Company enjoys a favourable positioning
+with its operations located close to the
+consumer markets. The steady growth
+in the Chinese economy is helpful to the
+development of both refined oil business and
+chemical business of the Company; through
+continuous and specialised marketing efforts,
+the Company's capability in international
+operations and market expansion has been
+further enhanced.
+The integrated business structure of
+the Company carries strong advantages
+in synergy among its various business
+segments, contributing to the Company
+by tapping onto potentials in attaining an
+efficient and comprehensive utilisation of its
+resources, and endows the Company with
+strong capabilities in risk resistance and
+sustaining profitability.
+25 CORE COMPETITIVENESS ANALYSIS
+The Company is a large-scale integrated
+energy and petrochemical company with
+upstream, mid-stream and downstream
+operations, and has overall strong strength
+of scale. The Company is a large oil and gas
+producer in China and ranks first globally
+in terms of refining capacity. The Company
+ranks domestically first and globally second
+in terms of ethylene production. The
+Company is equipped with a well-developed
+refined oil products sales network, being the
+largest supplier of refined oil and chemical
+products in China.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+Report of the Board of Directors
+26 RISK FACTORS
+65
+Our reserves estimates are guided by
+procedural manuals and technical guidance
+formulated by the Company. A number of
+working divisions at the production bureau
+level, including the exploration, development
+and financial divisions, are responsible
+for initial collection and compilation of
+information about reserves. Experts from
+exploration, development and economic
+divisions prepare the initial report on the
+reserves estimate which is then reviewed by
+the RMC at the subsidiary level to ensure the
+qualitative and quantitative compliance with
+technical guidance as well as its accuracy
+and reasonableness. We also engage external
+consultants to assist in our compliance
+with the rules and regulations of the U.S.
+Securities and Exchange Commission.
+Our reserves estimation process is further
+facilitated by a specialised reserves
+database, which is improved and updated
+periodically.
+Our RMC consists of the senior management
+of the Company, related departments of
+headquarter, senior managers of International
+Petroleum Exploration and Production
+Limited and Petroleum Exploration and
+Production Research Institute of Sinopec
+(PEPRIS). Mr. Niu Shuanwen, the Chairman
+of RMC is Senior Vice President of Sinopec
+Corp., with about 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.
+751,261,659.40
+454,631,267.60
+We manage our reserves estimation through
+a two-tier management system. Our Oil
+and Natural Gas Reserves Management
+Committee, or RMC, at the headquarter level
+oversees the overall reserves estimation
+process including organisation, coordination,
+monitoring and major decision-making,
+and reviews the reserves estimation of the
+Company. Each of our oilfield branches
+has a reserves management committee
+that manages and coordinates the reserves
+estimation, organises the estimation process
+and reviews the reserve estimation report at
+the branch level, being responsible to the
+RMC of the Company.
+24 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+As of 31 December 2023, the Company has
+not entered into any equity-linked agreement.
+23 EQUITY-LINKED AGREEMENTS
+22 PERMITTED INDEMNITY PROVISIONS
+During the reporting period, Sinopec Corp.
+has purchased liability insurance for all
+Directors to minimise their risks arising
+from the performance of their duties. The
+permitted indemnity provisions are stipulated
+in such Directors' liability insurance in
+respect of the liabilities and costs associated
+with the potential legal proceedings that may
+be brought against such Directors.
+No contracts concerning management
+or administration of the whole or any
+substantial part of the business of the
+Company were entered into or existed during
+the reporting period.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+69
+2023
+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.
+2
+0
+3
+0
+0
+4
+2
+(2) Attendance to the Board meetings and general meetings during the reporting period by the former Directors of the eighth session of the
+Board
+Director
+Director
+Independent Director
+Independent Director
+Independent Director
+Independent Director
+Director
+6
+Bi Mingjian
+6
+Shi Dan
+6
+Ng, Kar Ling Johnny
+6
+Cai Hongbin
+3
+4
+0
+0
+3
+4
+2
+3
+3
+0
+0
+4
+2
+3
+Lv Lianggong
+3
+1
+4
+2
+3
+3
+0
+0
+2
+1
+0
+0
+6
+6
+means of
+On-site
+attendance
+held
+Name
+Positions
+Chairman
+Director
+electronic
+No. of
+meetings
+through
+General meetings
+attended
+Meetings
+Board meeting
+(1) Attendance to the Board meetings and general meetings during the reporting period by the Directors of the eighth session of the Board
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL MEETINGS DURING THE REPORTING PERIOD
+During this reporting period, in accordance with relevant laws and regulations as well as the Articles of Association, all members of the Board
+diligently and conscientiously implemented the resolutions approved at the general meetings of Sinopec Corp. with due care, and had completed all
+the tasks delegated to them at the general meetings.
+2 IMPLEMENTATION OF RESOLUTIONS APPROVED AT THE GENERAL MEETINGS OF SHAREHOLDERS BY THE BOARD
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+60
+Meetings
+attended
+No. of
+meetings
+communication
+by proxy
+Yu Baocai
+3
+3
+0
+1
+4
+2
+6
+Zhao Dong
+Li Yonglin
+3
+0
+0
+4
+2
+6
+Ma Yongsheng
+Actual
+attendance
+held
+Absent
+3
+The dividend distribution and capital reserve capitalization declared by Sinopec Corp. in the past three years are as follows:
+0
+3
+Report of the Board of Directors
+Report of the Board of Directors
+61
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+6 PERFORMANCE OF THE DIRECTORS
+During the reporting period, The Directors of
+Sinopec Corp. fulfilled their duties diligently
+in accordance with the Articles of Association,
+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
+meetings). The Directors reviewed proposals
+with due care, used their professional
+expertise to provide suggestions on decision-
+making of significant events, maintained
+timely and effective communication with the
+management, external auditors and internal
+audit department, and promoted scientific
+decision-making by offering advice on the
+PERFORMING THEIR DUTIES DURING THE
+REPORTING PERIOD WITHOUT OBJECTION.
+BOARD COMMITTEES ISSUED REVIEW
+OPINIONS TO THE BOARD WHEN
+(11) The 1st meeting of the Special Meeting
+of Independent Directors of the eighth
+session of the Board was held by on-
+site meeting and video conference on
+25 October 2023, whereby the proposal
+in relation to the reform plan of refining
+and petrochemical integration in Yueyang
+area was approved.
+(10) The 12th meeting of the Audit Committee
+of the eighth session of the Board
+was held by on-site meeting and video
+conference on 25 October 2023, whereby
+the proposals in relation to the following
+matters were approved: (i) Third
+Quarterly Report for 2023; (ii) Report on
+the Implementation of the Internal Audit
+Plan in the third quarter of 2023.
+(9) The 3rd meeting of the Sustainable
+Development Committee of the eighth
+session of the Board was held through
+electronic means of communication on
+23 August 2023, whereby the proposal in
+relation to the Report on the Completion
+of HSE Work for the first half of 2023 and
+the Work Arrangements for the second
+half of 2023 was approved.
+Transactions between Sinopec Corp.
+and Sinopec Finance Co., Ltd. and
+Century Bright for the first half of the
+year 2023; (v) Report on the Main Audit
+Work for the first half of 2023 and the
+Major Arrangement of Audit Work for the
+second half of 2023.
+5
+(8) The 11th meeting of the Audit Committee
+of the eighth session of the Board
+was held by on-site meeting and video
+conference on 23 August 2023, whereby
+the proposals in relation to the following
+matters were approved: (i) Report
+on Financial Results and Business
+Performance for the first half of the
+year 2023; (ii) Financial Statements
+for the first half of the year 2023; (iii)
+Interim Report for 2023; (iv) Continuous
+Risk Assessment Report of Connected
+(7) The 4th meeting of the Nomination
+Committee of the eighth session of the
+Board was held through electronic means
+of communication on 25 July 2023,
+whereby the proposal in relation to the
+appointment of Senior Vice President of
+Sinopec Corp. was approved.
+(6) The 10th meeting of the Audit Committee
+of the eighth session of the Board
+was held through electronic means
+of communication on 27 April 2023,
+whereby the proposals in relation to the
+following matters were approved: (i) First
+Quarterly Report for 2023; (ii) Form 20-F
+of the Company for the year 2022; (iii)
+Report on the Implementation of the
+Internal Audit Plan in the first quarter of
+2023.
