REG - China Pet &Chem Corp - Annual Financial Report-1
28/03/2022 07:01
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RNS Number : 1488G China Petroleum & Chemical Corp 28 March 2022
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibilities for the contents of this announcement, make
no representation as to its accuracy or completeness and expressly disclaim
any liability whatsoever for any loss howsoever arising from or in reliance
upon the whole or any part of the contents of this announcement.
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00386)
Annual Results for the Year Ended 31 December 2021
The board of directors (the "Board") of China Petroleum & Chemical
Corporation ("Sinopec Corp." or the "Company") hereby announces the audited
results of Sinopec Corp. and its subsidiaries for the year ended 31 December
2021. This announcement, containing the full text of the 2021 Annual Report of
Sinopec Corp., complies with the relevant requirements of the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited in
relation to information to accompany preliminary announcement of annual
results. The full text of the 2021 Annual Report of Sinopec Corp. is published
on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk)
and of Sinopec Corp. (www.sinopec.com/listco/). Printed version of the 2021
Annual Report of Sinopec Corp. will be delivered to the shareholders of H
shares of Sinopec Corp. in April 2022.
Publication of Results Announcement
Both the Chinese and English versions of this results announcement are
available on the websites of Sinopec Corp. (www.sinopec.com/listco/) and The
Stock Exchange of Hong Kong Limited (www.hkex.com.hk). In the event of any
discrepancies in interpretations between the English version and Chinese
version, the Chinese version shall prevail.
By Order of the Board
China Petroleum & Chemical Corporation
Huang Wensheng
Vice President and Secretary to the Board of Directors
Beijing, the PRC,
25 March 2022
As of the date of this announcement, directors of the Company are: Ma
Yongsheng(*), Zhao Dong(*), Yu Baocai(#),
Ling Yiqun(#), Li Yonglin(#), Liu Hongbin(#), Cai Hongbin(+), Ng, Kar Ling
Johnny(+), Shi Dan(+) and Bi Mingjian(+).
# Executive Director
* Non-executive Director
+ Independent Non-executive Director
CONTENTS
2 Company Profile
3 Principal Financial Data and Indicators
7 Chairman's Address
10 Business Review and Prospects
17 Management's Discussion and Analysis
28 Corporate Governance
47 Environment and Social Responsibilities
48 Significant Events
55 Connected Transactions
57 Report of the Board of Directors
65 Report of the Board of Supervisors
67 Changes in Share Capital and Shareholdings
of Principal Shareholders
69 Bond General Information
72 Principal Wholly-owned and
Controlled Subsidiaries
73 Financial Statements
211 Corporate Information
212 Documents for Inspection
This annual report includes forward-looking statements. All statements, other
than statements of historical facts, that address activities, events or
developments that the Company expects or anticipates will or may occur in the
future (including but not limited to projections, targets, reserve and other
estimates and business plans) are forward-looking statements. The Company's
actual results or developments may differ materially from those indicated by
these forward-looking statements as a result of various factors and
uncertainties. The Company makes the forward-looking statements referred to
herein as at 25 March 2022 and unless required by regulatory authorities, the
Company undertakes no obligation to update these statements.
COMPANY PROFILE
IMPORTANT NOTICE: THE BOARD OF DIRECTORS, THE BOARD OF SUPERVISORS, DIRECTORS,
SUPERVISORS AND SENIOR MANAGEMENT OF SINOPEC CORP. WARRANT THAT THERE ARE NO
FALSE REPRESENTATIONS, MISLEADING STATEMENTS OR MATERIAL OMISSIONS IN THIS
ANNUAL REPORT, AND JOINTLY AND SEVERALLY ACCEPT FULL RESPONSIBILITY FOR THE
AUTHENTICITY, ACCURACY AND COMPLETENESS OF THE INFORMATION CONTAINED IN THIS
ANNUAL REPORT. THERE IS NO OCCUPANCY OF NON-OPERATING FUNDS BY THE CONTROLLING
SHAREHOLDERS OF SINOPEC CORP.
ALL DIRECTORS ATTENDED THE 7TH MEETING OF THE EIGHTH SESSION OF THE BOARD. MR.
MA YONGSHENG, CHAIRMAN OF THE BOARD, MR. YU BAOCAI, PRESIDENT, MS. SHOU
DONGHUA, CHIEF FINANCIAL OFFICER AND HEAD OF THE FINACIAL DEPARTMENT OF
SINOPEC CORP. WARRANT THE AUTHENTICITY AND COMPLETENESS OF THE FINANCIAL
STATEMENTS CONTAINED IN THIS ANNUAL REPORT. THE AUDIT COMMITTEE OF SINOPEC
CORP. HAS REVIEWED THE ANNUAL REPORT OF SINOPEC CORP. FOR THE YEAR ENDED 31
DECEMBER 2021.
THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 OF THE COMPANY
PREPARED IN ACCORDANCE WITH THE PRC ACCOUNTING STANDARDS FOR BUSINESS
ENTERPRISES (CASs) AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) HAVE
BEEN AUDITED BY KPMG HUAZHEN LLP AND KPMG RESPECTIVELY. BOTH FIRMS HAVE ISSUED
STANDARD UNQUALIFIED AUDITOR'S REPORT.
AS APPROVED AT THE 7TH MEETING OF THE EIGHTH SESSION OF THE BOARD OF DIRECTORS
OF SINOPEC CORP., THE BOARD PROPOSED A FINAL CASH DIVIDEND OF RMB0.31 (TAX
INCLUSIVE) PER SHARE FOR 2021, COMBINING WITH THE INTERIM DIVIDEND OF RMB0.16
(TAX INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2021WILL BE RMB0.47
(TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS SUBJECT TO THE
SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2021.
COMPANY PROFILE
Sinopec H shares were listed in Hong Kong, New York and London exchanges on
October 18 and 19, 2000, respectively, and A shares were listed in the
Shanghai Stock Exchange on August 8, 2001.Sinopec Corp. is one of the largest
integrated energy and chemical companies in China. Its principal operations
include the exploration and production, pipeline transportation and sale of
petroleum and natural gas; the production, sale, storage and transportation of
refinery products, petrochemical products, coal chemical products, synthetic
fibre, and other chemical products; the import and export, including an import
and export agency business, of petroleum, natural gas, petroleum products,
petrochemical and chemical products, and other commodities and technologies;
and research, development and application of technologies and information;
hydrogen energy business and related services such as hydrogen production,
storage, transportation and sales; battery charging and swaping, solar energy,
wind energy and other new energy business and related services。
DEFINITIONS:
In this report, unless the context otherwise requires, the following terms
shall have the meaning as set out below:
Sinopec Corp.: China Petroleum & Chemical Corporation
Company: Sinopec Corp. and its subsidiaries
China Petrochemical Corporation: The controlling shareholder of Sinopec Corp.,
China Petrochemical Corporation
Sinopec Group: China Petrochemical Corporation and its subsidiaries
NDRC: China National Development and Reform Commission
RMC: Oil and Natural Gas Reserves Management Committee of the Company
Sinopec Finance Co.: Sinopec Finance Co., Ltd.
Century Bright: Sinopec Century Bright Capital Investment, Ltd.
CSRC: China Securities Regulatory Commission.
Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
Hong Kong Listing Rules: Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited
CONVERSION:
For domestic production of crude oil, 1 tonne = 7.1 barrels;
For overseas production of crude oil: 1 tonne = 7.22 barrels in 2021, 1 tonne
= 7.20 barrels in 2020, 1 tonne = 7.21 barrels in 2019;
For production of natural gas, 1 cubic meter = 35.31 cubic feet;
Refinery throughput is converted at 1 tonne = 7.35 barrels.
PRINCIPAL FINANCIAL DATA AND INDICATORS
1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASs
(1) Principal financial data
For the year ended 31 December
2021 2020 2020 Change 2019 2019
After Before After Before
adjustment adjustment adjustment adjustment
Items RMB million RMB million RMB million (%) RMB million RMB million
Operating income 2,740,884 2,104,724 2,105,984 30.2 2,957,868 2,959,799
Operating profit 112,414 50,803 50,331 121.3 90,273 90,134
Profit before taxation 108,348 48,441 47,969 123.7 90,250 90,111
Net profit attributable to equity shareholders of the Company 71,208 33,271 32,924 114.0 57,643 57,619
Net profit/(loss) attributable to equity shareholders of the Company excluding 72,220 (1,565) (1,565) - 54,280 54,280
extraordinary gains and losses
Net cash flow from operating activities 225,174 168,520 167,518 33.6 154,380 153,619
2021
First Second Third Fourth Total
Quarter Quarter Quarter Quarter
RMB million RMB million RMB million RMB million RMB million
Operating income 576,559 684,214 740,918 739,193 2,740,884
Net profit attributable to equity shareholders of the Company 18,160 21,266 20,603 11,179 71,208
Net profit attributable to equity shareholders of the Company 17,674 20,746 20,300 13,500 72,220
excluding extraordinary gains and losses
Net cash flow from operating activities (15,188) 63,535 68,397 108,430 225,174
For the year ended 31 December
2021 2020 2020 Change 2019 2019
After Before After Before
adjustment adjustment adjustment adjustment
Items RMB million RMB million RMB million (%) RMB million RMB million
Total assets 1,889,255 1,738,896 1,733,805 8.6 1,765,702 1,760,286
Total liabilities 973,214 850,176 849,929 14.5 882,554 881,912
Total equity attributable to equity shareholders of the Company 775,102 747,294 742,463 3.7 744,738 739,965
Total number of shares (1,000 shares) 121,071,210 121,071,210 121,071,210 - 121,071,210 121,071,210
(2) Principal financial indicators
For the year ended 31 December
2021 2020 2020 Change 2019 2019
After Before After Before
adjustment adjustment adjustment adjustment
Items RMB Yuan RMB Yuan RMB Yuan (%) RMB Yuan RMB Yuan
Basic earnings per share 0.588 0.275 0.272 113.8 0.476 0.476
Diluted earnings per share 0.588 0.275 0.272 113.8 0.476 0.476
Basic earnings per share (excluding extraordinary gains and losses) 0.597 (0.013) (0.013) - 0.448 0.448
Weighted average return on net assets (%) 9.35 4.46 4.44 4.89 7.85 7.90
percentage
points
Weighted average return (excluding extraordinary gains and losses) 9.49 (0.21) (0.21) 9.70 7.39 7.44
on net assets (%) percentage
points
Net cash flow from operating activities per share 1.860 1.392 1.384 33.6 1.275 1.269
For the year ended 31 December
2021 2020 2020 Change 2019 2019
After Before After Before
adjustment adjustment adjustment adjustment
Items RMB Yuan RMB Yuan RMB Yuan (%) RMB Yuan RMB Yuan
Net assets attributable to equity shareholders of the Company per share 6.402 6.172 6.132 3.7 6.151 6.112
Liabilities to assets ratio (%) 51.51 48.89 49.02 2.62 49.98 50.10
percentage
points
(3) Extraordinary items and corresponding amounts
For the year ended 31 December
(Income)/expenses
2021 2020 2019
Items RMB million RMB million RMB million
Net (gain)/loss on disposal of non-current assets (665) (973) 1,318
Donations 165 301 209
Government grants (3,085) (8,605) (6,857)
Gain on holding and disposal of various investments (259) (37,520) (410)
Other non-operating expenses, net 4,720 2,992 634
Net (loss)/profit acquired through business combination under common control 101 (472) (139)
during the reporting period
Subtotal 977 (44,277) (5,245)
Tax effect (72) 6,736 1,757
Total 905 (37,541) (3,488)
Attributable to: Equity shareholders of the Company 1,012 (34,836) (3,363)
Minority interests (107) (2,705) (125)
(4) Items measured by fair values
Unit: RMB million
Influence
Beginning End on the profit
Items of the year of the year Changes of the year
Other equity instruments 1,525 767 (758) -
Derivative financial instruments 157 1,350 1,193 (14,873)
Cash flow hedging 7,545 13,798 6,253 10,690
Financial assets held for trading 1 - (1) 99
Receivables financing 8,735 5,939 (2,796) -
Total 17,963 21,854 3,891 (4,084)
(5) Significant changes of items in the financial statements
The table below sets forth reasons for those changes where the fluctuation was
more than 30% during the reporting period:
As of 31 December Increase/(decrease)
2021 2020 Amount Percentage
Items RMB million RMB million RMB million (%) Reasons for change
Operating income 2,740,884 2,104,724 636,160 30.2 A result of sharp increase in the price and sales volume of refining
products
Operating costs 2,216,551 1,685,674 530,877 31.5 Increase in procurement cost of raw materials due to the rising prices
of commodities including crude oil
Investment income 6,032 47,486 (41,454) (87.3) Lump-sum income from the restruction of PipeChina was recognised in
2020
Gains/(Losses) from changes in fair value 3,341 (1,253) 4,594 - Impact of changes in variable gains and losses on hedged derivatives
Impairment losses (13,165) (26,087) 12,922 (49.5) Decrease in allowance for diminution in value of inventories
Operating profit 112,414 50,803 61,611 121.3 Increase in demand and gross margins of main products
Profit before taxation 108,348 48,441 59,907 123.7 Expansion of operation and increase in the level of gross profit
Income tax expense 23,318 6,344 16,974 267.6 Increase in profit for the year
Net profit 85,030 42,097 42,933 102.0 Increase in operating profit
Cash flow hedges 19,018 7,073 11,945 168.9 Increase in effective portion of cash flow hedges
Derivative financial assets 18,371 12,528 5,843 46.6
Unrealised profit increased from crude oil hedging
Derivative financial liabilities 3,223 4,826 (1,603) (33.2)
Receivables financing 5,939 8,735 (2,796) (32.0) Improvement in fund efficiency and increase of bills turnover
Inventories 207,433 152,191 55,242 36.3 Increase in the prices of crude oil, refined oil products and the
cost of inventory
Short-term loans 27,366 20,756 6,610 31.8 Increase in loan of holding subsidiaries.
Accounts payable 203,919 151,514 52,405 34.6 Increase in procurement cost due to increase in the price of crude
oil and refined oil
Other payables 114,701 85,012 29,689 34.9 Increase in derivative commodity margins
Net cash flow from operating activities 225,174 168,520 56,654 33.6 Increase in cash income from net profit due to higher gross profit
Net cash received from disposal of subsidiaries and other business entities 5,205 49,869 (44,664) (89.6) Mainly due to the cash consideration received from the restruction of
PipeChina in 2020
Net cash flow from investing activities (145,198) (102,650) (42,548) 41.4 Mainly because of the cash consideration received from the
restruction of PipeChina in 2020
Net cash flow from financing activities (57,942) (37,510) (20,432) 54.5 Increase in actual cash dividend paid for 2021
2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED
IN ACCORDANCE WITH IFRS
Unit: RMB million
For the year ended 31 December
Items 2021 2020 2019 2018 2017
Revenue 2,740,884 2,104,724 2,957,868 2,879,192 2,347,726
Operating profit 94,628 13,669 86,516 82,884 72,396
Profit before taxation 109,169 48,615 90,161 99,658 87,544
Profit attributable to shareholders of the Company 71,975 33,443 57,517 61,920 51,821
Basic earnings per share (RMB) 0.594 0.276 0.475 0.511 0.428
Diluted earnings per share (RMB) 0.594 0.276 0.475 0.511 0.428
Return on capital employed (%) 11.29 6.22 8.94 9.21 8.27
Return on net assets (%) 9.30 4.48 7.73 8.57 7.08
Net cash generated from operating activities per share (RMB) 1.860 1.392 1.275 1.455 1.579
Unit: RMB million
As of 31 December
Items 2021 2020 2019 2018 2017
Non-current assets 1,331,231 1,283,236 1,318,258 1,097,045 1,074,985
Net current liabilities 83,256 67,335 133,166 63,514 52,466
Non-current liabilities 332,901 328,199 303,014 170,803 163,387
Non-controlling interests 140,892 141,377 138,359 139,922 127,510
Total equity attributable to shareholders of the Company 774,182 746,325 743,719 722,806 731,622
Net assets per share (RMB) 6.394 6.164 6.143 5.970 6.043
Adjusted net assets per share (RMB) 6.225 5.954 5.993 5.787 5.913
3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED
UNDER CASs AND IFRS PLEASE REFER TO PAGE 204 OF THE REPORT.
CHAIRMAN'S ADDRESS
Dear Shareholders and Friends:
First, I would like to express my sincere gratitude to our shareholders and
directors for their valued trust and support in nominating me as Chairman of
the Company. I am honored to take on this mission and the responsibilities of
the role. Together with the Board, we will fulfill our duties with diligence,
promote high-quality development of the Company, and continuously improve our
corporate value.
In 2021, confronted with the impacts of the Covid-19 pandemic as well as the
complex and challenging macroeconomic environment, the Board of Directors
fully evaluated market conditions both domestically and internationally,
adhered to the goal of pursuing progress while maintaining stability,
dedicated the Company to vigorously implementing its world-leading development
strategy, and focused on promoting high-quality development. At the same time,
the management led the entire staff with great dedication in order to
accomplish all of the Company's targets and tasks, getting off to a good start
of the 14th Five-Year Plan.
Operating results for 2021 achieved a 10-year record high. Over the past year,
the Company has taken full advantage of its integrated businesses, made every
effort to optimize operations, expanded sales and markets, and reduced costs
and expenses, resulting in a substantial increase in operating performance. In
accordance with International Financial Reporting Standards, our revenue
increased by 30.2% from the previous year to RMB2.74 trillion, operating
profit increased by 592.3% to RMB94.628 billion, and profits attributable to
shareholders of the Company increased by 115.2% to RMB71.975 billion. Net cash
flow from operating activities amounted to RMB225.174 billion, reaching a
historical high. The ratio of liabilities to assets at the end of the year was
51.56%, representing a solid financial position. In view of the Company's
profitability, shareholder return, and future development needs, the Board of
Directors recommended the payment of a final dividend of RMB0.31 per share.
Taking into account the interim dividend of RMB0.16 per share, the total
dividend for the year was RMB0.47 per share, with a dividend payout ratio of
80%.
Corporate governance has continued to evolve. During the year, the Company
elected new members to the Board of Directors and the Board of Supervisors and
made appointments to senior management, enhancing diversity on the board
level. All independent directors fulfilled their duties with diligence and
offered strategic advice for reform and development. The Company optimized a
number of corporate governance practices and laid a solid foundation for its
compliance management system. By deepening reforms and strengthening
management, the Company put the SOE Reform 3-year action plan into effect and
implemented the benchmarking programme of improving management, enhanced the
effectiveness of its internal controls, and upgraded its corporate management
performance. Taking advantage of its Party-building activities, the Company
further enhanced its supervision mechanisms, motivating staff to increase
productivity and pursue career development. In addition, we placed great
emphasis on shareholder returns, improved communications with stakeholders,
and strengthened environmental, social, and governance measures and
disclosures in an effort to consistently increase corporate transparency.
Continuing connected transactions of the Company for the next three years
gained support and approval by shareholders, ensuring greater production and
operational stability.
Research and development initiatives achieved fruitful results. We have
vigorously implemented an innovation-driven strategy, deepened reform of our
R&D mechanisms, built new R&D institutions and technology incubators,
and accelerated the deployment of cutting-edge technologies in key areas,
including oil & gas exploration and production, chemical new materials,
new energy, and green and low-carbon development. As a result, a number of our
major R&D projects achieved breakthroughs, and the Company's comprehensive
patent advantages continued to rank at the forefront of domestic enterprises,
providing vital support for quality development of the Company.
The Company has steadily improved the overall quality of its development. We
have strengthened scientific and technological innovation, optimized
production and operations, accelerated transformation and development, and
upgraded the quality and efficiency of the industrial chain. In upstream, we
accelerated our efforts in oil and gas exploration, and we achieved major
breakthroughs in continental facies shale oilfields exploration. The domestic
oil and gas reserve replacement rate reached 154%, while natural gas
production grew by 11.9% over the previous year, thereby increasing reserves,
stabilizing oil production, increasing gas output, and improving efficiency.
In refining, throughput and major products have seen significant growth as a
result of the Company's ongoing structural adjustment, including initiatives
to shift from oil products to chemicals and specialty products, as well as
efforts to construct world-class refining and chemical production clusters. In
the chemicals segment, we optimized our raw material and product mix,
achieving ongoing increases in production of high-value-added products. In the
marketing and distribution segment, we strove to integrate and coordinate
production and sales to increase market share, leading to steady growth of
domestic sales of refined oil products. We have also achieved rapid
development of our non-fuel businesses, as the Company accelerated its
development into a comprehensive provider of gasoline, natural gas, hydrogen,
power, and energy services. The Company accelerated the pace of its low-carbon
transition, deployed projects for hydrogen energy, photovoltaic power
stations, and battery charging and swapping, and actively developed
biodegradable materials, medical and healthcare materials, and other new
businesses. E-commerce platforms such as EPEC, Easy Joy and Chememall have
also advanced rapidly.
The Company also effectively fulfilled its corporate social responsibilities
over the past year. As a Lead member of the United Nations Global Compact, the
Company actively responded to climate change by implementing a green and
low-carbon development strategy. It has been awarded the title of China
Low-Carbon Model for eleven consecutive years. The Company diligently promoted
the construction of its health, safety, and environment management system and
carried out a three-year campaign to address production safety. We have also
strengthened pollution prevention and control to better ensure ecological
wellbeing and biodiversity. We implemented multiple measures to support the
rural revitalization plan and proactively rendered assistance in flooded
areas, as well as undertaking domestic disaster relief and post-disaster
reconstruction. As a sponsor of the Beijing Winter Olympics and Paralympics,
the Company was committed to providing the best services and disseminating the
Olympic spirit. The Company actively and consistently participated in various
social welfare initiatives, such as the Warm Stations Program and Drivers'
Home Program. We have always valued the physical and psychological health of
all our staff, strictly following all mandated measures for pandemic control
to safeguard health management. Moreover, the Company has been well recognized
for supporting the fight against the pandemic in its business operating
locations, and promoting local economic development and environmental
protection.
We attribute our hard-won achievements in 2021 to the efforts and dedication
of the Company's Board of Directors, the Board of Supervisors, the management,
and all staff, as well as the valued support of our shareholders and the
community. On behalf of the Board of Directors, the management, and our staff,
I thank our shareholders and the community for their continued interest in and
support of Sinopec Corp. Due to new working arrangements, Mr. Zhang Yuzhuo
ended his term as the Chairman of the Company. During his tenure, he was
devoted to his duties and played a vital role in improving corporate
governance and promoting sustainable development of the Company. On behalf of
the Board of Directors, I would like to extend my sincere gratitude to him.
Looking ahead, in light of the country's carbon peak and carbon neutrality
goals, resource and environmental constraints will have a profound impact on
the development of the energy and chemical industries. The energy industry has
entered a phase of transition requiring qualitative changes and a deepening
structural adjustment, which will pose serious challenges to the Company's
high-quality development. Considering the current stage of its development, as
well as the existing opportunities and challenges, the Company will continue
to optimize its 14th Five-Year Plan and Vision 2035, and will set out a clear
path towards sustainable development through actionable goals and principles:
Focus on promoting corporate governance. Through further improvements in its
corporate governance system and enhancements to governance efficiency, the
Company will ensure that it can achieve superior operating standards. To
fulfill the goals of strengthening internal controls, reducing risk, and
promoting compliance, we will work on the integration of risk control,
internal control, and compliance management, and we will minimize risk in all
aspects of our operations, including safety in production, environmental
protection, and operations management. We will deepen our corporate reform to
maintain the vitality of operating systems and mechanisms. In addition, the
Company will elevate corporate management performance to new levels by
benchmarking world-class management practices. The Company will further
improve its Party-building efforts to promote high-quality development.
Focus on implementing an innovation-driven strategy. The Company will strive
to nurture a wellspring of self-developed new technologies, promote research
and development of advanced oil and gas exploration technologies, and enhance
innovation and breakthroughs in high-end chemicals, new materials, modern coal
chemical technology, and new energy products, as well as in key, generic and
advanced technologies. The Company will turn those technological achievements
into its competitive business advantages to support its transformation and
upgrading.
Focus on improving energy supply capacity. The Company will redouble its
efforts in exploration, especially in shale oil and shale gas. It will
continue to implement integrated development of natural gas production,
supply, storage, and sales. It will continue to develop its hydrogen energy
business at a reliable pace, while building out photovoltaic power stations
according to local conditions, thereby expanding the scope of its energy and
resources. In addition, the Company will strengthen its international trade
capability, coordinate the allocation of global resources, and further explore
the build-out of a successful multi-energy supply system.
Focus on enhancing the quality and upgrading of the petrochemical industry.
Adhering to the goal of excelling in the refining business and strengthening
its chemicals business, the Company will speed up the development of
initiatives to shift from oil products to chemicals and specialty products,
upgrade the chemicals business to concentrate on mid-to-high-end products,
advance construction of world-class, large-scale, intelligent, integrated
refining and chemical production clusters, and strengthen the resilience of
its industrial chain. Following the general trend in transportation energy,
the Company will accelerate its transformation to a comprehensive provider of
gasoline, natural gas, hydrogen, power, and energy services. Furthermore, the
Company will commit to implementing the digital transition and intelligent
manufacturing of its traditional businesses, and further develop e-commerce
platforms to expand momentum of new business growth.
Focus on boosting green and low-carbon competitiveness. By coordinating its
environmental goals with production development, the Company will base its
emission reduction targets on scientifically achievable approaches, and
continue to optimize its industrial and energy structure. It will enhance its
energy efficiency with the aim of establishing an industry benchmark. The
Company will establish its green and low-carbon initiatives and help advance
the circular development system, thereby promoting resource utilization that
is efficient, intensive, and recyclable. It will also accelerate research and
innovation in green and low-carbon technologies such as carbon capture,
utilization, and storage to take the initiative in innovative development.
With the challenges of the ongoing global pandemic, geopolitical tensions, and
high spot prices of commodity, the recovery of the world economy is still
subject to significant uncertainties. The international environment faced by
the Company has grown more complex. Nevertheless, China's economy is expected
to maintain steady growth, with strong resilience, great potential, and risk
resistance capabilities. Domestic economic fundamentals will remain strong in
the long term. The stable and healthy domestic economic environment will
create great opportunities for the Company's future development.
In 2022, the Company will continue to adhere to the principle of pursuing
progress while maintaining stability. In complete, accurate and comprehensive
implementation of China's new development philosophy, the Company will
integrate the new development philosophy with its existing businesses by high
quality to further enhance its corporate governance, production and
operations, transformation and development, technological innovation,
management reform, risk control, and Party building, making every effort to
achieve its goal of becoming a world-leading company. In its upstream
businesses, the Company will make greater efforts to increase reserves with
higher efficiency, upgrade production in an economical way, and reduce costs
and fees, while expanding its resource channels and improving its energy
supply capacity. In refining, the Company will strive to adjust its structure
to reduce costs and improve supply capacity. In the chemicals business, the
Company will accelerate advanced capacity construction to extend its high-end
industrial chain and develop new growth engines. In the marketing and
distribution segment, it will further take advantage of its marketing network
to provide customers with comprehensive, high-quality services. Moreover, the
Company will actively and steadily deploy new energy businesses such as
hydrogen energy and photovoltaic stations to strengthen its green and
low-carbon competitiveness. Capital expenditures will be RMB198 billion in
2022, mainly for investments in high-quality exploration and production;
natural gas systems including production, supply, storage, and sales;
adjustments in the structure of the refining business; construction of
refining and chemical production clusters; high-end materials projects; and
integrated energy service stations for gasoline, natural gas, hydrogen, power,
and services, as well as new energy businesses. The Company will endeavor to
consolidate and enhance its business competitiveness to achieve a healthier
and more sustainable growth.
When the path ahead is tortuous, the only way forward is trailblazing. I
cherish the strong belief that under the leadership of the Board of Directors
and through the combined efforts of the management and staff, as well as the
strong support of our shareholders and the community, Sinopec Corp. will be
able to take full advantage of its strengths in the industry, its
technologies, and its talents to forge a distinctive path to high-quality
growth, creating greater value for our shareholders and society at large and
providing cleaner energy for a better life.
BUSINESS REVIEW AND PROSPECTS
BUSINESS REVIEW
In 2021, the COVID-19 pandemic continued and the world economic recovery was
weak. China achieved remarkable results in pandemic prevention and control,
and its economy continued to grow. The annual gross domestic product (GDP)
increased by 8.1% year on year. International oil prices fluctuated with
upward trend, the domestic demand for refined oil products recovered, the
demand for natural gas increased rapidly, and the demand for chemical products
remained stable.
Following market conditions, the Company optimized the whole business chain,
expanded market, increased sales volume, and significantly improved the
profits of our core businesses. The net profit attributable to the
shareholders of the company reached the best level in the same period for
nearly a decade.
1 MARKET REVIEW
(1) Crude Oil & Natural Gas Market
In 2021, international crude oil prices fluctuated with upward trend. The spot
price of Platts Brent for the year averaged USD70.7 per barrel, up by 69.7%
year on year. In the context of energy transition, the domestic natural gas
demand grew rapidly. Based on statistics by NDRC, the domestic apparent
consumption of natural gas reached 372.6 billion cubic meters, up by 12.7%
year on year.
(2) Refined Oil Products Market
In 2021, the domestic refined oil products market demand picked up. According
to NDRC statistics, the apparent consumption of refined oil products
(including gasoline, diesel and kerosene) was 340 million tonnes, up by 3.2%
from the previous year. Among them, gasoline, diesel and kerosene increased by
5.7%, 0.5% and 5.7%, respectively. According to the change of international
crude oil prices, there were 21 price adjustments domestically for refined oil
products throughout the year with 15 increases and 6 decreases.
(3) Chemical Products Market
In 2021, the domestic demand for chemicals maintained stable. Based on our
statistics, the domestic apparent consumption of ethylene equivalent decreased
by 1.7% from the previous year, and the apparent consumption of synthetic
resin, synthetic fiber and synthetic rubber decreased by 0.3%, increased by
0.3% and decreased by 4.5%,, respectively. Domestic prices of chemical
products increased year on year.
