Annual Report 2012

Financial Statements (PRC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended 31 December 2012
14 INTANGIBLE ASSETS (Continued)
The Company
104
Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION
Land use Non-patent Operation
rights Patents technology rights Others Total
RMB millions RMB millions RMB millions RMB millions RMB millions RMB millions
Cost:
Balance at 1 January 2012 22,578 2,845 2,503 5,986 1,449 35,361
Additions for the year 12,855 38 150 5,542 265 18,850
Transferred to subsidiaries (73) — — — — (73)
Other decreases for the year (25) (4) (32) (2) (8) (71)
Balance at 31 December 2012 35,335 2,879 2,621 11,526 1,706 54,067
Accumulated amortisation:
Balance at 1 January 2012 1,940 2,202 953 663 753 6,511
Additions for the year 2,683 133 266 647 188 3,917
Transferred to subsidiaries (3) — — — — (3)
Other decreases for the year (1) (4) (32) — (8) (45)
Balance at 31 December 2012 4,619 2,331 1,187 1,310 933 10,380
Provision for impairment losses:
Balance at 1 January 2012 48 304 24 — 16 392
Additions for the year 145 — — 37 — 182
Decreases for the year (1) — — — — (1)
Balance at 31 December 2012 192 304 24 37 16 573
Net book value:
Balance at 31 December 2012 30,524 244 1,410 10,179 757 43,114
Balance at 31 December 2011 20,590 339 1,526 5,323 680 28,458
Amortisation of the intangible assets of the Company charged for the year ended 31 December 2012 is RMB 1,904 million (2011: RMB 1,220
million).
15 GOODWILL
Goodwill is allocated to the following Group’s cash-generating units:
2012 2011
RMB millions RMB millions
Sinopec Beijing Yanshan Branch (“Sinopec Yanshan”) 1,157 1,157
Sinopec Zhenhai Refining and Chemical Branch (“Sinopec Zhenhai”) 4,043 4,043
Sinopec (Hong Kong) Limited 853 853
Multiple units without individual significant goodwill 204 2,159
6,257 8,212
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 11.5% to 12.5% (2011: 12.0%
to 12.7%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no impairment loss was
recognised. However, as key assumptions on which management has made in respect of future cash projections are subject to change, management
believes that any adverse change in the assumptions would cause the carrying amount to exceed its recoverable amount.
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.
During the year ended 31 December 2012, the Group adjusted the carrying amounts of certain identifiable assets acquired in prior periods and
corresponding goodwill, that are insignificant to the Group, has been adjusted accordingly.
16 LONG-TERM DEFERRED EXPENSES
Long-term deferred expenses primarily represent prepaid rental expenses over one year and catalysts expenditures.
17 DEFERRED TAX ASSETS AND LIABILITIES