+(5) The 9th meeting of the Audit Committee
+of the eighth session of the Board
+was held by on-site meeting and
+video conference on 23 March 2023,
+whereby the proposals in relation to
+the following matters were approved: (i)
+Report on financial results and business
+performance of the Company for the year
+2022; (ii) Continuous Risk Assessment
+Report of Connected Transactions
+between Sinopec Corp. and Sinopec
+Finance Co., Ltd. and Century Bright;
+(iii) Report on the Implementation of
+Derivatives Business for the year 2022
+and the Work Plan for the year 2023; (iv)
+Financial Statements of Sinopec Corp. for
+the year 2022; (v) Annual Report of the
+Company for the year 2022; (vi) Internal
+Control Assessment Report of Sinopec
+Corp. for the year 2022; (vii) Report on
+the Main Audit Work in 2022 and the
+Overall Arrangement of Audit Work in
+2023; (viii) Resolutions regarding the
+Issuance of A Shares by Sinopec Corp. to
+the Target Subscriber.
+(4) The 2nd meeting of the Sustainable
+Development Committee of the eighth
+session of the Board was held by
+written resolution on 22 March 2023,
+whereby the proposals in relation to
+the following matters were approved: (i)
+Sustainability Report of Sinopec Corp.
+for the year 2022; (ii) Report on the
+Completion of Environmental Protection
+Key Targets for the year 2022 and the
+Work Arrangements for the year 2023; (iii)
+Report on the Anti-corruption Compliance
+Work of Sinopec Corp. for the year 2022
+and the Work Plan of 2023.
+(3) The 2nd meeting of the eighth session
+of the Remuneration and Appraisal
+Committee was held by written resolution
+on 22 March 2023 whereby the proposal
+in relation to implementation of the
+rules of the remuneration of Directors,
+supervisors and other senior management
+for 2022 was approved.
+Committee of the eighth session of the
+Board was held by written resolution on
+22 March 2023, whereby the proposal
+in relation to the nomination of Mr. Lv
+Lianggong as candidate for Executive
+Director was approved.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Company's development strategy, operations
+and reform. Sinopec Corp. has established
+the mechanism of the Special Meeting of
+Independent Directors to built platform for
+Independent Directors fulfilling their duties.
+The Independent Directors conscientiously
+fulfilled their duties as required by Terms
+of Reference of the Independent Non-
+executive Directors, played a positive
+role in "participation in decision-making,
+supervision and independence, professional
+consultation", listened to the reports on
+significant decisions. The Independent
+Directors conducted research on a regular
+basis and visited subsidiaries of Sinopec
+Corp. in Jiangsu and Hainan to research the
+situation of business development, actively
+followed up business operation of the
+Company. The Independent Directors issued
+their independent opinions on matters such
+as nomination of candidate for Director,
+appointment of senior management,
+connected transactions, profit distribution
+plan, re-appointment of accounting firms,
+issuance of A Shares to target subscriber,
+share buy-back proposal, and protected the
+minority shareholders' legitimate interests.
+None of the Directors had any objection
+to the Company's resolutions, and all the
+suggestions of Directors on relevant reform
+and development were accepted.
+Pursuant to requirements of securities
+regulatory authority of China, Independent
+Directors of Sinopec Corp. reviewed the
+performance of the senior management
+of Sinopec Corp. who concurrently are
+senior management in China Petrochemical
+Corporation, and issued a special opinion
+as follows: "The President Mr. Yu Baocai,
+Senior Vice Presidents Mr. Ling Yiqun, Mr.
+Li Yonglin, Mr. Lv Lianggong and Mr. Niu
+Shuanwen, 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 2023, Mr. Yu Baocai, Mr.
+Ling Yiqun, Mr. Li Yonglin, Mr. Lv Lianggong
+and Mr. Niu Shuanwen strictly abided by
+the provisions of laws and regulations,
+the Articles of Association and the service
+contracts, conscientiously fulfilled their
+duties of loyalty and diligence, implemented
+the resolutions of the Board, and gave
+sufficient time and attention to organize
+production and operation. They protected
+the interests of Sinopec Corp. 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
+for the withholding. For investors who are
+I will report to the competent tax authorities
+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
+securities investment funds. The Company
+will not withhold or pay the income tax of
+dividends for domestic enterprise investors
+and those domestic enterprise investors
+shall report and pay the relevant tax by
+themselves.
+For dividends of domestic investors investing
+in the H Shares of Sinopec Corp. through
+Shanghai Hong Kong and Shenzhen-Hong
+Kong Stock Connect Program, the Company
+shall withhold and pay income tax at the rate
+of 20% on behalf of individual investors and
+場交易互聯互通機制試點有關稅收政策的通知)
+(Caishui [2014] No. 81) and the Notice on
+the Tax Policies Related to the Pilot Program
+of the Shenzhen-Hong Kong Stock Connect
+《關於深港股票市場交易互聯互通機制試點有關稅
+») (Caishui [2016] No.127):
+Related to the Pilot Program of the Shanghai-
+Hong Kong Stock Connect (
+Pursuant to the Notice on the Tax Policies
+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%.
+(2) The 3rd meeting of the Nomination
+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
+62
+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 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.
+The final cash dividend will be distributed
+on or before Friday, 26 July 2024 to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on
+the record date of Monday, 15 July 2024.
+In order to qualify for the final dividend
+for H shares, the holders of H shares must
+lodge all share certificates accompanied
+by the transfer documents with Hong Kong
+Registrars Limited located at 1712-1716,
+17th Floor Hopewell Centre, 183 Queen's
+Road East, Wan Chai, Hong Kong before
+4:30 p.m. on Tuesday, 9 July 2024 for
+registration. The H shares register and
+transfer of members of Sinopec Corp. will
+be closed from Wednesday, 10 July 2024
+to Monday, 15 July 2024 (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.
+Proposals for dividend distribution
+At the 21st meeting of the eighth session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMBO.2
+(tax inclusive) per share for 2023. Taking
+into account the distributed interim dividend
+of RMBO.145 (tax inclusive) per share for the
+first half of 2023, the total dividend for the
+whole year is RMB0.345 (tax inclusive) per
+share.
+The profit distribution plan of the Company
+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.
+The profit distribution policy of Sinopec
+Corp. maintains consistency and steadiness
+and taken into account 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 cash every year shall be no less than 30%
+of the net profits of the Company realised
+during the corresponding year.
+DIVIDEND
+The financial results of the Company for the
+year ended 31 December 2023, which were
+prepared in accordance with IFRS Accounting
+Standards and the financial position as at
+that date and the accompanying analysis
+are set out from page 154 to page 212
+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
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+3
+(1) The 8th meeting of the Audit Committee
+of the eighth session of the Board was
+held by written resolution on 13 January
+2023, whereby the proposal in relation to
+the Internal Control Manual (2023) was
+approved.
+4 THE BOARD COMMITTEES MEETINGS AND
+THE SPECIAL MEETING OF INDEPENDENT
+DIRECTORS
+attendance
+held
+Name
+Positions
+No. of
+meetings
+Meetings
+attended
+means of
+On-site
+electronic
+No. of
+meetings
+through
+attended
+Board meeting
+Meetings
+3
+3
+0
+0
+4
+2
+communication
+by proxy
+Absent
+held
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+0
+oo
+0
+0
+0
+2
+1
+0
+During the reporting period, the Board
+committees held ten (10) meetings, among
+which, Audit Committee held five (5)
+meetings, the Remuneration and Appraisal
+Committee held one (1) meeting, the
+Sustainable Development Committee held
+two (2) meetings, and the Nomination
+Committee held two (2) meetings. All
+members of each committee attended the
+relevant meetings. The Company held one (1)
+Special Meeting of Independent Directors, all
+Independent Directors attended the meeting.
+Details of those meetings are as follows:
+0
+1
+1
+2
+3
+Note: No Directors were absent from two consecutive meetings of the Board.
+Liu Hongbin
+Former Director
+Former Director
+Ling Yiqun
+Actual
+attendance
+0
+Report of the Supervisory Committee
+General meetings
+Sinopec-SK (Wuhan) Petrochemical
+Company Limited
++86 (10) 8508 5000
++86 (10) 8518 5111
+kpmg.com/cn
+畢馬威華振審字第2402028號
+The Shareholders of China Petroleum & Chemical Corporation:
+OPINION
+We have audited the accompanying financial statements of China Petroleum & Chemical Corporation ("the Company"), which comprise the consolidated
+and company balance sheets as at 31 December 2023, the consolidated and company income statements, the consolidated and company cash
+flow statements, the consolidated and company statements of changes in shareholders' equity for the year then ended, and notes to the financial
+statements.
+In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company financial position of the
+Company as at 31 December 2023, and the consolidated and company financial performance and cash flows of the Company for the year then ended
+in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of the People's Republic of China.