2 PRODUCTION & OPERATION REVIEW
(1) Exploration and Production
In 2021, the Company seized the opportunity of rising oil prices to promote
oil and gas exploration and development in major target basins, continuously
scaled up profitable capacity, and made new breakthroughs in increasing
reserves, maintaining oil production, increasing gas output, and improving
efficiency. In exploration, we strengthened risk exploration and trap
pre-exploration in new areas, and made a number of new oil and gas
discoveries, including major breakthroughs in continental facies shale
oilfields exploration in Bohai Bay Basin, North Jiangsu Basin and Sichuan
Basin. In crude oil development, we accelerated building of production
capacity in Shunbei and Tahe, and strengthened fine development in mature
fields. In natural gas development, we sped up capacity building of Weirong,
Yongchuan South and Nanchuan fields, strengthened fine development of Puguang,
Yuanba and other fields, and deepened the development of Fuling shale gas
field. In the meantime, we signed medium and long-term LNG agreements to
increase overseas natural gas supply. We developed new natural gas market
reaching more quality end users with sales volume and market share rising
constantly. The Company's production of oil and gas equivalent reached 479.74
million barrels including 249.60 million barrels of domestic crude which kept
flat year on year, and 1,199.4 billion cubic feet of natural gas which
increased by 11.9% year on year.
Summary of Operations for the Exploration and Production Segment
Change from
2021 2020 2019 2020 to 2021(%)
Oil and gas production (mmboe) 479.74 459.02 458.92 4.5
Crude oil production (mmbbls) 279.76 280.22 284.22 (0.2)
China 249.60 249.52 249.43 0.0
Overseas 30.16 30.70 34.79 (1.8)
Natural gas production (bcf) 1,199.44 1,072.33 1,047.78 11.9
Summary of Reserves of Crude Oil and Natural Gas
Crude oil reserves (mmbbls)
Items 31 December 2021 31 December 2020
Proved reserves 1,749 1,542
Proved developed reserves 1,578 1,389
China 1,291 1,130
Consolidated companies 1,291 1,130
Shengli 961 821
Others 330 309
Overseas 287 259
Consolidated companies 24 15
Equity accounted entities 263 244
Proved undeveloped reserves 171 153
China 125 102
Consolidated companies 125 102
Shengli 17 16
Others 108 86
Overseas 46 51
Consolidated companies 0 5
Equity accounted entities 46 46
Natural gas reserves (bcf)
Items 31 December 2021 31 December 2020
Proved reserves 8,456 8,191
Proved developed reserves 6,740 6,365
China 6,734 6,357
Consolidated companies 6,734 6,357
Puguang 1,582 1,675
Fuling 1,529 1,491
Others 3,623 3,191
Overseas 6 8
Consolidated companies 0 0
Equity accounted entities 6 8
Proved undeveloped reserves 1,716 1,826
China 1,715 1,824
Consolidated companies 1,715 1,824
Fuling 99 119
Others 1,616 1,705
Overseas 1 2
Consolidated companies 0 0
Equity accounted entities 1 2
Exploration and Production Activities
Wells drilled (as of 31 December)
2021 2020
Exploratory Development Exploratory Development
Productive Dry Productive Dry Productive Dry Productive Dry
China 363 129 1,828 4 383 136 2,015 3
Consolidated companies 363 129 1,828 4 383 136 2,015 3
Shengli 170 58 944 2 204 64 1,080 2
Others 193 71 884 2 179 72 935 1
Overseas 2 1 114 0 2 0 100 0
Consolidated companies 0 0 2 0 0 0 4 0
Equity accounted entities 2 1 112 0 2 0 96 0
Total 365 130 1,942 4 385 136 2,115 3
Wells drilling (as of 31 December)
2021 2020
Gross Net Gross Net
Exploratory Development Exploratory Development Exploratory Development Exploratory Development
China 108 201 108 201 92 212 92 212
Consolidated companies 108 201 108 201 92 212 92 212
Shengli 33 55 33 55 29 52 29 52
Others 75 146 75 146 63 160 63 160
Overseas 0 123 0 62 2 0 2 0
Consolidated companies 0 3 0 1 0 0 0 0
Equity accounted entities 0 120 0 61 2 0 2 0
Total 108 324 108 263 94 212 94 212
Oil productive wells (as of 31 December)
2021 2020
Gross Net Gross Net
China 53,851 53,851 53,240 53,240
Consolidated companies 53,851 53,851 53,240 53,240
Shengli 34,991 34,991 34,572 34,572
Others 18,860 18,860 18,668 18,668
Overseas 5,534 2,372 7,055 2,752
Consolidated companies 30 11 28 10
Equity accounted entities 5,504 2,361 7,027 2,742
Total 59,385 56,223 60,295 55,992
Natural gas productive wells (as of 31 December)
2021 2020
Region Gross Net Gross Net
China 7,539 7,489 6,976 6,928
Consolidated companies 7,539 7,489 6,976 6,928
Puguang 79 79 67 67
Fuling 779 779 632 632
Others 6,681 6,631 6,277 6,229
Total 7,539 7,489 6,976 6,928
Unit: Square kilometers
Area under license (as of 31 December)
2021 2020
Acreage with exploration licenses 390,023 436,864
China 390,023 436,864
Acreage with development licenses 42,391 39,195
China 36,480 33,965
Overseas 5,911 5,230
(2) Refining
In 2021, the Company seized the favorable opportunity of recovery and rising
oil prices, insisted on integration and optimisation of production and
marketing, focused on expanding scale and adjusting structure, and maximized
the overall profits along the value chain. Guided by the market demand, we
expedited adjustment to increase the yield of chemicals feedstock and refining
specialities. We vigorously increased production of gasoline and light
chemical feedstock, continued to expand marketing and sales of special
products such as low-sulfur bunker fuel, and maintained high utilization rate.
The Company optimized resource allocation and achieved significant cost
reduction in procurement. We accelerated building up advanced production
capacity and promoted structural adjustments. Six hydrogen purification units
and filling facilities were built throughout the year. In 2021, the Company
processed 255 million tonnes of crude oil, up by 7.8%, yielding 146 million
tonnes of refined oil products, with a year-on-year increase of 3.3%. Among
them, gasoline output was 65.21 million tonnes, increased by 12.6%, and light
chemical feedstock was 45.41 million tonnes, up by 12.9%.
Summary of Operations for the Refining Segment
Unit: million tonnes
Change from
2021 2020 2019 2020 to 2021 (%)
Refinery throughput 255.28 236.91 248.52 7.8
Gasoline, diesel and kerosene production 146.21 141.50 159.99 3.3
Gasoline 65.21 57.91 62.77 12.6
Diesel 59.85 63.21 66.06 (5.3)
Kerosene 21.15 20.38 31.16 3.8
Light chemical feedstock production 45.41 40.22 39.78 12.9
Light product yield (%) 73.83 74.34 76.38 (0.51) percentage points
Refinery yield (%) 94.65 94.77 94.98 (0.12) percentage points
Note: Includes 100% of the production from domestic joint ventures.
(3) Marketing and Distribution
In 2021, domestic consumption of refined oil products recovered. The company
gave full play to the advantages of integration and marketing network to
continuously improve quality and scale in operation. We innovated marketing
approaches, implemented precision marketing strategies, and expanded sales.
Our network layout for end-users were further optimized, and an internet
operation center was established, with online and offline businesses
constantly integrated. We actively promoted the construction of comprehensive
service stations including oil, gas, hydrogen, electricity and non-fuel
businesses and accelerated building up new energy service networks. Total
annual sales volume of refined oil products was 221 million tonnes, of which
total domestic sales volume amounted to 171 million tonnes, up by 2.0% year on
year.
Summary of Operations for the Marketing and Distribution Segment
Change from
2021 2020 2019 2020 to 2021 (%)
Total sales volume of oil products (million tonnes)* 220.79 217.91 254.95 1.3
Total domestic sales volume of oil products (million tonnes) 171.31 167.99 184.45 2.0
Retail sales (million tonnes) 114.30 113.19 122.54 1.0
Direct sales and distribution (million tonnes) 57.01 54.80 61.91 4.0
Annual average throughput per station (tonne/station) 3,720 3,686 3,992 0.9
31 December 31 December 31 December Change from
2021 2020 2019 the end of the
previous year to
the end of the
reporting period
(%)
Total number of service stations under the Sinopec brand 30,725 30,713 30,702 0.04
Number of company-operated stations 30,725 30,707 30,696 0.06
Note: The total sales volume of refined oil products includes the amount of
refined oil marketing and trading sales volume.
(4) Chemicals
In 2021, the Company adhered to "basic plus high-end", accelerated the
construction of advanced production capacity, strengthened structural
adjustment, extended the industrial chain and cultivated growth points. We
continuously diversified raw materials, optimized structure and maintenance
scheduling of facilities, and maintained high-profitable units' utilization
rates. We further integrated process of production, marketing, research and
application, strengthened R&D efforts for high-end products and new
materials, and increased output of high value-added products such as
metallocene polyolefin and carbon fiber. The production ratio of synthetic
resin, synthetic rubber, synthetic fiber and fine chemicals with added value
were increased by 1.0, 3.5, 1.6 and 3.0 percentage points respectively. The
annual ethylene output was 13.38 million tonnes, representing a year-on-year
increase of 10.9%. At the same time, we vigorously developed strategic
customers and continuously improved the service level. The total operating
volume of chemical products in 2021 was 81.6 million tonnes, realizing full
production and sales.
Summary of Operations for the Chemicals Segment
Unit: thousand
tonnes
Change from
2021 2020 2019 2020 to 2021
(%)
Ethylene 13,380 12,060 12,493 10.9
Synthetic resin 18,999 17,370 17,244 9.4
Synthetic rubber 1,252 1,067 1,047 17.3
Synthetic fiber monomer and polymer 9,201 9,057 10,029 1.6
Synthetic fiber 1,357 1,313 1,289 3.4
Note: Includes 100% of the production of domestic joint ventures.
(5) Research and Development
In 2021, the Company deepened the reform of science and technology system and
mechanism, increased science and technology investment, promoted key core
technology research, and achieved fruitful results, giving full play to the
leading role of science and technology in industrial development. In upstream,
new progress was made in exploration theory and breakthrough was achieved in
key technology for exploration and development of Sichuan Basin and Shunbei
area. In refining, the world's first industrial test of full distillates crude
oil catalytic cracking technology was completed. The industrial application of
MFP technology, which produces more propylene and low-sulfur fuel, realized a
breakthrough. We also successfully developed and produced needle coke
products. In chemicals, we took the lead in completing the industrial test of
direct cracking of crude oil to ethylene in China, and we successfully
developed 15 new lightweight products for green and environment-friendly
vehicles, such as carbon fiber reinforced epoxy resin composites.
Breakthroughs were made in the development of hydrogenated styrenic
thermal-plastic elastomer. In 2021, the Company had 8,045 patent applications
at home and abroad, among which 4,868 were granted. We won 1 first prize and 5
second prizes of National Scientific and Technological Progress Award and 1
second prize of National Technological Invention Award for 2020. We also
obtained 1 gold, 4 silver and 11 excellence awards for Chinese patents.
(6) Health and Safety
In 2021, the Company comprehensively promoted HSE management system and
continuously strengthened management. We focused on employees' health, safety
and security management, enhanced pandemic prevention and control mechanism,
and improved emergency response capacity, so as to maintain occupational,
physical and mental health of employees at home and abroad. We implemented
production safety responsibility among all employees, popularized prevention
mechanisms of safety risk controlling and hidden risks shooting. We promoted
the pilot project of "Industrial Internet plus Safe Production", carried out
special actions including a 3-year rectification program for production
safety, and "A Hundred Days without Accidents" activity. The Company witnessed
overall stable and safe production in 2021.
(7) Capital Expenditures
In 2021, focusing on investment quality and return, the Company continued to
optimize investment management. The capital expenditures for the whole year
were RMB167.9 billion. Capital expenditures of the exploration and production
segment were RMB68.1 billion, mainly used for crude production capacity
construction in Shunbei Oilfield, natural gas production capacity construction
in Western Sichuan, Fuling and Weirong, storage and transmission facilities of
Tianjin LNG Phase II and Qingdao LNG Phase III, and the CCUS Project in
Shengli Oilfield. The capital expenditures of the refining segment were
RMB22.5 billion, mainly used for the expansion of Zhenhai refinery and
structural adjustment of Anqing and Yangzi refineries. The capital
expenditures of the marketing and distribution segment were RMB21.9 billion,
mainly used for service stations, integrated energy stations and logistics
facilities. The capital expenditures of the chemicals segment were RMB51.6
billion, mainly used for Zhenhai, Sinopec-SK, Hainan, Tianjin Nangang, Gulei
ethylene projects, AGCC project, Jiujiang Aromatics project, Shanghai
large-tow carbon fiber project, Yizheng PTA project, Guizhou PGA project, and
Qilu CCUS project. The capital expenditures for corporate and others were
RMB3.8 billion, mainly for R&D facilities and information technology
projects.
BUSINESS PROSPECTS
(1) Market Prospects
Looking forward to 2022, the world economic growth is expected to maintain the
recovery. China's economy is expected to achieve stable growth, and the
long-term positive fundamentals will remain unchanged. It is expected that the
market demand for refined oil products will continue to recover, and that for
natural gas and petrochemical products will continue to grow. Oil prices may
face greater volatility risks due to geopolitical situation, changes in global
supply and demand, inventory levels, and carbon peaking and neutrality
targets.
(2) Production & Operation
In 2022, guided by the development strategy of building a world-leading
company, the Company will focus on optimization of production and operation,
transition and development, technology innovation, reform and management, and
risk prevention and control to march toward its targets firmly. The following
are specific measures:
Exploration and production segment:
The Company will enhance risk exploration and trap pre-exploration efforts,
strengthen profitable development, and speed up the construction of natural
gas production, supply, storage and marketing system, so as to achieve better
results in oil production stabilization, gas production increase, cost
reduction and efficiency improvement. In terms of crude oil development, the
Company will scale up the production in Shunbei and Tahe oilfields, accelerate
the construction of the national demonstration zone of continental facies
shale oilfields in Jiyang, and refine the development of mature oilfields, so
as to achieve steady crude oil production growth and a significant decrease in
the break-even point. In terms of natural gas development, the Company will
accelerate the capacity building of Dongsheng and Western Sichuan gas fields,
further expand and tap the potential of Puguang, Yuanba gas fields, and deepen
the development adjustment of Fuling gas field. At the same time, more efforts
will be made in taking a diversified approach to expand resource channels,
cultivate high-quality and efficient end-user markets, and maintain the good
momentum of natural gas development. The planned annual production of crude
oil is 281.20 million barrels, of which 31.28 million barrels will come from
overseas and that of natural gas is 1,256.7 billion cubic feet.
Refining segment: The Company will prioritize structural adjustment and cost
reduction, speed up the construction of world-class refining and chemical
bases, and promote the systemic improvement of the refining value chain.
Oriented by profitability, the Company will make appropriate arrangement for
facilities utilization and production scheduling, flexibly adjust the yield of
refined oil products and diesel-gasoline ratio; dynamically optimize the
allocation of crude oil resources to reduce procurement costs; accelerate the
shift from refined oil products to chemicals, increase the production of
chemical raw materials, improve the self-sufficient rate of chemical
feedstocks; speed up the shift from refined oil products to special products,
expand the market of special products such as low-sulfur bunker fuel,
lubricating grease, base oil, needle coke, etc., and improve profitability.
The annual plan for crude oil throughput is 258 million tonnes and that for
refined oil products production is 147 million tonnes.
Marketing segment: Giving full play to integrated advantages, the Company will
make every effort to expand the market, improve efficiency, and consolidate
its position in the market. The Company plans to improve the market monitoring
system, implement well-targeted marketing strategies, increase both retailing
sales volume and efficiency; implement network development strategies by
different regions and levels, continue to optimize network layout, enhance
network integrity, stability and competitiveness; strengthen the development
of Sinopec-brand products, improve the quality and profitability of non-fuel
business; promote gas and hydrogen refueling, power charging and battery
swapping, build integrated energy stations covering gasoline, diesel, gas,
hydrogen, electricity and non-fuel services; and accelerate the construction
of carbon-neutral gas stations. The annual domestic sales volume of refined
oil products is planned to be 174 million tonnes.
Chemicals segment: Adhering to "basic + high-end", the Company will promote
the building of advanced capacity, speed up the deployment of large-scale
ethylene plants, promote the upgrading and appropriate extension of the
aromatics industry chain, continuously enhance market competitiveness;
diversify raw materials, enhance the cost advantage; dynamically optimize and
adjust the utilization, continue to promote facilities' operation efficiency;
stay market-oriented, vigorously develop new materials and applications with
high added value and advanced technology. Meanwhile, we will optimize the
mechanism to respond to market need rapidly, strengthen refined management,
and improve service quality and efficiency. The planned annual ethylene
production is 15.25 million tonnes.
Technological development: Following the innovation-driven strategy, the
Company aims to make breakthroughs in core technologies, promote the mechanism
reform of the technological system, accelerate the intelligent application and
digital transformation to build a technology-leading company. Specific focuses
include technological breakthroughs in oil and gas exploration and production
with the emphases on oil production stabilization, gas production increase,
cost reduction, and efficiency improvement, oil and gas reserves and
production increase; coordinated development of integration of refining and
chemical technologies, refined oil products structure optimization, clean,
efficient and low-carbon utilization of resources; key raw materials and
high-end new materials development, coordination of the development and
application of technologies such as safety and environmental protection;
energy conservation and emission reduction, and intelligent optimization;
forward-looking and basic research on such areas as green and low-carbon, new
energy, and new materials to support industrial transition and upgrading.
Capital expenditures: In 2022, the Company's planned capital expenditures are
RMB198 billion, of which, RMB81.5 billion will be for the exploration and
production segment, including the construction of crude oil production
capacity in Shunbei and Tahe oilfields, and natural gas production capacity in
Western Sichuan, Dongsheng and Zhongjiang and construction of storage and
transmission facilities such as Longkou LNG. Capital expenditures for the
refining segment will be RMB20.4 billion, mainly for the construction of
Anqing, Yangzi refinery structural adjustment projects and Zhenhai refinery
Phase II. Capital expenditures for the marketing and distribution segment will
be RMB23.7 billion, mainly used for the construction of service stations,
integrated energy stations and logistics facilities. The capital expenditures
of the chemicals segment will be RMB66.1 billion, which will be mainly used
for Hainan and Tianjin Nangang ethylene projects, Jiujiang Aromatics project,
Shanghai large-tow carbon fiber project, Yizheng PTA project, Guizhou PGA
project, Zhenhai Refinery Phase II. Capital expenditures for corporate and
others are planned to be RMB6.3 billion, which will be mainly used for R&D
facilities and information technology projects.
MANAGEMENT'S DISCUSSION AND ANALYSIS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S AUDITED FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES. PARTS OF
THE FOLLOWING FINANCIAL DATA WERE ABSTRACTED FROM THE COMPANY'S AUDITED
FINANCIAL STATEMENTS THAT HAVE BEEN PREPARED ACCORDING TO THE IFRS, UNLESS
OTHERWISE STATED. THE PRICES IN THE FOLLOWING DISCUSSION DO NOT INCLUDE
VALUE-ADDED TAX.
1 CONSOLIDATED RESULTS OF OPERATIONS
In 2021, the Company's revenue was RMB2,740.9 billion, increased by 30.2%
compared with that of 2020. That was mainly due to the good momentum of
Chinese economy, increase of international crude oil price, recovery of
domestic refined oil products demand and increase of chemical products prices.
The Company sized the opportunity of demand recovery, optimised operation and
production, promoted structural adjustment and transition and upgrading, and
realised RMB94.6 billion operating profit, up by 592.3% year on year.
The following table sets forth the main revenue and expenses from the
Company's consolidated financial statements:
Year ended 31 December
2021 2020 Change (%)
RMB million RMB million
Revenue 2,740,884 2,104,724 30.2
Revenue from primary business 2,679,500 2,048,654 30.8
Other operating revenues 61,384 56,070 9.5
Operating expenses (2,646,256) (2,091,055) 26.6
Purchased crude oil, products and operating supplies and expenses (2,076,665) (1,589,821) 30.6
Selling, general and administrative expenses (54,978) (53,668) 2.4
Depreciation, depletion and amortisation (115,680) (107,461) 7.6
Exploration expenses, including dry holes (12,382) (9,716) 27.4
Personnel expenses (103,492) (87,525) 18.2
Taxes other than income tax (259,032) (235,018) 10.2
Other operating expenses, net (21,716) (5,780) 275.7
Operating profit 94,628 13,669 592.3
Net finance costs (9,010) (9,510) (5.3)
Investment income and share of profits less losses from associates and joint 23,551 44,456 (47.0)
ventures
Profit before taxation 109,169 48,615 124.6
Income tax expense (23,318) (6,344) 267.6
Profit for the year 85,851 42,271 103.1
Attributable to:
Shareholders of the Company 71,975 33,443 115.2
Non-controlling interests 13,876 8,828 57.2
(1) Revenue
In 2021, the Company's revenue from primary business was RMB2,679.5 billion,
representing an increase of 30.8% over 2020. This was mainly due to the price
and sales volume increase in refined oil products and chemical products.
The following table sets forth the external sales volume, average realised
prices and respective rates of change of the Company's major products in 2021
and 2020:
Average realised price
Sales volume (thousand tonnes) (RMB/tonne, RMB/thousand cubic meters)
Year ended 31 December Year ended 31 December
2021 2020 Change (%) 2021 2020 Change (%)
Crude oil 7,162 7,422 (3.5) 3,049 2,029 50.3
Natural gas (million cubic meters) 29,953 26,280 14.0 1,606 1,352 18.8
Gasoline 90,836 86,193 5.4 7,731 6,300 22.7
Diesel 78,335 77,280 1.4 5,891 4,789 23.0
Kerosene 21,270 20,828 2.1 3,772 2,635 43.1
Basic chemical feedstock 36,173 36,683 (1.4) 5,486 3,636 50.9
Monomer and polymer for synthetic fibre 6,955 9,691 (28.2) 6,537 4,297 52.1
Synthetic resin 17,923 17,112 4.7 8,325 7,148 16.5
Synthetic fibre 1,457 1,402 3.9 7,521 6,381 17.9
Synthetic rubber 1,286 1,361 (5.5) 11,099 7,982 39.1
Chemical fertiliser 976 1,177 (17.1) 2,807 1,955 43.6
Most crude oil and a small portion of natural gas produced by the Company were
internally used for refining and chemical production, with the remaining sold
to external customers. In 2021, the turnover from crude oil, natural gas and
other upstream products sold externally amounted to RMB156.0 billion,
representing an increase of 49.3% over 2020. The change was mainly due to
increases in crude oil and natural gas prices, and the increase of natural gas
sales volume.
In 2021, petroleum products (mainly consisting of refined oil products and
other refined petroleum products) sold by Refining Segment and Marketing and
Distribution Segment achieved external sales revenues of RMB1,535.5 billion
(accounting for 56.0% of the Company's revenue), representing an increase of
30.6% over 2020, mainly due to the increase in prices and volume of refined
oil products. The sales revenue of gasoline, diesel and kerosene was
RMB1,243.9 billion, representing an increase of 28.5% over 2020, and
accounting for 81.0% of the total sales revenue of petroleum products.
Turnover of other refined petroleum products was RMB291.6 billion,
representing an increase of 49.0% compared with that of 2020, accounting for
19.0% of the total sales revenue of petroleum products.
The Company's external sales revenue of chemical products was RMB424.8
billion, representing an increase of 31.8% over 2020, accounting for 15.5% of
the Company's total revenue. This was mainly due to the increase in price and
sales volume of chemical products.
(2) Operating expenses
In 2021, the Company's operating expenses was RMB2,646.3 billion, increased by
26.6% compared with that of 2020. The operating expenses mainly consisted of
the following:
Purchased crude oil, products and operating supplies and expenses was
RMB2,076.7 billion, representing an increase of 30.6% over the same period of
2020, accounting for 78.5% of the total operating expenses, of which:
Crude oil purchasing expenses was RMB689.5 billion, representing an increase
of 43.9% over the same period of 2020. Crude oil purchased externally used for
processing in 2021 was 212.55 million tonnes (excluding the volume processed
for third parties), representing an increase of 7.9% over the same period of
2020. The average cost of crude oil purchased externally was RMB3,244 per
tonne, representing an increase by 33.3% over 2020.
The Company's other purchasing expenses was RMB1,387.2 billion, representing
an increase of 24.9% over the same period of 2020. This was mainly
attributable to the sharp increase in international bulk raw material prices
and purchasing volume increase.
Selling, general and administrative expenses was RMB55.0 billion, representing
an increase of 2.4% over 2020.
Depreciation, depletion and amortisation was RMB115.7 billion, representing an
increase of 7.6% over the same period of 2020. That was mainly because that
the proved reserve decreased resulting from the decrease of international
crude oil prices and appreciation of RMB exchange rate in 2020, thus the
depletion ratio of oil and gas assets increased, which led to the depreciation
and depletion increased.
Exploration expenses was RMB12.4 billion, representing an increase of 27.4%
compared with 2020. That was mainly due to increased investment in exploration
and development to improve the quality of oil and gas assets.
Personnel expenses was RMB103.5 billion, representing an increase of 18.2%
over 2020. That was due to the government's preferential policy on social
insurance during the COVID-19 pandemic in 2020, which was cancelled in 2021,
as well as a year-on-year increase in performance-related bonus as a reward
for the significant improvement in operating profit.
Taxes other than income tax was RMB259.0 billion, representing an increase of
10.2% over the same period of 2020. That was mainly due to the increase of
consumption tax resulting from the increase of production volume in gasoline
and diesel.
Other operating expense, net was RMB21.7 billion, representing an increase of
RMB275.7% over the same period of 2020. That was mainly due to impact of the
loss on disposal of property, plant, equipment and other non-current assets.
(3) Operating profit was RMB94.6 billion, representing an increase of 592.3%
over the same period of 2020. That was mainly because that with the increase
of international crude oil prices and steady improvement of market demand, the
Company increased its processing volume and sales volumes which led to an
increase in the gross profit margin of petrochemical products and significant
improvement of the Company's operating results.
(4) Profit before taxation was RMB109.2 billion, representing an increase of
124.6% compared with 2020.
(5) Income tax expense was RMB23.3 billion, representing an increase of
267.6% year on year. That was mainly due to the taxable income increase as a
result of good profit the Company achieved in 2021.
(6) Profit attributable to non-controlling shareholders was RMB13.9 billion,
representing an increase of RMB5.0 billion and 57.2% over the same period of
2020. That was mainly due to the improvement in the profits of our non-wholly
owned subsidiaries.
(7) Profit attributable to shareholders of the Company was RMB72.0 billion,
representing a year-on-year increase of 115.2%.
2 RESULTS OF SEGMENT OPERATIONS
The Company manages its operations through four business segments, namely
exploration and production segment, refining segment, marketing and
distribution segment and chemicals segment, and corporate and others. Unless
otherwise specified, the inter-segment transactions have not been eliminated
from financial data discussed in this section. In addition, the operating
revenue data of each segment include other operating revenues.
The following table shows the operating revenues by each segment, the
contribution of external sales and inter-segment sales as a percentage of
operating revenues before elimination of inter-segment sales, and the
contribution of external sales as a percentage of consolidated operating
revenues (i.e. after elimination of inter-segment sales) for the periods
indicated.
Operating revenues As a percentage of As a percentage of
Year ended 31 December consolidated operating consolidated operating
revenue before elimination revenue after elimination
of inter-segment sales of inter-segment sales
Year ended 31 December Year ended 31 December
2021 2020 2021 2020 2021 2020
RMB million RMB million (%) (%) (%) (%)
Exploration and Production Segment
External sales* 162,700 110,242 3.4 3.2 5.9 5.2
Inter-segment sales 87,298 57,513 1.8 1.7
Operating revenues 249,998 167,755 5.2 4.9
Refining Segment
External sales* 173,109 117,847 3.6 3.4 6.3 5.6
Inter-segment sales 1,212,455 826,219 24.9 23.7
Operating revenues 1,385,564 944,066 28.5 27.1
Marketing and Distribution Segment
External sales* 1,404,469 1,097,352 29.0 31.6 51.2 52.1
Inter-segment sales 7,075 4,854 0.1 0.1
Operating revenues 1,411,544 1,102,206 29.1 31.7
Chemicals Segment
External sales* 435,261 330,927 9.0 9.5 16.0 15.2
Inter-segment sales 70,242 40,702 1.4 1.2
Operating revenues 505,503 371,629 10.4 10.7
Corporate and Others
External sales* 565,345 460,210 11.7 13.2 20.6 21.9
Inter-segment sales 732,356 430,073 15.1 12.4
Operating revenues 1,297,701 890,283 26.8 25.6
Operating revenue before elimination of inter-segment sales 4,850,310 3,475,939 100.0 100.0
Elimination of inter-segment sales (2,109,426) (1,371,215)
Revenue 2,740,884 2,104,724 100.0 100.0
* Other operating revenues are included.
The following table sets forth the operating revenues, operating expenses and
operating profit by each segment before elimination of the inter-segment
transactions for the periods indicated, and the percentage change of 2021
compared to 2020.
Year ended 31 December
2021 2020 Change
RMB million RMB million (%)
Exploration and Production Segment
Operating revenues 249,998 167,755 49.0
Operating expenses 245,313 184,231 33.2
Operating profit/(loss) 4,685 (16,476) -
Refining Segment
Operating revenues 1,385,564 944,066 46.8
Operating expenses 1,320,285 949,591 39.0
Operating profit/(loss) 65,279 (5,525) -
Marketing and Distribution Segment
Operating revenues 1,411,544 1,102,206 28.1
Operating expenses 1,390,340 1,081,378 28.6
Operating profit 21,204 20,828 1.8
Chemicals Segment
Operating revenues 505,503 371,629 36.0
Operating expenses 494,397 360,811 37.0
Operating profit 11,106 10,818 2.7
Corporate and Others
Operating revenues 1,297,701 890,283 45.8
Operating expenses 1,300,926 890,676 46.1
Operating loss (3,225) (393) -
Elimination of inter-segment profit/(loss) (4,421) 4,417 -
(1) Exploration and Production Segment
Most crude oil and a small portion of the natural gas produced by the
exploration and production segment were used for the Company's refining and
chemical production. Most of the natural gas and a small portion of crude oil
were sold externally to other customers.
In 2021, the operating revenues of this segment was RMB250.0 billion,
representing an increase of 49.0% over 2020. This was mainly attributed to the
increase of realised price in crude oil and natural gas, as well as the sales
volume of natural gas increase.
