Annual Report 2012

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Financial Statements (International) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 39 PRINCIPAL SUBSIDIARIES At 31 December 2012, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group. Particulars of issued Percentage Name of company capital of equity Principal activities (millions) % China Petrochemical International Company Limited RMB 1,400 100.00 Trading of petrochemical products Sinopec Sales Company Limited RMB 1,700 100.00 Marketing and distribution of refined petroleum products Sinopec Yangzi Petrochemical Company Limited RMB 13,203 100.00 Manufacturing of intermediate petrochemical products and petroleum products Fujian Petrochemical Company Limited (Note) RMB 5,019 50.00 Manufacturing of plastics, intermediate petrochemical products and petroleum products Sinopec Shanghai Petrochemical Company Limited RMB 7,200 55.56 Manufacturing of synthetic fibres, resin and plastics, intermediate petrochemical products and petroleum products Sinopec Kantons Holdings Limited HKD 207 72.34 Trading of crude oil and petroleum products Sinopec Yizheng Chemical Fibre Company Limited (Note) RMB 4,000 42.00 Production and sale of polyester chips and polyester fibres Sinopec Zhongyuan Petrochemical Company Limited RMB 2,400 93.51 Manufacturing of petrochemical products Sinopec Shell (Jiangsu) Petroleum Marketing Company Limited RMB 830 60.00 Marketing and distribution of refined petroleum products BP Sinopec (Zhejiang) Petroleum Company Limited RMB 800 60.00 Marketing and distribution of refined petroleum products Sinopec Qingdao Refining and Chemical Company Limited RMB 5,000 85.00 Manufacturing of intermediate petrochemical products and petroleum products China International United Petroleum and Chemical Company Limited RMB 3,000 100.00 Trading of crude oil and petrochemical products Sinopec Hainan Refining and Chemical Company Limited RMB 3,986 75.00 Manufacturing of intermediate petrochemical products and petroleum products Sinopec (Hong Kong) Limited HKD 5,477 100.00 Trading of crude oil and petrochemical products Sinopec Senmei (Fujian) Petroleum Limited RMB 1,840 55.00 Marketing and distribution of refined petroleum products Sinopec Qingdao Petrochemical Company Limited RMB 1,595 100.00 Manufacturing of intermediate petrochemical products and petroleum products Sinopec Chemical Sales Company Limited RMB 1,000 100.00 Marketing and distribution of petrochemical products Sinopec International Petroleum Exploration and Production Limited RMB 8,000 100.00 Investment in exploration, production and sales of petroleum and natural gas Sinopec Fuel Oil Sales Company Limited RMB 2,200 100.00 Marketing and distribution of refined petroleum products Except for Sinopec Kantons Holdings Limited and Sinopec (Hong Kong) Limited, which are incorporated in Bermuda and Hong Kong respectively, all of the above principal subsidiaries are incorporated in the PRC. All of the above principal subsidiaries are limited companies. Note: The Company consolidated the financial statements of the entity because it controlled the board of this entity and had the power to govern its financial and operating policies. 184 Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES Overview Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, investments, trade accounts receivable, bills receivable, amounts due from Sinopec Group Company and fellow subsidiaries, advances to third parties, amounts due from associates and jointly controlled entities, derivative financial instruments and other receivables. Financial liabilities of the Group include short-term and long-term debts, loans from Sinopec Group Company and fellow subsidiaries, trade accounts payable, bills payable, amounts due to Sinopec Group Company and fellow subsidiaries, derivative financial instruments and advances from third parties. 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 controls 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 institutions in the PRC with acceptable credit ratings. The majority of the Group’s trade accounts receivable relate to sales of petroleum and chemical products to related parties and third parties operating in the petroleum and chemical industries. Management performs ongoing credit evaluations of the Group’s customers’ financial condition and generally does not require collateral on trade 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 trade accounts receivable. The details of the Group’s credit policy and quantitative disclosures in respect of the Group’s exposure on credit risk for trade receivables are set out in Note 25. The carrying amounts of cash and cash equivalents, 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 will not be able to meet its financial obligations as they fall due. The Group’s approach in 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 conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Management prepares monthly cash flow budget to ensure that the Group will always have sufficient liquidity to meet its financial obligations 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 Group’s liquidity risk. As at 31 December 2012, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB 197,696 million (2011: RMB 170,500 million) on an unsecured basis, at a weighted average interest rate of 2.20% (2011: 3.63%) per annum. As 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 short-term debts. 185 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 135 and 136: NOTES TO THE FINANCIAL STATEMENTS (
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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Page 193 and 194: (C) DIFFERENCES BETWEEN FINANCIAL S
Page 195 and 196: (D) SUPPLEMENTAL INFORMATION ON OIL
Page 198 and 199: Corporate Information CORPORATE INF
Page 200: Confirmation from fhe Directors and
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Annual Report 2012

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