+BASIS FOR OPINION
+We conducted our audit in accordance with China Standards on Auditing for Certified Public Accountants ("CSAS"). Our responsibilities under those
+standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent
+of the Company in accordance with the China Code of Ethics for Certified Public Accountants ("the Code"), and we have fulfilled our other ethical
+responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
+opinion.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
+period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
+not provide a separate opinion on these matters.
+Assessment of impairment of fixed assets relating to oil and gas producing activities
+Refer to Note 3 (8) Oil and gas properties, (12) Impairment of other non-financial long-term assets, Note 13 Fixed assets, and Note 59 Principal
+accounting estimates and judgements to the financial statements
+The Key Audit Matter
+The Company reported fixed assets of Renminbi ("RMB") 690,957 million
+as at 31 December 2023, a portion of which related to oil and gas
+producing activities. The Company reported impairment losses of RMB777
+million for the fixed assets relating to oil and gas producing activities for
+the year ended 31 December 2023.
+The Company groups fixed assets relating to oil and gas producing
+activities into cash-generating units ("CGUS") for impairment assessment.
+The Company compares the carrying amount of individual CGU with its
+value in use, using a discounted cash flow forecast, which was prepared
+based on the future production profiles included in the oil and gas
+reserves reports, to determine the impairment loss to be recognised.
+We identified assessment of impairment of fixed assets relating to oil and
+gas producing activities as a key audit matter. The value in use amounts
+of these CGUS are sensitive to the changes to future selling prices and
+production costs for crude oil and natural gas, future production profiles,
+and discount rates. Therefore a higher degree of subjective auditor
+judgment was required to evaluate the Company's impairment assessment
+of fixed assets relating to oil and gas producing activities.
+How the matter was addressed in our audit
+The following are the primary procedures we performed to address this
+key audit matter:
+we evaluated the design and tested the operating effectiveness
+of certain internal controls related to the process for impairment
+assessment of fixed assets relating to oil and gas producing activities;
+we assessed the competence, capabilities and objectivity of the
+Company's reserves specialists and evaluated the methodology
+adopted by them in estimating the oil and gas reserves against the
+recognised industry standards;
+we compared future selling prices for crude oil and natural gas used in
+the discounted cash flow forecasts with the Company's business plans
+and forecasts by external analysts;
+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
+東方廣場畢馬威大樓8層
+郵政編碼:100738
+東長安街1號
+中國北京
+(特殊普通合夥)
+8,804 Trading of crude oil and petrochemical products
+(1,786) Overseas investment and equity holding
+management
+910 Production and sale of catalyst products
+1,197 Trading of petrochemical products
+1,842 Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+1,782 Manufacturing of intermediate petrochemical
+products and petroleum products
+128 Manufacturing of intermediate petrochemical
+products and petroleum products
+22,418 Marketing and distribution of refined petroleum
+products
+(762) Production, sale, research and development
+of petroleum, petrochemical, ethylene and
+downstream by-products
+1,169 Oil jetty and nature gas pipeline
+106 Manufacturing of intermediate petrochemical
+products and petroleum products
+(1,409) Manufacturing of synthetic fibres, resin and
+plastics, intermediate petrochemical products
+and petroleum products
+(1,196) Manufacturing of plastics, intermediate
+petrochemical products and petroleum
+products
+Note 1: In 2023, all above subsidiaries are audited by KPMG Huazhen LLP or KPMG.
+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.
+2: The above total assets and net profit have been prepared in accordance with CASS. Except for Sinopec Kantons Holdings Limited and Sinopec Overseas Investment
+Holdings Ltd., which are incorporated in Bermuda and Hong Kong SAR, respectively, all of the above wholly-owned and non-wholly-owned subsidiaries are incorporated
+in the PRC. All of the above wholly-owned and controlling subsidiaries are limited liability companies except for Sinopec Shanghai Petrochemical Company Limited,
+Sinopec Marketing Co., Limited and Sinopec Kantons Holdings Limited. The Board of Directors considered that it would be redundant to disclose the particulars of all
+subsidiaries of Sinopec Corp. and, therefore, only those which have material impact on the results or assets of Sinopec Corp. are set out above.
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR
+KPMG
+AUDITOR'S REPORT
+KPMG Huazhen LLP
+8th Floor, KPMG Tower
+Oriental Plaza
+1 East Chang An Avenue
+Beijing 100738
+China
+Telephone +86 (10) 8508 5000
+Fax
++86 (10) 8518 5111
+Internet kpmg.com/cn
+畢馬威華振會計師事務所
+74
+1,678 Marketing and distribution of petrochemical
+products
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Financial Statements (PRC)
+KPMG Huazhen LLP
+Beijing, China
+Certified Public Accountants
+Registered in the People's
+Republic of China
+Yang Jie (Engagement Partner)
+He Shu
+22 March 2024
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+77
+Financial Statements (PRC)
+Financial Statements (PRC)
+(A) FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+As at 31 December 2023
+Assets
+Current assets
+Cash at bank and on hand
+Financial assets held for trading
+Derivative financial assets
+Accounts receivable
+Receivables financing
+Prepayments
+Other receivables
+Inventories
+Other current assets
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of
+the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law
+or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
+communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and
+communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related
+safeguards.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (Continued)
+KPMG
+REPORT OF THE PRC AUDITOR (CONTINUED)
+KPMG
+OTHER INFORMATION
+The Company's management is responsible for the other information. The other information comprises all the information included in 2023 annual
+report of the Company, other than the financial statements and our auditor's report thereon.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
+other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
+fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Accounting Standards for
+Business Enterprises, and for the design, implementation and maintenance of such internal control necessary to enable that the financial statements
+are free from material misstatement, whether due to fraud or error.
+In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing,
+as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the
+Company or to cease operations, or has no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing the Company's financial reporting process.
+75
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
+Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
+procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
+detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal control.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern.
+If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial
+statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date
+of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
+Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements
+represent the underlying transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express
+an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely
+responsible for our audit opinion.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
+findings, including any significant deficiencies in internal control that we identify during our audit.
+Financial Statements (PRC)
+76
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+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.
+Total current assets
+374 Manufacturing of intermediate petrochemical
+products and petroleum products
+73 Coal chemical industry investment management,
+production and sale of coal chemical products
+(3,135) Manufacturing of intermediate petrochemical
+products and petroleum products
+(1,490) Production and sale of polyester chips and
+polyester fibres
+253,249
+1,143,420
+915.790
+940,510
+1,189,467
+41,365
+47,004
+9,487
+6,567
+4,183
+4,652
+8,095
+8,312
+91,549
+84,589
+81,501
+70,306
+296,530
+305,494
+345
+15
+14
+13
+201
+4,010
+4,299
+5,014
+4,038
+Accounts payable
+Non-current liabilities
+438,204
+433,338
+Total current liabilities
+1,002
+912
+Other current liabilities
+39,990
+16,100
+Non-current liabilities due within one year
+247,480
+14
+250,472
+12,044
+22,103
+Taxes payable
+8,467
+8,366
+Employee benefits payable
+9,769
+9,079
+Contract liabilities
+107,105
+81,628
+Other payables
+307 Production and sale of refined petroleum
+products, lubricant base oil, and petrochemical
+materials
+382,879
+2
+At 31 December
+2023
+RMB million
+At 31 December
+Notes
+Bills payable
+Sinopec Shanghai Gaoqiao Petroleum
+10,000
+55
+33,425
+22,268
+and Chemical Limited
+Sinopec Shanghai Petrochemical
+10,799
+50.55
+39,658
+24,942
+Company Limited
+Fujian Petrochemical Company Limited
+10,492
+50
+12,591
+10,048
+3,208 Investment in exploration, production and sale of
+petroleum and natural gas
+2022
+RMB million
+65,753
+54,578
+12
+227,630
+248,957
+21,260
+33,852
+70,376
+67,922
+38,517
+50,940
+4,461
+1,760
+413,572
+10
+9
+703
+367
+33,841
+27,878
+7
+IN
+3,892
+482
+2
+3
+10
+Long-term loans
+Non-current assets
+Other equity instrument investments
+7,817
+7,256
+13,133