In 2021, the segment sold 34.09 million tonnes of crude oil, representing a
decrease of 1.2% over 2020. Natural gas sales volume was 30.8 billion cubic
meters (bcm), representing an increase of 11.1% over 2020. Regasified LNG
sales volume was 19.1 bcm, representing an increase of 22.3% over 2020. LNG
sales volume was 6.18 million tonnes, representing an increase of 0.1% over
2020. Average realised prices of crude oil, natural gas, Regasified LNG, and
LNG were RMB2,932 per tonne, RMB1,605 per thousand cubic meters, RMB2,119 per
thousand cubic meters, and RMB3,909 per tonne, respectively, representing an
increase of 54.2%, 18.0%, 19.4%, and 53.7% respectively over 2020.
In 2021, the operating expenses of this segment was RMB245.3 billion,
representing an increase of 33.2% over 2020. That was mainly due to the
following:
Procurement cost of LNG increased by RMB45.0 billion year on year;
Depreciation, depletion and amortisation increased by RMB6.6 billion year on
year, as a result of the increase of depletion ratio; Resource Tax and special
oil income levy increased by RMB3.9 billion year on year; Exploration expense
increased by RMB2.7 billion year on year; Impairment decreased by RMB6.0
billion year on year;
In 2021, the oil and gas lifting cost was RMB776.94 per tonne, representing a
year on year increase of 6.5%, mainly attributable to the increase in the cost
of purchased material, fuels, and power as the international commodities
prices increased, and the increase of personnel expenses.
In 2021, the operating profit of the exploration and production segment was
RMB4.7 billion, representing an increase of RMB21.2 billion over the same
period of 2020, which was mainly attributable to the fact that the segment
promoted high-quality exploration and profitable development, focused on
reducing cost, enhanced integrated operation of production, supply, storage
and sales.
(2) Refining Segment
Business activities of the refining segment include purchasing crude oil from
third parties and the exploration and production segment of the Company, as
well as processing crude oil into refined petroleum products. Gasoline, diesel
and kerosene were sold internally to the marketing and distribution segment of
the Company; part of the chemical feedstock was sold to the chemicals segment
of the Company; and other refined petroleum products were sold externally to
both domestic and overseas customers.
In 2021, the operating revenues of this segment was RMB1,385.6 billion,
representing an increase of 46.8% over 2020. This was mainly attributed to the
demand recovery and the increases of refined oil products prices and sales
volume.
The following table sets forth the sales volumes, average realised prices and
the respective changes of the Company's major refined oil products of the
segment in 2021 and 2020.
Sales Volume (thousand tonnes) Average realised price (RMB/tonne)
Year ended 31 December Year ended 31 December
2021 2020 Change (%) 2021 2020 Change (%)
Gasoline 63,827 56,259 13.5 7,208 5,813 24.0
Diesel 58,807 61,167 (3.9) 5,563 4,354 27.8
Kerosene 17,313 17,309 0.0 3,734 2,673 39.7
Chemical feedstock 45,234 39,872 13.5 3,989 2,596 53.7
Other refined petroleum products 68,783 65,353 5.3 5,061 3,004 68.5
In 2021, sales revenue of gasoline was RMB460.1 billion, representing an
increase of 40.7% over 2020.
The sales revenue of diesel was RMB327.1 billion, representing an increase of
22.8% over 2020.
The sales revenue of kerosene was RMB64.6 billion, representing an increase of
39.7% over 2020.
The sales revenue of chemical feedstock was RMB180.4 billion, representing an
increase of 74.3% over 2020.
The sales revenue of refined petroleum products other than gasoline, diesel,
kerosene and chemical feedstock was RMB348.1 billion, representing an increase
of 77.3% over 2020.
In 2021, the segment's operating expenses was RMB1,320.3 billion, representing
an increase of 39.0% over 2020. This was mainly attributed to the increase in
procurement cost of crude oil, and the increase of taxes and surcharges
related to sales revenue year on year.
In 2021, the average processing cost for crude oil was RMB3,329 per tonne,
representing a increase of 35.6% over 2020. Total crude oil processed was
263.85 million tonnes (excluding volume processed for third parties),
representing an increase of 7.3% over 2020. The total cost of crude oil
processed was RMB878.4 billion, representing an increase of 45.5% over 2020.
In 2021, refining margin was RMB532 per tonne, representing an increase of
RMB292 per tonne compared with that of the same period of 2020. This was
mainly attributed to the increase in demand for refined oil products and
chemical raw materials,and substantial improvement in gross margin of refined
oil products and naphtha, as well as the significant inventory gains of crude
oil and refined products.
In 2021, the refining unit cash operating cost (defined as operating expenses
less the processing cost of crude oil and refining feedstock, depreciation and
amortisation, taxes other than income tax and other operating expenses, then
divided by the throughput of crude oil and refining feedstock) was RMB213 per
tonne, representing an increase of 17.5% over 2020, which was mainly
attributed to the increased expense of safety, environment protection, and
maintenance year on year.
In 2021, the operating revenue of the segment totaled RMB65.3 billion,
representing an increase of RMB70.8 billion compared with that of 2020. This
was mainly due to the fact that the segment seized the opportunity of market
recovery to increase the utilisation rates of facilities and made efforts to
optimise the product slate. The inventory gains of crude oil and refined
products increased, and the refining margin improved significantly.
(3) Marketing and distribution segment
The business activities of the marketing and distribution segment include
purchasing refined oil products from the refining segment and the third
parties, conducting direct sales and wholesale to domestic customers and
retailing, distributing oil products through the segment's retail and
distribution network as well as providing related services.
In 2021, the operating revenues of this segment was RMB1,411.5 billion, up by
28.1% year-on-year. This was mainly attributed to the recovery of market
demand and thus the increase in the sales volume and price of refined oil
products. The sales revenues of gasoline totaled RMB702.5 billion, up by 27.9%
year-on-year; the sales revenues of diesel was RMB462.8 billion, up by 22.7%
year-on-year; the sales revenues of kerosene was RMB80.3 billion, up by 46.4%
year-on-year.
The following table sets forth the sales volumes, average realised prices and
respective percentage changes of the segment's four major refined oil products
in 2021 and 2020, including detailed information about retail, direct sales
and distribution of gasoline and diesel:
Sales volume (thousand tonnes) Average realised price (RMB/tonne)
Year ended 31 December Year ended 31 December
2021 2020 Change (%) 2021 2020 Change (%)
Gasoline 90,873 86,216 5.4 7,730 6,370 21.4
Retail 64,325 61,446 4.7 8,223 6,940 18.5
Direct sales and distribution 26,548 24,770 7.2 6,537 4,955 31.9
Diesel 78,566 77,507 1.4 5,890 4,865 21.1
Retail 33,644 36,757 (8.5) 6,537 5,351 22.2
Direct sales and distribution 44,923 40,750 10.2 5,406 4,426 22.1
Kerosene 21,296 20,828 2.2 3,772 2,634 43.2
Fuel oil 25,847 23,331 10.8 3,437 2,536 35.6
In 2021, the operating expenses of the segment were RMB1,390.3 billion, up by
28.6% year-on-year. This was mainly due to the increase of sales volumes and
prices of refined oil products, and thus the increase of procurement costs.
In 2021, the segment's marketing expense (defined as the operating expenses
less the purchase costs, taxes other than income tax, depreciation and
amortization, divided by sales volume) was RMB197.66 per tonne, up by 4.11%
year on year.
In 2021, the operating revenues of non-fuel business was RMB35.4 billion, up
by RMB1.5 billion year-on-year and the profit of non-fuel business was RMB4.1
billion, up by RMB0.4 billion. This was mainly because the Company vigorously
promoted company-owned and actively explored emerging business models to
maintain the increase of volume and profit of non-fuel business.
In 2021, the segment seized the favorable opportunity of market recovery,
brought synergy advantages of industrial chain into full play, coordinated
internal and external resources, expanded market and increased sales, and
continuously expand business volume. Operating profit was RMB21.2 billion,
representing an increase of RMB0.4 billion or 1.8% year on year.
(4) Chemicals segment
The business activities of the chemicals segment include purchasing chemical
feedstock from the refining segment and the third parties and producing,
marketing and distributing petrochemical and inorganic chemical products.
In 2021, the operating revenues of this segment was RMB505.5 billion, up by
36.0% year-on-year. This was mainly due to the steady growth of domestic
economy, and the fact that the demand for chemical products still maintained a
high level, and the product prices increased year on year.
In 2021, the sales revenue generated by the segment's six major categories of
chemical products (namely basic organic chemicals, synthetic resin, synthetic
fiber monomer and polymer, synthetic fibre, synthetic rubber, and chemical
fertiliser) was RMB478.6 billion, up by 34.9%, accounting for 94.7% of the
operating revenues of the segment.
The following table sets forth the sales volume, average realised prices and
respective changes of each of the segment's six categories of chemical
products in 2021 and 2020.
Sales Volume (Thousand tonnes) Average realised price (RMB/tonne)
Year ended 31 December Year ended 31 December
2021 2020 Change (%) 2021 2020 Change (%)
Basic organic chemicals 48,059 47,109 2.0 5,311 3,569 48.8
Synthetic fibre monomer and polymer 7,010 9,743 (28.1) 6,580 4,302 53.0
Synthetic resin 17,924 17,124 4.7 8,325 7,150 16.4
Synthetic fibre 1,457 1,403 3.8 7,521 6,407 17.4
Synthetic rubber 1,289 1,364 (5.5) 11,104 7,986 39.0
Chemical fertiliser 981 1,181 (16.9) 2,797 1,950 43.4
In 2021, the operating expenses of the chemicals segment was RMB494.4 billion,
representing an increase of 37.0% over 2020, mainly because of the increase in
the price of externally procured raw materials as a result of crude oil price
increase.
In 2021, the Company seized the favorable opportunities of economy recovery
and high realised prices of chemical products, continuously optimised the
structures of feedstock, product and facilities, and achieved growing profits
with increased margins of petrochemicals. The operating profit of this segment
was RMB11.1 billion, representing an increase of 2.7% over 2020.
(5) Corporate and Others
The business activities of corporate and others mainly consist of import and
export business activities of the Company's subsidiaries, R&D activities
of the Company, and managerial activities of headquarters.
In 2021, the operating revenue generated from corporate and others was
approximately RMB1,297.7 billion, representing an increase of 45.8% over 2020.
This was mainly attributed to the great increase in the trading prices of
crude oil and refined oil products.
In 2021, the operating expenses of corporate and others was RMB1,300.9
billion, representing an increase of 46.1% over 2020.
In 2021, the operating loss from corporate and others was RMB3.2 billion,
representing an increase in loss of RMB2.8 billion over the same period of
2020. This was mainly attributed to the expansion of R&D investment scale
which led to increase in R&D expenses and the increase of personnel
expenses.
3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
The major funding sources of the Company are its operating activities and
short-term and long-term loans. The major use of funds includes operating
expenses, capital expenditures, and repayment of the short-term and long-term
debts.
(1) Assets, liabilities and equity
Unit: RMB million
As of As of Change
31 December 31 December
2021 2020
Total assets 1,889,255 1,738,896 150,359
Current assets 558,024 455,660 102,364
Non-current assets 1,331,231 1,283,236 47,995
Total liabilities 974,181 851,194 122,987
Current liabilities 641,280 522,995 118,285
Non-current liabilities 332,901 328,199 4,702
Total equity attributable to shareholders of the Company 774,182 746,325 27,857
Share capital 121,071 121,071 -
Reserves 653,111 625,254 27,857
Non-controlling interests 140,892 141,377 (485)
Total equity 915,074 887,702 27,372
As of 31 December 2021, the Company's total assets was RMB1,889.3 billion,
representing an increase of RMB150.4 billion compared with that of the end of
2020, of which:
Current assets was RMB558.0 billion, representing an increase of RMB102.4
billion compared with that of the end of 2020, mainly because the cash and
cash equivalents and time deposit increased by RMB33.9 billion, and crude oil
and refined oil product inventories increased by RMB55.2 billion as a result
of international crude oil price increase.
Non-current assets was RMB1,331.2 billion, representing an increase of RMB48.0
billion as compared with that of the end of 2020. This was mainly due to the
net value of property plant and equipment increased by RMB5.3 billion,
construction in progress increased by RMB30.4 billion equity of associates and
joint ventures increased by RMB20.8 billion because of the increased profit in
these companies.
The Company's total liabilities was RMB974.2 billion, representing an increase
of RMB123.0 billion compared with that of the end of 2020, of which:
Current liabilities was RMB641.3 billion, representing an increase of RMB118.3
billion as compared with that of the end of 2020. This was mainly due to the
fact that the short-term debts increased by RMB11.5 billion, accounts payable
and bills payable and liabilities from contracts increased by RMB53.7 billion
as a result of raw materials price escalation and operation scale expansion,
other payables increased by RMB60.6 billion, and contract liabilities
decreased RMB1.6 billion.
Non-current liabilities was RMB332.9 billion, representing an increase of
RMB4.7 billion compared with that of the end of 2020.
Total equity attributable to owners of the Company was RMB774.2 billion,
representing an increase of RMB27.9 billion compared with that of the end of
2020.
(2) Cash Flow
The following table sets forth the major items in the consolidated cash flow
statements for 2021 and 2020.
Unit: RMB million
Major items of cash flows Year ended 31 December
2021 2020
Net cash generated from operating activities 225,174 168,520
Net cash used in investing activities (145,198) (102,650)
Net cash used in financing activities (57,942) (37,510)
In 2021, the net cash generated from operating activities of the Company was
RMB225.2 billion, representing an increase of RMB56.7 billion over 2020. This
was mainly due to the increase of RMB60.6 billion in profit before taxation.
In 2021, the net cash used in investing activities was RMB145.2 billion,
representing an increase of RMB42.5 billion over 2020, of which: income from
sales of investment and gains from investing in associates and joint ventures
decreased by RMB44.8 billion, capital expenditure increased by RMB9.6 billion,
exploratory wells expenditure increased by RMB3.6 billion, purchasing
investment and associates and joint ventures investments decreased by RMB1.1
billion, and cash outflow from changes in time deposit with maturities over
three months decreased by RMB13.2 billion.
In 2021, the net cash used in the Company's financing activities was RMB57.9
billion, representing an increase of cash outflow by RMB20.4 billion over
2020. This was mainly due to an increase of RMB3.2 billion in investments from
non-controlling shareholders,, increase of RMB3.6 billion in cash paid for
dividends, decrease of RMB3.2 billion in dividends allocated to
non-controlling shareholders by subsidiaries, and increase of RMB7.1 billion
in acquisition of non-controlling equity interests, and increase in repayment
for lease liabilities of RMB4.1 billion.
At the end of 2021, the cash and cash equivalents was RMB108.6 billion.
(3) Contingent Liabilities
Please refer to "Material Guarantee Contracts and Their Performance" in the
"Significant Events" section of this report.
(4) Capital Expenditure
Please refer to "Capital Expenditures" in the "Business Review and Prospects"
section of this report.
(5) Research & Development and Environmental Expenditures
R&D expenditures include expenses occurred in the period. In 2021 the
expenditures for R&D was RMB21.1 billion, of which expense was RMB11.5
billion, and capitalised cost was RMB9.6 billion.
Environmental expenditures refer to the normal routine pollutant discharge
fees paid by the Company, excluding capitalised cost of pollutant treatment
properties. In 2021, the Company paid environmental expenditures of RMB11.0
billion.
(6) Measurement of fair values of derivatives and relevant system
The Company has established sound decision-making mechanism, business process
and internal control systems relevant to financial instrument accounting and
information disclosure.
Items relevant to measurement of main fair
values
Unit: RMB million
Items Beginning End of Profits and Accumulated Impairment Funding
of the year the year losses from variation of loss source
variation of fair values provision
fair values recorded of the
in the as equity current year
current year
Financial assets held for trading 1 - - - - Self-owned fund
Stock 1 - - - -
Derivative financial instruments 157 1,350 (14,873) - - Self-owned fund
Cash flow hedges 7,545 13,798 694 15,659 - Self-owned fund
Other equity instruments investment 1,525 767 - (6) - Self-owned fund
Total 9,228 15,915 (14,179) 15,653 -
4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASs
The major differences between the Company's financial statements prepared
under CASs and IFRS are set out in Section C of the financial
statements of the Company on page 204 of this report.
(1) Under CASs, the operating income and operating profit or loss by
reportable segments were as follows:
Year ended 31 December
2021 2020
RMB million RMB million
Operating income
Exploration and Production Segment 249,998 167,755
Refining Segment 1,385,564 944,066
Marketing and Distribution Segment 1,411,544 1,102,206
Chemicals Segment 505,503 371,629
Corporate and Others 1,297,701 890,283
Elimination of inter-segment sales (2,109,426) (1,371,215)
Consolidated operating income 2,740,884 2,104,724
Operating profit/(loss)
Exploration and Production Segment 613 (20,570)
Refining Segment 65,360 (6,526)
Marketing and Distribution Segment 23,102 19,634
Chemicals Segment 11,361 9,592
Corporate and Others 9,521 (2,048)
Elimination of inter-segment sales (4,421) 4,417
Financial expenses, investment income, losses from changes in fair value, 6,878 46,304
other income and asset disposal gains/(losses)
Consolidated operating profit 112,414 50,803
Net profit attributable to equity shareholders of the Company 71,208 33,271
Operating profit: In 2021, the operating profit of the Company was RMB112.4
billion, representing an increase of RMB62.1 billion as compared with that of
2020.
Net profit: In 2021, the net profit attributable to the equity shareholders of
the Company was RMB71.2 billion, representing an increase of RMB37.9 billion
or 114.02% compared with 2020.
(2) Financial data prepared under CASs
As of 31 As of 31
December 2021 December 2020 Change
RMB million RMB million
Total assets 1,889,255 1,738,896 150,359
Non-current liabilities 331,934 327,181 4,753
Shareholder's equity 916,041 888,720 27,321
Change analysis:
At the end of 2021, the Company's total assets was RMB1,889.3 billion,
representing an increase of RMB150.4 billion compared with that of the end of
2020, mainly because inventory increased by RMB55.2 billion, cash at bank and
on hand increased by RMB37.6 billion, long-term equity investment increased by
RMB20.8 billion, and construction in progress increased by RMB30.4 billion.
At the end of 2021, the Company's non-current liabilities was RMB331.9
billion, representing an increase of RMB4.8 billion compared with that of the
end of 2020.
At the end of 2021, the shareholders' equity of the Company was RMB916.0
billion, representing an increase of RMB27.3 billion compared with that of the
end of 2020.
(3) The results of the principal operations by segments
Segments Operation Operation Gross profit Increase Increase of Increase/
income cost margin* (%) of operation operation cost (decrease) of
RMB million RMB million income on a on a year-on- gross profit
year-on-year year basis (%) margin on a
basis (%) year-on-year
basis (%)
Exploration and Production 249,998 206,332 12.9 49.0 37.3 7.0
Refining 1,385,564 1,061,650 6.0 46.8 50.8 4.0
Marketing and Distribution 1,411,544 1,317,918 6.4 28.1 29.4 (0.9)
Chemicals 505,503 466,971 6.9 36.0 38.8 (2.0)
Corporate and Others 1,297,701 1,268,685 2.2 45.8 45.1 0.4
Elimination of inter-segment sales (2,109,426) (2,105,005) N/A N/A N/A N/A
Total 2,740,884 2,216,551 9.7 30.2 31.5 0.9
*: Gross profit margin = (operation income - operation cost, tax and
surcharges)/operation income.
5 THE CAUSE AND IMPACT OF THE CHANGE IN THE COMPANY'S ACCOUNTING POLICY,
ACCOUNTING ESTIMATES AND ACCOUNTING METHODS
For details, please refer to Note 3(26) to the financial statements prepared
in accordance with CASs and Note 1 to the financial statement prepared in
accordance with IFRS.
CORPORATE GOVERNANCE
1 IMPROVEMENTS IN CORPORATE GOVERNANCE DURING THE REPORTING PERIOD
During the reporting period, the Company complied with the Articles of
Association as well as domestic and overseas laws and regulations, adhered to
the standard operation, continuously improved the corporate governance and
promoted the corporate quality. The Company further improved its corporate
governance structure by completing the re-election of the Board of Directors
and Board of Supervisors, which improved the diversity of the Board; adjusting
the members of special committees of the Board, renaming the Social
Responsibility Management Committee as the Sustainable Development Committee;
and appointing the Senior Management. The Independent Non-executive Directors
of Sinopec Corp. conscientiously fulfilled their duties, actively attended the
board meetings and meetings of special committees of the Board, reviewed and
considered proposals with due care, and offered advice and suggestions on the
Company's reforms and development. The Company strengthened the edifice of the
fundamental system of corporate governance and laid a solid foundation by
revising management regulations of Information Disclosure and Investor
Relations, the Terms of Reference of the Independent Non-Executive Directors,
the Nomination Committee and the Sustainable Development Committee according
to the latest regulatory requirements and work practice. The Company
endeavoured to improve the effectiveness of internal control policy, and the
edifice of internal control system had reached a new level. The Company
continuously improve the quality of information disclosure and enhance
transparency by paying more attention to the information disclosure about ESG,
appointing an independent third party to verify the sustainable development
report, and providing more information voluntarily. As a result, the Company
obtained an A-level rating of Shanghai Stock Exchange in the assessment of
information disclosure. The Company focused on communication with investors,
maintained positive interaction with investors despite of the adverse impact
of the Covid-19 pandemic, resulting in new enhancements of investor relations.
The Company continuously improved the quality of Party building to stimulate
the enthusiasm of the staff for work, and enhanced the discipline inspection
and supervision to maintain the effective implementation of the deployments of
the Board all of which achieve the high-quality development of the Company.
During the reporting period, there was no material inconsistency between
Sinopec Corp.'s corporate governance and the requirements of the PRC Company
Law and relevant regulations of the CSRC. The Board of Supervisors of Sinopec
Corp. had no objection to any of the supervised matters. None of Sinopec
Corp., the Board, the Directors, the Supervisors, the Senior Management, the
controlling shareholder or de facto controllers of Sinopec Corp. were under
the investigation by the CSRC or received any regulatory sanction or public
condemnation by the CSRC, the Hong Kong Securities and Futures Commission, or
the Securities and Exchange Commission of the United States, or received any
public censure from Shanghai Stock Exchange, the Hong Kong Stock Exchange, the
New York Stock Exchange or the London Stock Exchange.
2 GENERAL MEETINGS
During the reporting period, Sinopec Corp. convened 2020 Annual General
Meeting on 25 May 2021 in Beijing, China, and 2021 First Extraordinary General
Meeting on 20 October 2021 in Beijing, China in accordance with the procedures
of noticing, convening and holding pursuant to the relevant laws and
regulations and the Articles of Association. For details of the general
meetings, please refer to the poll results announcements published on 26 May
and 21 October 2021 respectively on China Securities Journal, Shanghai
Securities News, Securities Times and the website of Shanghai Stock Exchange,
as well as those published on 25 May and 20 October 2021 respectively on the
website of Hong Kong Stock Exchange.
3 EQUITY INTERESTS OF DIRECTORS, SUPERVISORS AND OTHER SENIOR MANAGEMENT
As of December 31, 2021, Mr. Ling Yiqun, Director, Senior Vice President, held
13,000 A shares of Sinopec Corp., and Mr. Li Defang, Supervisor, held 40,000 A
shares of Sinopec Corp. (held as interest of spouse).
Save as disclosed above, during the reporting period, none of the Directors,
Supervisors and Senior Management of Sinopec Corp. and their respective
associates had any interests or short positions (including any interest or
short position that is regarded or treated as being held in accordance with
the SFO) in the shares, debentures and underlying shares of Sinopec Corp. or
any associated corporations (as defined in Part XV of SFO) would fall to be
disclosed to the Sinopec Corp. and the Hong Kong Stock Exchange under the
Divisions 7 and 8 of Part XV of SFO or which was recorded in the register
required to be kept under section 352 of SFO or otherwise should notified
Sinopec Corp. or the Hong Kong Stock Exchange pursuant to the Model Code for
Securities Transactions by Directors of Listed Company under the Hong Kong
Listing Rules.
4 COMPANY'S INDEPENDENCE FROM CONTROLLING SHAREHOLDER
The Company is independent from its controlling shareholder in terms of, among
other matters, business, assets and finances. The controlling shareholder of
the Company exercised shareholder's rights through the general meeting
according to applicable laws and didn't overstep the authority of the general
meeting or directly or indirectly interfere with the Company's operating
decisions and operating activities. The Company has a well-integrated
independent business and independent operating capabilities. During the
reporting period, the Company did not identify the controlling shareholder
taking advantage of its special position to misappropriate and damage the
interests of the Company or the other shareholders.
5 COMPETITION BETWEEN SINOPEC CORP. AND ITS CONTROLLING SHAREHOLDER
Please refer to "Performance of Undertaking by China Petrochemical
Corporation" under the section "Significant Events" in this annual report for
details.
6 IMPROVEMENT AND IMPLEMENTATION OF THE INTERNAL CONTROL SYSTEM
For details of internal control self-assessment and internal control auditing,
please refer to the internal control assessment report and the internal
control auditing report disclosed by the Company on the same date of this
annual report.
7 MANAGEMENT CONTROL OF SUBSIDIARIES
The Company implements standardized control over different types of
subsidiaries in accordance with laws and regulations, the Articles of
Association and the internal control system. During the Reporting Period, the
Company did not purchase subsidiaries that met material criteria.
8 SENIOR MANAGEMENT APPRAISAL AND INCENTIVE SCHEMES
Sinopec Corp. has established and is continuously improving its fair and
transparent set of performance appraisal standards, incentive and restrictive
mechanisms for Directors, Supervisors and other Senior Management. Sinopec
Corp. has implemented incentive policies including the Measures of Sinopec
Corp. for the Management of Performance Evaluations.
9 CORPORATE GOVERNANCE REPORT (IN ACCORDANCE WITH HONG KONG LISTING
RULES)
(1) Compliance with the Corporate Governance Code
Sinopec Corp. complied with all code provisions of the Corporate Governance
Code set out in Appendix 14 of the Hong Kong Listing Rules during the
reporting period.
A Board of Directors
A.1 Board of Directors
a. The Board is the decision-making body of Sinopec Corp. and abides by
good corporate governance practices and procedures. All decisions made by the
Board are implemented by the Management of Sinopec Corp.
b. The Board of the Company held its meetings at least once a quarter. The
Board will usually communicate the time and proposals of the Board meeting 14
days before convening of the meeting. The relevant documents and materials for
Board meetings are usually delivered to each Director 10 days in advance. In
2021, Sinopec Corp. held seven Board meetings. For details about each
Director's attendance at the Board meetings and the general meetings, please
refer to the section "Report of the Board of Directors" in this annual report.
c. Each Director of the Board can submit proposals to be included in the
agenda of Board meetings, and each Director is entitled to request other
related information.
d. The Board has reviewed and evaluated its performance in 2021 and is of
the view that the Board made decisions in compliance with domestic and
overseas regulatory authorities' requirements and the Company's internal
rules; that the Board has considered the suggestions from the Party
organisation, Board of Supervisors and management during its decision-making
process; and that the Board safeguarded the legitimate rights and interests of
Sinopec Corp. and its shareholders.
e. The Secretary to the Board assists the Directors in handling the
day-to-day work of the Board, continuously informs the Directors of the
regulations, policies or other requirements of domestic or overseas regulatory
authorities in relation to corporate governance and ensures that the Directors
comply with domestic and overseas laws and regulations when performing their
duties and responsibilities. Sinopec Corp. has purchased liability insurance
for all Directors to minimise the potential risks that might arise from the
adequate performance of their duties.
A.2 Chairman and President
a. Mr. Ma Yongsheng serves as Chairman of the Board and Mr. Yu Baocai
serves as President of Sinopec Corp. The Chairman of the Board is elected by a
majority vote of all Directors, and the President is nominated and appointed
by the Board. The respective main duties and responsibilities of the Chairman
and the President are clearly distinguished from each other, and the scope of
their respective duties and responsibilities are set out in the Articles of
Association.
b. The Chairman of the Board places great emphasis on communication with
the Independent Non-executive Directors. The Chairman independently held three
meetings with the Independent Non-executive Directors in respect of
development strategy, corporate governance, and operational management, etc.
c. The Chairman encourages open and active discussions. The Directors
fully and deeply participated in the discussions of significant decisions in
the Board meetings.
A.3 Board composition
a. The Board of Directors currently consists of ten members, among whom
are four Executive Directors and six Non-executive Directors. Among the
Non-executive Directors, there are four Independent Non-executive Directors,
accounting for two-fifths of the total number of Directors. For details,
please refer to the section "Directors, Supervisors, Senior Management and
Employees" of this annual report.
b. Sinopec Corp. has received from each of the Independent Non-executive
Directors a letter of confirmation for 2022 regarding their compliance with
relevant independence requirements set out in Rule 3.13 of the Hong Kong
Listing Rules. Sinopec Corp. considers that each of the Independent
Non-executive Directors is independent.
A.4 Appointment, re-election and dismissal
a. The Directors serve three-year terms, and the consecutive terms of
office of any Independent Non-executive Director cannot exceed six years. In
May 2021, Mr. Zhang Yuzhuo, Mr. Ma Yongsheng, Mr. Zhao Dong, Mr. Yu Baocai,
Mr. Ling Yiqun, Mr. Li Yonglin, Mr. Liu Hongbin, Mr. Cai Hongbin, Mr. Ng, Kar
Ling Johnny, Ms. Shi Dan, and Mr. Bi Mingjian, nominated by the Board of
Directors as the candidates for the eighth session of the Board based on the
actual needs of the Company, were elected by the general meeting of
shareholders as Directors of the Company; Mr. Ma Yongsheng was elected by the
Board of Directors as Chairman of the Board of Directors of Sinopec Corp on 29
November 2021. For details about the tenure of each Director, please refer to
the section "Directors, Supervisors, Senior Management and Employees".
