Annual Report 2012

Chairman’s Statement
CHAIRMAN’S STATEMENT
Mr. Fu Chengyu, Chairman
Dear shareholders,
On behalf of the Board of Directors, I would
like to express my sincerest gratitude for the
ongoing trust and support you have shown the
Company this year.
The world witnessed difficult macroeconomic
conditions in 2012, as well as a complex and
volatile environment in the petroleum and
petrochemical markets. By planning ahead,
the Company was able to respond proactively
to market dynamics, while also strengthening
corporate governance, increasing shareholder
returns and deepening internal reforms. Its
ability to adapt to difficult market conditions
leaves the Company well positioned to build a
leading energy and chemicals enterprise and
achieve positive operating results. In 2012, the
Company’s total revenues and other operating
income increased by 11.2% from the previous
year to RMB 2,786 billion. Profits attributable
to equity shareholders of the Company under
International Financial Reporting Standards
8
Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION
decreased by 12.8% to RMB 63.9 billion, while
net profits attributable to equity shareholders
of the Company, under China Accounting
Standards for Business Enterprises, dropped by
11.4% to RMB 63.5 billion.
As part of the progress in our integrated
business in 2012, the upstream business
successfully overcame a number of challenges
through initiatives that we refer to as the
Five Campaigns. Consequently, our oil and
gas reserves and production increased, and
we achieved significant breakthroughs in the
exploration and production of unconventional oil
and gas. By expanding the scale of our refining
business and improving the quality of our oil
products, we have made major advances in our
competitiveness in this part of the business.
Sinopec’s strong brand, comprehensive
marketing network, and efficient product
distribution system all contributed to steady
growth in the volume of our oil product sales
and the optimization of our sales structure,
creating one-stop shopping for consumers. Our
non-fuel business grew rapidly, allowing us to
better serve our customers. In order to mitigate
the impact from weak demand and declined
price of chemical products, Sinopec combined
its research, production and marketing efforts in
the chemical business, allowing us to optimize
load of utilization for chemicals production and
adjust the product mix, and ultimately improve
the quality of our customer service and promote
continued loyalty. Strong performance in trading
and new technological applications helped
strengthen development of the Company’s
integrated business. The progress we have made
in the business has won recognition and support
from our shareholders and the public. Since the
start of the second half of 2012, Sinopec Corp.’s
share price has outperformed the market and its
peers both domestically and overseas, and, as a
result, shareholder returns and the value of the
Company have increased substantially.
With these positive operational performance and
strong confidence in the future development
of the Company from our executives, we are
more than happy to share these achievements
with our shareholders. Taking into account
the Company’s profitability, shareholder
expectations and the need for future sustainable
development, the Board of Directors proposed
a final cash dividend of RMB 0.20 per share for
2012, which, combined with the interim cash
dividend of RMB 0.10 per share, brings the total
annual cash dividend for 2012 to RMB 0.30 per
share. The Board also proposed to distributed
2 bonus shares from retained earnings plus 1
bonus shares from capital reserve for every 10
existing shares.
Sinopec Corp. enhanced its corporate governance
in 2012 through a number of initiatives. In May
2012, the Board of Directors and the Board of
Supervisors underwent a smooth transition of
its membership and appointed management
team members. The Board of Directors attaches
great importance to the Company’s efforts in
corporate social responsibility and has now
established the Corporate Social Responsibility
Committee. With a focus on shareholder returns,
Sinopec Corp. has amended its Articles of
Association to clarify its dividend policy. We have
also enhanced our communication with investors
by refining our disclosure policies. With strong
support from our Independent Directors and
independent shareholders, the renewal at the
continuing connected transaction and relevant
caps were approved for the period from 2013 to
2015. Meanwhile, Sinopec Corp. also improved
its internal control protocols to make its internal
controls more effective and to increase its
overall capabilities for risk management.