+14,068
+420,943
+1,068,019
+343,279
+1,010,664
+36
+119,349
+119,896
+37
+117,273
+118,875
+Other comprehensive income
+Specific reserve
+Surplus reserves
+Retained earnings
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+Total shareholders' equity
+Total liabilities and shareholders' equity
+38
+3,060
+19
+47,587
+48,269
+34
+30,457
+62,844
+20,833
+19,159
+Total current liabilities
+647,076
+667,385
+Non-current liabilities
+Long-term loans
+Debentures payable
+Lease liabilities
+Provisions
+3,072
+Deferred tax liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+333323
+179,347
+94,964
+8,513
+12,997
+163,864
+166,407
+Other non-current liabilities
+Total non-current liabilities
+119,892
+39
+2,813
+Financial assets held for trading
+Derivative financial assets
+Accounts receivable
+Receivables financing
+Prepayments
+Other receivables
+Inventories
+Other current assets
+Total current assets
+Non-current assets
+Long-term equity investments
+Other equity instrument investments
+Fixed assets
+Construction in progress
+Right-of-use assets
+Intangible assets
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+Total non-current assets
+Total assets
+Liabilities and shareholders' equity
+Current liabilities
+Short-term loans
+Derivative financial liabilities
+Cash at bank and on hand
+Current assets
+Assets
+As at 31 December 2023
+40
+223,134
+218,009
+340,381
+325,806
+805,794
+788,471
+152,861
+151,986
+958,655
+940,457
+2,597
+2,026,674
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+78
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shou Donghua
+Chief Financial Officer
+BALANCE SHEET
+1,951,121
+Long-term equity investments
+93,031
+40,008
+46,364
+2,221
+3,507
+9
+5,067
+7,956
+10
+26,089
+27,009
+11
+250,898
+244,241
+26,824
+29,674
+534,435
+523,140
+12
+2
+234,608
+233,941
+450
+730
+13
+48,652
+7
+19,335
+9,721
+Fixed assets
+Construction in progress
+Right-of-use assets
+Intangible assets
+Goodwill
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+Total non-current assets
+Total assets
+Liabilities and shareholders' equity
+14
+Current liabilities
+Notes
+At 31 December
+2023
+RMB million
+At 31 December
+2022
+RMB million
+LO
+5
+164,960
+145,052
+3
+2
+6182
+Short-term loans
+28,379
+15
+17
+Contract liabilities
+25
+Employee benefits payable
+Taxes payable
+27
+Other payables
+28
+Non-current liabilities due within one year
+29
+Other current liabilities
+30
+2622222223
+59,815
+2,752
+21,313
+7,313
+29,122
+10,782
+229,878
+258,642
+127,239
+125,444
+13,941
+13,617
+24
+Accounts payable
+Bills payable
+Derivative financial liabilities
+18
+19
+20
+34567890
+690,957
+630,758
+180,250
+196,045
+174,529
+178,359
+138,181
+16
+120,694
+6,464
+13,199
+12,034
+20,110
+22,433
+33,483
+26,523
+1,492,239
+1,427,981
+2,026,674
+1,951,121
+6,472
+Debentures payable
+Lease liabilities
+39,413
+251
+Other non-current liabilities
+EBITDA to total debt ratio
+5,910
+63,143
+69,053
+Net profit of the Company excluding extraordinary gains
+and losses (RMB million)
+Change
+2,730
+57,962
+60,692
+Net profit attributable to equity shareholders of the
+Company excluding extraordinary gains and losses (RMB
+million)
+2022
+2023
+0.42
+0.02
+51.80% 0.90 percentage points
+100%
+52.70%
+100%
+0.44
+Loan repayment rate
+Liability-to-asset ratio
+Quick ratio
+Increase in cash at bank
+and on hand, and significant
+0.05
+Reasons for change
+Change
+0.78
+0.83
+EBITDA to interest coverage ratio
+Interest coverage ratio
+Cash interest coverage ratio
+Interest payment rate
+173
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+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 totalled USD750 million, with an annual
+interest rate of 1.250% and had been repaid and delisted; the 5-year notes principal totalled USD1 billion, with an annual interest rate of 1.875%
+and had been repaid and delisted; the 10-year notes principal totalled USD1.25 billion, with an annual interest rate of 3.125% and had been repaid
+and delisted; and the 30-year notes principal totalled USD500 million, with an annual interest rate of 4.250%. These notes were listed on the Hong
+Kong Stock Exchange on 25 April 2013, with interest payable semi-annually. The first payment of interest was made on 24 October 2013. During
+the reporting period, the Company has paid in full the current-period interests of all notes with 10 years and 30 years.
+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 2023, the standby credit line provided by several domestic financial institutions to the Company was RMB416.4 billion in total, facilitating
+the Company to get such amount of unsecured loans. The Company has fulfilled all the relevant undertakings in the bond offering circular and had
+no significant matters which could influence the Company's operation and debt repayment ability.
+Note: Liability-to-asset ratio = total liabilities/total assets
+100%
+100%
+Year-on-year increase in net
+cash flow from operating
+activities
+8.17
+14.80
+22.97
+2022
+(0.98)
+5.59
+Decrease in profit before
+taxation, and increase in
+interest expense
+Decrease in profit before
+taxation
+Increase in borrowings
+Due to the recovery of
+market demand, the profits
+of the refining and chemicals
+segments increased
+year-on-year
+Due to the recovery of
+market demand, the profits
+of the refining and chemicals
+segments increased
+year-on-year
+Reasons for change
+Increase in cash at bank
+and on hand, and significant
+decrease in accounts payable
+Increase in borrowings
+decrease in accounts payable
+(0.36)
+(1.39)
+1.02
+12.16
+0.66
+10.77
+6.57
+Bond General Information
+31 December
+Current ratio
+2021/8/5
+5
+3.2
+5
+2026/7/27
+2021/7/27
+2021/7/23
+102101480
+102101386
+The second medium-term
+notes in 2021
+21 MTN002
+The first medium-term
+notes in 2021
+21 MTN001
+Credit rating
+Use of proceeds
+Trading market
+(if any), and countermeasures
+Risk of suspension for listed trading
+Principal and interest repayment
+Investor Qualification Arrangement
+Applicable trading mechanism
+Outstanding balance (RMB billion)
+Interest rate (%)
+Amount issued (RMB billion)
+Interest commencement date
+Maturity date
+Issuance date
+code
+Bond name
+Abbreviation
+1. INTERBANK BOND MARKET DEBT FINANCING INSTRUMENT OF NON-FINANCIAL ENTERPRISES
+2021/8/6
+2024/8/6
+2
+2
+Principal data
+Principal accounting data and financial indicators for the two years ended 31 December 2023
+72 Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note: Please refer to offering circular published on the website of Shanghai Stock Exchange (http://www.sse.com.cn), China Money Network (http://www.chinamoney.com.cn)
+and other websites for the name, office address, signing auditor, contact person and telephone number of the intermediary institutions providing services for the
+issuance and during the terms of the above-mentioned in interbank market debt financial instrument of non-financial enterprises and other disclosed information in
+the offering circular.
+Corporate bonds trustee has performed its duties in accordance with regulatory requirements
+During the reporting period, the bondholders' meeting was not convened.
+No guarantee. No change on the repayment scheme.
+Performance of corporate bonds trustee
+Guarantee, repayment scheme and other
+related events during the reporting period
+Convening of corporate bond holders'
+meeting
+or investor protection, whether triggered
+or executed
+Special terms for Issuer or investor option Not applicable
+31 December
+2023
+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.
+Interest is paid once a year. The principal will be paid at maturity with last instalment of interest.
+Nationwide inter-bank bond market institutional investors
+Circulated and transferred in nationwide inter-bank bond market
+Not applicable
+2.5
+2.55
+2.55
+2024/12/28
+2021/12/28
+2021/12/27
+132100172
+notes in 2021
+21中石化GN001
+Provisions
+2.95
+Nationwide inter-bank bond market
+BOND GENERAL INFORMATION
+Principal Wholly-Owned
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+18,307
+98.98
+5,294
+Sinopec Beihai Refining and Chemical
+Company Limited
+5,362
+22,056
+100
+1,400
+China Petrochemical International
+7,096
+15,483
+100
+1,500
+Sinopec Catalyst Company Limited
+Million USD
+20,373
+29,629
+100
+3,598
+and Chemical Company Limited
+Sinopec Overseas Investment Holding
+Limited
+61,887
+230,455
+13,990
+Limited Liability Company
+Sinopec Qingdao Refining and Chemical
+5,000
+7,193
+59
+24,640
+9,649
+Sinopec Kantons Holdings Limited
+248
+60.33
+14,119
+13,657
+Million HKD
+526,621
+100
+70.42
+Sinopec Marketing Co., Limited
+Company Limited
+23,745
+46,926
+100
+9,606
+Sinopec Hainan Refining and Chemical
+Company Limited
+13,875
+21,393
+85
+28,403
+and Controlled Subsidiaries
+5,000
+Limited
+Company Limited
+21,370
+50,271
+100
+22,761
+Sinopec Great Wall Energy & Chemical
+Exploration and Production Limited
+RMB million Principal Business
+(%) RMB million RMB million
+100
+28,512
+15,993
+8,250
+Sinopec International Petroleum
+RMB million
+Name of Company
+(Net Loss)
+Net Assets
+Corp. Total Assets
+Net Profit/
+by Sinopec
+Registered
+Capital
+Shares Held
+of
+Percentage
+On 31 December 2023, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+Sinopec Yangzi Petrochemical Company
+15,651
+100
+31,806
+6,643
+24,980
+100
+1,000
+Sinopec Chemical Sales Company
+Company Limited
+1,327
+3,332
+100
+1,595
+Sinopec Qingdao Petrochemical
+China International United Petroleum
+5,153
+100
+3,374
+Sinopec Lubricant Company Limited
+Liability Company
+3,532
+13,890
+100
+4,000
+Sinopec Yizheng Chemical Fibre Limited
+Limited
+13,644
+8,767
+Bond General Information
+The first green medium-term
+Changes in Share Capital alders
+Shareholdings of Principal
+94,971,971,046
+(%)
+Amount
+Amount¹
+(143,500,000)
+percentage
+percentage
+(%)
+79.33
+After change
+Changes
+Unit: share
+119,896,407,646
+24,780,936,600
+95,115,471,046
+Amount
+Before change
+Total number of shares.