Mr. Bi was a Director of China International Capital Corporation Limited
("CICC") before his retirement in February 2020. China International Capital
Corporation Limited provided financial advisory services to China
Petrochemical Corporation (being the controlling shareholder of the Company)
and its subsidiaries during the period from 1 January 2019 to the date of this
report. However, the Board is of the view that Mr. Bi satisfies the
independence requirements for Independent Non-executive Directors, taking into
account the following factors:
(1) Mr. Bi was not a relationship holder of the Company or China
Petrochemical Corporation in CICC throughout his service in CICC;
(2) Other than being a consultant ending in March 2022, which is of honorary
nature, Mr. Bi does not involve in the management or operation of CICC, and
Mr. Bi has not had any engagement with CICC, nor holds any position in CICC
after his retirement;
(3) Mr. Bi holds no share in the Company or China Petrochemical Corporation
as at the date of this report;
(4) Mr. Bi holds 1,501,451 shares in CICC, representing 0.03% of the total
issued shares of CICC as at the date of this report, which constitutes a
minimal part of the share capital of CICC and is immaterial in the context of
independence, and Mr. Bi does not have any other economic interest in or in
association with CICC;
(5) Mr. Bi has not involved or participated in, and will not involve or
participate in, any transaction (if any) between the Company (or its
controlling shareholder, or their respective subsidiaries or core connected
persons) and CICC in his capacity as a consultant of CICC; and
(6) Mr. Bi has met all requirements under Rule 3.13 (other than Rule
3.13(3)) of the Hong Kong Listing Rules ("Listing Rules") and there are no
other matters that would potentially compromise Mr. Bi's compliance with the
independence criterion as set out in Rule 3.13.
b. All Directors of Sinopec Corp. have been elected at the general meeting
of shareholders. The Board has no power to appoint temporary Directors.
c. Sinopec Corp. engages professional consultants to prepare detailed
materials for newly elected Directors, to notify them of the regulations of
each listing place of Sinopec Corp. and to remind them of their rights,
responsibilities, and obligations as Directors.
A.5 Nomination Committee
a. The Board of Directors established Nomination Committee, consisting of
the Independent Non-executive Director, Ms. Shi Dan, who serves as the
chairman, and the Chairman of the Board, Mr. Ma Yongsheng, and Mr. Ng, Kar
Ling Johnny, who serve as members. The principal responsibilities of
Nomination Committee are to provide suggestions to the Board on Board's size
and composition, the selecting standards and procedures, and candidates for
Directors and senior management. Procedures to Propose a Person for Election
as a Director of Sinopec Corp. are published on Sinopec Corp.'s website at
http://www.sinopec.com.
b. The Board established the Board Diversity Policy which stipulates that
the members of the Board shall be nominated and appointed based on the skills
and experience for the overall optimum operation of the Board, while taking
into account the targets and requirements of the board diversity. When
deciding the composition of the Board, Sinopec Corp. shall consider several
factors in relation to the diversity of the Board, including but not limited
to professional experience, skills, knowledge, length of service, regions,
cultural and educational backgrounds, gender, and age. The provisions of the
Articles of Association concerning the term of office of directors help to
ensure that the Board of Directors has a proper balance between continuous
experience and new thinking, and enhance the level of diversity. Sinopec Corp.
focuses on the implementation of the Board Diversity Policy. Currently, the
Board has achieved diversity in terms of gender, culture, educational
backgrounds, professional specialties, etc. The Directors come from different
industries at home and abroad with rich work experience. Professional
backgrounds of Directors include petroleum and petrochemical corporate
management, as well as economics, accounting, finance, and industry and energy
economy, which are conductive to strategic planning and scientific
decision-making.
c. The members of the Nomination Committee can engage professionals when
performing their duties. Reasonable costs arising from such consultations are
borne by Sinopec Corp. In the meantime, the Nomination Committee has also
appointed consultant members and can require such member to provide advice.
The working expenses of the Nomination Committee are included in the budget of
Sinopec Corp.
d. During the reporting period, the Nomination Committee held two meetings
(please refer to "Meetings Held by the Board Committees" under the section
"Report of the Board of Directors" in this annual report).
A.6 Responsibility of Directors
a. All Non-executive Directors have the same duties and powers as the
Executive Directors. In addition, the Independent Non-executive Directors are
entitled to certain specific powers. The Articles of Association and the Rules
of Procedure of Board Meetings clearly prescribe the duties and powers of
Directors, Non-executive Directors including Independent Non-executive
Directors, which are published on the Sinopec Corp.'s website at
http://www.sinopec.com.
b. Each of the Directors was able to devote sufficient time and efforts to
handling the affairs of Sinopec Corp.
c. Each of the Directors confirmed that he/she has complied with the Model
Code for Securities Transactions by Directors of Listed Issuers during the
reporting period. Meanwhile, Sinopec Corp. formulated the Rules Governing
Shares Held by Company Directors, Supervisors and Senior Managers and Changes
in Shares and the Model Code of Securities Transactions by Company Employees
to regulate the purchase and sale of Sinopec Corp.'s securities by relevant
personnel.
d. Sinopec Corp. organised and arranged training sessions for Directors
and paid the relevant fees as well as making relevant records. During the
reporting period, the Directors actively participated in the trainings and
attached great importance to continuing professional development to ensure
that their contribution to the Board remains informed and relevant.
A.7 Provision and use of information
a. The agenda and other documents for reference for meetings of the Board
and Board committees are distributed prior to the meetings to allow each
Director sufficient time to review the materials so that Directors can make
informed decisions.
b. Each Director can obtain all related information in a comprehensive and
timely manner. The Secretary of the Board is responsible for organising and
preparing the materials for the Board meetings, including preparation of
explanations for each proposal to ensure fully understanding by the Directors.
The Management is responsible for providing the Directors with necessary
information and materials. The Directors may require the Management, or
require, via the Management, relevant departments to provide necessary
information or explanations. The Directors may seek advice from professional
consultants when necessary.
B Remuneration and Appraisal Committee
a. Remuneration and Appraisal Committee ("Remuneration Committee")
consists of Independent Non-executive Director, Mr. Bi Mingjian, who serves as
the Chairman, and the Chairman of the Board, Mr. Ma Yongsheng and the
Independent Non-executive Director, Mr. Ng, Kar Ling Johnny, who serve as the
members of the Remuneration Committee. The Remuneration Committee is
responsible for reviewing the implementation of the annual remuneration plans
for Directors, Supervisors, and other senior management as approved at the
general meeting of the shareholders, and reporting to the Board.
b. The Remuneration Committee always consults the Chairman of the Board
and the President about the remuneration plans for other Executive Directors.
After the Remuneration Committee's review, it is of the view that all the
Executive Directors of Sinopec Corp. have fulfilled the duty clauses in their
service contracts in 2021.
c. The members of the Remuneration Committee can engage independent
professionals when performing its duties. Reasonable costs arising from such
consultations are borne by Sinopec Corp. In the meantime, the Remuneration
Committee has also appointed consultant members and can require such members
to provide advice. The working expenses of the Remuneration Committee are
included in the budget of Sinopec Corp. According to the policies of Sinopec
Corp., the senior management and relevant departments of Sinopec Corp. shall
actively cooperate with the Remuneration Committee.
d. During the reporting period, the Remuneration Committee held one
meeting (please refer to "Meetings Held by the Board Committees" under the
section of "Report of the Board of Directors" in this annual report).
C Accountability and Auditing
C.1 Financial reporting
a. Directors are responsible for supervising the preparation of accounts
for each fiscal period to ensure that the accounts truly and fairly reflect
the condition of the business, the performance, and the cash flow of the
Company during the period. The Board approved the Financial Report for 2021
and warranted that the annual report contained no false representations, no
material omissions or misleading statements and jointly and severally accepted
full responsibility for the authenticity, accuracy, and completeness of the
content.
b. Sinopec Corp. provides Directors with information about the financial,
production and operating data of the Company, capital market updates, and
securities regulatory developments every month to ensure that the Directors
can learn about the latest developments of the Company and regulatory changes
in a timely manner.
c. Sinopec Corp. has adopted an internal control mechanism to ensure that
the Management and relevant departments have provided the Board and the Audit
Committee with sufficient financial data and related explanations and
materials.
d. The external auditors of Sinopec Corp. made a statement on their
reporting responsibilities in the auditor's report contained in the financial
report.
C.2 Internal Control and Risk Management
a. Sinopec Corp. has formulated and implemented its internal control and
risk management system. The Board as a decision-making body is responsible for
evaluating and reviewing the effectiveness of its internal control and risk
management. The Board and the Audit Committee periodically (at least annually)
receive reports of the Company regarding internal control and risk management
information from the Management. All major internal control and risk
management issues are reported to the Board and the Audit Committee. Sinopec
Corp. has set up its internal control and risk management department and
internal auditing departments, which are equipped with sufficient staff, and
these departments periodically (at least twice per year) report to the Audit
Committee. The internal control and risk management system of the Company are
designed to manage rather than eliminate all the risks of the Company.
b. In terms of internal control, Sinopec Corp. adopted the internal
control framework prescribed in the internationally accepted Committee of
Sponsoring Organisations of the Treadway Commission Report ("COSO"). Based
upon the Articles of Association and the applicable management policies
currently in effect, as well as in accordance with relevant domestic and
overseas applicable regulations, Sinopec Corp. formulates and continuously
improves the Internal Control Manual to achieve internal control of all
factors of internal environment, risk assessment, controlling activities,
information and communication, and internal supervision. At the same time,
Sinopec Corp. has constantly supervised and evaluated its internal control,
and conducted comprehensive and multi-level inspections including regular
test, enterprise self-examination and auditing check, and included
headquarters, branches and subsidiaries into the scope of internal control
evaluation, with an internal control evaluation report being produced. The
Board annually reviews the internal control evaluation report. For detailed
information about the internal control during the reporting period, please
refer to the "Report on Internal Control Evaluation" prepared by Sinopec Corp.
Sinopec Corp. has formulated and implemented its information disclosure policy
and insider registration policy. The Company regularly evaluates the policy
implementation and makes disclosure in accordance with relevant regulations.
Please refer to the website of Sinopec Corp. (http://www.sinopec.com) for the
details of the information disclosure policy.
c. In terms of risk management, Sinopec Corp. adopts the enterprise risk
management framework provided by COSO, and establishes its risk management
policy and risk management organisation system. The Company annually conducts
risk evaluation to identify major and important risks and perform risk
management duties. It has designed major and important risks tackling
strategies and measures combined with its internal control system and
periodically monitors their implementation to ensure adequate care, monitor
and tackling of major risks.
d. Based upon the review and evaluation of internal control and risk
management of the reporting period, the Board is of the view that the internal
control and risk management of the Company are effective.
C.3 Audit Committee
a. The Board has established an Audit Committee. The Audit Committee
consists of Independent Non-executive Director, Mr. Ng, Kar Ling Johnny, who
serves as the Chairman, and Independent Non-executive Directors, Mr. Cai
Hongbin, Ms. Shi Dan, and Mr. Bi Mingjian, who serve as members.
b. During the reporting period, the Audit Committee held five meetings
(please refer to the "Meetings Held by the Board Committees" under the section
of "Report of the Board of Directors" in this annual report). The review
opinions were issued at each meeting and submitted to the Board. During the
reporting period, the Board and the Audit Committee had no disagreement.
c. Audit Committee can engage independent professionals when performing its
duties. Reasonable costs arising from such consultations are borne by Sinopec
Corp. In the meantime, the Audit Committee has appointed consultant members
and can request such members to provide advice. The working expenses of the
Audit Committee are included in the budget of Sinopec Corp. In accordance with
the policies of Sinopec Corp., the senior management and relevant departments
of Sinopec Corp. shall actively cooperate with the Audit Committee.
d. The Audit Committee has reviewed the adequacy and sufficiency of the
resources for accounting and financial reporting and the qualifications and
experience of the relevant employees as well as the sufficiency of the
training courses and the budget thereof. Audit Committee is of the view that
the Management has fulfilled the duties to establish an effective internal
control system. The Company established a whistle-blowing policy in its
internal control system, providing several channels including online
reporting, reporting by letters, appeals and complaint mailbox, etc. to
employees to report behaviour that violates the internal control system of the
Company. The Audit Committee has reviewed and approved such policy.
D Delegation of power by the Board
a. The Board and the Management have clear duties and responsibilities
under written rules. The Articles of Association and the Rules of Procedure
for the General Meetings of Shareholders and the Rules of Procedure of the
Board Meetings clearly set forth the scope of duties, powers, and delegation
of power of the Board and Management, which are published on the website of
Sinopec Corp. at http://www.sinopec.com.
b. In addition to the Audit Committee, the Remuneration Committee and
Nomination Committee, the Board had established the Strategy Committee and the
Sustainable Development Committee (formerly known as Social Responsibility
Management Committee). The Strategy Committee is responsible for overseeing
long-term development strategies and significant investment decisions of the
Company. The Strategy Committee consists of eight Directors, including the
Chairman of the Board, Mr. Ma Yongsheng, who serves as Chairman, Executive
Directors, Mr. Yu Baocai, Mr. Ling Yiqun, Mr. Li Yonglin, Mr. Liu Hongbin, and
Independent Non-executive Directors, Mr. Cai Hongbin, Ms. Shi Dan, and Mr. Bi
Mingjian, who serve as members. The Sustainable Development Committee
(formerly known as Social Responsibility Management Committee) is responsible
for preparing policies, governance, strategies and plans for sustainable
development of the Company, which consists of four Directors, including the
Chairman of the Board, Mr. Ma Yongsheng, who serves as Chairman, the
Non-executive Director, Mr. Zhao Dong, the Executive Director, Mr. Li Yonglin,
and the Independent Non-executive Director, Mr. Cai Hongbin, who serve as
members.
c. Each Board Committee shall report its decisions and recommendations to
the Board and has formulated its terms of references. The Terms of Reference
of the Audit Committee, the Terms of Reference of the Remuneration Committee,
the Terms of Reference of the Nomination Committee and the Terms of Reference
of the Nomination Committee are published on the website of Sinopec Corp. at
http://www.sinopec.com.
E Investor Relations
a. Sinopec Corp. attach considerable significance to investor relations.
The Management attends road shows every year to answer questions on subjects
of concern to investors, such as introducing the development strategies and
the production and business performance of the Company. The Board Secretariat
of Sinopec Corp. is responsible for communicating with investors. In
compliance with regulatory provisions, Sinopec Corp. enhances communication
with investors by holding meetings with institutional investors, setting up an
investor hotline, and communicating through internet platform, etc.
b. During the reporting period, separate resolutions were proposed for
each substantially separate issue at the general meeting of shareholders. All
resolutions were voted by poll in protection of the interest of all
shareholders. Notices of the general meeting were dispatched to shareholders
45 days (excluding the date of the general meeting) in advance.
c. The Chairman (or the director who performs the duties of Chairman) of
the Board hosted the annual general meeting for the year 2020 and the First
Extraordinary General Meeting for the year 2021. Several members of the Board
of Directors, the Board of Supervisors, and senior management attended the
meetings and conducted in-depth communication with the investors.
d. According to relevant rules of Sinopec Corp., the Secretary to the Board
is responsible for establishing an effective communication channel between
Sinopec Corp. and its shareholders, for setting up special departments to
communicate with the shareholders and for passing the opinions and proposals
of the shareholders to the Board and Management in a timely manner. Contact
details of Sinopec Corp. can be found in the "Investor Centre" column on
Sinopec Corp.'s website.
F Company Secretary
a. The Hong Kong Stock Exchange recognised the Secretary to the Board as
having the relevant qualifications as company Secretary. Nominated by the
Chairman of the Board and appointed by the Board, the Secretary to the Board
is a senior management officer of Sinopec Corp. and responsible for the
Company and the Board. The Secretary gives opinions on corporate governance to
the Board and arranges orientation training and professional development for
the Directors.
b. During the reporting period, the Secretary to the Board actively
participated in career development training for more than 15 training hours.
G Shareholders' Rights
a. Shareholders who individually or collectively hold 10% of the total
voting shares of Sinopec Corp. may request the Board in writing to convene the
general meeting of shareholders. If the Board fails to approve the request to
convene the meeting according to the Rules of Procedure for General Meetings
of Shareholders, the shareholders may convene and hold the meeting at their
discretion according to applicable laws, and reasonable expenses incurred will
be borne by Sinopec Corp. These aforementioned provisions are subject to the
following conditions: the proposals at the general meeting of shareholders
must fall within the responsibilities of the general meeting of shareholders,
with specific proposals and resolutions and in compliance with relevant laws,
administrative regulations and the Articles of Association.
b. When Sinopec Corp. holds the general meeting of shareholders,
shareholders who individually or collectively hold 3% of the total voting
shares of Sinopec Corp. may propose a supplemental proposal 10 days before the
date of the general meeting.
c. The eligibility for attending the general meeting, the rights of
shareholders, the resolutions at the meeting and the voting procedures are
clearly stated in the notice of the general meeting of shareholders of Sinopec
Corp. dispatched to the shareholders.
d. Sinopec Corp. has established a special organisation for communication
with shareholders and publishes relevant contact details to facilitate
shareholders to make enquiries in accordance with Articles of Association.
(2) Auditors
The appointment of KPMG Huazhen LLP and KPMG as Sinopec Corp.'s external
auditors for 2021 and the authorisation of the Board to determine their
remuneration were approved at Sinopec Corp.'s Annual General Meeting for the
Year 2020 on 25 May 2021. The audit fee for 2021 is RMB41.69 million
(including audit fee of internal control), which was approved at the 7th
Meeting of the Eighth Session of the Board. The annual financial statements of
the year ended 31 December 2021 have been audited by KPMG Huazhen LLP and
KPMG. The Chinese certified public accountants signing the report are Yang Jie
and He Shu from KPMG Huazhen LLP.During the reporting period, KPMG Huazhen LLP
and KPMG and their affiliates firms provided non-audit service, such as tax
consulting and due diligence investigation to the Company, and the fee charged
was RMB8.11 million. PricewaterhouseCoopers and PricewaterhouseCoopers Zhong
Tian LLP (collectively, the "Former Auditors") served respectively as the
external auditors of the Company for the year 2013 to 2020 and retired as the
external auditors of the Company as resolved by shareholders at the annual
general meeting for the year 2020. Each of the Former Auditors has no
objections to the retirement, and has confirmed that there are no matters in
relation to their retirement which should be brought to the attention of the
shareholders of the Company. The Board is not aware of any matters in relation
to the change in Auditors that need to be brought to the attention of the
shareholders of the Company.
(3) Other information about Sinopec Corp.'s corporate governance
Except for their working relationships with Sinopec Corp., none of the
Directors, Supervisors or other senior management has any financial, business
or family relationship or any relationship in other material aspects with one
another. For information about shareholdings of substantial shareholders and
changes in share capital, please refer to page 67 to page 68; for information
about meetings of the Board, please refer to page 57 to page 58; for
information about meetings held by Board Committees, please refer to page 59;
for information about tenure of Non-executive Directors, please refer to page
38; for information about equity interests of Directors, Supervisors and other
senior management, please refer to page 28; for information about the
biographies and annual remuneration of Directors, Supervisors and other senior
management, please refer to page 35 to page 43.
10 DETAILED IMPLEMENTATION OF THE SHARE INCENTIVE SCHEME DURING THE
REPORTING PERIOD
The Company did not implement any share incentive scheme during the reporting
period.
11 INTRODUCTION OF DIRECTORS, SUPERVISORS AND OTHER SENIOR MANAGEMENT
(1) Directors
Ma Yongsheng, aged 60, Chairman of the Board of Sinopec Corp. Mr. Ma is a
professor level senior engineer with a Ph.D. degree. Mr. Ma is a member of the
13th National Committee of Chinese People's Political Consultative Conference
("CPPCC") and an academician of the Chinese Academy of Engineering. In April
2002, he was appointed as Chief Geologist of Sinopec Southern Exploration and
Production Company; in April 2006, he was appointed as Executive Deputy
Manager (in charge of overall management), Chief Geologist of Sinopec Southern
Exploration and Production Company; in January 2007, he was appointed as
General Manager and Party Secretary of CPC Committee of Sinopec Southern
Exploration and Production Company; in March 2007, he served as General
Manager and Deputy Party Secretary of CPC Committee of Sinopec Exploration
Company; in May 2007, he was appointed as Deputy Commander of Sichuan-East
China Gas Pipeline Project Headquarter of Sinopec Corp.; in May 2008, he was
appointed as Deputy Director General of Exploration and Production Department
of Sinopec Corp. (Director General Level); in July 2010, he served as Deputy
Chief Geologist of Sinopec Corp.; in August 2013, he was appointed as Chief
Geologist of Sinopec Corp.; in December 2015, he served as Vice President of
China Petrochemical Corporation and was appointed as Senior Vice President of
Sinopec Corp.; in January 2017, he was appointed as Member of the Leading
Party Member Group of China Petrochemical Corporation; in October 2018, he was
appointed as President of Sinopec Corp; in April 2019, he was appointed as
Director, President and Vice Secretary of the Leading Party Member Group of
China Petrochemical Corporation; in November 2021, he was appointed as
Chairman and Secretary of the Leading Party Member Group of China
Petrochemical Corporation. Mr. Ma was elected as Director of Sinopec Corp. in
February 2016, and was elected as the Chairman of the Board of Sinopec Corp.
in November 2021.
Zhao Dong, aged 51, Director of Sinopec Corp. Mr. Zhao is a professor level
senior accountant with a Ph.D. degree. In July 2002, he was appointed as Chief
Accountant and General Manager of Financial Assets Department of CNPC
International (Nile) Ltd.; in January 2005, he was appointed as Deputy Chief
Accountant and Executive Deputy Director of Financial and Capital Operation
Department of China National Oil and Gas Exploration and Development
Corporation; in April 2005, he was appointed as Deputy Chief Accountant and
General Manager of Financial and Capital Operation Department of China
National Oil and Gas Exploration and Development Corporation; in June 2008, he
was appointed as Chief Accountant of China National Oil and Gas Exploration
and Development Corporation; in October 2009, he was appointed as Chief
Accountant of China National Oil and Gas Exploration and Development
Corporation and Chief Financial Officer of PetroChina International Investment
Company Limited; in September 2012, he was appointed as Deputy General Manager
of CNPC Nile Company; in August 2013, he was appointed as General Manager of
CNPC Nile Company; in November 2015, he was appointed as Chief Financial
Officer of PetroChina Company Limited. In November 2016, he was appointed as a
Member of the Leading Party Member Group and Chief Accountant of China
Petrochemical Corporation; in May 2020, he was appointed as Director and
Deputy Secretary of the Leading Party Member Group of China Petrochemical
Corporation. In June 2017, he was elected as Chairman of Board of Supervisors
of Sinopec Corp.; in May 2021, he was elected as Director of Sinopec Corp.
Yu Baocai, aged 57, Director and President of Sinopec Corp. Mr. Yu is a senior
engineer with a master's degree in economics. In September 1999, Mr. Yu was
appointed as Deputy General Manager of Daqing Petrochemical Company; in
December 2001, he was appointed as General Manager and Deputy Secretary of CPC
Committee of Daqing Petrochemical Company; in September 2003, he was appointed
as General Manager and Secretary of CPC Committee of Lanzhou Petrochemical
Company; in June 2007, he was appointed as General Manager and Deputy
Secretary of CPC Committee of Lanzhou Petrochemical Company and General
Manager of Lanzhou Petroleum & Chemical Company; in September 2008, he was
appointed as a member of the Leading Party Member Group and Deputy General
Manager of China National Petroleum Corporation ("CNPC") and since May 2011,
he acted concurrently as Director of PetroChina Company Limited; in June 2018,
he was appointed as a Member of the Leading Party Member Group and Vice
President of China Petrochemical Corporation; in September 2020, he was
appointed as Senior Vice President of Sinopec Corp. Mr. Yu was elected as
Director of Sinopec Corp. in October 2018, and was appointed as President of
Sinopec Corp. in November 2021.
Ling Yiqun, aged 59, Director and Senior Vice President of Sinopec Corp. Mr.
Ling is a professor level senior engineer with a Ph.D. degree. From August
1983, he worked in the refinery of Beijing Yanshan Petrochemical Company and
the Refining Department of Beijing Yanshan Petrochemical Company Ltd.; in
February 2000, he was appointed as Deputy Director General of Refining
Department of Sinopec Corp.; in June 2003, he was appointed as Director
General of Refining Department of Sinopec Corp.; in July 2010, he was
appointed as Vice President of Sinopec Corp.; in May 2012, he was appointed
concurrently as Executive Director, President and Secretary of CPC Committee
of Sinopec Refinery Product Sales Company Limited; in August 2013, he was
appointed concurrently as President and Secretary of CPC Committee of Sinopec
Qilu Petrochemical Company, and President of Sinopec Qilu Company; in March
2017, he was appointed as Vice President of China Petrochemical Corporation;
since April 2019, he has been a member of the Leading Party Member Group of
China Petrochemical Corporation. In February 2018, he was appointed as Senior
Vice President of Sinopec Corp.; in May 2018, he was elected as Director of
Sinopec Corp.
Li Yonglin, aged 55, Director and Senior Vice President of Sinopec Corp. Mr.
Li is a professor level senior engineer with a Ph.D. degree. Mr. Li is a
member of the 13th National Committee of CPPCC. He was appointed as Vice
General Manager of Sinopec Maoming Company in March 2003; in July 2009, he was
appointed as Chief of Preparatory Group for the Beihai Refining Off-Site
Reconstruction Project; in November 2011, he was appointed as General Manager
and Deputy Secretary of CPC Committee of Sinopec Beihai Refining &
Chemical Co., Ltd.; in March 2015, he was appointed as Vice Director General
of Refining Division of Sinopec Corp. (Director General Level); in December
2016 he was appointed as General Manager and Deputy Secretary of CPC Committee
of Sinopec Tianjin Petrochemical Company, General Manager of Sinopec Tianjin
Company and Vice Chairman of SINOPEC SABIC Tianjin Petrochemical Co., Ltd.; in
October 2019, he was appointed as Secretary of CPC Committee of Sinopec
Tianjin Petrochemical Company and Corporate Representative of Sinopec Tianjin
Company; in July 2020, he was appointed as Assistant to the President of China
Petrochemical Corporation, concurrently serving as General Manager of Human
Resources Department and Head of Organizational Department of the Leading
Party Member Group; in November 2020, he was appointed as a member of Leading
Party Member Group and Vice President of China Petrochemical Corporation.; in
May 2021, he was elected as Director of Sinopec Corp. and was appointed as
Senior Vice President of Sinopec Corp.
Liu Hongbin, aged 59, Director and Senior Vice President of Sinopec Corp. Mr.
Liu is a senior engineer with a bachelor's degree. In June 1995, he was
appointed as Chief Engineer of Tuha Petroleum Exploration & Development
Headquarters; in July 1999, he was appointed as Deputy General Manager of
PetroChina Tuha Oilfield Company; in July 2000, he was appointed as Commander
and Deputy Secretary of CPC Committee of Tuha Petroleum Exploration &
Development Headquarters; in March 2002, he served as General Manager of the
Planning Department of PetroChina Company Limited; in September 2005, he
served as Director of the Planning Department of CNPC; in June 2007, he was
appointed as Vice President of PetroChina Company Limited, and in November
2007, he served concurrently as General Manager and Secretary of CPC Committee
of the Marketing Branch of PetroChina Company Limited; in June 2009, he served
concurrently as General Manager and Deputy Secretary of CPC Committee of the
Marketing Branch of PetroChina Company Limited; in July 2013, he was appointed
as Member of the Leading Party Member Group and Deputy General Manager of CNPC
and in August 2013, he served concurrently as an Executive Director and
General Manager of Daqing Oilfield Company Limited, Head of enterprise
Coordination in Heilongjiang Province, Director of Daqing Petroleum
Administration Bureau and Deputy Secretary of CPC Committee of Daqing
Oilfield; in May 2014, he served concurrently as Director of PetroChina
Company Limited; in November 2019, he was appointed as a member of the Leading
Party Member Group of China Petrochemical Corporation; in December 2019, he
was appointed as Vice President of China Petrochemical Corporation. In March
2020, he was appointed as Senior Vice President of Sinopec Corp. In May 2020,
he was elected as Director of Sinopec Corp.
Cai Hongbin, aged 54, Independent Director of Sinopec Corp. Mr. Cai is Dean of
Faculty of Business and Economics and Professor of Economics of the University
of Hong Kong. Mr. Cai has a Ph.D. degree in Economics. From 1997 to 2005, Mr.
Cai taught at the University of California, Los Angeles. Since 2005, he served
as a professor and Ph.D. supervisor in Applied Economics Department at
Guanghua School of Management at Peking University, and he once served as
Director, Assistant to the Dean and Vice Dean of the Applied Economics
Department. From December 2010 to January 2017, he served as Dean of Guanghua
School of Management at Peking University. In June 2017, he joined the Faculty
of Business and Economics of the University of Hong Kong. Mr. Cai once served
as a member of the 12th National People's Congress, a member of Beijing
Municipal Committee of CPPCC, a member of the 11th Central Committee of China
Democratic League, Deputy Chairman of Beijing Municipal Committee of China
Democratic League and a Special Auditor of the National Audit Office. He
currently serves as an Independent Director of CCB International (Holdings)
Limited and Ping An Bank Co., Ltd. In May 2018, he was elected as Independent
Director of Sinopec Corp.
Ng, Kar Ling Johnny, aged 61, Independent Director of Sinopec Corp. Mr. Ng
currently is a practicing Certified Public Accountant in Hong Kong, a
practicing auditor and accountant in Macau, a Fellow of the Hong Kong
Institute of Certified Public Accountants (FCPA), a Fellow of the Association
of Chartered Certified Accountant (FCCA), and a Fellow of the Institute of
Chartered Accountants in England and Wales (FCA). Mr. Ng obtained a bachelor's
degree and a master's degree in business administration from the Chinese
University of Hong Kong in 1984 and 1999, respectively. Mr. Ng joined KPMG
(Hong Kong) in 1984 and became a Partner in 1996. He acted as a Managing
Partner from June 2000 to September 2015 and Vice Chairman of KPMG China from
October 2015 to March 2016. Mr. Ng currently serves as Independent
Non-executive Director of China Vanke Co., Ltd., Fangdd Network Group Ltd. and
Metallurgical Corporation of China Ltd. In May 2018, he was elected as
Independent Director of Sinopec Corp.
Shi Dan, aged 60, Independent Director of Sinopec Corp. Ms. Shi is the legal
representative and Chairman of China Industrial Economics Society, a member of
Expert Advisory Committee of the National Energy Commission and a member of
National Expert Committee on Climate Change and enjoys special government
subsidies from the State Council. Ms. Shi obtained bachelor's degree in
engineering, master's degree in economics, master's degree of development
economics and Ph.D. degree in management from Changchun University of
Technology, Renmin University of China, Australian National University and
Huazhong University of Science and Technology respectively. In October 1993,
Ms. Shi was appointed as Research Fellow and Assistant to the Dean of the
Institute of Industrial Economics of Chinese Academy of Social Sciences; in
August 2010, Ms. Shi was appointed as a Research Fellow and Deputy Dean of
National Academy of Economic Strategy, Chinese Academy of Social Sciences; in
November 2013, she was appointed as a Research Fellow and Secretary of CPC
Committee (Deputy Dean) of the Institute of Industrial Economics of Chinese
Academy of Social Sciences; in November 2017, she served as External Director
of China Energy Investment Corporation Limited. In March 2019, she was
appointed as Dean of Institute of Industrial Economics of Chinese Academy of
Social Sciences. In May 2021, she was elected as Independent Director of
Sinopec Corp.
