Annual Report 2012

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Financial Statements (PRC) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 37 FINANCIAL EXPENSES 114 Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Interest expenses incurred 12,069 9,398 10,922 8,788 Less: Capitalised interest expenses 1,708 898 1,461 813 Net interest expenses 10,361 8,500 9,461 7,975 Accretion expenses (Note 30) 856 741 798 690 Interest income (1,254) (1,584) (1,188) (1,603) Net foreign exchange gain (144) (1,113) (71) (440) Total 9,819 6,544 9,000 6,622 The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2012 by the Group and the Company ranged from 2.6% to 6.2% (2011: 3.1% to 6.9%). 38 EXPLORATION EXPENSES Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs. 39 IMPAIRMENT LOSSES The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Receivables (181) (134) (176) (234) Inventories 7,041 3,142 6,134 2,507 Long-term equity investments — 2 — 2 Fixed assets 1,014 2,781 1,014 2,749 Construction in progress — 28 — 28 Others 32 (8) 30 (7) Total 7,906 5,811 7,002 5,045 40 GAIN FROM CHANGES IN FAIR VALUE The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Changes in fair value of financial assets and liabilities held for trading 246 146 152 69 Fair value (loss)/gain on the embedded derivative component of the convertible bonds (Note 29(iii) and (v)) (62) 1,259 (62) 1,259 Others 22 18 — — Total 206 1,423 90 1,328 41 INVESTMENT INCOME The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Income from investment accounted for under cost method 85 123 14,611 16,015 Income from investment accounted for under equity method 1,626 4,152 1,582 2,881 Investment income from disposal of long-term equity investments 95 5 297 2 Investment income from holding/disposal of available-for-sale financial assets 9 11 — — Investment loss from disposal of financial assets and liabilities held for trading (314) (261) — — (Loss)/gain from ineffective portion of cash flow hedge (4) 142 — — Others 43 14 336 312 Total 1,540 4,186 16,826 19,210
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 42 NON-OPERATING INCOME The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Gain on disposal of non-current assets 931 1,412 889 1,361 Government grants 2,814 1,400 2,414 1,243 Others 828 599 642 425 Total 4,573 3,411 3,945 3,029 43 NON-OPERATING EXPENSES The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Loss on disposal of non-current assets 798 658 679 491 Fines, penalties and compensation 181 236 176 231 Donations 231 90 226 86 Others 1,182 755 1,117 738 Total 2,392 1,739 2,198 1,546 44 INCOME TAX EXPENSE The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Provision for income tax for the year 23,950 22,731 13,049 12,147 Deferred taxation (826) 2,676 1,313 983 Under-provision for income tax in respect of preceding year 572 367 718 285 Total 23,696 25,774 15,080 13,415 Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows: The Group The Company 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Profit before taxation 90,107 102,638 78,480 78,936 Expected income tax expense at a tax rate of 25% 22,527 25,660 19,620 19,734 Tax effect of non-deductible expenses 536 542 400 447 Tax effect of non-taxable income (679) (1,542) (3,813) (5,272) Tax effect of preferential tax rate (Note) (2,085) (1,817) (1,857) (1,779) Effect of income taxes from foreign operations in excess of taxes at the PRC statutory tax rate (Note) 1,911 1,587 — — Tax effect of utilisation of previously unrecognised tax losses and temporary differences (241) (394) — — Tax effect of unrecognised temporary differences 12 104 12 — Tax effect of tax losses not recognised 963 734 — — Write-down of deferred tax assets 180 533 — — Adjustment for under-provision for income tax in respect of preceding year 572 367 718 285 Actual income tax expense 23,696 25,774 15,080 13,415 Note: 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 the PRC that are taxed at preferential rates, and the foreign operation in the Republic of Angola (“Angola”) that is taxed at 50% of the assessable income as determined in accordance with the relevant income tax rules and regulations of Angola. 115 CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2012 Financial Statements (PRC)
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CONTENTS 2 Company Profile 3 Princi
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PRINCIPAL FINANCIAL DATA AND INDICA
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2 FINANCIAL INFORMATION EXTRACTED F
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(2) Information disclosed by the sh
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Sinopec Corp.’s development accel
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Business Review and Prospects BUSIN
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MANAGEMENT’S DISCUSSION AND ANALY
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The following table shows the opera
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In 2012, refining margin was RMB 15
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As at 31 December 2012, the Company
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(2) Financial data prepared under A
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(2) THE PROPOSED ISSUANCE OF A SHAR
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Significant Events SIGNIFICANT EVEN
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CONNECTED TRANSACTIONS 1 AGREEMENTS
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Decision-making procedures: The maj
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Corporate Governance CORPORATE GOVE
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REPORT OF THE BOARD OF DIRECTORS Th
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6 DIVIDEND During this report perio
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16 RISK FACTORS In the course of it
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Firstly, the Board of Directors dil
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DIRECTORS, SUPERVISORS, SENIOR MANA
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Li Chunguang Dai Houliang Liu Yun L
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The Members of the Fourth Session o
Page 65 and 66: Zou Huiping Zou Huiping, aged 52, S
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Page 69 and 70: Lei Dianwu Ling Yiqun Lei Dianwu, a
Page 71 and 72: THE BREAKDOWN ACCORDING TO THE MEMB
Page 73 and 74: REPORT OF THE PRC AUDITOR All Share
Page 75 and 76: BALANCE SHEET as at 31 December 201
Page 77 and 78: INCOME STATEMENT for the year ended
Page 79 and 80: CASH FLOW STATEMENT for the year en
Page 81 and 82: STATEMENT OF CHANGES IN EQUITY for
Page 83 and 84: NOTES TO THE FINANCIAL STATEMENTS (
Page 115: NOTES TO THE FINANCIAL STATEMENTS (
Page 137 and 138: (B) FINANCIAL STATEMENTS PREPARED U
Page 139 and 140: CONSOLIDATED BALANCE SHEET as at 31
Page 141 and 142: CONSOLIDATED STATEMENT OF CHANGES I
Page 143 and 144: CONSOLIDATED STATEMENT OF CASH FLOW
Page 145 and 146: NOTES TO THE FINANCIAL STATEMENTS f
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NOTES TO THE FINANCIAL STATEMENTS (
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NOTES TO THE FINANCIAL STATEMENTS f
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(C) DIFFERENCES BETWEEN FINANCIAL S
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(D) SUPPLEMENTAL INFORMATION ON OIL
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Corporate Information CORPORATE INF
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Confirmation from fhe Directors and
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Annual Report 2012

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