+Foreign shares listed overseas
+Others
+Domestic listed foreign shares
+RMB ordinary shares
+Item
+1 CHANGES IN THE SHARE CAPITAL
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+70
+20.67
+(403,656,000)
+24,377,280,600
+20.43
+H Share
+lock-up
+Number of
+shares subject
+to pledges,
+marked or
+Unit: share
+Changes of
+Shareholding¹
+shares held
+80,633,828,289
+67.56
+State-owned Share
+Shareholders shareholdings %
+HKSCC Nominees Limited³
+China Petrochemical Corporation²
+0
+Name of shareholders
+Percentage of
+Nature of
+The shareholdings of top ten shareholders as of 31 December 2023 are listed as below:
+(1) Shareholdings of top ten shareholders
+As of 31 December 2023, the total number of shareholders of Sinopec Corp. was 399,412 including 393,981 holders of A shares and 5,431 holders
+of H shares. As of 29 February 2024, the total number of shareholders of Sinopec Corp. was 378,416. Sinopec Corp. has complied with requirement
+for public float under the Hong Kong Listing Rules.
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+Note 1: During the reporting period, 143,500,000 A shares of Sinopec Corp. were repurchased and cancelled, and 403,656,000 H shares of Sinopec Corp. were
+repurchased and cancelled. During the reporting period, there was no issue of new shares, stock dividends, or conversion of provident fund into shares.
+100
+119,349,251,646
+(547,156,000)
+100
+Total number of
+20.30 24,226,599,699
+Shareholdings of Principal Shareholders
+Changes
+63,628
+61,814
+119,896
+119,349
+636,793
+674,918
+2,121
+198,589
+241,580
+1,684
+38,298
+40,077
+9,537
+91,878
+86,399
+4,993
+56,755
+108,427
+Specific reserve
+Other comprehensive income
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+700
+827
+1,673
+1,745
+Financial Statements (PRC)
+79
+12
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+Yu Baocai
+President
+(Legal representative)
+Chairman
+Ma Yongsheng
+Share Capital and
+1,143,420
+506,627
+514,549
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+Total liabilities and shareholders' equity
+Total shareholders' equity.
+102,522
+107,879
+218,009
+223,134
+Retained earnings
+Surplus reserves
+1,189,467
+61,660,896
+(408,299,599)
+79.57
+Unknown
+1,247,104,477(L)
+1,709,867,256(L)
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+as of the end of the reporting period
+It provides well-drilling services, well-
+logging services, downhole operation
+services, services in connection with
+manufacturing and maintenance of
+production equipment, engineering
+construction service, and utility services
+including water and power and social
+services.
+The controlling shareholder of
+Sinopec Corp. is China Petrochemical
+Corporation. Established in July 1998,
+China Petrochemical Corporation is a
+state-authorised investment organisation
+and a state-owned enterprise. The legal
+representative is Mr. Ma Yongsheng.
+Through re-organization in 2000, China
+Petrochemical Corporation injected its
+principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+retained certain petrochemical facilities.
+(1) Controlling shareholder
+There was no change in the controlling
+shareholder or the de facto controller of
+Sinopec Corp. during the reporting period.
+4 CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+There were no existing employee shares
+of Sinopec Corp. during the reporting
+period.
+(2) Existing employee shares
+There was no issuance of securities
+of Sinopec Corp. during the reporting
+period.
+(1) Issuance of securities during the
+reporting period
+3 ISSUANCE AND LISTING OF SECURITIES
+Interest of corporation controlled by the
+substantial shareholder
+Investment manager
+Status of shareholders
+(L) Long position, (S): Short position
+Schroders PLC
+BlackRock, Inc.
+% of Sinopec Corp.'s issued
+voting shares (H Share)
+Number of shares interested
+Name of shareholders
+(2) Information disclosed by the shareholders of H shares in accordance with the SFO as of 31 December 2023
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+(3) Basic information of the de facto
+controller
+7.01(L)
+5.12(L)
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+and
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+* Inclusive of 810,388,000 H shares held
+by Century Bright (overseas wholly-
+owned subsidiary of China Petrochemical
+Corporation) through HKSCC Nominees
+Limited.
+(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.
+1.00%
+1,830,210,000
+13.45%
+1,095,463,711
+47.79%
+456,756,300
+Sinopec Corp. is not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
+Sinopec Corp.
+10,727,896,364
+68.24%*
+Sinopec Oilfield Service
+Corporation
+Sinopec Oilfield Equipment
+Corporation
+China Merchants Energy
+Shipping Co., Ltd
+China National Petroleum
+Corporation
+65.81%
+2,907,856,000
+China Petrochemical Corporation
+Number of Shareholding
+Shares Held Percentage
+Name of Company
+Sinopec Engineering (Group)
+Co. Ltd
+100%
+0
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+56.51%
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+State-owned Assets Supervision
+and Administration Commission
+of the State Council
+Note 3: Century Bright, an overseas wholly-owned subsidiary of China Petrochemical Corporation, held 810,388,000 H shares, accounting for 0.68% 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.
+158,325,150
+603,945,092
+0.51
+中國人壽保險股份有限公司-傳統-普通保險產品-005L-CT001 滬
+0
+83,074,942
+1,228,874,968
+1.03
+A Share
+香港中央結算有限公司
+0
+0
+2,165,749,530
+1.81
+A Share
+中國石油天然氣集團有限公司
+0
+0
+2,325,374,407
+1.95
+A Share
+中國證券金融股份有限公司
+Note 4: During the reporting period, I — ±250 ✰*¯*#*#&A, one of the top ten shareholders of Sinopec Corp., participated in the
+refinancing and lending business. At the beginning of the reporting period, the number of refinancing and lending shares was 30,000, and all of them were
+returned by the end of the reporting period
+0
+中央匯金資產管理有限責任公司
+A Share
+0.26
+Note 2: During the period, due to confidence in the Company's development prospects, the controlling shareholder China Petrochemical Corporation planned to
+increase its shareholdings of A shares and H shares of the Company by itself and its wholly-owned subsidiary, by an amount of not less than RMB1 billion
+(inclusive) and not more than RMB2 billion (inclusive) within 12 months since 11 November 2023 (the "Shareholding Increase Plan"). As of 31 December
+2023, the Shareholding Increase Plan was not complete, China Petrochemical Corporation would continue to increase its shareholdings when appropriate
+according to the Shareholding Increase Plan. For details, please refer to the announcements published by Sinopec Corp. on China Securities Journal, Shanghai
+Securities News, Securities Times, the website of Shanghai Stock Exchange on 11 November 2023 and 6 December 2023, on the website of Hong Kong Stock
+Exchange on 10 November 2023 and 18 December 2023.
+Note 1: As compared with the number of shares held as of 31 December 2022.