Bi Mingjian, aged 66, Independent Director of Sinopec Corp. Mr. Bi obtained
the certificate of diploma majoring in English from East China Normal
University in 1982 and master's degree in business administration from George
Mason University in the United States of America in 1993 respectively. Mr. Bi
served as a cadre at Shanghai Subei Haifeng Farm from April 1977 to April
1979; he studied at the External Training Program of the Cadre School of the
Ministry of State Farms and Land Reclamation, and subsequently he studied at a
farm in Saskatchewan Province of Canada from April 1979 to November 1980; he
served as a cadre at the Foreign Affairs Bureau of the Ministry of State Farms
and Land Reclamation from November 1980 to December 1983; he served as Deputy
Division Chief of the State Farms and Land Reclamation Bureau of the Ministry
of Agriculture from January 1984 to December 1985; he served as Operation
Officer of the World Bank Representative Office in China from December 1985 to
June 1988; he served as Deputy Director of the project office of China Rural
Trust and Investment Corporation from June 1988 to October 1988; he served as
Project Economist and Advisor of the World Bank from October 1988 to January
1994; he served as a cadre at People's Construction Bank of China from January
1994 to July 1995; he served as Deputy Chief Executive Officer, member and
Deputy Chairman of the Management Committee, Co-Chief Operating Officer and
Co-Head of the Investment Banking Department of China International Capital
Corporation Limited ("CICC") from August 1995 to February 2006; he served as a
Senior Advisor to CICC from March 2006 to November 2012; he served as a
Managing Partner of HOPU Investment Management Co., Ltd. from November 2012 to
March 2015; he served as a non-executive director for China Investment
Securities Co., Ltd. (currently known as China CICC Wealth Management
Securities Company Limited) from March 2017 to January 2020; from March 2015
to December 2019, he served as Chief Executive Officer and Chairman of
Management Committee of CICC; from May 2015 to February 2020, he served as
Executive Director of CICC. In May 2021, he was elected as Independent
Director of Sinopec Corp.
LIST OF MEMBERS OF THE BOARD
Remuneration
paid by Whether
in 2021 paid by Equity interests in Sinopec Corp.
Position in (RMB1,000, the holding (as at 31 December)
Name Gender Age Sinopec Corp. Tenure before tax) Company 2021 2020
Ma Yongsheng Male 60 Board Director, President 2016.02-2024.05 715.3 No 0 0
Zhao Dong Male 51 Board Director 2021.05-2024.05 - Yes 0 0
Yu Baocai Male 57 Board Director, President 2018.10-2024.05 441.8 No 0 0
Ling Yiqun Male 59 Board Director, 2018.05-2024.05 - Yes 13,000 13,000
Senior Vice President
Li Yonglin Male 55 Board Director, 2021.05-2024.05 - Yes 0 0
Senior Vice President
Liu Hongbin Male 59 Board Director, 2020.05-2024.05 - Yes 0 0
Senior Vice President
Cai Hongbin Male 54 Independent Director 2018.05-2024.05 416.7 No 0 0
Ng, Kar Ling Johnny Male 61 Independent Director 2018.05-2024.05 416.7 No 0 0
Shi Dan Female 60 Independent Director 2021.05-2024.05 300.0 No 0 0
Bi Mingjian Male 66 Independent Director 2021.05-2024.05 300.0 No 0 0
LIST OF FORMER MEMBERS OF THE BOARD
Remuneration
paid by Whether
in 2021 paid by Equity interests in Sinopec Corp.
Position in (RMB1,000, the holding (as at 31 December)
Name Gender Age Sinopec Corp. Tenure before tax) Company 2021 2020
Zhang Yuzhuo Male 60 Former Chairman 2020.03-2021.08 - Yes 0 0
Zhang Shaofeng Male 50 Former Director 2020.09-2021.05 - Yes 0 0
Tang Min Male 68 Former Independent 2015.05-2021.05 116.7 No 0 0
Director
Note: According to regulation of the authority, Mr. Fan Gang did not get
remuneration from the Company.
(2) Supervisors
Zhang Shaofeng, aged 50, Chairman of Board of Supervisors of Sinopec Corp. Mr.
Zhang is a professor level senior accountant with a master's degree in
business administration. In December 2008, he was appointed as Chief
Accountant and Member of the CPC Committee of Trans-Asia Gas Pipeline Company
Limited of China National Petroleum Corporation ("CNPC"); in July 2017, he was
appointed as General Manager of Finance Department of CNPC (PetroChina Company
Limited); in December 2017, he was appointed as General Manager of Finance
Department of CNPC (PetroChina Company Limited); in July 2020, he was
appointed as Member of the Leading Party Member Group and Chief Accountant of
China Petrochemical Corporation. In September 2020, he was elected as Director
of Sinopec Corp.; in May 2021, he was elected as Chairman of Board of
Supervisors of Sinopec Corp.
Jiang Zhenying, aged 57,Supervisor of Sinopec Corp. Mr. Jiang is a professor
level senior economist with a Ph.D. degree in management. In December 1998, he
was appointed as Vice President of China Petrochemical Supplies &
Equipment Co., Ltd.; in February 2000, he was appointed as Deputy Director
General of Sinopec Procurement Management Department; in December 2001, he was
appointed as Director General of Sinopec Procurement Management Department; in
November 2005, he concurrently held the positions of Chairman of Board of
Directors, President and Secretary of CPC Committee of China Petrochemical
International Co., Ltd.; in March 2006, he was appointed as Director General
(General Manager), Executive Director and Secretary of the CPC Committee of
Sinopec Procurement Management Department (Sinopec International Co. Ltd.); in
April 2010, he was appointed as Director General (General Manager), Executive
Director and Deputy Secretary of the CPC Committee of Sinopec Procurement
Management Department (Sinopec International Co. Ltd.); in November 2014, he
was appointed as Director of Safety Supervisory Bureau of China Petrochemical
Corporation and Director General of Safety Supervisory Department of Sinopec
Corp. In May 2017, he was appointed as Deputy Director General (Director
General level) of the Office of Leading Party Member Group Inspection Work of
China Petrochemical Corporation; in December 2018, he was appointed as
Director of Audit Bureau of China Petrochemical Corporation, and Director of
Audit Department of Sinopec Corp.; in December 2019, he was appointed as
President of Audit Bureau of Sinopec Corp. and Director of the Office of Audit
Committee of Leading Party Member Group of China Petrochemical Corporation. In
December 2010, he was elected as Employee's Representative Supervisor of
Sinopec Corp.; in May 2018, he was elected as Supervisor of Sinopec Corp.
Zhang Zhiguo, aged 59, Supervisor of Sinopec Corp. Mr. Zhang is a professor
level senior administration engineer with a master's degree. In September
2009, he was appointed as Deputy Director General of Corporate Office of China
Petrochemical Corporation (Sinopec President's office); in March 2015, he was
appointed as Secretary of CPC Committee of Sinopec Management Institute
(Sinopec Communist Party School); in December 2018, he was appointed as
Director General of the Office of Leading Party Member Group Inspection Work
of China Petrochemical Corporation; in December 2019, he was appointed as
Director General of the General Management Department and Director of Leading
Party Member Group Office of China Petrochemical Corporation. In May 2021, he
was elected as Supervisor of Sinopec Corp.
Yin Zhaolin, aged 56, Supervisor of Sinopec Corp. Mr. Yin is a professor level
senior engineer with a master's degree in engineering. In April 2010, he was
appointed as Deputy General Manager of Sinopec Maoming Company; in January
2017, he was appointed as Executive Deputy General Manager of Sinopec Maoming
Company (administrated as a General Manager of a Level-I Large-scale
Enterprise); in April 2017, he was appointed as General Manager and Deputy
Secretary of CPC Committee of Sinopec Maoming Petrochemical Company and
General Manager of Sinopec Maoming Company; in July 2017, he was appointed to
serve a temporary position as a member of the Standing Committee of the CPC
Maoming Municipal Committee; in October 2020, he was appointed as Executive
Director and Secretary of CPC Committee of the Sinopec Maoming Petrochemical
Company and the representative of the Sinopec Maoming Company, head of
Maoming-Zhanjiang Integration Leading Group. In May 2021, he was elected as
Supervisor of Sinopec Corp.
Guo Hongjin, aged 56, Supervisor of Sinopec Corp. Mr. Guo is a professor level
senior engineer with a Ph.D. degree. In July 2013, he was appointed as Deputy
General Manager of Sinopec Shengli Oilfield Company; in March 2018, he was
appointed as General Manager and Deputy Secretary of CPC Committee of Sinopec
Shengli Petroleum Administrative Bureau Co., Ltd. and General Manager of
Sinopec Shengli Oilfield Company; in December 2018, he was appointed as
Executive Director, General Manager and Deputy Secretary of CPC Committee of
Sinopec Jianghan Petroleum Administrative Bureau Co., Ltd. and General Manager
of Sinopec Jianghan Oilfield Company; in July 2019, he was appointed as
Executive Director and Secretary of CPC Committee of Sinopec Jianghan
Petroleum Administrative Bureau Co., Ltd. and the representative of Sinopec
Jianghan Oilfield Company; in April 2020, he was appointed as General Manager
of the Petroleum Exploration & Development Department of Sinopec Corp. In
May 2021, he was elected as Supervisor of Sinopec Corp.
Li Defang, aged 60, Employee's Representative Supervisor of Sinopec Corp. Mr.
Li is a professor level senior engineer with a Ph.D. degree. In May 2001, he
was appointed as Deputy Secretary of CPC Committee and Trade Union Chairman of
Sinopec Engineering Incorporation; in December 2001, he was appointed as
Director General of Information System Management Department of Sinopec Corp.;
in September 2013, he was appointed as Director General of Informatisation
Management Department of Sinopec Corp.; in October 2014, he was appointed as
Chairman of Petro-CyberWorks Information Technology Co., Ltd.; in January
2018, he was elected as Employee Supervisor of China Petrochemical
Corporation; in March 2019, he was appointed as Secretary of CPC Committee of
Sinopec Management Institute (Sinopec Communist Party School); in November
2020, he was appointed as the Secretary of CPC Committee of Sinopec Management
Institute and Executive Vice Principal of Sinopec Communist Party School. In
May 2020, he was elected as Employee's Representative Supervisor of Sinopec
Corp.
Lv Dapeng, aged 60, Employee's Representative Supervisor of Sinopec Corp. Mr.
Lv is a professor level senior administration engineer with a Master's degree
of business administration. In December 2001, he was appointed as Deputy
Director General of China Petrochemical News; in March 2003, he was appointed
as Deputy Director General and Chief Editor of China Petrochemical News; in
June 2004, he was appointed as Director General and Chief Editor of China
Petrochemical News; in December 2004, he was appointed as Director General,
Secretary of CPC Committee and Chief Editor of China Petrochemical News; in
March 2011, he was appointed as Director General of Corporate Culture
Department of Sinopec Corp., and Director General of the Political Work
Department of and Deputy Secretary of the CPC Committee directly under China
Petrochemical Corporation; in June 2012, he was appointed concurrently as
Deputy Director General of Working Committee of Trade Union and Deputy
Director of the Youth Working Committee of China Petrochemical Corporation; in
March 2015, he was appointed as Director General of Corporate Culture
Department of Sinopec Corp. and Director General of Communications Department
(Press Office) of China Petrochemical Corporation; in December 2019, he was
appointed as Director General of Corporate Culture Department of Sinopec
Corp., Director General of Communication Department and Director General of
Press Office of China Petrochemical Corporation. In January 2021, he was
elected as Employee's Representative Supervisor of Sinopec Corp.
Chen Yaohuan, aged 58, Employee's Representative Supervisor of Sinopec Corp.
Mr. Chen is a professor level senior engineer with a Master's degree awarded
by Central Party School of the CPC. In October 2008, he was appointed as
Deputy Director General of Refining Department of Sinopec Corp.; in March
2015, he was appointed as Executive Director, General Manager and Deputy
Secretary of the CPC Committee of Sinopec Beihai Refining and Chemical Limited
Liability Company; in May 2015, he was appointed as a member of the Standing
Committee of the CPC Beihai Municipal Committee; in June 2018, he was
appointed as General Manager and Deputy Secretary of the CPC Committee of
Guanzhou Branch of Sinopec Corp. and General Manager of Guangzhou Branch of
Sinopec Assets Management Corporation; in July 2019, he was appointed as
Deputy Director General (Director General Level) and Chief Engineer of
Refining Department of Sinopec Corp.; in October 2019, he was appointed
concurrently as Chairman of Sinopec Kantons International Limited and Sinopec
Kantons Holdings Limited; in December 2019, he was appointed as General
Manager and Chief Engineer of Refining Department of Sinopec Corp.; in
December 2019, he was appointed concurrently as Vice Chairman and Chairman of
Audit Committee of Yanbu Aramco Sinopec Refining Company Ltd.; in August 2020,
he was appointed concurrently as Executive Director and Secretary of CPC
Committee of Sinopec Petroleum Marketing Company Limited and Chairman of
Sinopec Petroleum Storage and Reserve Limited. In January 2021, he was elected
as Employee's Representative Supervisor of Sinopec Corp.
LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
Whether
Remuneration paid by the
paid by shareholders
Sinopec Corp. of the Equity interests
in 2021 Company or in Sinopec Corp.
Position in (RMB1,000, their related (as of 31 December)
Name Gender Age Sinopec Corp. Tenure before tax) entities 2021 2020
Zhang Shaofeng Male 50 Chairman of the 2021.05-2024.05 - Yes 0 0
Board of Supervisors
Jiang Zhenying Male 57 Supervisor 2018.05-2024.05 - Yes 0 0
Zhang Zhiguo Male 59 Supervisor 2021.05-2024.05 - Yes 0 0
Yin Zhaolin Male 56 Supervisor 2021.05-2024.05 - Yes 0 0
Guo Hongjin Male 56 Supervisor 2021.05-2024.05 403.2 No 0 0
Li Defang Male 60 Employee Representative Supervisor 2020.05-2024.05 298.4 No 40,000 40,000
Lv Dapeng Male 60 Employee representative Supervisor 2021.01-2024.05 417.2 No 0 0
Chen Yaohuan Male 58 Employee Representative Supervisor 2021.01-2024.05 1,165.4 No 0 0
Note: Mr. Li Defang holds 40,000 A shares of Sinopec Corp.(the actual holder
of the said shares is the spouse of Mr. Li Defang).
LIST OF FORMER MEMBERS OF THE BOARD OF SUPERVISORS
Whether
paid by the
Remuneration shareholders
paid by of the Equity interests
in 2020 Company or in Sinopec Corp.
Position in (RMB1,000, their related (as of 31 December)
Name Gender Age Sinopec Corp. Tenure before tax) entities 2021 2020
Zhao Dong Male 51 Former Chairman of the 2017.06-2021.05 - Yes 0 0
Board of supervisor
Zou Huiping Male 61 Supervisor 2006.05-2021.01 0 No 0 0
Sun Huanquan Male 57 Employee Representative Supervisor 2020.05-2021.01 - Yes 0 0
Yu Renming Male 58 Employee Representative Supervisor 2010.12-2021.01 - Yes 0 0
(3) Other Members of Senior Management
Chen Ge, aged 59, Senior Vice President of Sinopec Corp. Mr. Chen is a senior
economist with a Master's degree. In February 2000, he was appointed as Deputy
Director General of the Board Secretariat of Sinopec Corp.; in December 2001,
he was appointed as Director General of the Board Secretariat of Sinopec
Corp.; in April 2003, he was appointed as Secretary to the Board of Directors
of Sinopec Corp.; from April 2005 to August 2013, he was appointed
concurrently as Director General of Corporate Reform & Management Dept. of
Sinopec Corp.; in July 2010, he was appointed as Assistant to President of
China Petrochemical Corporation; from December 2013 to December 2015, he was
appointed temporarily as Deputy Secretary-General of Guizhou Provincial
People's Government and a member of the Leading Party Member Group of Guizhou
Provincial General Office; in November 2015, he was appointed as Employee's
Representative Director of China Petrochemical Corporation; in December 2017,
he was appointed concurrently as Director General of Corporate Reform &
Management Dept. of Sinopec Corp.; in October 2018, he was appointed as Senior
Vice President of Sinopec Corp.; in July 2020, he was appointed concurrently
as General counsel.
Yu Xizhi, aged 59, Vice President of Sinopec Corp. Mr Yu is a professor-level
senior engineer with a Ph.D. degree in engineering. In August 1997, he was
appointed as Deputy General Manager of Anqing Petrochemical General Plant and
concurrently as General Manager of Fertiliser Plant; in September 1999, he
became a member of the CPC Standing Committee of Anqing Petrochemical General
Plant; in February 2000, he was appointed as Deputy General Manager of Sinopec
Anqing Company and in September 2000, he was appointed as General Manager of
Sinopec Anqing Company; in January 2005, he was appointed as General Manager
of Anqing Petrochemical General Plant and from May 2009 to July 2010, he
temporarily served as a member of the Standing Committee of the CPC Anqing
Municipal Committee; in July 2010, he became General Manager and Deputy
Secretary of the CPC Committee of Maoming Petrochemical Company and General
Manager of Sinopec Maoming Company; in July 2016, Mr. Yu was appointed as head
of Maoming-Zhanjiang Integration Leading Group; in December 2016, he became
Executive Director, General Manager and Deputy Secretary of the CPC Committee
of Zhongke (Guangdong) Refining and Petrochemical Co., Ltd.; in April 2017,
Mr. Yu was appointed as Director General of Human Resources Department of
Sinopec Corp.; in June 2017, he was elected as Employee's Representative
Supervisor of Sinopec Corp.; in December 2019, he was appointed as President
of Human Resource Department of Sinopec Corp. and the Director General of
Organization Department of China Petrochemical Corporation; in January 2020,
he was elected as Director of China Petrochemical Corporation. In July 2020,
he was appointed as Vice President of Sinopec Corp.
Shou Donghua, aged 52, Chief Financial Officer and General Manager of Finance
Department of Sinopec Corp. Ms. Shou is a professor level senior accountant
with a Master's degree of business administration. In July 2010, she was
appointed as the Chief Financial Officer of Sinopec Zhenhai Refining &
Chemical Company; in October 2014, she was appointed as Deputy Director
General of Human Resource Department of Sinopec Corp.; in August 2017, she was
appointed as the Secretary of CPC Committee of Sinopec Zhenhai Refining &
Chemical Company and Deputy General Manager of Sinopec Zhenhai Refining &
Chemical Company; in August 2018, she was appointed as the Director General of
Finance Department of China Petrochemical Corporation and concurrently served
as the Chairman of Sinopec Century Bright Capital Investment Limited; in
December 2019, she was appointed as General Manager of Finance Department of
Sinopec Corp. and concurrently served as the Chairman of Sinopec Century
Bright Capital Investment Limited. In January 2020, she was appointed as Chief
Financial Officer of Sinopec Corp. and General Manager of Finance Department.
Zhao Rifeng, aged 59, Vice President of Sinopec Corp. Mr. Zhao is a professor
level Senior Engineer with a Master's degree. In July 2000, he was appointed
as Deputy General Manager of Sinopec Jinling Petrochemical Co., Ltd. and
Deputy Manager of Sinopec Jinling Company; in October 2004, he was appointed
as General Manager of Sinopec Jinling Company; in October 2006, he was
appointed as Vice Chairman and General Manager of Sinopec Jinling
Petrochemical Co., Ltd.; in November 2010, he was appointed as Chairman,
General Manger, Deputy Secretary of CPC Committee of Sinopec Jinling
Petrochemical Co., Ltd.; in August 2013, he was appointed as Director General
of Refining Department of Sinopec Corp.; in December 2017, he was appointed as
the Director General of the Marketing Department of Sinopec Corp. and Chairman
and Secretary of CPC Committee of Sinopec Marketing Company Limited; in
December 2019, he was appointed as the President of the Marketing Department
of Sinopec Corp. and Chairman and Secretary of CPC Committee of Sinopec
Marketing Company Limited. In February 2018, he was appointed as Vice
President of Sinopec Corp.
Huang Wensheng, aged 55, Vice President of Sinopec Corp., Secretary to the
Board of Directors. Mr. Huang is a professor level senior economist with a
university diploma. In March 2003, he was appointed as Deputy Director General
of the Board Secretariat of Sinopec Corp.; in May 2006, he was appointed as
Representative on Securities Matters of Sinopec Corp.; in August 2009, he was
appointed as the Deputy Director General of President's office of Sinopec
Corp.; in September 2009, he was appointed as Director General of the Board
Secretariat of Sinopec Corp.; in June 2018, he was appointed concurrently as
Director General of Department of Capital Management and Financial Services of
China Petrochemical Corporation; in July 2018, he was appointed concurrently
as Chairman and Secretary of CPC Committee of Sinopec Capital Co., Ltd.; in
December 2019, he was appointed as President of Department of Capital
Management and Financial Services of China Petrochemical Corporation. In May
2012, he was appointed as Secretary to the Board of Directors of Sinopec
Corp.; in May 2014, he was appointed as Vice President of Sinopec Corp.
LIST OF MEMBERS OF THE SENIOR MANAGEMENT
Whether
Remuneration paid by the
paid by shareholders
Sinopec Corp. of the
in 2021 Company or Equity interests in Sinopec Corp.
Position in (RMB1,000, their related (as of 31 December)
Name Gender Age Sinopec Corp. before tax) entities 2021 2020
Chen Ge Male 59 Senior Vice President 1,586.7 No 0 0
Yu Xizhi Male 59 Vice President 1,411.0 No 0 0
Shou Donghua Female 52 Chief Financial Officer 1,292.4 No 0 0
Zhao Rifeng Male 59 Vice President 1,451.9 No 0 0
Huang Wensheng Male 55 Vice President, Board Secretary 1,407.9 No 0 0
12 INFORMATION ON APPOINTMENT OR TERMINATION OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
On 1 January 2021, Mr. Yu Renming, Mr. Sun Huanquan resigned as Employee's
Representative Supervisors of Sinopec Corp. due to change of working
arrangement. Mr. Lv Dapeng and Mr. Chen Yaohuan were elected as the employee's
representative supervisors of the seventh session of the Board of Supervisors
of Sinopec Corp. through democratic procedure, for a term commencing from 11
January 2021 to the date when the term of the seventh session of the board of
supervisors of the Company expires.
On 28 January 2021, Mr. Zou Huiping resigned as Supervisor of Sinopec Corp.
due to age.
On 25 May 2021, the members of the Eighth Session of the Board of Directors
and the Board of Supervisors (non-Employee-
Representative Supervisors) were elected at the 2020 general meeting of
shareholders. The Chairman of the Board was elected and the senior management
appointed at the 1st meeting of the Eighth session of Board held at the same
date.The Chairman of the Board of Supervisors was elected at The 1st meeting
of the Eighth Session of the Board of Supervisors.The changes of the
Directors, Supervisors and other senior management are as follows:
Board of Directors: Mr. Zhang Yuzhuo was elected as Non-executive Director and
Chairman of the Board. Mr. Ma Yongsheng was elected as Executive Director and
President; Mr. Zhao Dong was elected as Non-executive Director; Mr. Yu Baocai,
Mr Ling Yiqun, Mr. Li Yonglin, Mr. Liu Hongbin were elected as Executive
Directors and Senior Vice President. Mr. Cai Hongbin and Mr. Ng Kar Ling
Johnny, Ms. Shi Dan, Mr. Bi Mingjian were elected as Independent Non-executive
Directors. Mr. Tang Min was no longer the Independent Non-executive Directors
of the Board.
Board of Supervisors: Mr. Zhang Shaofeng was elected as the Chairman of Board
of Supervisors. Mr. Jiang Zhenying, Mr. Zhang Zhiguo, Mr. Yin Zhaolin, Mr. Guo
Hongjin were elected as Supervisors. Mr. Li Defang, Mr. Lv Dapeng, Mr. Chen
Yaohuan were elected as Employee Representative Supervisors.
Other Senior Management: Mr. Chen Ge was elected as Senior Vice President. Mr.
Yu Xizhi, Mr. Zhao Rifeng, Mr. Huang Wensheng were elected as Vice Presidents.
Ms. Shou Donghua was appointed as Chief Financial Officer. Mr. Huang Wensheng
was elected as Secretary to the Board.
On 2 August 2021, Mr. Zhang Yuzhuo resigned as Chairman of the Board,
Non-executive Director and Chairman of each of the Strategy Committee,
Nomination Committee and Sustainable Development Committee (Social
Responsibility Management Committee)of the Board of Sinopec Corp. due to
change of working arrangement.
On 29 November 2021, Mr. Ma Yongsheng was appointed as Chairman of the Board,
Chairman of each of the Strategy Committee, Nomination Committee and
Sustainable Development Committee (formerly, the Social Responsibility
Management Committee) of the Board of Sinopec Corp. resigned as President and
became a non-executive director.
On 29 November 2021, Mr. Yu Baocai was appointed as President of Sinopec Corp.
13 CHANGE OF SHAREHOLDING OF DIRECTORS, SUPERVISORS, AND THE SENIOR MANAGEMENT
There is no change in shareholdings of the Company by Directors, Supervisors
and other senior managers during the reporting period.
14 CONTRACTUAL INTERESTS OF DIRECTORS AND SUPERVISORS
As of 31 December 2021 or any time during the reporting period, no Director or
Supervisor of the Company entered into any agreement with Sinopec Corp., its
controlling shareholder, any subsidiary or related subsidiary which shall
substantially benefit such Director or Supervisor.
15 CONTRACTS WITH DIRECTORS AND SUPERVISORS
The Company has entered into service contracts with all the Directors and
Supervisors. None of the Directors and Supervisors has entered into or will
enter into service contracts that are not terminable by the Company within one
year without compensation (except for statutory compensation).
16 REMUNERATION OF DIRECTORS, SUPERVISORS, AND THE SENIOR MANAGEMENT
During this reporting period, a total of 16 Directors, Supervisors and other
senior managers received remuneration from Sinopec Corp. with a total amount
of RMB12.1413 million.
17 THE COMPANY'S EMPLOYEES
As at 31 December 2021, the Company has a total of 385,691 employees. There
are a total of 280,216 retired employees to be reimbursed by Sinopec Corp.
Sinopec Marketing Co. Limited, the principal subsidiaries of Sinopec Corp.,
has 122,232 employees.
THE BREAKDOWN OF NUMBER OF EMPLOYEES BY OPERATION SEGMENTS IS AS FOLLOWS:
(INCLUDING EXPLORATION AND PRODUCTION, REFINING, MARKETING AND DISTRIBUTION,
CHEMICALS, R&D AND OTHERS)
EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS: (INCLUDING PRODUCTION, SALES,
TECHNOLOGY, FINANCE, ADMINISTRATION AND OTHERS)
EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS: (INCLUDING MASTER'S
DEGREE OR ABOVE, UNDERGRADUATE, JUNIOR COLLEGE, SENIOR HIGH SCHOOL AND
TECHNICAL SCHOOL DEGREES OR BELOW)
TECHNOLOGY PERSONNEL EDUCATION STRUCTURE: (INCLUDING PHD, MASTER'S DEGREE,
UNDERGRADUATE OR BELOW)
TECHNOLOGY PERSONNEL AGE STRUCTURE
18 CHANGES OF CORE TECHNICAL TEAM OR KEY TECHNICIANS
During the reporting period, there are no significant changes of core
technical team or key technicians.
19 EMPLOYEE BENEFITS SCHEME
Details of the Company's employee benefits scheme are set out in Note 40 of
the financial statements prepared under IFRS of this annual report. As at 31
December 2021, the Company has a total of 280,216 retired employees. All of
them participated in the basic pension schemes administered by provincial
governments (or those of autonomous regions or municipalities).
Government-administered pension schemes are responsible for the payments of
basic pensions.
20 REMUNERATION POLICY
Based on a relatively unified basic remuneration system, Sinopec Corp. has
established its remuneration distribution system based on the value of
positions, performance & contribution, with an aim to improve employee
capabilities, and constantly improve employee performance evaluation and
incentive & discipline mechanisms.
21 TRAINING PROGRAMS
In 2021, the Company strengthened coordination for training programs, took
innovative approaches to establish high quality training system, and conducted
training programs for all types of talents. The training for management staff
became more systematic, with the 8-level echelon training system being
constantly improved, covering new employees up to top management staff of
subsidiaries, with an emphasis on middle-aged and young management staff
training programs. The technician, skilled worker and specialist training
proved more practically effective, with programmes focusing on oil and gas
exploration specialists' versatile knowledge and advanced study, high-end
synthetic material specialists' research and study, "future scientist"
creativity upgrading, state craftsman forging and upgrading. The programmes
enhanced post exposure, basic skill training and contingent skill training.
The international talent training was further strengthened, focusing on
overseas project teams, with training projects covering overseas project
managers, international trade managers, refining and chemical international
talents. The headquarters trained 5,122 key talents of various types. In
addition, the Company strengthened online training by rendering it more
intelligent and tailor-made, and participants have spent over 50 million hours
on the online training program during the year of 2021.
ENVIRONMENT AND SOCIAL RESPONSIBILITIES
1 Work Conducted in Ecological Protection, Pollution Prevention and
Environmental Responsibilities Implementation in the Reporting Period
In the reporting period, the Company targeted to build a world-leading clean
energy and chemical company, stuck to green and clean development strategy,
persistently carried out "green enterprise action", deepened the campaign of
pollution prevention, kept environment risk from occurring, thus no
substantial or sudden environmental incident happened. The COD and sulphur
dioxide emissions decreased by 2.1% and 4.2% respectively, and the solid waste
was 100% properly treated.
2 Measures taken to Mitigate Carbon Emission and its Effect in the
Reporting Period
In the reporting period, the Company, guided by the carbon peak and carbon
neutrality targets, advanced the "energy efficiency upgrading plan" in depth,
persistently intensified carbon assets management, thus the energy saving and
carbon reduction has been further improved. In 2021, the Company decreased its
greenhouse gas emission by 2.38 million ton carbon dioxide equivalent,
recycled 1.52 million tons of carbon dioxide, used 0.31 million tons of carbon
dioxide for EOR, recycled 717 million cubic meters of methane which is
equivalent to 10.75 million tons of carbon dioxide in terms of greenhouse gas
emission.
