Annual Report 2012

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Financial Statements (PRC) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 54 FINANCIAL INSTRUMENTS Overview Financial assets of the Group include cash at bank, equity investments, accounts receivable, bills receivable, prepayments, financial assets held for trading, derivative financial instruments and other receivables. Financial liabilities of the Group include short-term and long-term loans, accounts payable, bills payable, advances from customers, debentures payable, derivative financial instruments and other payables. The Group has exposure to the following risks from its use of financial instruments: • credit risk; • liquidity risk; • market risk; and • equity price 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, to 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 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. 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. No single customer accounted for greater than 10% of total accounts receivable. The carrying amounts of cash at bank, 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. Liquidity risk Liquidity risk is the risk that the Group encounters short fall of capital when meeting its obligation of financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed capital conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group prepares monthly cash flow budget to ensure that they will always have sufficient liquidity to meet its financial 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. At 31 December 2012, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB 197,700 million (2011: RMB 170,500 million) on an unsecured basis, at a weighted average interest rate of 2.20% (2011: 3.63%). At 31 December 2012, the Group’s outstanding borrowings under these facilities were RMB 12,815 million (2011: RMB 13,767 million) and were included in shortterm bank loans. 128 Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 54 FINANCIAL INSTRUMENTS (Continued) The following table sets out the remaining contractual maturities at the balance sheet date of the Group’s and the Company’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 and the Company would be required to repay: The Group At 31 December 2012 Total contractual Within 1 More than 1 More than 2 Carrying undiscounted year or on year but less years but less More than amount cash flow demand than 2 years than 5 years 5 years RMB RMB RMB RMB RMB RMB millions millions millions millions millions millions Short-term loans 70,228 70,555 70,555 — — — Non-current liabilities due within one year 15,754 16,444 16,444 — — — Short-term debentures payable 30,000 30,441 30,441 — — — Long-term loans 40,267 40,950 223 1,699 2,628 36,400 Debentures payable 121,849 139,232 3,135 45,661 72,040 18,396 Bills payable 6,656 6,656 6,656 — — — Accounts payable 215,628 215,628 215,628 — — — Other payables and employee benefits payable 63,559 63,559 63,559 — — — Total 563,941 583,465 406,641 47,360 74,668 54,796 At 31 December 2011 Total contractual Within 1 More than 1 More than 2 Carrying undiscounted year or on year but less years but less More than amount cash flow demand than 2 years than 5 years 5 years RMB RMB RMB RMB RMB RMB millions millions millions millions millions millions Short-term loans 36,985 37,727 37,727 — — — Non-current liabilities due within one year 43,388 44,254 44,254 — — — Long-term loans 54,320 60,500 5,455 15,963 2,500 36,582 Debentures payable 100,137 109,129 2,152 2,208 57,316 47,453 Bills payable 5,933 5,933 5,933 — — — Accounts payable 177,002 177,002 177,002 — — — Other payables and employee benefits payable 53,655 53,655 53,655 — — — Total 471,420 488,200 326,178 18,171 59,816 84,035 The Company At 31 December 2012 Total contractual Within 1 More than 1 More than 2 Carrying undiscounted year or on year but less years but less More than amount cash flow demand than 2 years than 5 years 5 years RMB RMB RMB RMB RMB RMB millions millions millions millions millions millions Short-term loans 1,692 1,716 1,716 — — — Non-current liabilities due within one year 15,644 16,332 16,332 — — — Short-term debentures payable 30,000 30,441 30,441 — — — Long-term loans 38,560 38,905 132 1,530 843 36,400 Debentures payable 121,849 139,232 3,135 45,661 72,040 18,396 Bills payable 4,000 4,000 4,000 — — — Accounts payable 121,184 121,184 121,184 — — — Other payables and employee benefits payable 119,626 119,626 119,626 — — — Total 452,555 471,436 296,566 47,191 72,883 54,796 At 31 December 2011 Total contractual Within 1 More than 1 More than 2 Carrying undiscounted year or on year but less years but less More than amount cash flow demand than 2 years than 5 years 5 years RMB RMB RMB RMB RMB RMB millions millions millions millions millions millions Short-term loans 3,842 3,943 3,943 — — — Non-current liabilities due within one year 43,281 44,146 44,146 — — — Long-term loans 53,783 59,803 5,330 15,794 2,112 36,567 Debentures payable 100,137 109,129 2,152 2,208 57,316 47,453 Bills payable 3,052 3,052 3,052 — — — Accounts payable 128,138 128,138 128,138 — — — Other payables and employee benefits payable 70,066 70,066 70,066 — — — Total 402,299 418,277 256,827 18,002 59,428 84,020 129 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
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Zou Huiping Zou Huiping, aged 52, S
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The Members of the Fourth Session o
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Lei Dianwu Ling Yiqun Lei Dianwu, a
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THE BREAKDOWN ACCORDING TO THE MEMB
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REPORT OF THE PRC AUDITOR All Share
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BALANCE SHEET as at 31 December 201
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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 (
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Page 137 and 138: (B) FINANCIAL STATEMENTS PREPARED U
Page 139 and 140: CONSOLIDATED BALANCE SHEET as at 31
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Page 143 and 144: CONSOLIDATED STATEMENT OF CASH FLOW
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NOTES TO THE FINANCIAL STATEMENTS (
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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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