+0
+118,944,338
+233,504,214
+0.20
+A Share
+中國工商銀行 - 上證50交易型開放式指數證券投資基金4
+0
+2,392,600
+237,544,524
+0.20
+A Share
+315,223,600
+國信證券股份有限公司
+0
+243,314,589
+243,314,589
+0.20
+A Share
+國新投資有限公司
+0
+0
+A Share
+86,744
+(1) Other comprehensive income (net of tax) attributable to shareholders of the Company
+Items that will not be reclassified to profit or loss
+4,859
+Diluted earnings per share (RMB/share)
+96,414
+Other comprehensive income
+2,598
+1,970
+2,960
+54
+Basic earnings per share (RMB/share)
+86,116
+53
+Non-controlling interests
+(12,009)
+Classification by ownership:
+Net profit from continuing operations
+Net profit from discontinued operations
+Classification by going concern:
+Net profit
+Less: Income tax expense
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+672
+4,226
+Asset disposal gains
+94,515
+(8,772)
+Shareholders of the Company
+55
+Cost of hedging reserve
+17,901
+52
+Attributable to:
+Total comprehensive income
+Total other comprehensive income net of tax
+(2) Other comprehensive income (net of tax) attributable to non-controlling interests
+Foreign currency translation differences
+Cash flow hedges
+Other comprehensive income that can be reclassified to profit or loss under the
+equity method
+Items that may be reclassified subsequently to profit or loss
+Changes in fair value of other equity instrument investments
+(65)
+(8)
+19,126
+2,501
+16,070
+38
+0.505
+65
+0.555
+0.505
+65
+७७
+9,532
+9,583
+67,082
+60,463
+76,614
+70,046
+76,614
+70,046
+0.555
+Impairment losses
+51,243
+243
+46
+58,567
+61,164
+45
+263,991
+272,921
+42
+2,819,363
+2,709,656
+41
+3,318,168
+3,212,215
+41
+1125643
+444
+Financial expenses
+Research and development expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+Less: Operating costs
+Operating income
+2022
+RMB million
+2023
+RMB million
+Notes
+For the year ended 31 December 2023
+CONSOLIDATED INCOME STATEMENT
+Financial Statements (PRC)
+Shareholders of the Company
+Non-controlling interests
+59,664
+57,208
+47
+13,969
+Credit impairment reversals
+(1,715)
+467
+51
+Gains/(losses) from changes in fair value
+14,479
+8.177
+Including: Income from investment in associates and joint ventures
+14,462
+5,811
+50
+Investment income
+8,219
+10,905
+1,084
+49
+10,591
+11,055
+48
+Exploration expenses, including dry holes
+6,266
+6,828
+Interest income
+16,769
+18,069
+Including: Interest expenses
+9,974
+9,922
+43
+12,773
+Add: Other income
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+Cash flows from operating activities:
+Chairman
+China Petroleum & Chemical Corporation (the "Company") was established on 25 February 2000 as a joint stock limited company. The company is
+registered in Beijing, the People's Republic of China, and the headquarter is located in Beijing, the People's Republic of China. The approval date of
+the financial report is 22 March 2024.
+1 STATUS OF THE COMPANY
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS
+Financial Statements (PRC)
+Financial Statements (PRC)
+85
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+President
+Yu Baocai
+(Legal representative)
+Ma Yongsheng
+Chairman
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+514,549
+107,879
+223,134
+1,673
+700
+61,814
+119.349
+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").
+Balance at 31 December 2023
+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.
+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.
+2 BASIS OF PREPARATION (Continued)
+For the year ended 31 December 2023
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+86
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Company and its subsidiaries determine their
+functional currency according to the main economic environment in where they operate. The Group's consolidated financial statements are
+presented in Renminbi. Some of subsidiaries use other currency as the functional currency. The Company translates the financial statements of
+subsidiaries from their respective functional currencies into Renminbi (see Note 3(2)) if the subsidiaries' functional currencies are not Renminbi.
+(4) Functional currency and presentation currency
+Receivables financing (see Note 3(11))
+Derivative financial instruments (see Note 3(11))
+Other equity instrument investments (see Note 3(11))
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial assets held for trading (see Note 3(11))
+(3) Measurement basis
+The accounting year of the Group is from 1 January to 31 December.
+(2) Accounting period
+These financial statements are prepared on a basis of going concern.
+(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
+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" revised in 2023 by the China Securities Regulatory
+Commission ("CSRC"). These financial statements present truly and completely the consolidated and company financial position as at 31
+December 2023, and the consolidated and company financial performance and the consolidated and company cash flows for the year ended 31
+December 2023.
+- Basic
+2 BASIS OF PREPARATION
+Details of the Company's principal subsidiaries are set out in Note 60.
+(3) the production and sale of chemical.
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(1) the exploration, development and production of crude oil and natural gas;
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+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.
+(5) Materiality criteria: Determination method and selection basis
+(1)
+(36)
+359
+(486)
+359
+359
+Amounts transferred to initial carrying amount of hedged items
+(61,566)
+(58,404)
+(818)
+(59,222)
+9. Net increase in specific reserve for the year
+149
+149
+30
+179
+10. Other equity movements under the equity method
+(1,009)
+(1,009)
+(1,009)
+11. Transfer of other comprehensive income to retained earnings
+(1)
+1
+12. Others
+22
+51,243
+7. Others
+51,602
+Transactions with owners, recorded directly in shareholders' equity:
+(36)
+6. Other equity movements under the equity method
+(72)
+(72)
+5. Net increase in specific reserve for the year
+(43,085)
+(45,885)
+5,125
+(1,778)
+(547)
+Total transactions with owners, recorded directly in shareholders' equity
+(40,760)
+(40,760)
+-Distributions to shareholders (Note 56)
+(5,125)
+5,125
+-Appropriations for surplus reserves (Note 40)
+4. Appropriations of profits:
+(2,325)
+(1,778)
+(547)
+-Purchase of own shares (Note 36)
+3. Shareholders' decrease of capital:
+(486)
+Item
+Principal joint ventures and associates
+Principal construction in progress
+Goodwill
+Transaction with non-controlling interests
+(1,713)
+(1,713)
+7.
+Distributions to non-controlling interests
+(6,691)
+(6,691)
+8.
+Other contributions to subsidiaries from owners
+2,678
+2,678
+2.191
+4,869
+Total transactions with owners, recorded directly in shareholders' equity
+(1,175)
+(326)
+4,663
+Financial Statements (PRC)
+89
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+An investment in a subsidiary acquired otherwise than through a business combination is initially recognised at actual purchase cost if the
+Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity
+securities, or at the value stipulated in the investment contract or agreement if an investment is contributed by investors.
+For a long-term equity investment obtained through a business combination not involving enterprises under common control, the initial
+investment cost comprises the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity securities issued
+by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not
+involving enterprises under common control, if it is achieved in stages, the initial cost comprises the carrying value of previously-held equity
+investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
+The initial investment cost of a long-term equity investment obtained through a business combination involving entities under common
+control is the Company's share of the carrying amount of the subsidiary's equity at the combination date. The difference between the initial
+investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the
+share premium is insufficient, any excess is adjusted to retained earnings.
+6.
+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:
+5,395
+5. Contributions to subsidiaries from non-controlling interests
+(15,363)
+(439)
+(15,802)
+2. Other comprehensive income (Note 38)
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3.
+4.
+Decrease of shareholders' capital:
+- Purchase of own shares (Note 36)
+Appropriations of profits:
+- Appropriations for surplus reserves (Note 40)
+- Distributions to shareholders (Note 56)
+(1,175)
+(3,004)
+(4,179)
+(4,179)
+4,663
+(4,663)
+(56,903)
+(56,903)
+(56,903)
+5,395
+(a) Investment in subsidiaries
+(5) Long-term equity investments
+Inventories are recorded by perpetual method.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+88
+Financial Statements (PRC)
+87
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Where the Company acquired a non-controlling interest from a subsidiary's non-controlling shareholders, the difference between the
+investment cost and the newly acquired interest into the subsidiary's identifiable net assets at the acquisition date is adjusted to the capital
+reserve (capital surplus) in the consolidated balance sheet. Where the Company partially disposed an investment of a subsidiary that do not
+result in a loss of control, the difference between the proceeds and the corresponding share of the interest into the subsidiary is adjusted to
+the capital reserve (capital surplus) in the consolidated balance sheet. If the credit balance of capital reserve (capital surplus) is insufficient,
+any excess is adjusted to retained profits.
+Where the Company acquires a subsidiary during the reporting year through a business combination involving entities not under common
+control, the identifiable assets, liabilities and results of operations of the subsidiaries are consolidated into consolidated financial statements
+from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.
+Where the Company combines a subsidiary during the reporting period through a business combination involving entities under common
+control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at
+the beginning of the earliest comparative year presented or, if later, at the date that common control was established. Therefore the opening
+balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial
+statements, the subsidiary's assets, liabilities and results of operations are included in the consolidated balance sheet and the consolidated
+income statement, respectively, based on their carrying amounts in the subsidiary's financial statements, from the date that common control
+was established.
+The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its
+subsidiaries. Control means an entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
+to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
+statements from the date that control commences until the date that control ceases.
+(c) Criteria for determining control and method for the preparation of consolidated financial statements
+A business combination involving entities or businesses not under common control is a business combination in which all of the combining
+entities or businesses are not ultimately controlled by the same party or parties both before and after the business combination. Difference
+between the consideration paid by the Group as the acquirer, comprises of the aggregate of the fair value at the acquisition date of assets
+given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree, and the Group's
+interest in the fair value of the identifiable net assets of the acquiree, is recognised as goodwill (Note 3(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.