3 Environmental Protection Solutions of Companies and Their Subsidiaries
as Major Pollutant Discharging Companies Identified By Environmental
Protection Departments
(1) Pollutant discharge information
In the reporting period, certain subsidiaries of Sinopec Corp. listed as major
pollutant discharge units announced by national or local ecological and
environmental authorities have disclosed environmental information in
accordance with the requirements of the national list of fixed pollution
source emission permit classification management and acquired their pollutant
discharge license as required by the relevant authorities and local
government. The details of such information was published on national
pollutant discharge license management information platform
(http://permit.mee.gov.cn/permitExt/defaults/default-index!getInformation.action)
and the local government website.
(2) Construction and operation of pollution prevention facilities
In the reporting period, the Company built prevention and control facilities
for sewage, flue gas, solid waste and noise in accordance with the
requirements of the national and local pollution prevention and environmental
protection standards, kept effective and stable operation of pollution
prevention and control facilities.
(3) Environmental influence evaluation for construction projects and other
administrative permit for environmental protection
In the reporting period, the Company standardized environmental protection
management for construction projects, enforced whole process construction and
operation management, with measures of the "simultaneous three" implemented,
all new projects have acquired approval for environmental evaluation from
government.
(4) Contingent scheme for sudden environmental incident
In the reporting period, the Company complied with the requirements for
environmental incident contingent scheme by the State, promulgated "contingent
scheme for sudden environmental incidents", and persistently improved its
contingent scheme against sudden environmental incidents of enterprises and
severe pollution weather.
(5) Scheme for environment self-monitoring
In the reporting period, the Company improved its self-monitoring scheme in
accordance with the industry guideline, enforced the new requirements for
sewage, flue gas and noise monitoring, and disclosed the monitor information
as required.
(6) Administrative penalties due to environmental problems in the reporting
period
In the reporting period, no penalty for significant environmental protection
incident was imposed on the Company. The subsidiaries' administrative
penalties have been disclosed in the website required by environment
departments of local government.
(7) Other environmental information to be disclosed
In the reporting period, for subsidiaries not listed as major pollution units,
the Company has acquired related permissions from national and local
government, and enforces environmental protection measures. The above
mentioned subsidiaries are not obliged to disclose in accordance with the
requirements of national and local ecological environment authorities.
4 Expand the achievements in poverty-alleviation and rural
revitalization
In the reporting period, the Company focused its rural revitalisation efforts
on the 8 counties designated for its assistance, the poverty of which has
already been alleviated. The Company recognised industry, education and
consumption as three main fields of work, and strengthened the linkage between
the outcome of poverty alleviation and rural revitalization.
On 1 March 2021, Sinopec Corp. became the first to publish its 14th-five-year
plan to support rural revitalization, mapped out its education and consumption
support enforcement plans respectively, including the vision to be realized in
the 14th-five-year period, the planed fund and major projects, which ensured
the all-round support work. In 2021, the Company accumulatively dispatched 349
village teams and 925 village cadres to undertake 610 village-level support
projects, invested and introduced to-be-paid and non-to-be-paid funds of
RMB580 million in total, trained over 30,000 entry-level personnel and
supported local consumption by RMB950 million.
5 Support the Winter Olympic and Paralympic Games Beijing 2022
As an official sponsor for Winter Olympic and Paralympic Games Beijing 2022,
Sinopec Corp. proactively implemented its concept of "clean energy, serve the
Winter Olympic Games", dedicated itself to service, supply and promotion for
the Olympic Games. The Company facilitated the construction of oil and
hydrogen energy stations, used the hydrogen it produced to fuel the Olympic
torches, and supplied clean energy for the Games. Meanwhile, the Company
developed and manufactured the carbon fibre synthetic material used in the
coat of the "flying upward" torch, which has promoted the Company's brand
concept of "cleaner energy, better life".
SIGNIFICANT EVENTS
1 MAJOR PROJECTS
(1) Zhenhai refining & chemical expansion project (phase 1)
Zhenhai Refining & Chemical expansion project (phase 1) consists of
4,000,000 tpa crude oil modification project for old refinery and 1,200,000
tpa ethylene project. The project was approved in June 2018, ethylene and
relevant projects started at the end of October 2018. The mechanical
completion was finished in June 2021. The Company's self-owned fund accounts
for 30% of the project investment, bank loan is the main source of the
remaining 70%. As of 31 December 2021, the aggregate amount invested was RMB23
billion.
(2) Zhenhai refining & chemical expansion project (phase 2)
Zhenhai Refining & Chemical expansion project (phase 2) consists of
building 11,000,000 tpa refinery project and 600,000 tpa propane
dehydrogenatin and downstream projects. The project is expected to begin in
March 2022 and mechanical completion is expected to be finished in June 2024.
The Company's self-owned fund accounts for 30% of the project investment, bank
loan is the main source of the remaining funds. As of 31 December 2021, the
aggregate amount invested was RMB2.1 billion.
(3) Tianjin Nanggang ethylene and downstream high-end new material industry
cluster project
Tianjin Nanggang Ethylene and downstream High-End New Material Industry
Cluster Project consists of 1,200,000 tpa ethylene project and downstream
processing units. The project began in May 2021 and mechanical completion is
expected to be finished in the end of 2023. The Company's self-owned fund
accounts for approximately 30% of the project investment and bank loan is the
main source of the remaining funds. As of 31 December 2021, the aggregate
amount invested was RMB3.0 billion.
(4) Wuhan de-bottleneck project
Wuhan de-bottleneck project expands the original an 800,000 tpa-to-1,100,000
tpa ethylene capacity expansion project. The project started at the end of
October 2018 and mechanical completion was finished in June.2021. It's put
into operation in Sep. 2021. The Company's self-owned fund accounts for
approximately 30% of the project investment and bank loan is the main source
of the remaining funds. As of 31 December 2021, the aggregate amount invested
was RMB3.9 billion.
(5) Hainan 1,000,000 tpa ethylene and refining expansion project
Hainan Ethylene and Refining Expansion project mainly consists of 1,000,000
tpa ethylene and auxiliary units. The project started at the end of December
2018 and is expected to achieve the mechanical completion in Jun. 2022. The
Company's self-owned fund accounts for approximately 30% of the project
investment and bank loan is the main source of the remaining funds. As of 31
December 2021, the aggregate amount invested was RMB15.6 billion.
(6) Yifzheng PTA project
Yizheng 3 million tpa PTA project mainly consists of oxidation, purification
units and auxiliary units. The project started in July 2021 and the mechanical
completion is expected to be finished in Aug. 2023. The Company's self-owned
fund accounts for 30% of the project investment, bank loan is the main source
of the remaining funds. As of 31 December 2021, the aggregate amount invested
was RMB0.65 billion.
(7) Weirong shale gas project (phases 1 & 2)
Guided by the principle of "overall deployment, stage-wise implementation and
fully consideration", the building of first phase of production capacity,
which is 1 billion cubic meters per year, unfolded comprehensively since
August 2018. The phase-one 1 billion-cubic-meter capacity was built up in
December 2020. It is expected to complete phase-two 2 billion-cubic-meter
capacity in December 2022. The Company's self-owned fund accounts for 30% of
the project investment and bank loan is the main source of the remaining
funds. As of 31 December 2021, the aggregate amount invested was RMB6.3
billion.
(8) Tianjin LNG project (phase 2)
Tianjin LNG project (phase 2) mainly consists of a new wharf, five new
220,000-cubic-meter storage tanks etc. LNG capacity will reach 11 million tons
per year after phase 2 is completed. The project started in January 2019 and
is expected to put into operation in August 2023. The Company's self-owned
fund accounts for approximately 30% of the project investment and bank loan is
the main source of the remaining funds. As of 31 December 2021, the aggregate
amount invested was RMB3.0 billion.
(9) Longkou LNG project
Longkou LNG project mainly consists of a wharf, terminal and power plant warm
drainage and water Intake. The first phase designed LNG capacity is 6 million
tons per year. One LNG berth with 0.266 million cubic meter capacity will be
modified and four 0.22 million cubic meter capacity storage tanks will be
newly built up. The project started in Nov. 2021 and is expected to put into
operation in Nov. 2024. The Company's self-owned fund accounts for
approximately 30% of the project investment and bank loan is the main source
of the remaining funds. As of 31 December 2021, the aggregate amount invested
was RMB1.4 billion.
2 PURCHASE OF EQUITY AND NON-EQUITY ASSETS
On 26 March 2021, Sinopec Corp. and Sinopec Group Asset Management Co., Ltd.
("Asset Company") entered into acquisition agreements to purchase the equity
interest in Cangzhou Toray and the polypropylene and utilities assets, Sinopec
Corp. and Orient Petrochemical entered into agreement to purchase equipment
and related assets. On the same day, Overseas Investment Company of Sinopec
Corp. and Century Bright Company entered into agreement to purchase equity
interest in Hainan Refining and Chemical, Beihai Refining & Chemical of
Sinopec Corp. and Beihai Petrochemical entered into agreement to purchase the
non-equity assets including the pier operation platform. As of 1 July 2021,
conditions precedent for closing in above agreements have been met, the
ownership, obligations, responsibilities and risks of targeted assets have
been transferred to Sinopec Corp. or its subsidiaries.
On 29 November 2021, Sinopec Corp. and Assets Company entered into the
agreement on purchasing the equity assets, non-equity assets and liabilities
of the production and operating business held by the Assets Company, Sinopec
Yizheng Chemical Fibre Company Limited and Assets Company entered into the
agreement on purchasing the equity assets, non-equity assets and liabilities
of the production and operating business held by the Assets Company, Sinopec
Corp. and Sinopec Beijing Yanshan Petrochemical Co., Ltd. entered into the
agreement on purchasing the non-equity assets and liabilities of the
production and operating business held by Sinopec Beijing Yanshan
Petrochemical Co., Ltd. As of 1 December 2021, the ownership, obligations,
responsibilities and risks of targeted assets have been transferred to Sinopec
Corp. or its subsidiaries.
For details, please refer to the announcements published by Sinopec Corp. on
China Securities Journal, Shanghai Securities News, Securities Times, and on
the website of Shanghai Stock Exchange on 29 March 2021, 2 July 2021, 30
November 2021 and 2 December 2021, on the website of Hong Kong Stock Exchange
on 28 March 2021, 1 July 2021, 29 November 2021 and 1 December 2021.
3. THE TRANSACTIONS WITH CHINA OIL & GAS PIPELINE NETWORK CORPORATION
(PIPECHINA)
On 28 January 2021, the Board approved the continuing related party
transaction cap in relation to refined oil pipeline transportation between
Marketing Company and PipeChina for the period from 1 October 2020 to 31
December 2021. The aggregate amount of the continuing related party
transaction of the Company from 1 January 2021 to 31 December 2021 was RMB5.93
billion.
4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
Type of Whether bears Whether strictly
Background Undertaking Party Contents Term for performance deadline or not performed or not
Undertakings related to Initial Public Offerings (IPOs) IPOs China Petrochemical Corporation 1 Compliance with the connected transaction agreements; From 22 June 2001 No Yes
2 Solving the issues regarding the legality of land-use rights
certificates and property ownership rights certificates within a specified
period of time;
3 Implementation of the Reorganisation Agreement (please refer to the
definition of Reorganisation Agreement in the H share prospectus of Sinopec
Corp.);
4 Granting licenses for intellectual property rights;
5 Avoiding competition within the same industry;
6 Abandonment of business competition and conflicts of interest with
Sinopec Corp.
Other undertakings Other China Petrochemical Corporation Given that China Petrochemical Corporation engages in the same or similar Within 10 years after 29 April 2014 or the date when China Petrochemical Yes Yes
businesses as Sinopec Corp. with regard to the exploration and production of Corporation acquires the assets
overseas petroleum and natural gas, China Petrochemical Corporation hereby
grants a 10-year option to Sinopec Corp. with the following provisions: (i)
after a thorough analysis from political, economic and other perspectives,
Sinopec Corp. is entitled to require China Petrochemical Corporation to sell
its overseas oil and gas assets owned as of the date of the undertaking and
still in its possession upon Sinopec Corp.'s exercise of the option to Sinopec
Corp.; (ii) in relation to the overseas oil and gas assets acquired by China
Petrochemical Corporation after the issuance of the undertaking, within 10
years of the completion of such acquisition, after a thorough analysis from
political, economic and other perspectives, Sinopec Corp. is entitled to
require China Petrochemical Corporation to sell these assets to Sinopec Corp.
China Petrochemical Corporation undertakes to transfer the assets as required
by Sinopec Corp. under aforesaid items (i) and (ii) to Sinopec Corp., provided
that the exercise of such option complies with applicable laws and
regulations, contractual obligations and other procedural requirements.
As of the date of this report, Sinopec Corp. had no undertakings in respect of
financial performance, asset injections or asset restructuring that had not
been fulfilled, nor has Sinopec Corp. made any profit forecast in relation to
any asset or project.
5 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
Unit: RMB million
Major external guarantees (excluding guarantees for controlled subsidiaries)
Guarantor Relationship Name of Amount(*1) Transaction date Period of guarantee Type Principal guaranty Whether Whether Amount of Counter- Whether
with the guaranteed (date of signing) debt completed overdue overdue guaranteed guaranteed
Company company condition or not or not guarantee for
connected
parties
yes or no)(*2)
Sinopec Corp. The listed company itself Zhongtian Hechuang Energy Co., Ltd 5,746 May-16 May 2016-December 2023 Joint and several liability guarantee Normal performance - No No - No No
(the mature date is
estimated)
Sinopec Corp. The listed company itself Zhong An United Coal Chemical Co., Ltd. 5,680 Apr-18 April 2018-December 2031 Joint and several liability guarantee Normal performance - No No - No No
Sinopec Corp. The listed company itself Russian Amur Natural Gas Chemical Integrated LLC 3,264(*4) Dec-21 December 2021-December 2035 (the mature date is Joint and several liability guarantee Normal performance - No No - No No
( ) estimated)
( )
Sinopec Corp. The listed company Russian Amur Natural 173 Jan-21 January 2021-June 2026 (the mature date is estimated) Joint and several liability guarantee Normal performance - No No - No No
itself Gas Chemical Integrated LLC
Total amount of guarantees provided during the reporting period(*4) 3,437
Total amount of guarantees outstanding at the end of reporting period(*4) (A) 14,863
Guarantees by the Company to the controlled subsidiaries
Total amount of guarantee provided to controlled subsidiaries during the 0
reporting period
Total amount of guarantee for controlled subsidiaries outstanding at the end 11,157
of the reporting period (B)
Total amount of guarantees for the Company (including those provided for
controlled subsidiaries)
Total amount of guarantees (A+B) 26,020
The proportion of the total amount of guarantees to the Sinopec Corp.'s net 3.36
assets (%)
Guarantees provided for shareholder, de facto controller and its related 0
parties (C)
Amount of debt guarantees provided directly or indirectly to the companies 9,117
with liabilities to assets ratio over 70% (D)
The amount of guarantees in excess of 50% of the net assets (E) 0
Total amount of the above three guarantee items (C+D+E) 9,117
Statement of guarantee undue that might be involved in any joint and several None
liabilities
Statement of guarantee status
* 1: Guarantee amount refers to the actual amount of guarantee liability
that the company may undertake during the reporting period within the approved
guarantee limit.
* 2: As defined in the Rules Governing the Listing of Stocks on Shanghai
Stock Exchange.
* 3: Excluding the interest corresponding to the loan principal agreed
in the guarantee contract, export credit premium and other expenses
* 4: The amount of guarantees provided during the reporting period and
the outstanding balance of guarantees amount at the end of the reporting
period include the guarantees provided by the controlled subsidiaries to
external parties. The amount of the guarantees provided by these subsidiaries
is derived from multiplying the guarantees provided by Sinopec Corp.'s
subsidiaries by the percentage of shareholding of Sinopec Corp. in such
subsidiaries.
For the details of the guarantees provided by Sinopec Corp. for Zhongtian
Hechuang Energy Co., Lt, Zhong An United Coal Chemical Co., Ltd., and Russian
Amur Natural Gas Chemical Integrated LLC in the above table, please refer to
the Company's respective documents dated December 29, 2015, March 26, 2018,
And April 16, 2020 26 January 2021 A notice disclosed on the website of the
Shanghai Stock Exchange on 16 December 2021 and a circular dated 7 January
2016, a circular dated 23 March 2018, and a notice dated 15 December 2021,
respectively disclosed on the website of the Hong Kong Stock Exchange.
6. SPECIFIC STATEMENTS AND INDEPENDENT OPINIONS FROM INDEPENDENT
NON-EXECUTIVE DIRECTORS REGARDING OUTSTANDING EXTERNAL GUARANTEES PROVIDED BY
THE COMPANY DURING AND BY THE END OF 2021:
We, as independent directors of Sinopec Corp., hereby make the following
statements after conducting a thorough check of external guarantees provided
by the Company accumulated up to and during 2021 in accordance with the
requirements of the domestic regulatory authorities:
The external guarantees prior to 2021 had been disclosed in previous annual
report. The aggregate balance of outstanding external guarantees provided by
Sinopec Corp. for the year 2021 was RMB26 billion, accounting for
approximately 3.36% of the Company's net assets. The total amount of
guarantees provided during the reporting period was RMB3.4 billion, accounting
for approximately 0.44% of the Company's net assets. In accordance with the
Articles of Association of the Company and the relevant laws and regulations
and securities regulatory authorities on external guarantees, we hereby
present the following opinions:
In the reporting period, Sinopec Corp. strictly complied with the approval
requirements by regulatory authorities and stock exchanges at home and
abroad. There was no violation of decision-making procedures for offering
external guarantees, no misconduct impairing the company's and minority
shareholders' interest, thus no witness of possible significant risks. Sinopec
Corp. shall continue to strengthen its management and actively monitor
guarantee risks. It shall strictly follow the approval and disclosure
procedures in relation to guarantee businesses for any new external guarantees
provided thereafter.
7 SIGNIFICANT LITIGATION, ARBITRATION RELATING TO THE COMPANY
No significant litigation, arbitration relating to the Company occurred during
the reporting period.
8 INSOLVENCY AND RESTRUCTURING
During the reporting period, the Company was not involved in any insolvency or
restructuring matters.
9 OTHER MATERIAL CONTRACTS
Saved as disclosed by Sinopec Corp., the Company did not enter into any
material contracts subject to disclosure obligations during the reporting
period.
10 CREDIBILITY FOR THE COMPANY, CONTROLLING SHAREHOLDERS AND DE FACTO
CONTROLLER
During the reporting period, the Company and its controlling shareholder did
not fail to perform any effective judgments of the courts or fail to repay any
substantial amount of debt due.
11 TRUSTEESHIP, CONTRACTING AND LEASES
During the reporting period, the Company was not involved in any events
relating to significant trusteeship, contracting or leases for the assets of
any other company, nor has it placed its assets with any other company under a
trust, contracting or lease agreement subject to disclosure obligations.
12 ENTRUSTED FINANCING AND LOAN
(1) ENTRUSTED FINANCING
During the reporting period, the Company was not involved in any entrusted
financing.
(2) ENTRUSTED LOAN
unit：RMB million
Class Origin Transaction Undue Overdue
amount amount
Working capital loan Self-owned fund (467) 154 0
Project construction loan Self-owned fund (42) 2,690 0
(3) OTHER LOAN
unit：RMB million
Class Origin Transaction Undue Overdue
amount amount
Project construction loan Self-owned fund 3,060 3,060 0
(4) OTHER FINANCING AND DERIVATIVE INVESTMENT
During the reporting period, the Company was not involved in other financing
or derivative investment.
13 BUSINESS WITH SINOPEC FINANCE CO., LTD. (Sinopec Finance) AND SINOPEC
CENTURY BRIGHT CAPITAL INVESTMENT, LTD. (Century Bright)
(1) DEPOSIT
unit: RMB million
Transaction amount
Related party Related party relationship Daily Cap Interest rate range Balance Total Total Balance
at beginning deposit withdrawn in the end
RMB80 billion by Sinopec Finance and Century Bright
Sinopec Finance Sinopec Group 51%; Sinopec Corp.49% current：0.35%-1.725%；time deposit: 1.35%-7.4% 23,953 9,385 9,480 15,708
Century Bright Sinopec Group 100% current：0%-0.25%；time deposit: 0.08%-1.23% 29,464 197,800 176,800 45,974
Note 1: generally, the deposit interest rate at Sinopec Finance and
Century Bright is no lower than that of the same type of deposits for the same
period from major commercial banks
Note 2: the current period's occurrence is on a time deposit basis.
(2) LOAN
unit: RMB million
Transaction amount
Related party Related party relationship Daily Cap Interest Balance at Total Total Balance
rate range beginning loan withdrawn in the end
Century Bright Sinopec Group 100% 127,920 0.56%-4.25% 6,614 151,233 154,648 3,199
Sinopec Finance Sinopec Group 51%; Sinopec Corp. 49% 13,364 1.08%-5.23% 10,428 32,305 29,369 13,364
Note: generally, the loan interest rate at Sinopec Finance and
Century Bright is no higher than that of the same type of deposits for the
same period from major commercial banks.
(3) CREDIT OR OTHER FINANCIAL BUSINESS
unit: RMB million
Related party Related party relationship Business Total Transaction
nature amount amount
Sinopec Finance Sinopec Group 51%; Credit 9,494 23,590
Sinopec Corp. 49% Discounted bills - 7,194
Note: the occurred amount includes the newly issued bills and
discounts in the year
In order to regulate related party transactions between the Company and
Sinopec Finance Co., Ltd. (Sinopec Corp.'s domestic settlement center,
hereinafter referred as the Finance Company) and to ensure the safety and
liquidity of the deposits of the Company at the Finance Company, Sinopec Corp.
and the Finance Company formulated the Risk Control System on Connected
Transactions between China Petroleum & Chemical Corporation and Sinopec
Finance Co., Ltd., which covers the risk control system and the risk
management plan of the Company to prevent financial risks, ensuring the
Company's discretion to use and control its deposits with the Finance Company.
At the same time, as the controlling shareholder of the Finance Company, China
Petrochemical Corporation undertook that in case of an emergency when the
Finance Company has difficulty in making payments, China Petrochemical
Corporation would increase the capital of the Finance Company to meet the need
for the purpose of making payment.
In order to regulate related party transactions between the Company and
Sinopec Century Bright Capital Investment, Ltd. (Sinopec Corp.'s overseas
settlement center, hereinafter referred at the Century Bright Company),
Century Bright Company ensures the safety of the deposits of the Company at
Century Bright Company by strengthening internal risk controls and obtaining
support from China Petrochemical Corporation. China Petrochemical Corporation
has formulated a number of internal rules, including the Rules for the
Internal Control System, the Rules for Implementation of Overseas Capital
Management Methods, and the Provisional Methods for Overseas Fund Platform
Management, to impose strict restrictions on Century Bright Company regarding
the provision of overseas financial services. Century Bright Company has also
established the Rules for the Implementation of the Internal Control System,
which ensures the standardisation and safety of its corporate deposits
business. At the same time, as the wholly controlling shareholder of Century
Bright Company, China Petrochemical Corporation entered into a keep-well
agreement with Century Bright Company in 2013, in which China Petrochemical
Corporation undertakes that when Century Bright Company has difficulty in
making payments, China Petrochemical Corporation will ensure that Century
Bright Company will fulfill its repayment obligation through various channels.
The deposits of the Company at the Finance Company and Century Bright Company
during the reporting period are in strict compliance with the relevant caps as
approved at the general meeting of Sinopec Corp. During daily operations, the
Company can withdraw the full amount of its deposits at the Finance Company
and Century Bright Company.
14 APPROPRIATION OF NON-OPERATIONAL FUNDS BY THE CONTROLLING SHAREHOLDER AND
ITS RELATED PARTIES AND THE PROGRESS FOR CLEARING UP
Not applicable
15 STRUCTURED ENTITY CONTROLLED BY THE COMPANY
None
16 INFLUENCE ON THE INDUSTRY FROM NEWLY-ENFORCED LAW, ADMINISTRATIVE RULES,
REGULATIONS AND INDUSTRY POLICIES
In 2021, the NPC Standing Committee promulgated the Safety Production Law
(revised in 2021) to strengthen the supervision on safety production. The
State Council promulgated Sewage Permission Management Rules which set up a
system to take sewage permit as core to monitor stationary pollution source.
The NDRC promulgated Natural Gas Pipe Transportation Price Management
Regulation and Natural Gas Pipe Transportation Pricing Cost Supervision
Regulation (provisional) which specifies the trans-province natural gas pipe
transportation pricing principle, method, procedures, cost structure and
review method etc in detail.
In addition, governmental departments promulgated relevant carbon peak and
carbon neutrality guidelines which stress on the need to curb high energy
consumption and high emission projects, and promote green transformation and
high quality development.
CONNECTED TRANSACTIONS
1 AGREEMENTS CONCERNING CONTINUING CONNECTED TRANSACTIONS BETWEEN
SINOPEC CORP. AND CHINA PETROCHEMICAL CORPORATION
Prior to Sinopec Corp.'s overseas listing, in order to ensure the smooth
continuation of production and business conducted by the Company and China
Petrochemical Corporation, the two parties entered into the agreements on
continuing connected transactions.
On 27 August 2021, Sinopec Corp. and China Petrochemical Corporation entered
into the sixth supplemental agreement on continuing connected transactions.
The resolution relating to continuing connected transactions for the three
years from 2022 to 2024 was approved at the first extraordinary general
meeting of Sinopec Corp. for the year of 2021 held on 20 October 2021. For
details of the above continuing connected transactions, please refer to
relevant announcements published on 30 August 2021 in China Securities
Journal, Shanghai Securities News and Securities Times and on 29 August 2021
on the website of the Shanghai Stock Exchange and the website of the Hong Kong
Stock Exchange. The capitalised terms used in this section shall have the same
meaning as that used in the above-mentioned announcements.
2 COMPLIANCE OF DISCLOSURE AND APPROVALS OF CONTINUING CONNECTED
TRANSACTIONS BETWEEN THE COMPANY AND SINOPEC GROUP WITH HONG KONG LISTING
RULES AND THE SHANGHAI LISTING RULES
Pursuant to the Hong Kong Listing Rules and the Shanghai Listing Rules, the
continuing connected transactions between the Company and Sinopec Group are
subject to disclosure, independent non-executive directors' approval and/or
independent shareholders' approval (if needed) based on the nature and the
value of the transactions. Sinopec Corp. has fully complied with the above
requirements in relation to the continuing connected transaction between the
Company and Sinopec Group.
The aggregated amount of the continuing connected transactions for 2021 of the
Company is in compliance with the relevant requirements of the Hong Kong
Listing Rules and the Shanghai Listing Rules. For performance details of
connected transaction agreements, please refer to Item 3 below.
3 ACTUAL CONTINUING CONNECTED TRANSACTIONS ENTERED INTO BY THE COMPANY
DURING THE YEAR
Pursuant to the above-mentioned agreements on continuing connected
transactions, the aggregate amount of the continuing connected transactions of
the Company during the reporting period was RMB382.445 billion. Among which,
purchases expenses amounted to RMB259.882 billion, representing 9.35% of the
total amount of this type of transaction for the reporting period, including
purchases of products and services (procurement, storage and transportation,
exploration and development services, and production-related services) of
RMB246.211 billion, purchases of auxiliary and community services of RMB1.730
billion, payment of property rent of RMB565 million, payment of land use right
of RMB10.831 billion, other lease payment RMB159 million, and the interest
expenses amounted to RMB386 million. The sales income amounted to RMB122.563
billion, representing 4.25% of the total amount of this type of transaction
for the reporting period, including RMB121.676 billion for sales of products
and services, RMB165 million for agency commission income, and RMB722 million
for interest income.
The amounts of the above continuing connected transactions between the Company
and Sinopec Group did not exceed the relevant caps for the continuing
connected transactions as approved by the general meeting of shareholders and
the Board.
The pricing principles for the continuing connected transactions are as
follows:
(a) The government-prescribed price, if any, will apply;
(b) where there is no government-prescribed price but where there is a
government-guidance price, the government-guidance price will apply;
(c) where there is neither a government-prescribed price nor a
government-guidance price, the market price will apply; or
(d) where none of the above is applicable, the price for the provision of
the products or services is to be agreed between the relevant parties, which
shall be the reasonable cost incurred in providing the same plus 6% or less of
such cost.
For details of the pricing principle, please refer to relevant announcements
published on 30 August 2021 in China Securities Journal, Shanghai Securities
News and Securities Times and on 29 August 2021 on the website of the Shanghai
Stock Exchange and the website of the Hong Kong Stock Exchange.
Decision-making procedures:
The continuing connected transaction agreements were entered into in the
ordinary course of the Company's business and in accordance with normal
commercial terms that are fair and reasonable to the Company and its
shareholders. The Company, according to its internal control procedures,
adjusts the scope and the relevant caps of continuing connected transactions
every three years, and will announce and implement upon the approval of the
Board and/or independent shareholders. For the other connected transactions,
Sinopec Corp., in strict compliance with domestic and overseas regulatory
rules, will publish the announcement and implement the transactions only after
submitting the relevant proposals of connected transactions to the Board
and/or the general meeting of shareholders for consideration and approval
according to internal control procedures.
Related party transactions with the Sinopec Group that occurred during the
year, as set out in Note 39 to the financial statements prepared under the
IFRS in this annual report, also fall under the definition of connected
transactions under Chapter 14A of the Hong Kong Listing Rules.
The above-mentioned connected transactions between the Company and Sinopec
Group were approved at the 2nd meeting of the eighth session of the Board and
have complied with the requirements under Chapter 14A of the Hong Kong Listing
Rules.
The external auditor of Sinopec Corp. was engaged to report on the Company's
continuing connected transactions in accordance with the Hong Kong Standard on
Assurance Engagements 3000, Assurance Engagement Other Than Audits or Reviews
of Historical Financial Information, and with reference to Practice Note 740,
Auditor's Letter on Continuing Connected Transactions under the Hong Kong
Listing Rules, issued by the Hong Kong Institute of Certified Public
Accountants. The auditor has issued its unqualified letter containing its
conclusions in respect of the above-mentioned continuing connected
transactions in accordance with Rule 14A.56 of the Hong Kong Listing Rules.
