Annual Report 2012

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Financial Statements (International) NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2012 (Amounts in millions) (a) Reconciliation of profit before taxation to net cash generated from operating activities 142 Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION 2012 2011 RMB RMB Operating activities Profit before taxation 90,642 104,565 Adjustments for: Depreciation, depletion and amortisation 70,456 63,816 Dry hole costs written off 7,988 5,979 Share of profits less losses from associates and jointly controlled entities (1,626) (4,152) Investment income (235) (168) Interest income (1,254) (1,584) Interest expense 11,217 9,241 Unrealised gain on foreign currency exchange rate changes and derivative financial instruments (190) (1,679) Gain on disposal of property, plant and equipment, net (16) (754) Impairment losses on long-lived assets 1,014 2,809 Unrealised loss/(gain) on embedded derivative component of the convertible bonds 62 (1,259) 178,058 176,814 Increase in trade accounts receivable (22,674) (15,628) Decrease/(increase) in bills receivable 7,916 (12,011) Increase in inventories (14,845) (46,871) Increase in prepaid expenses and other current assets (8,245) (3,189) Increase in lease prepayments (10,139) (5,776) Decrease in long-term prepayments and other assets 7,549 5,815 Increase in trade accounts payable 38,626 44,474 Increase in bills payable 723 2,115 (Decrease)/increase in accrued expenses and other payables (12,040) 33,809 Increase in other non-current liabilities 129 868 165,058 180,420 Income tax paid (22,678) (29,798) Net cash generated from operating activities 142,380 150,622 The notes on pages 143 to 190 form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2012 1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION Principal activities 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. 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 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. Basis of preparation The accompanying financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”). IFRS includes International Accounting Standards (“IAS”) and related interpretations. These 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 and the Company are set out in Note 2. The IASB has issued certain new and revised IFRS that are first effective for the current accounting period of the Group. There have been no significant changes to the accounting policy applied in these financial statements for the periods presented as a result of these developments. The Group has not adopted any new standard or interpretation that is not yet effective for the current accounting period (Note 42). The accompanying 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(l) and (m)) and derivative component of the convertible bonds (Note 2(q)) to their fair values. The preparation of the 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 year. 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 financial statements and the major sources of estimation uncertainty are disclosed in Note 41. Certain comparative figures have been reclassified to conform with presentation adopted in the financial statements. 143 CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2012 Financial Statements (International)
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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
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CASH FLOW STATEMENT for the year en
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STATEMENT OF CHANGES IN EQUITY for
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NOTES TO THE FINANCIAL STATEMENTS (
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Page 93 and 94: NOTES TO THE FINANCIAL STATEMENTS (
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Page 139 and 140: CONSOLIDATED BALANCE SHEET as at 31
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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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