+(b) Business combination involving entities not under common control
+A business combination involving entities or businesses under common control is a business combination in which all of the combining
+entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that
+control is not transitory. The assets and liabilities that the acquirer receives in the acquisition are accounted for at the acquiree's carrying
+amount on the acquisition date. The difference between the carrying amount of the acquired net assets and the carrying amount of the
+consideration paid for the acquisition (or the total nominal value of shares issued) is recognised in the share premium of capital reserve, or
+the retained earnings in case of any shortfall in the share premium of capital reserve. Any costs directly attributable to the combination shall
+be recognised in profit or loss for the current period when occurred. The expense incurred for equity securities and debt securities issued as
+the consideration of the combination is recognised in the initial cost of the securities. The combination date is the date on which the acquirer
+effectively obtains control of the acquiree.
+(a) Business combination involving entities under common control
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+Principal accounting estimates and judgements of the Group are set out in Note 59.
+The Group determines specific accounting policies and accounting estimates based on the characteristics of production and operational activities,
+mainly reflected in the accounting for allowance for financial assets (Note 3(11)), valuation of inventories (Note 3(4)), depreciation of fixed assets
+and depletion of oil and gas properties (Notes 3(7), (8)), measurement of provisions (Note 3(16)), etc.
+The amount of non-controlling interests ≥ RMB4,000 million
+The carrying amount of goodwill ≥ RMB4,000 million
+The carrying amount of long-term equity investments > RMB4,000 million
+The carrying amount of construction in progress ≥ RMB4,000 million
+Materiality criteria
+3 MATERIAL ACCOUNTING POLICIES
+Principal non-wholly-owned subsidiary
+For the year ended 31 December 2023
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+(c) Criteria for determining control and method for the preparation of consolidated financial statements (Continued)
+(c) Inventory system
+Any excess of the cost over the net realisable value of each item of inventories is recognised as a provision for diminution in the value of
+inventories and included in the current period profit and loss. Net realisable value is the estimated selling price in the normal course of
+business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. The net realisable
+value of materials held for use in the production is measured based on the net realisable value of the finished goods in which they will be
+incorporated. The net realisable value of the quantity of inventory held to satisfy sales or service contracts is measured based on the contract
+price. If the quantities held by the Group are more than the quantities of inventories specified in sales contracts, the net realisable value of
+the excess portion of inventories is measured based on general selling prices.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+(b) Criteria for recognition and method of provision for diminution in value of 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.
+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.
+(a) Inventories categories
+(4) Inventories
+Cash and cash equivalents comprise cash on hand, demand deposits, short-term and highly liquid investments which are readily convertible into
+known amounts of cash and are subject to an insignificant risk of change in value.
+(3) Cash and cash equivalents
+3 MATERIAL ACCOUNTING POLICIES (Continued)
+(348)
+For the year ended 31 December 2023
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+The assets and liabilities of foreign operation are translated into Renminbi at the spot exchange rates at the balance sheet date. The equity
+items, excluding “Retained earnings", are translated into Renminbi at the spot exchange rates at the transaction dates. The income and
+expenses of foreign operation are translated into Renminbi at the spot exchange rates or an exchange rate that approximates the spot exchange
+rates on the transaction dates. The resulting exchange differences are separately presented as other comprehensive income in the balance sheet
+within equity. Upon disposal of a foreign operation, the cumulative amount of the exchange differences recognised in which relate to that foreign
+operation is transferred to profit or loss in the year in which the disposal occurs.
+Foreign currency monetary items are translated at the PBOC rates at the balance sheet date. Exchange differences, except for those directly
+related to the acquisition, construction or production of qualified assets, are recognised as income or expenses in the income statement. Non-
+monetary items denominated in foreign currency measured at historical cost are not translated. Non-monetary items denominated in foreign
+currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. The difference
+between the translated amount and the original currency amount is recognised as other comprehensive income, if it is classified as other equity
+instrument investments; or charged to the income statement if it is measured at fair value through profit or loss.
+Foreign currency transactions are, on initial recognition, translated into Renminbi at the spot exchange rates quoted by the People's Bank of
+China ("PBOC rates") at the transaction dates.
+(2) Transactions in foreign currencies and translation of financial statements in foreign currencies
+The unrealised profit or loss arising from the sale of assets by the Company to its subsidiaries is eliminated in full against the net profit
+attributed to shareholders; the unrealised profit or loss from the sale of assets by subsidiaries to the Company is eliminated according to
+the distribution ratio between shareholders of the parent company and non-controlling 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 non-controlling interests.
+Where the accounting policies and accounting period adopted by the subsidiaries are different from those adopted by the Company,
+adjustments are made to the subsidiaries' financial statements according to the Company's accounting policies and accounting period. Intra-
+group balances and transactions, and any unrealised profit or loss arising from intra-group transactions, are eliminated in preparing the
+consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised
+gains but only to the extent that there is no evidence of impairment.
+The excess of the loss attributable to the non-controlling interests during the period over the non-controlling interests' share of the equity at
+the beginning of the reporting period is deducted from non-controlling interests.
+Non-controlling interest is presented separately in the consolidated balance sheet within shareholders' equity. Net profit or loss attributable
+to non-controlling shareholders is presented separately in the consolidated income statement below the net profit line item.
+In a business combination involving entities not under common control achieved in stages, the Group remeasures its previously held equity
+interest in the acquiree on the acquisition date. The difference between the fair value and the net book value is recognised as investment
+income for the year. If other comprehensive income was recognised regarding the equity interest previously held in the acquiree before the
+acquisition date, the relevant other comprehensive income is transferred to investment income in the period in which the acquisition occurs.
+Where control of a subsidiary is lost due to partial disposal of the equity investment held in a subsidiary, or any other reasons, the Group
+derecognises assets, liabilities, non-controlling 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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+98,443
+(326)
+(621)
+RMB million
+Total comprehensive income
+67,897
+6,024
+1,658
+213,224
+116,440
+526,314
+122
+1,095
+1,217
+121,071
+67,897
+6,024
+1,658
+213,346
+117,535
+527,531
+46,637
+46,637
+5,736
+5,736
+(10,933)
+equity
+5,736
+earnings
+RMB million
+RMB million
+Shou Donghua
+Chief Financial Officer
+STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2023
+Balance at 31 December 2021
+Add: Changes in accounting policies (Note 3(27))
+Balance at 1 January 2022
+Change for the year
+1. Net profit
+Other
+Total
+Share
+Capital comprehensive
+Specific
+Surplus
+Retained
+shareholders'
+capital
+RMB million
+reserve
+RMB million
+income
+reserve
+RMB million
+reserves
+RMB million
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+46,637
+(10,933)
+(1,265)
+7. Others
+Balance at 31 December 2022
+Balance at 1 January 2023
+Change for the year
+1. Net profit
+(84)
+(84)
+119,896
+63,628
+827
+1,745
+218,009
+102,522
+506,627
+119,896
+63,628
+827
+1,745
+218.009
+102,522
+506,627
+51,243
+(1,265)
+52,373
+6. Other equity movements under the equity method
+87
+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. Shareholders' decrease of capital:
+-Purchase of own shares (Note 36)
+(1,175)
+(3,004)
+(4,179)
+4. Appropriations of profits:
+-Appropriations for surplus reserves (Note 40)
+4,663
+(4,663)
+-Distributions to shareholders (Note 56)
+(56,903)
+(56,903)
+Total transactions with owners, recorded directly in shareholders' equity
+(1,175)
+(3,004)
+4,663
+(61,566)
+(61,082)
+5. Net increase in specific reserve for the year
+87
+84
+The accompanying notes form part of these financial statements.
+Yu Baocai
+President
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3.
+Shareholders' decrease of capital:
+- Purchase of own shares (Note 36)
+4. Appropriations of profits:
+- Appropriations for surplus reserves (Note 40)
+- Distributions to shareholders (Note 56)
+2.501
+2,501
+(2,513)
+2,501
+(1,912)
+589
+60,463
+62,964
+7,671
+70.635
+(2,513)
+(142)
+(2,655)
+(547)
+2. Other comprehensive income (Note 38)
+(1,778)
+70,046
+60,463
+Balance at 31 December 2022
+119,896
+118.875
+3,072
+2,813
+218,009
+325,806
+788,471
+151,986
+940,457
+Balance at 1 January 2023
+119,896
+118,875
+3,072
+2,813
+218,009
+325,806
+788,471
+151.986
+940,457
+Change for the year
+1. Net profit
+60,463
+9,583
+5. Contributions to subsidiaries from non-controlling interests
+6.