Sinopec Corp. has submitted a copy of the auditor's letter to the Hong Kong
Stock Exchange.
After reviewing the above-mentioned connected transactions, the independent
non-executive directors of Sinopec Corp. have confirmed the following:
(a) The transactions have been conducted in the ordinary course of the
Company's business;
(b) The transactions have been entered into based on either of the following
terms:
i normal commercial terms; or
ii terms not less favorable than those available from or to independent
third parties, where there is no available comparison to determine whether
such terms are on normal commercial terms; and
(c) The transactions were conducted pursuant to the terms of relevant
agreements, and the terms were fair and reasonable and in the interests of
Sinopec Corp. and its shareholders as a whole.
4 OTHER SIGNIFICANT CONNECTED TRANSACTIONS OCCURED THIS YEAR
For details, please refer to item 2 "purchase of equity and non-equity assets"
and item 3 "The transactions with China Oil & Gas Pipeline Network
Corporation" of the section "Significant Events".
5 FUNDS PROVIDED BETWEEN RELATED PARTIES
Unit: RMB million
Funds to related parties Funds from related parties
Related Parties Relations Balance Amount Balance Balance Amount Balance at
at the incurred at the end at the incurred the end
beginning of the year beginning of the year
of the year of the year
Sinopec Group Parent company and affiliated companies* 10,645 (848) 9,797 9,670 21,012 30,682
Other related parties Associates and joint ventures 11,328 (4,185) 7,143 6,087 (2,494) 3,593
Total 21,973 (5,033) 16,940 15,757 18,518 34,275
Reason for provision of funds between related parties Loans and other accounts receivable and payable
Impacts on the Company No material negative impact
*: affiliated companies include subsidiaries, associates and joint
ventures.
REPORT OF THE BOARD OF DIRECTORS
The Board is pleased to present the report of the Board of Directors for the
year ended 31 December 2021 for the shareholders' review.
1 MEETINGS OF THE BOARD
During this reporting period, Sinopec Corp. held seven (7) Board meetings. The
details are as follows:
(1) The 20th meeting of the seventh session of the Board was held by written
proposals on 28 January 2021, whereby the proposals in relation to the
following matters were approved:(i) the continuing connected transactions with
China Oil & Gas Pipeline Network Corporation for the year 2020-2021; (ii)
Information Disclosure Management Regulation; (iii) Investor Relations
Management Regulation; (iv) the Internal Control Manual (2021).
(2) The 21st meeting of the seventh session of the Board was held by on-site
meeting and via video conference on 26 March 2021, whereby the proposals in
relation to the following matters were approved: (i) the development strategy
of Sinopec Corp. (ii) the Work Report of the seventh session of the Board;
(iii) the Work Report of the seventh session of the Senior Management; (iv)
financial results and business performance of the Company for the year 2020;
(v) provision for impairment for the year 2020; (vi) the continuing connected
transactions for the year 2020; (vii) profit distribution plan for the year
2020; (viii) audit costs for the year 2020; (ix) to authorize the Board to
determine the interim profit distribution plan of Sinopec Corp. for the year
2021; (x) to authorize the Board to determine the plan for issuance of debt
financing instrument(s); (xi) the report of Risk Assessment for Capital
Deposits at Finance Company and Century Bright Company; (xii) change in the
accounting firm; (xiii) Internal control assessment report of Sinopec Corp.
for the year 2020; (xiv) Financial Statements of Sinopec Corp. for the year
2020; (xv) Annual Report of the Company for the year 2020; (xvi) Form 20F of
the Company for the year 2020; (xvii) Acquisition of relevant assets and
equities of the Sinopec Group; (xviii) investment and construction of 11
million tonnes/year refinery and high-end synthetic new materials project;
(xix) the report of Sustainable Development of Sinopec Corp. for the year
2020; (xx) granting to the Board a general mandate to issue new domestic
shares and/or overseas-listed foreign shares of Sinopec Corp.; (xxi) the
re-election of the Board of Directors; (xxii) the re-election of the Board of
Supervisors; (xxiii) Service Contract for the Directors of the eighth session
of the Board (including remuneration clauses) and Supervisors of the eighth
session of the Board of Supervisors (including remuneration clauses); (xxiv)
Notice of 2020 Annual General Meeting.
(3) The 22th meeting of the seventh session of the Board was held by way of
written resolution on 28 April 2021, whereby the proposals in relation to the
following matters were approved: (i) the first quarterly report for the three
months ended 31 March 2021; (ii) transformation and upgrading of refining
business and improvement of ethylene business for Maoming Branch.
(4) The 1st meeting of the eighth session of the Board was held by on-site
meeting and via video conference on 25 May 2021, whereby the proposals in
relation to the following matters were approved: (i) election of the Chairman
of the eighth session of the Board; (ii) to rename the Social Responsibility
Management Committee and revise the Term of Reference of Social Responsibility
Management Committee; (iii) the revision of the terms of reference of the
Nomination Committee; (iv) composition of the special committees of the eighth
session of the Board; (v) the appointment of President of Sinopec Corp.; (vi)
the appointment of Senior Vice President, Vice President, Chief Financial
Officer of Sinopec Corp.; (vii) the appointment of the Secretary to the Board
of Sinopec Corp., the Authorized Representative of the Hong Kong Stock
Exchange and the Authorized Representative of the Shanghai Stock Exchange.
(5) The 2nd meeting of the eighth session of the Board was held by on-site
meeting on 27 August 2021, whereby the proposals in relation to the following
matters were approved: (i) the report on the fulfillment of the key targets
for the first half of the year 2021 and the work arrangements for the second
half of the year 2021; (ii) amendments to the Article of Association; (iii)
profit distribution plan for the first half of the year 2021; (iv) the report
of Risk Assessment for Capital Deposits at Finance Company and Century Bright
Company; (v) the financial statements for the first half of the year 2021;
(vi) interim report for the six months ended 30 June 2021; (vii) the
continuing connected transactions for the year 2022 to 2024; (viii)
establishment of a joint venture by Shanghai Petrochemical and Baling
Petrochemical; (ix) investment and construction of 1.5 million tonnes/year
ethylene project for Zhenhai Refinery & Chemical Branch; (x) Notice of
2021 First Extraordinary General Meeting.
(6) The 3rd meeting of the eighth session of the Board was held by written
resolution on 28 October 2021, whereby the proposal in relation to the third
quarterly report for three months ended 30 September 2021 was approved.
(7) The 4th meeting of the eighth session of the Board was held by way of
written resolution on 29 November 2021, whereby the proposals in relation to
the following matters were approved: (i) the election of the Chairman of the
Board; (ii) adjustment of the composition of the board special committees;
(iii) the appointment of President of Sinopec Corp.; (iv) acquisition of
relevant assets and equities of Sinopec Group; (v) the Terms of Reference of
the Independent Non-Executive Directors.
For details of each meeting, please refer to the announcements published in
China Securities Journal, Shanghai Securities News and Securities Times after
each meeting and on the websites of Shanghai Stock Exchange, Hong Kong Stock
Exchange and Sinopec Corp.
2 IMPLEMENTATION OF RESOLUTIONS APPROVED AT THE GENERAL MEETINGS OF
SHAREHOLDERS BY THE BOARD
During this reporting period, in accordance with relevant laws and regulations
as well as the Articles of Association, all members of the Board diligently
implemented the resolutions approved at the general meetings of Sinopec Corp.,
and had completed all the tasks delegated to them at the general meetings.
3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL
MEETINGS
(1) Attendance to the board meetings and general meetings during the
reporting period by the Directors of the eighth session of the Board
Director titles Name Board meeting General meeting
No. of On-site Meetings Meetings Absent No. of Actual
meetings held attendance attended by attend by meetings held attendance
communication proxy
Chairman Ma Yongsheng 7 3 4 0 0 2 2
Director Zhao Dong 4 1 2 1 0 1 1
Director Yu Baocai 7 2 4 1 0 2 2
Director Ling Yiqun 7 3 4 0 0 2 0
Director Li Yonglin 4 2 2 0 0 1 0
Director Liu Hongbin 7 2 4 1 0 2 0
Independent Director Cai Hongbin 7 2 4 1 0 2 0
Independent Director Ng, Kar Ling Johnny 7 3 4 0 0 2 0
Independent Director Shi Dan 4 2 2 0 0 1 0
Independent Director Bi Mingjian 4 2 2 0 0 1 0
(2) Attendance to the board meetings and general meetings during the
reporting period by the former Directors of the eighth session of the Board
Director titles Name Board meeting General meeting
No. of On-site Meetings Meetings Absent No. of Actual
meetings held attendance attend by attend by meetings held attendance
communication proxy
Former Chairman Zhang Yuzhuo 4 2 2 0 0 1 1
Former Director Zhang Shaofeng 3 1 2 0 0 1 0
Former Independent Director Tang Min 3 1 2 0 0 1 0
Note 1: No directors were absent from two consecutive meetings of the Board.
Note 2: Mr. Zhang Yuzhuo resigned as the Chairman, Director of the Board on 2
August 2021.
(3) Attendance to the general meetings by the Independent Director
During the reporting period, none of the Independent Directors had attended
the general meetings of shareholders in person due to Covid-19 pandemic or
official duties.
4 MEETINGS HELD BY THE BOARD COMMITTEES
During the reporting period, the Board committees held ten (10) meetings,
among which the Audit Committee held five (5) meetings, the Strategy Committee
held one (1) meeting, the Remuneration and Appraisal Committee held one (1)
meeting, the Sustainable Development Committee (formerly known as Social
Responsibility Management Committee) held one (1) meeting, and the Nomination
Committee held two (2) meetings. All members of each committee had attended
the relevant meetings. Details of those meetings are as follows:
(1) The 14th meeting of the seventh session of the Audit Committee was held
by way of written resolution on 28 January 2021, whereby the proposal in
relation to the Internal Control Manual (2021) was approved.
(2) The 15th meeting of the seventh session of the Audit Committee was held
by on-site meeting and via video conference on 25 March 2021, whereby the
proposals in relation to the following matters were approved: (i) Financial
results and business performance of the Company for the year 2020; (ii)
Financial statements of Sinopec Corp. for the year 2020; (iii) Annual Report
of the Company for the year 2020; (iv) Form 20F of the Company for the year
2020; (v) change in the accounting firm; (vi) Internal control assessment
report of Sinopec Corp. for the year 2020; (vii) Report on audit work for 2020
and audit work arrangement for 2021.
(3) The 16th meeting of the seventh session of the Audit Committee was held
by way of written resolution on 28 April 2021, whereby the proposal in
relation to the first quarterly report for the three months ended 31 March
2021 was approved.
(4) The 1st meeting of the eighth session of the Audit Committee was held by
on site meeting on 25 August 2021, whereby the proposals in relation to the
following matters were approved: (i) Notes on financial results and business
performance for the first half of the year 2021; (ii) Financial statements for
the first half of the year 2021;(iii) Interim report for the six months ended
30 June 2021; (iv) Proposal in relation to the continuing connected
transactions for the year 2022 to2024; (v) Report on the main audit work for
the first half of 2021 and the overall arrangement of audit work for the
second half of 2021.
(5) The 2nd meeting of the eighth session of the Audit Committee was held by
way of written resolution on 28 October 2021, whereby the proposal in relation
to the third quarterly report for the three months ended 30 September 2021 was
approved.
(6) The 7th meeting of the seventh session of the Strategy Committee was
held by way of written resolution on 25 March 2021, whereby the proposals in
relation to the following matters were approved:(i) the development strategy
of Sinopec Corp.; (ii) the investments plan of 2021 of Sinopec Corp.
(7) The 3rd meeting of the seventh session of the Remuneration and Appraisal
Committee was held by way of written resolution on 25 March 2021 whereby the
proposal in relation to implementation of the rules of the remuneration of
directors, supervisors and senior management for 2020 and the remuneration of
the Board of Directors and the Board of Supervisors of the eighth session of
the Board was approved.
(8) The 3rd meeting of the seventh session of the Social Responsibility
Management Committee was held by way of written resolution on 25 March 2021,
whereby the proposals in relation to the following matters were approved:(i)
Report of Sustainable Development of Sinopec Corp. for the year 2020; (ii)
Report on the environmental protection work of Sinopec Corp. for the year 2020
and the plan of 2021; (iii) Report on the anti-corruption compliance work of
Sinopec Corp. for the year 2020 and the plan of 2021.
(9) The 8th meeting of the seventh board of the Nomination Committee was
held by way of written resolution on 25 March 2021, whereby the proposal in
relation to the re-election of the Board of Directors was approved.
(10) The 1st meeting of the eighth session of the Nomination Committee was
held by on site meeting and via video conference on 25 May 2021, whereby the
proposals in relation to the following matters were approved:(i) the
appointment of President of Sinopec Corp.; (ii) the appointment of Senior Vice
President, Vice President, Chief Financial Officer of Sinopec Corp.; (iii) the
appointment of the Secretary to the Board of Directors of Sinopec Corp..
5 BOARD SPECIAL COMMITTEES ISSUED REVIEW OPINIONS TO THE BOARD WHEN
PERFORMING THEIR DUTIES DURING THE REPORTING PERIOD, WITHOUT OBJECTION.
6 PERFORMANCE OF THE DIRECTORS' DUTIES
During the reporting period, the Directors of Sinopec Corp. fulfilled their
duties diligently in accordance with the Articles of Association, actively
attended Board meetings and meetings of the Board committees (please refer to
the Report of the Board of Directors in this annual report for their
attendance of the meeting), reviewed the relevant documents with due care.
They utilised their professional expertise to provide suggestions on
decision-making of the Company of significant events. The Directors maintained
timely and effective communication with the management, external auditors and
internal audit department, and promoted scientific decision-making by offering
advice on the Company's development strategy, and operations and reform. The
Independent Directors of Sinopec Corp. fulfilled their duties in good faith as
required by Terms of Reference of the Independent Directors, put forward
specific requirements on auditing, participated in the replacement of external
auditor and other significant events, issued their independent opinions on
matters such as appointment of senior management, connected transactions and
profit distribution plan, and protected the legitimate interests of the
minority shareholders' interests. All directors had no objection to the
Company's resolutions, and every director's suggestions to the Company were
accepted.
Pursuant to requirements of securities regulatory authority of China,
Independent Directors of Sinopec Corp. reviewed the performance of the senior
management of Sinopec Corp. who held concurrent positions as senior management
in China Petrochemical Corporation and issued a special opinion as follows:
"The President Mr. Yu Baocai, Senior Vice President Mr. Ling Yiqun, Mr. Li
Yonglin and Mr. Liu Hongbin, each of whom concurrently held position as senior
management of China Petrochemical Corporation, have obtained the exemptions
for holding concurrent position from CSRC in accordance with the applicable
rules. In 2021, Mr. Yu Baocai, Mr. Ling Yiqun, Mr. Li Yonglin and Mr. Liu
Hongbin strictly abided by the provisions of laws and regulations, the
Articles of Association and the service contract, conscientiously fulfilled
their duties of loyalty and diligence, devoted sufficient time and energy to
organize production, operation and management in accordance with the decision
and deployment of the Board, and earnestly implemented the decisions of the
Board. They protected the interests of the Company and its shareholders
effectively and had not violated the legitimate interests of Sinopec Corp. and
its shareholders due to holding aforesaid concurrent positions in China
Petrochemical Corporation."
7 BUSINESS PERFORMANCE
The financial results of the Company for the year ended 31 December 2021,
which were prepared in accordance with IFRS and the financial position as at
that date and the accompanying analysis are set out from page 143 to page 203
in this annual report. A fair review of the Company's business, a discussion
and analysis on business performance using financial key performance
indicators and the material factors underlying our results and financial
position during the reporting period, particulars of significant events
affecting the Company and the outlook of the Company's business are discussed
throughout this annual report and included in the sections "Chairman's
Address", "Business Review and Prospects", "Management's Discussion and
Analysis" and "Significant Events" of this annual report. All of the above
discussions constitute parts of the report of the Board of Directors.
8 DIVIDEND
The profit distribution policy of Sinopec Corp. maintains consistency and
steadiness and considers the long-term interests of the Company, overall
interests of all the shareholders and the sustainable development of the
Company. Sinopec Corp. gives priority to adopting cash dividends for profit
distribution and is allowed to deliver an interim profit distribution. When
the net profits and retained earnings of the Company are positive in current
year and in the event that the cash flow of Sinopec Corp. can satisfy the
normal operation and sustainable development, Sinopec Corp. should adopt cash
dividends and the distribution profits in cash every year are no less than 30%
of the net profits of the Company realised during the corresponding year.
The profit distribution plan of Sinopec Corp. for the corresponding year will
be carried out in accordance with the policy and procedures stipulated in the
Articles of Association, taking into account the advice from the minority
shareholders. Meanwhile, the Independent Directors will issue independent
opinions.
Proposals for dividend distribution
At the 7th meeting of the eighth session of the Board, the Board approved the
proposal to distribute a final cash dividend of RMB0.31 (tax inclusive) per
share for 2021. Taking into account the distributed interim dividend of
RMB0.16 (tax inclusive) per share for the first half of 2021, the total
dividend for the whole year is RMB0.47 (tax inclusive) per share.
The final cash dividend will be distributed on or before Thursday, 23 June
2022 to all shareholders whose names appear on the register of members of
Sinopec Corp. on the record date of Thursday, 9 June 2022. In order to qualify
for the final dividend for H shares, the holders of H shares must lodge all
share certificates accompanied by the transfer documents with Hong Kong
Registrars Limited located at 1712-1716, 17th Floor Hopewell Centre, 183
Queen's Road East, Wan Chai, Hong Kong before 4:30 p.m. on Wednesday, 1 June
2022 for registration. The H shares register and transfer of members of
Sinopec Corp. will be closed from Thursday, 2 June 2022 to Thursday, 9 June
2022 (both dates inclusive). The dividend will be denominated and declared in
RMB, and distributed to the domestic shareholders and investors participating
in the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect Programmes in
RMB and to the overseas shareholders in Hong Kong Dollar. The exchange rate
for the dividend calculated in Hong Kong Dollar is based on the average
benchmark exchange rate of RMB against Hong Kong Dollar as published by the
People's Bank of China one week preceding the date of the declaration and
distribution of such dividend.
In accordance with the Enterprise Income Tax Law of the People's Republic of
China and its implementation regulations which came into effect on 1 January
2008, Sinopec Corp. is required to withhold and pay enterprise income tax at
the rate of 10% on behalf of the non-resident enterprise shareholders whose
names appear on the register of members for H Shares of Sinopec Corp. when
distributing the cash dividends or issuing bonus shares by way of
capitalisation from retained earnings. Any H Shares of the Sinopec Corp. which
are not registered under the name of an individual shareholder, including
those registered under HKSCC Nominees Limited, other nominees, agents or
trustees, or other organisations or groups, shall be deemed as shares held by
non-resident enterprise shareholders. On such basis, enterprise income tax
shall be withheld from dividends payable to such shareholders. If holders of H
Shares intend to change their shareholder status, please enquire about the
relevant procedures with your agents or trustees. Sinopec Corp. will strictly
comply with the law or the requirements of the relevant government authority
to withhold and pay enterprise income tax on behalf of the relevant
shareholders based on the registration of members for H shares of Sinopec
Corp. as at the record date.
If the individual holders of H shares are residents of Hong Kong, Macau or
countries which had an agreed tax rate of 10% for cash dividends or bonus
shares by way of capitalisation from retained earnings with China under the
relevant tax agreement, Sinopec Corp. should withhold and pay individual
income tax on behalf of the relevant shareholders at a rate of 10%. If the
individual holders of H Shares are residents of countries which had an agreed
tax rate of less than 10% with China under relevant tax agreement, Sinopec
Corp. shall withhold and pay individual income tax on behalf of the relevant
shareholders at a rate of 10%. In that case, if the relevant individual
holders of H Shares wish to reclaim the extra amount withheld due to the
application of 10% tax rate, Sinopec Corp. would apply for the relevant agreed
preferential tax treatment pursuant to the relevant tax agreement provided
that the relevant shareholders submit the evidence required by the notice of
the tax agreement to the share register of H Shares of Sinopec Corp. in a
timely manner. Sinopec Corp. will assist with the tax refund after the
approval of the competent tax authority. If the individual holders of H Shares
are residents of countries which had an agreed tax rate of over 10% but less
than 20% with China under the tax agreement, Sinopec Corp. shall withhold and
pay the individual income tax at the agreed actual rate in accordance with the
relevant tax agreements. If the individual holders of H Shares are residents
of countries which had an agreed tax rate of 20% with China, or which had not
entered into any tax agreement with China, or otherwise, Sinopec Corp. shall
withhold and pay the individual income tax at a rate of 20%.
Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the
Shanghai-Hong Kong Stock Connect
(關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知)
(Caishui 2014 No. 81) and the Notice on the Tax Policies Related to the
Pilot Program of the Shenzhen-Hong Kong Stock Connect
(《關於深港股票市場交易互聯互通機制試點有關稅收政策的通知》)
(Caishui 2016 No.127):
For dividends of domestic investors investing in the H Shares of Sinopec Corp.
through Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect Program, the
Company shall withhold and pay income tax at the rate of 20% on behalf of
individual investors and securities investment funds. The Company will not
withhold or pay the income tax of dividends for domestic enterprise investors
and those domestic enterprise investors shall report and pay the relevant tax
by themselves.
For dividends of investors of the Hong Kong Stock Exchange (including
enterprises and individuals) investing in the A Shares of Sinopec Corp.
through Shanghai-Hong Kong Stock Connect Program, the Company will withhold
and pay income taxes at the rate of 10% on behalf of those investors and will
report to the competent tax authorities for the withholding. For investors who
are tax residents of other countries which have entered into a tax treaty with
the PRC stipulating a dividend tax rate of lower than 10%, the enterprises and
individuals may, or may entrust a withholding agent to, apply to the competent
tax authorities for the entitlement of the rate under such tax treaty. Upon
approval by the tax authorities, the amount paid in excess of the tax payable
based on the tax rate according to such tax treaty will be refunded.
According to the PRC Accounting Standards, the dividend distribution and bonus
shares declared by Sinopec Corp. in the past three years are as follows:
2021 2020 2019
Cash dividends (RMB/Share, tax inclusive) 0.47 0.20 0.31
Total amount of cash dividends (RMB billion, tax inclusive) 569.03 242.14 375.33
Net profits attributed to the shareholders of the listed company shown in the 712.08 332.71 576.43
consolidated statement for the dividend year (RMB billion)
Ratio of the dividends to the net profit attributed to the shareholders of 79.9 72.8 65.1
the listed company in the consolidated statement (%)
Note: The final cash dividend for 2021 is subject to the approval at the 2021
annual general meeting.
The aggregate cash dividend declared by Sinopec Corp. during three years from
2019 to 2021 is RMB0.98 per share, and the total dividend payment from 2019 to
2021 as a percentage of average net profit attributed to the shareholders of
the listed company in the three years is 220%.
9 RESPONSIBILITIES FOR THE COMPANY'S INTERNAL CONTROL
The Board is fully responsible for establishing and maintaining the internal
control system related to the financial statements as well as ensuring its
effective implementation. In 2021, the Board assessed and evaluated the
internal control of Sinopec Corp. according to the Basic Standard for
Enterprise Internal Control, Application Guidelines for Enterprise Internal
Control and Assessment Guidelines for Enterprise Internal Control. There were
no material defects in relation to the internal control system as of 31
December 2021. The internal control system of Sinopec Corp. related to the
financial statements is sound and effective.
2021 Internal Control Assessment Report of Sinopec Corp. was reviewed and
approved at the 7th meeting of the eighth session of the Board on 25 March
2022, and all members of the Board warrant that the contents of the report are
true, accurate and complete, and there are no false representations,
misleading statements or material omissions contained in the report.
10 DURING THe REPORTING PERIOD, THE IMPLEMTATION OF ENVIRONMENTAL POLICIES
BY THE COMPANY
During the reporting period, the Company complied with the environmental
policy in all material aspects. Details with regard to the Company's
performance in relation to environmental and social-related policies and
performances are provided in the section "Environment and Social
Responsibilities" in this annual report as well as the 2021 Sustainability
Report of Sinopec Corp.
11 DURING THE REPORTING PERIOD, THE COMPANY DID NOT VIOLATE LAWS OR
REGULATIONS WHICH HAVE A MATERIAL IMPACT ON THE COMPANY
12 MAJOR SUPPLIERS AND CUSTOMERS
During the reporting period, the total value of the purchasing from the top
five crude oil suppliers of the Company accounted for 31% of the total value
of the crude oil purchasing by the Company, of which the total value of the
purchasing from the largest supplier accounted for 12% of the total value of
the crude oil purchasing by the Company.
The total revenue from the five largest customers of the Company in 2021 was
RMB216,201 million, accounting for 7.89% of the total revenue of the Company,
of which the sales value to the connected party Sinopec Group among the five
largest customers was RMB73,186 million, accounting for 2.67% of the total
revenue for the year.
During the reporting period, other than disclosed above, to the best knowledge
of the Board of the Directors of the Company, none of the Directors of the
Company, their close associates, and shareholders holding more than 5% of the
shares of the Company had any interest in the top five suppliers or the top
five customers of the Company. There were no suppliers, customers, employees
or others that have a significant impact on the Company and on which the
Company's success depends.
13 BANK LOANS AND OTHER BORROWINGS
Details of bank loans and other borrowings of the Company as of 31 December
2021 are set out in Note 30 to the financial statements prepared in accordance
with IFRS in this annual report.
14 FIXED ASSETS
During the reporting period, changes to the fixed assets of the Company are
set out in Note 17 to the financial statements prepared in accordance with
IFRS in this annual report.
15 RESERVES
During the reporting period, the changes to the reserves of the Company are
set out in the consolidated statement of changes in shareholders' equity in
the financial statements prepared in accordance with IFRS in this annual
report.
16 DONATIONS
During the reporting period, the amount of charity donations made by the
Company amounted to RMB165 million.
17 PRE-EMPTIVE RIGHTS
Pursuant to the Articles of Association and the laws of the PRC, the
shareholders of Sinopec Corp. are not entitled to any pre-emptive rights.
Therefore the existing shareholders cannot request Sinopec Corp. to issue
shares to them on a preferential basis in proportion to their shareholdings.
18 REPURCHASE, SALES AND REDEMPTION OF SHARES
During the reporting period, neither Sinopec Corp. nor any of its subsidiaries
repurchased, sold or redeemed any listed shares of Sinopec Corp. or its
subsidiaries.
19 DIRECTORS' INTERESTS IN COMPETING BUSINESS
As at the end of the reporting period, the Company has resolved its
competition with Sinopec Group in the chemical business. For details for the
positions held by the Directors (excluding Independent Non-Executive
Directors) of Sinopec Corp. in the Sinopec Group during the reporting period,
please refer to the section "Corporate Governance" of this annual report.
20 DIRECTORS' INTERESTS IN CONTRACTS
No Director had a material interest, either directly or indirectly, in any
contract of significance to the business of the Company to which Sinopec Corp.
or any of its holding companies, subsidiaries or fellow subsidiaries was a
party during the reporting period.
21 MANAGEMENT CONTRACTS
No contracts concerning management or administration of the whole or any
substantial part of the business of the Company were entered into or existed
during the reporting period.
22 PERMITTED INDEMNITY PROVISIONS
During the reporting period, Sinopec Corp. has purchased liability insurance
for all Directors to minimise their risks arising from the performance of
their duties. The permitted indemnity provisions are stipulated in such
Directors' liability insurance in respect of the liabilities and costs
associated with the potential legal proceedings that may be brought against
such Directors.
23 EQUITY-LINKED AGREEMENTS
As of 31 December 2021, the Company has not entered into any equity-linked
agreement.
24 OIL & GAS RESERVE APPRAISAL PRINCIPLES
We manage our reserves estimation through a two-tier management system. Our
Oil and Natural Gas Reserves Management Committee, or RMC, at the headquarters
level oversees the overall reserves estimation process including organisation,
coordination, monitoring and major decision-making, and reviews the reserves
estimation of our Company. Each of our branches has a reserves management
committee that manages and coordinates the reserves estimation, organises the
estimation process and reviews the reserve estimation report at the branch
level, being responsible to the RMC of the Company.
Our RMC consists of the senior management of the Company, related departments
of headquarters, Petroleum Exploration and Production Research Institute of
Sinopec (PEPRIS) and senior managers of oilfield branches. Mr. Liu Hongbin,
the Chairman of RMC is Senior Vice President of Sinopec Corp., with over 30
years of experience in oil and gas industry. A majority of our RMC members
hold master's or Ph.D. degrees, and have an average of more than 20 years of
technical experience in relevant professional fields, such as geology,
engineering and economics.
Our reserves estimates are guided by procedural manuals and technical guidance
formulated by the Company. A number of working divisions at the production
bureau level, including the exploration, development and financial divisions,
are responsible for initial collection and compilation of information about
reserves. Experts from exploration, development and economic divisions prepare
the initial report on the reserves estimate which is then reviewed by the RMC
at the subsidiary level to ensure the qualitative and quantitative compliance
with technical guidance as well as its accuracy and reasonableness. We also
engage external consultants to assist in our compliance with the rules and
regulations of the U.S. Securities and Exchange Commission. Our reserves
estimation process is further facilitated by a specialised reserves database,
which is improved and updated periodically.
25 CORE COMPETITIVENESS ANALYSIS
The Company is a large scale integrated energy and petrochemical company with
upstream, mid-stream and downstream operations. The Company is a large scaled
oil and gas producer in China; in respect of refining capacity, it ranks first
in China; equipped with a well-developed refined oil products sales network,
the Company is the largest supplier of refined oil products in China; and in
terms of ethylene production capacity, the Company ranks first in China, and
has a well-established marketing network for chemical products.
The integrated business structure of the Company carries strong advantages in
synergy among its various business segments, enabling the Company to
continuously tap onto potentials in attaining an efficient and comprehensive
utilisation of its resources, and endowed the Company with strong resistance
against risks, as well as remarkable capabilities in sustaining profitability.
The Company enjoys a favourable positioning with its operations located close
to the consumer markets. Along with the steady growth in the Chinese economy,
sales volume of both refined oil products and chemical products of the Company
has been increasing steadily over the years; through continuous and
specialised marketing efforts, the Company's capability in international
operations and market expansion has been further enhanced.
The Company owns a team of professionals with expertise in the production of
oil and gas, operation of refineries and chemical plants, as well as marketing
activities. The Company applies outstanding fine management measures with its
remarkable capabilities in management of operations, and enjoys a favourable
operational cost advantage in its downstream businesses.
The Company has formulated a well-established technology system and mechanism,
and owns competent teams specialised in R&D covering a wide range of
subjects; the four platforms for technology advancement is taking shape, which
includes exploration and development of oil and gas, refining, petrochemicals
and strategic emerging technology. With its overall technologies reaching
state of the art level in the global arena, and some of them taking the lead
globally, the Company enjoys a strong technical strength.
The Company always attaches great importance to the fulfilment of social
responsibilities, and carries out the green and low carbon development
strategy to pursue a sustainable development. Moreover, the Company enjoys an
outstanding "Sinopec" brand name, plays an important role in the national
economy and is a renowned and reputable company in China.
26 RISK FACTORS
In the course of its production and operations, the Company will actively take
various measures to circumvent operational risks. However, in practice, it may
not be possible to prevent the occurrence of all risks and uncertainties
described below.
Risks with regard to the variations from macroeconomic situation: The business
results of the Company are closely related to China's and global economic
situation. China achieved remarkable results in pandemic prevention and
control, and its economy continued to grow. World economic recovery was weak,
and with significant imbalance situation. The development of economy is
increasingly constrained by climate change and environmental issues. The
Company's business could also be adversely affected by other factors such as
the impact on export due to trade protectionism from certain countries, and
negative impact on the investment of overseas oil and gas exploration and
development and refining and chemical storage projects which results from the
uncertainty of geopolitics, international crude oil price and etc.
Risks with regard to the cyclical effects from the industry: The majority of
the Company's operating income comes from the sales of refined oil products
and petrochemical products, and part of those businesses and their related
products are cyclic and are sensitive to macro-economy, cyclic changes of
regional and global economy, the changes of the production capacity and
output, demand of consumers, prices and supply of the raw materials, as well
as prices and supply of the alternative products etc. Although the Company is
an integrated company with upstream, midstream and downstream operations, it
can only counteract the adverse influences of industry cycle to a certain
extent.
Risks from the macroeconomic policies and government regulation: Although the
Chinese government is gradually liberalizing the market entry regulations on
petroleum and petrochemicals sector, the petroleum and petrochemical
industries in China are still subject to entry regulations to a certain
degree, which include: issuing the exploration and development licenses of
crude oil and natural gas; issuing licenses in relation to exploration and
development of crude oil and natural gas, issuing business licenses for
trading crude oil and refined oil, setting caps for retail prices of gasoline,
diesel and other oil products, the imposition of the special oil income levy;
the formulation of refined oil import and export quotas and procedures; the
formulation of safety, quality and environmental protection standards and the
formulation of energy conservation policies. In addition, the changes which
have occurred or might occur in macroeconomic and industry policies such as
the opening up the right of managing and using of imported crude oil;
reforming and improvement in pricing mechanism of natural gas, cost
supervision of gas pipeline and access to third party; cancellation of
qualification approval of the wholesale and storage of refined oil business,
decentralisation of retail business authorisation of refined oil products to
regional and city level government, further improvement in pricing mechanism
of refined oil products, gas stations investment being fully opened to foreign
investment; and reforming in resource tax and environmental tax, etc. Such
changes might further intensify market competition and have certain effects on
the operations and profitability of the Company.
Risks with regard to the changes from environmental legislation requirements:
Our production activities generate waste liquids, gases and solids. The
Company has built up the supporting effluent treatment systems to prevent and
reduce the pollution to the environment. However, the relevant government
authorities may issue and implement much stricter environmental protection
laws and regulations, adopt much stricter environment protection standards.
Under such situations, the Company may increase expenses in relation to the
environment protection accordingly.
Risks from the uncertainties of obtaining additional oil and gas resources:
The future sustainable development of the Company is partly dependent to a
certain extent on our abilities in continuously discovering or acquiring
additional oil and natural gas resources. To obtain additional oil and natural
gas resources, the Company faces some inherent risks associated with
exploration and development and/or with acquisition activities, and the
Company has to invest a large amount of money with no guarantee of certainty.
If the Company fails to acquire additional resources through further
exploration, development and acquisition to increase the reserves of crude oil
and natural gas, the oil and natural gas reserves and production of the
Company may decline over time which may adversely affect the Company's
financial situation and operation performance.
Risks with regard to the external purchase of crude oil: A significant amount
of crude oil as needed by the Company is satisfied through external purchases.
In recent years, especially influenced by the continues spread of COVID-19
pandemic, mismatch between supply and demand of crude oil, geopolitics, global
economic growth and other factors, the prices of crude oil fluctuate sharply.
Additionally, the supply of crude oil may even be interrupted due to some
extreme major incidents in certain regions. Although the Company has taken
flexible countermeasures, it may not fully avoid risks associated with any
significant fluctuation of international crude oil prices and sudden
disruption of supply of crude oil from certain regions.
Risks with regard to the operation and natural disasters: The process of
petroleum chemical production is exposed to the high risks of inflammation,
explosion, toxicity, harm and environmental pollution and is vulnerable to
extreme natural disasters. Such contingencies may cause serious impacts to the
society, major financial losses to the Company and grievous injuries to
people. The Company has always been laying great emphasis on the safety
production, and has implemented a strict HSSE management system as an effort
to avoid such risks as far as possible. Meanwhile, the main assets and
inventories of the Company as well as the possibility of damage to a third
party have been insured. However, such measures may not shield the Company
from financial losses or adverse impact resulting from such contingencies.
Investment risks: Petroleum and chemical sector is a capital intensive
industry. Although the Company has adopted a prudent investment strategy, as
stipulated and enforced by the new investment decision-making rules in 2021,
developed negative investment lists, and conducted rigorous feasibility study
and risk evaluation on each investment project, which consists of special
verifications in raw material market, technical scheme, profitability, safety
and environmental protection, legal compliance, etc., certain investment risks
will still exist and expected returns may not be achieved due to major changes
in factors such as market environment, prices of equipment and raw materials,
and construction period during the implementation of the projects.
Risks with regard to overseas business development and management: The Company
engages in oil and gas exploration, refining and chemical, warehouse logistics
and international trading businesses in some regions outside China. The
Company's overseas businesses and assets are subject to the jurisdiction of
the host country's laws and regulations. In light of the complicated factors
such as changes in international geopolitics, spread of COVID-19, uncertainty
of economic recovery, imbalance of global economy, competitiveness of industry
and trade structure, exclusiveness of regional trading blocs, polarisation of
benefits distribution in trade, and politicisation of economic and trade
issues, including sanctions, barriers to entry, instability in the financial
and taxation policies, contract defaults, tax dispute, the Company's risks
with regard to overseas business development and management could be
increased.
Currency risks: At present, China implements an administered floating exchange
rate regime based on market supply and demand which is regulated with
reference to a basket of currencies in terms of the exchange rate of Renminbi.
As the Company purchases a significant portion of crude oil in foreign
currency which is based on US dollar-denominated prices, the realized price of
crude oil is based on international crude oil price. Despite the fact that,
the price of the domestic refined oil products will change as the exchange
rate of the Renminbi changes according to the pricing mechanism for the
domestic refined oil products, and the price of other domestic petrochemical
products will also be influenced by the price of the imported products, which
to a large extent, smooths the impact of the Renminbi exchange rate on the
processing and sales of the Company's crude oil refined products. However, the
fluctuation of the Renminbi exchange rate will still have an effect on the
income of the upstream sector.
Cyber-security risks: The Company has a well-established network safety
system. We establish an emergency response mechanism in relation to network
security operation and information system, build an information platform of
network security risk management and control, and devote significant resources
to protecting our digital infrastructure and data against cyber-attacks.
However, if our systems against cyber-security risk are proved to be
ineffective, we could be adversely affected by, among other things,
disruptions to our business operations, and loss of proprietary information,
including, intellectual property, financial information and employer and
customer data, thus causing harm to our personnel, property, environment and
reputation. As cyber-security attacks continue to evolve, we may be required
to expend additional resources to enhance our protective measures against
cyber-security breaches.
By Order of the Board
Ma Yongsheng
Chairman
Beijing, China, 25 March 2022
REPORT OF THE BOARD OF SUPERVISORS
Dear Shareholders:
In 2021, the Board of Supervisors and each supervisor of Sinopec Corp.
diligently performed their supervision responsibilities, actively participated
in the supervision process of decision making, carefully reviewed and
effectively supervised the major decisions of the Company, and endeavored to
safeguard the interests of shareholders and the Company in accordance with the
PRC Company Law and the Articles of Association of Sinopec Corp.
During the reporting period, the Board of Supervisors held five (5) meetings
in total, and mainly reviewed and approved the proposals in relation to the
Company's annual report, financial statements, sustainable development report,
internal control assessment report and working report of the Board of
Supervisors etc.
On 26 March 2021, the 12th meeting of the seventh session of the Board of
Supervisors was held, and the proposals in relation to Annual Report of
Sinopec Corp. for 2020, the Financial Statements of Sinopec Corp. for 2020,
Sustainable Development Report of Sinopec Corp. for 2020, Internal Control
Assessment Report of Sinopec Corp. for 2020, Work Report of the Board of
Supervisors of Sinopec Corp. for 2020, Work Report of the 7th Session of Board
of Supervisors of Sinopec Corp., and Work Plan of the Board of Supervisors of
Sinopec Corp. for 2021, were reviewed and approved at the meeting.
On 28 April 2021, the 13th meeting of the seventh session of the Board of
Supervisors was held, and the proposal in relation to the First Quarterly
Report of Sinopec Corp. for the three months ended 31 March 2021 was reviewed
and approved at the meeting.
On 25 May 2021, the 1st meeting of the eighth session of the Board of
Supervisors was held, on which Mr. Zhang Shaofeng was elected as Chairman of
the eighth session of the Board of Supervisors.
On 27 August 2021, the 2nd meeting of the eighth session of the Board of
Supervisors was held, the Interim Financial Statements of Sinopec Corp. for
2021, the Interim Report of Sinopec Corp. for 2021 for 2021 and the proposal
of continuing connected transactions for 2022 to 2024, were reviewed and
approved at the meeting.
On 28 October 2021, the 3rd meeting of the eighth session of the Board of
Supervisors was held, and the Third Quarterly Report of Sinopec Corp. for the
three months ended 31 September 2021 was reviewed and approved at the meeting.
In addition, the Company organised the supervisors to attend the general
meetings of shareholders and meetings of the Board. The Company also organised
some of the supervisors to attend the trainings for directors and supervisors
of listed companies organised by Beijing Securities Supervisory Bureau under
CSRC, which have further improved the Supervisors' capabilities in performing
supervisory duties.
Through supervision and inspection on the production and operation management
as well as financial management, the Board of Supervisors and all the
supervisors conclude that in 2021, although the COVID-19 pandemic accelerates
unprecedented change in a century and the external situation tends to be more
complicated and severe, China is establishing its new development pattern,
with all industries restructuring and deep adjustment. Energy development has
entered into a phase of transformative and qualitative change. The Company
conscientiously implements the decision-making and deployment of the board of
directors to improve performance, coordinates energy supply, scores new
achievements in scientific and technological innovation and promotes all work
as a whole to maintain the steady advance of business operations, and achieves
the best business performance in the company's history. The Board of
Supervisors had no objection to the supervised issues during the reporting
period.
Firstly, the Board and the senior management of Sinopec Corp. performed their
responsibilities pursuant to relevant laws and regulations, and implemented
efficient management. The Board diligently fulfilled its obligations and
exercised its rights under the PRC Company Law and the Articles of
Association, and made informed decisions on major issues. The senior
management diligently executed the resolutions approved by the Board, made
all-out efforts to tap potentials and enhance efficiency, optimise business
structures, committed to achieving the target of business operations set by
the Board. During the reporting period, the Board of Supervisors did not
discover any behavior of any director or senior management which violated
laws, regulations, or the Articles of Association, or was detrimental to the
interests of Sinopec Corp. or its shareholders.
Secondly, the reports and financial statements prepared by Sinopec Corp. in
2021 complied with the relevant regulation of domestic and overseas securities
regulators, the disclosed information truly, accurately, completely and fairly
reflected Sinopec Corp.'s financial results and operation performance. The
dividend distribution plan was made after comprehensive consideration of the
long-term interests of Sinopec Corp. and the interests of the shareholders. No
violation of confidential provisions of persons who prepared and reviewed the
report was found.
Thirdly, Sinopec Corp.'s internal control system was effective. No material
defects of internal control were found.
Fourthly, the consideration for assets transactions made by Sinopec Corp. was
fair and reasonable, neither insider trading, damage to shareholders' interest
nor losses of corporate assets were discovered.
Fifthly, all connected transactions between the Company and Sinopec Group were
in compliance with the relevant rules and regulations of domestic and overseas
listing exchanges. The pricing of all the connected transaction was fair and
reasonable. No behavior detrimental to the interests of Sinopec Corp. or its
shareholders was discovered.
In 2022, the Board of Supervisors and each supervisor will continue to follow
the principle of due diligence and integrity, earnestly perform the duties of
supervision as delegated by the shareholders, strictly review the significant
decisions, strengthen the process control and supervision, increase the
strength of inspection and supervision on subsidiaries and protect Sinopec
Corp.'s benefit and its shareholders' interests.
Zhang Shaofeng
Chairman of the Board of Supervisors
25 March 2022
CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
1 CHANGES IN THE SHARE CAPITAL
There was no change in the number and nature of shares of Sinopec Corp. during
the reporting period
2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
As of 31 December 2021, the total number of shareholders of Sinopec Corp. was
517,592 including 512,026 holders of A shares and 5,566 holders of H shares.
As of 28 February 2022, the total number of shareholders of Sinopec Corp. was
527,563. Sinopec Corp. has complied with requirement for minimum public float
under the Hong Kong Listing Rules.
(1) Shareholdings of top ten shareholders
The shareholdings of top ten shareholders as of 31 December 2021 are listed as
below:
Unit: share
Name of shareholders Nature of Percentage of Total number of Changes of Number of
Shareholders shareholdings % shares held shareholding(1) shares subject
to pledges or
lock-up
China Petrochemical Corporation State-owned Share 68.31 82,709,227,393 0 0
HKSCC Nominees Limited(2) H Share 20.97 25,386,207,159 926,751 unknown
中國證券金融股份有限公司 A Share 1.92 2,325,374,407 (283,937,650) 0
香港中央結算有限公司 A Share 0.87 1,054,953,821 213,881,539 0
中國人壽保險股份有限公司－傳統－普通保險產品－005L－CT001滬 A Share 0.69 834,160,431 19,554,400 0
中央匯金資產管理有限責任公司 A Share 0.26 315,223,600 (6,814,300) 0
國信證券股份有限公司 A Share 0.17 202,363,585 183,178,790 0
中國工商銀行－上證50交易型開放式指數證券投資基金 A Share 0.09 113,436,276 13,846,100 0
全國社保基金一一三組合 A Share 0.09 110,044,157 110,044,157 0
中國人壽保險股份有限公司－分紅－個人分紅－005L－FH002滬 A Share 0.08 98,655,327 (717,014,841) 0
Note 1: As compared with the number of shares held as of 31 December 2020.
Note 2: Sinopec Century Bright Capital Investment Limited, an overseas
wholly-owned subsidiary of China Petrochemical Corporation, held 623,454,000 H
shares, accounting for 0.52% of the total issued share capital of Sinopec
Corp. Those shareholdings were included in the total number of the shares held
by HKSCC Nominees Limited.
Statement on the connected relationship or acting in concert among the
above-mentioned shareholders:
Apart from
除中國人壽保險股份有限公司－分紅－個人分紅－005L－FH002
滬and中國人壽保險股份有限公司－傳統－普通保險產品－005L－CT001滬which
were both managed by 中國人壽保險股份有限公司, Sinopec Corp. is
not aware of any connected relationship or acting in concert among or between
the above-mentioned shareholders.
(2) Information disclosed by the shareholders of H shares in accordance with
the Securities and Futures Ordinance (SFO) as of 31 December 2021
Name of shareholders Status of shareholders Number of shares interested % of Sinopec Corp.'s issued
voting shares (H Share)
BlackRock, Inc. Interest of corporation controlled by 2,029,241,960(L) 7.95(L)
the substantial shareholder
Citigroup Inc. Person having a security interest in shares 11,307,899(L) 0.04(L)
Interest of corporation controlled by 68,263,244(L) 0.27(L)
the substantial shareholder 66,210,083(S) 0.26(S)
Approved lending agent 1,704,518,264(L) 6.68(L)
(L): Long position, (S): Short position
3 ISSUANCE AND LISTING OF SECURITIES
(1) Issuance of securities during the reporting period
There was no issuance of securities of the Company during the reporting
period.
(2) Existing employee shares
There was no existing employee shares of the Company during the reporting
period.
4 CHANGES IN THE CONTROLLING SHAREHOLDERS AND THE DE FACTO CONTROLLER
There was no change in the controlling shareholder and the de facto controller
of Sinopec Corp. during the reporting period.
(1) Controlling shareholder
The controlling shareholder of Sinopec Corp. is China Petrochemical
Corporation. Established in July 1998, China Petrochemical Corporation is a
state-authorised investment organisation and a state-owned enterprise. The
legal representative is Mr. Ma Yongsheng. Through re-organization in 2000,
China Petrochemical Corporation injected its principal petroleum and
petrochemical businesses into Sinopec Corp. and retained certain petrochemical
facilities. It provides well-drilling services, well-logging services,
downhole operation services, services in connection with manufacturing and
maintenance of production equipment, engineering construction, and utility
services including water and power and social services.
Shares of other listed companies directly held by China
Petrochemical Corporation as of the end of the reporting period
Number of Shareholding
Name of Company Shares Held Percentage
Sinopec Engineering (Group) 2,907,856,000 65.67%
Co. Ltd
Sinopec Oilfield Service 10,727,896,364 56.51%
Corporation
Sinopec Oilfield Equipment 456,756,300 58.74%
Corporation
China Merchants Energy 1,095,463,711 13.54%
Shipping Co., Ltd
(2) Other than HKSCC Nominees Limited, there was no other legal person
shareholder holding 10% or more of the total issued share capital of Sinopec
Corp.
(3) Basic information of the de facto controller
China Petrochemical Corporation is the de facto controller of Sinopec Corp.
(4) Diagram of the equity and controlling relationship between Sinopec Corp.
and its de facto controller
* : Inclusive of 623,454,000 H shares held by Sinopec Century Bright
Capital Investment Ltd. (overseas wholly-owned subsidiary of China
Petrochemical Corporation) through HKSCC Nominees Limited.
BOND GENERAL INFORMATION
1. Corporate Bond
Bond name Sinopec Corp. 2012 Corporate bond
Abbreviation 12石化02
Code 122150
Issuance date 1 June 2012
Interest commencement date 1 June 2012
Maturity date 1 June 2022
Amount issued (RMB billion) 7
Outstanding balance (RMB billion) 7
Interest rate (%) 4.90
Principal and interest repayment Simple interest is calculated and paid on an annual basis without compounding
interests. Interest is paid once a year. The principal will be paid at
maturity with last instalment of interest.
Investor Qualification Arrangement 12石化02 was publicly offered to qualified investors in accordance with
Administration of the Issuance and Trading of Corporate Bonds.
Applicable trading mechanism Floor trading at Shanghai Stock Exchange, in line with pledge repurchase
requirement
Risk of suspension for listed trading, N/A
and countermeasures
Listing exchange Shanghai Stock Exchange
Use of proceeds Proceeds from the above-mentioned corporate bonds have been used for their
designated purpose as disclosed. All the proceeds have been completely used.
Credit rating During the reporting period, China Lianhe Credit Rating Co., Ltd. tracked and
provided credit rating for 12石化02 and reaffirmed AAA credit rating in the
continuing credit rating report. The long-term credit rating of Sinopec Corp.
remained AAA with its outlook being stable. Pursuant to relevant regulations,
the latest credit rating results have been published through media designated
by regulators within six months commencing from the disclosure of annual
report for 2020.
Special terms for Issuer or investor No special terms for Issuer or investor option or investor protection, thus
not applicable
option or investor protection,
whether triggered or executed
Guarantee, repayment scheme and China Petrochemical Corporation bears non-irrevocable joint liability
guarantee. Interest is paid as usual during the reporting period without
other related events during the triggering any guarantee.
reporting period
Convening of corporate bond holders' During the reporting period, the bondholders' meeting was not convened.
meeting
Performance of corporate During the durations of the above-mentioned bonds, the bond trustee, China
International Capital Corporation Limited, has strictly followed the Bond
bonds trustee Trustee Management Agreement and continuously tracked the Company's credit
status, utilisation of bond proceeds and repayment of principals and interests
of the bond. The bond trustee has also advised the Company to fulfil
obligations as described in the corporate bond prospectus and actively
exercised its duty to protect the bondholders' legitimate rights and
interests. The bond trustee has disclosed the Trustee Management Affairs
Report of last year. The full disclosure is available on the website of
Shanghai Stock Exchange (http://www.sse.com.cn).
2. Interbank Bond Market Debt Financing Instrument of
Non-financial Enterprises
Bond name The first The second The third The first The second The third The first green
medium-term medium-term medium-term medium-term medium-term medium-term medium-term
notes in 2020 notes in 2020 notes in 2020 notes in 2021 notes in 2021 notes in 2021 notes in 2021
Abbreviation 20中石化MTN001 20中石化MTN002 20中石化MTN003 21中石化MTN001 21中石化MTN002 21中石化MTN003 21中石化GN001
code 102000568 102000569 102001109 102101386 102101480 102101489 132100172
Issuance date 2020/3/31 2020/3/31 2020/5/27 2021/7/23 2021/8/5 2021/8/5 2021/12/27
Interest commencement date 2020/4/1 2020/4/1 2020/5/28 2021/7/27 2021/8/6 2021/8/9 2021/12/28
Maturity date 2023/4/1 2023/4/1 2023/5/28 2026/7/27 2024/8/6 2023/8/9 2024/12/28
Amount issued (RMB billion) 5 5 10 5 2 2 2.55
Outstanding balance (RMB billion) 5 5 10 5 2 2 2.55
Interest rate (%) 2.7 2.7 2.2 3.2 2.95 2.8 2.5
Principal and interest repayment Interest is paid once a year. The principal will be paid at maturity with last
instalment of interest.
Investor Qualification Arrangement Nationwide inter-bank bond market institutional investors
Applicable trading mechanism Circulated and transferred in nationwide inter-bank bond market
Risk of suspension for listed trading Not applicable
(if any), and countermeasures
Trading market Nationwide inter-bank bond market
Use of proceeds Proceeds from the above-mentioned corporate bonds have been used for their
designated purpose as disclosed in the corporate bond prospectus. All the
proceeds have been completely used till now.
Credit rating During the reporting period, United Credit Ratings Co., Ltd. issued the
continuing credit rating report on May 21. The long-term credit rating of
Sinopec Corp. remained AAA with its outlook being stable.
Special terms for Issuer or investor Not applicable
option or investor protection,
whether triggered or executed
Guarantee, repayment scheme and No guarantee. Interest is paid as usual during the reporting period without
triggering any guarantee.
other related events during
the reporting period
Convening of corporate bond holders' Not applicable
meeting
Performance of corporate bonds trustee Corporate bonds trustee has performed its duties in accordance with regulatory
requirements
Note: Please refer to the website of Shanghai Stock Exchange
(http://www.sse.com.cn), China Money Network (WWW) for the name, office
address, name, contact person and telephone number of the intermediary
institutions providing services for the issuance and maturity of the debt
financing instruments of the above-mentioned corporate bonds and non-financial
enterprises in the interbank market. Chinamoney.com.cn) and other websites
disclosed the relevant contents of the prospectus and other documents.
Principal accounting data and financial indicators for the two years ended 31
December 2021
Principal data 31 Dec. 2021 31 Dec. 2020 Change Reasons for change
Current ratio 0.87 0.87 0
Quick ratio 0.55 0.58 (0.03) Increase in current liabilities
Liability-to-asset ratio (%) 51.51 48.89 2.62 percentage points Increase in liabilities
Loan repayment rate (%) 100 100 0
2021 2020 Change Reasons for change
Net profit/(loss) attributable to equity shareholders of 72,220 (1,565) 73,785 Increase in total profit
the Company excluding extraordinary gains and losses
(RMB million)
Net profit of the Company excluding extraordinary gains 85,935 4,556 81,379 Increase in total profit
and losses (RMB million)
EBITDA to total debt ratio 1.41 1.14 0.27 Increase in total profit
EBITDA to interest coverage ratio 15.12 9.89 5.23 Increase in total profit
Interest coverage ratio 8.28 4.05 4.23 Increase in total profit
Cash interest coverage ratio 43.56 24.65 18.91 Increase in net cash flow
Interest payment rate (%) 100 100 0
Note: Liability-to-asset ratio indicates the ratio of total
liabilities to total assets
During the reporting period, the Company paid in full and on time the interest
accrued for the other bonds and debt financing instruments. As at 31 December
2021, the standby credit line provided by several domestic financial
institutions to the Company was RMB441.6 billion in total, facilitating the
Company to get such amount of unsecured loans. The Company has fulfilled all
the relevant undertakings in the corporate bond prospectus and had no
significant matters which could influence the Company's operation and debt
paying ability.
On 18 April 2013, Sinopec Capital (2013) Limited, a wholly-owned overseas
subsidiary of Sinopec Corp., issued senior notes guaranteed by the Company
with four different maturities, 3 years, 5 years, 10 years and 30 years. The
3-year notes principal totaled USD750 million, with an annual interest rate of
1.250% and had been repaid and delisted; the 5-year notes principal totaled
USD1 billion, with an annual interest rate of 1.875% and had been repaid and
delisted; the 10-year notes principal totaled USD1.25 billion, with an annual
interest rate of 3.125%; and the 30-year notes principal totaled USD500
million, with an annual interest rate of 4.250%. These notes were listed on
the Hong Kong Stock Exchange on 25 April 2013, with interest payable
semi-annually. The first payment of interest was made on 24 October 2013.
During the reporting period, the Company has paid in full the current-period
interests of all notes with maturity of 5 years, 10 years and 30 years.
PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
On 31 December 2021, details of the principal wholly-owned and controlled
subsidiaries of the Company were as follows:
Name of Company Registered Capital Percentage Total Assets Net Assets Net Profit/ Principal Activities
RMB million of RMB million RMB million (Net Loss)
Shares Held RMB million
by Sinopec
Corp.
(%)
Sinopec International Petroleum 8,250 100 31,713 12,460 1,429 Investment in exploration, production and
Exploration and Production Limited sale of petroleum and natural gas
Sinopec Great Wall Energy & Chemical 22,761 100 30,655 14,187 3,714 Coal chemical industry investment
Company Limited management, production and
sale of coal chemical products
Sinopec Yangzi Petrochemical 15,651 100 36,602 22,482 1,945 Manufacturing of intermediate petrochemical
Company Limited products and petroleum products
Sinopec Yizheng Chemical Fibre 4,000 100 9,100 4,330 (1,290) Production and sale of polyester chips and
Limited Liability Company polyester fibres
Sinopec Lubricant Company Limited 3,374 100 9,311 4,789 141 Production and sale of refined petroleum
products, lubricant base oil,
and petrochemical materials
Sinopec Qingdao Petrochemical 1,595 100 5,319 1,370 873 Manufacturing of intermediate petrochemical
Company Limited products and petroleum products
Sinopec Chemical Sales Company 1,000 100 22,423 5,476 1,547 Marketing and distribution of
Limited petrochemical products
China International United Petroleum 5,000 100 229,548 44,082 6,268 Trading of crude oil and
and Chemical Company Limited petrochemical products
Sinopec Overseas Investment 3,009 100 23,019 13,467 (27) Overseas investment holding
Holding Limited Million USD
Sinopec Catalyst Company Limited 1,500 100 11,330 6,317 715 Production and sale of catalyst products
China Petrochemical International 1,400 100 21,113 4,270 603 Trading of petrochemical products
Company Limited
Sinopec Beihai Refining and Chemical 5,294 99 19,396 13,461 2,729 Import and processing of crude oil, production,
Limited Liability Company storage and sale of petroleum products and
petrochemical products
Sinopec Qingdao Refining and 5,000 85 23,807 13,357 3,711 Manufacturing of intermediate petrochemical
Chemical Company Limited products and petroleum products
Sinopec Hainan Refining and 9,606 100 40,040 23,265 4,097 Manufacturing of intermediate petrochemical
Chemical Company Limited products and petroleum products
Sinopec Marketing Co., Limited 28,403 70 486,036 233,117 18,582 Marketing and distribution of refined
petroleum products
Sinopec Shanghai SECCO Petrochemical 500 68 17,468 10,616 2,817 Production and sale of petrochemical products
Company Limited
Sinopec-SK(Wuhan) Petrochemical 7,193 59 27,441 11,807 1,606 Production, sale, research and development of
Company Limited petroleum, petrochemical, ethylene and
downstream by-products
Sinopec Kantons Holdings Limited 248 60 12,956 12,590 871 Oil jetty and nature gas pipeline
Million HKD
Sinopec Shanghai Gaoqiao Petroleum 10,000 55 37,561 18,214 3,536 Manufacturing of intermediate petrochemical
and Chemical Limited products and petroleum products
Sinopec Shanghai Petrochemical 10,824 50 47,039 30,395 2,004 Manufacturing of synthetic fibres, resin
Company Limited and plastics, intermediate petrochemical
products and petroleum products
Fujian Petrochemical Company Limited 10,492 50 14,672 13,830 951 Manufacturing of plastics, intermediate
petrochemical products and
petroleum products
Note 1: All above subsidiaries except Fujian Petrochemical Company Limited
are audited by KPMG Huazhen LLP or KPMG.
2: The above indicated total assets and net profit has
been prepared in accordance with CASs. Except for Sinopec Kantons Holdings
Limited and Sinopec Overseas Investment Holdings Ltd., which are incorporated
in Bermuda and Hong Kong SAR, respectively, all of the above wholly-owned and
non-wholly-owned subsidiaries are incorporated in the PRC. All of the above
wholly-owned and controlling subsidiaries are limited liability companies
except for Sinopec Shanghai Petrochemical Company Limited, Sinopec Marketing
Co., Limited and Sinopec Kantons Holdings Limited. The Board of Directors
considered that it would be redundant to disclose the particulars of all
subsidiaries of Sinopec Corp. and, therefore, only those which have material
impact on the results or assets of Sinopec Corp. are set out above.
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