+Transaction with non-controlling interests
+(43,085)
+(6,577)
+(49,662)
+(216)
+(216)
+(32)
+(248)
+220
+220
+(3)
+(47)
+(45)
+(92)
+2,597
+223,134
+340,381
+805,794
+152,861
+958,655
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+Ma Yongsheng
+Chairman
+(Legal representative)
+(45,885)
+5,125
+(8,573)
+(8,573)
+7. Distributions to non-controlling interests
+Total transactions with owners, recorded directly in shareholders' equity
+(547)
+(1,778)
+8. Net increase in specific reserve for the year
+9.
+Other equity movements under the equity method
+220
+10. Others
+Balance at 31 December 2023
+119,349
+(295)
+(44)
+117,273
+(2,325)
+(2,325)
+5,125
+(5,125)
+(40,760)
+(40,760)
+(40,760)
+2,209
+2,209
+(213)
+(213)
+3,060
+Ma Yongsheng
+12,235
+67,082
+CONSOLIDATED CASH FLOW STATEMENT
+For the year ended 31 December 2023
+Notes
+2023
+RMB million
+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
+3,577,814
+11,530
+165,002
+2022
+RMB million
+3,550,138
+12,010
+269,895
+3,754,346
+3,832,043
+(2,919,751)
+(2,914,966)
+Cash paid to and for employees
+Payments of taxes and levies
+Other cash paid relating to operating activities
+Sub-total of cash outflows
+Financial Statements (PRC)
+Net cash flow from operating activities
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2023
+Changes in fair value of other equity instrument investments
+Items that may be reclassified subsequently to profit or loss
+2
+N
+Other comprehensive income that can be converted into profit or loss under the equity method
+Cash flow hedges
+Total other comprehensive income net of tax
+Total comprehensive income
+(63)
+10
+420
+5,726
+359
+5,736
+51,602
+52,373
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+81
+Items that will not be reclassified subsequently to profit or loss
+Cash flows from investing activities:
+(102,171)
+(171,493)
+(172,527)
+(5,918)
+(10,456)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(110)
+(7,881)
+Other cash paid relating to investing activities
+57(f)
+(92,090)
+(33,505)
+Sub-total of cash outflows
+(269,611)
+(224,369)
+Net cash flow used in investing activities
+(155,865)
+(95,010)
+Cash flows from financing activities:
+Cash received from capital contributions
+Including: Cash received from non-controlling shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+57(h)
+1,509
+1,509
+699,410
+3,946
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(107,021)
+129,359
+95,917
+113,746
+(326,774)
+(385,818)
+(239,325)
+(312,819)
+(3,592,871)
+(3,715,774)
+57(a)
+161,475
+116,269
+Cash received from disposal of investments
+1,580
+1,980
+Cash received from returns on investments
+10,886
+13,969
+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
+5,363
+212
+57(d)
+10,041
+Other cash received relating to investing activities
+57(e)
+Sub-total of cash inflows
+103,157
+46,637
+51,243
+46,637
+Notes
+2023
+RMB million
+2022
+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
+44
+41
+1,206,728
+1,302,073
+41
+962,889
+1,052,885
+167,354
+165,940
+1,934
+1,964
+For the year ended 31 December 2023
+24,038
+INCOME STATEMENT
+7,671
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+80
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shou Donghua
+Chief Financial Officer
+(4,287)
+1,610
+329
+5,145
+11,174
+1,651
+6,078
+(1,912)
+2,703
+589
+21,829
+70,635
+98,443
+62,964
+86,208
+12,235
+24,415
+12,201
+11,490
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Less: Income tax expense
+Net profit
+Classification by going concern:
+Net profit from continuing operations
+Net profit from discontinued operations
+Other comprehensive income
+(5,057)
+(6,999)
+1,006
+139
+56,560
+53,131
+710
+1,209
+2,197
+1,992
+55,073
+52,348
+3,830
+5,711
+51,243
+Operating profit
+Asset disposal gains
+Impairment losses
+9
+11,319
+10,459
+19,187
+18,986
+8,027
+8,662
+Exploration expenses, including dry holes
+9,371
+9,087
+Add: Other income
+7,839
+3,946
+5,908
+50
+34,870
+29,221
+Including: Income from investment in associates and joint ventures
+4,552
+4,449
+Gains/(losses) from changes in fair value
+284
+(980)
+Credit impairment (losses)/reversal
+(4)
+Investment income
+86.208
+564,417
+Sub-total of cash inflows
+(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 2023
+83
+Financial Statements (PRC)
+Financial Statements (PRC)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2023
+Balance at 31 December 2021
+Add: Changes in accounting policies (Note 3(27))
+Balance at 1 January 2022
+Change for the year
+1. Net profit
+Total
+shareholders'
+equity
+attributable
+to equity
+Other
+Share
+Capital comprehensive
+Specific
+Surplus
+Chairman
+Retained
+Ma Yongsheng
+64,471
+(289.173)
+(52,391)
+(20,404)
+169,988
+207,045
+226,040
+403,573
+396,028
+610,618
+(99,656)
+(194,735)
+(48,816)
+(65,474)
+(231,193)
+(385,406)
+(379,665)
+(645,615)
+16,363
+(34,997)
+35
+41,243
+23,228
+(335)
+(11,347)
+34,575
+23,228
+(125,474)
+shareholders
+Total
+1,992
+2.114
+334
+2,448
+121,071
+120,188
+(690)
+2.664
+213,346
+320,637
+777.216
+141,273
+918,489
+67,082
+67,082
+9,532
+76,614
+19.126
+19,126
+(15,363)
+19.126
+2.703
+21,829
+122
+Non-
+controlling
+916,041
+775,102
+shareholders'
+capital
+RMB million
+reserve
+RMB million
+income
+RMB million
+reserve
+reserves
+earnings
+of the Company
+interests
+equity
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+121,071
+120,188
+(690)
+2,664
+213,224
+318.645
+140,939
+(178,354)
+(23,481)
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+3,288
+(15,152)
+108,590
+93,438
+These financial statements have been approved for issue by the board of directors on 22 March 2024.
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+82
+Annual Report 2023 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shou Donghua
+Chief Financial Officer
+CASH FLOW STATEMENT
+For the year ended 31 December 2023
+2. Other comprehensive income
+Cash received from sale of goods and rendering of services
+Refund of taxes and levies
+Other cash received relating to operating activities
+Sub-total of cash inflows
+Cash paid for goods and services
+Cash paid to and for employees
+Payments of taxes and levies
+Other cash paid relating to operating activities
+Sub-total of cash outflows
+121,759
+Net cash flow from operating activities
+57(c)
+Add: Cash and cash equivalents at the beginning of the year
+Cash and cash equivalents at the end of the year
+Cash repayments of borrowings
+420
+701,339
+(599,954)
+989
+569,352
+(514,275)
+Cash paid for dividends, profits distribution or interest
+(56,734)
+(71,831)
+Including: Subsidiaries' cash payments for distribution of dividends or profits to non-controlling
+shareholders
+(7,977)
+(5,249)
+Other cash paid relating to financing activities
+57(g)
+Sub-total of cash outflows
+Net cash flow from/(used in) financing activities
+Effects of changes in foreign exchange rate
+Net increase/(decrease) in cash and cash equivalents
+(21,919)
+(678,607)
+(22,945)
+(609,051)
+22,732
+(39,699)
+(21)
+57(b)
+28,321
+93,438
+Cash flows from investing activities:
+(173,711)
+Notes
+73,083
+268,769
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(80,398)
+(82,711)
+(21,595)
+(28,108)
+Net increase/(decrease) in cash and cash equivalents
+Other cash paid relating to investing activities
+Sub-total of cash outflows
+Net cash flow used in 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/(used in) financing activities
+Effects of changes in foreign exchange rate
+Add: Cash and cash equivalents at the beginning of the year
+Cash and cash equivalents at the end of the year
+Sub-total of cash inflows
+233,475
+45,932
+Other cash received relating to investing activities
+2023
+RMB million
+1,328,613
+7,396
+49,015
+1,385,024
+(988,689)
+(52,767)
+2022
+RMB million
+1,455,182
+6,627
+--------
+18,597
+1,480,406
+(1,085,666)
+(52,488)
+(224,935)
+(92,621)
+(72,928)
+(1,307,788)
+Other cash received relating to financing activities
+(1,436,017)
+44,389
+Cash received from disposal of investments
+4,241
+7,174
+Cash received from returns on investments
+21,550
+24,835
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Net cash received from disposal subsidiaries and other business units
+1,360
+26
+3,259
+77,236
+121,071