REG - China Pet &Chem Corp - Half-year Report <Origin Href="QuoteRef">600028.SS</Origin> - Part 12
29/08/2017 07:08
- Part 12: For the preceding part double click ID:nRSc0740Pk
construction in progress 3.92% to 4.41% 3.30% to 5.60%
Interest expense
3,979
5,164
* Interest rates per annum at which borrowing costs were capitalised for construction in progress
3.92% to 4.41%
3.30% to 5.60%
10 TAX EXPENSE
Tax expense in the consolidated income statement represents:
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Current tax
- Provision for the period 12,258 8,031
- Adjustment of prior years 645 29
Deferred taxation (Note 25) (3,988) 319
8,915 8,379
319
8,915
8,379
10 TAX EXPENSE (Continued)
Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is
as follows:
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Profit before taxation 45,957 35,521
Expected PRC income tax expense at a statutory tax rate of 25% 11,489 8,880
Tax effect of non-deductible expenses 140 161
Tax effect of non-taxable income (2,046) (1,184)
Tax effect of preferential tax rate (i) (422) 215
Effect of difference between income taxes at foreign operations tax rate (716) (556)
and the PRC statutory tax rate (ii)
Tax effect of utilisation of previously unrecognised tax losses and temporary differences (593) (345)
Tax effect of tax losses not recognised 409 500
Write-down of deferred tax assets 9 43
Adjustment of prior years 645 665
Actual income tax expense 8,915 8,379
409
500
Write-down of deferred tax assets
9
43
Adjustment of prior years
645
665
Actual income tax expense
8,915
8,379
Note:
(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of
the Group as determined in accordance with the relevant income tax rules and regulations of the PRC, except for certain
entities of the Group in western regions in the PRC are taxed at preferential income tax rate of 15% through the year
2020.
(ii) It is mainly due to the foreign operation in the Republic of Angola ("Angola") that is taxed at 50% of the assessable
income as determined in accordance with the relevant income tax rules and regulations of Angola.
11 DIVIDENDS
Dividends payable to shareholders of the Company attributable to the period represent:
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Interim dividends declared after the balance sheet date of RMB 0.10 per share 12,107 9,565
(2016: RMB 0.079 per share)
12,107
9,565
Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 25 August 2017, the
directors authorised to declare the interim dividends for the year ending 31 December 2017 of RMB 0.10 (2016: RMB 0.079)
per share totaling RMB 12,107 million (2016: RMB 9,565 million). Dividends declared after the balance sheet date are not
recognised as a liability at the balance sheet date.
Dividends payable to shareholders of the Company attributable to the previous financial year, approved during the period
represent:
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Final cash dividends in respect of the previous financial year, approved during 20,582 7,264
the period of RMB 0.17 per share (2016: RMB 0.06 per share)
20,582
7,264
Pursuant to the shareholders' approval at the Annual General Meeting on 28 June 2017, a final dividend of RMB 0.17 per
share totaling RMB 20,582 million according to total shares of 18 July 2017 was approved. All dividends have been paid in
July 2017.
Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2016, a final dividend of RMB 0.06 per share
totaling RMB 7,264 million according to total shares of 23 June 2016 was approved. All dividends have been paid in the
six-month period ended 30 June 2016.
12 OTHER COMPREHENSIVE INCOME
Six-month period ended 30 June 2017 Six-month period ended 30 June 2016
Before tax amount Tax effect Net of tax amount Before tax amount Tax effect Net of tax amount
RMB million RMB million RMB million RMB million RMB million RMB million
Cash flow hedges:
Effective portion of changes in fair value of hedging instruments 3,406 (604) 2,802 (513) 34 (479)
recognised during the period
Amounts transferred to initial carrying 89 (15) 74 (165) 27 (138)
amount of hedged items
Reclassification adjustments for amounts transferred to the consolidated income (3,281) 567 (2,714) 2,827 (443) 2,384
statement
Net movement during the period recognised in other 214 (52) 162 2,149 (382) 1,767
comprehensive income
Available-for-sale securities:
Changes in fair value recongnised (7) - (7) (33) - (33)
during the period
Net movement during the period recognised in other (7) - (7) (33) - (33)
comprehensive income
Share of other comprehensive 277 - 277 99 - 99
income of associates and joint ventures
Foreign currency translation differences (1,542) - (1,542) 987 - 987
Other comprehensive income (1,058) (52) (1,110) 3,202 (382) 2,820
-
(33)
Share of other comprehensive
income of associates and joint ventures
277
-
277
99
-
99
Foreign currency translation differences
(1,542)
-
(1,542)
987
-
987
Other comprehensive income
(1,058)
(52)
(1,110)
3,202
(382)
2,820
13 BASIC AND DILUTED EARNINGS PER SHARE
The calculation of basic earnings per share for the six-month period ended 30 June 2017 is based on the profit attributable
to ordinary shareholders of the Company of RMB 27,915 million (2016: RMB 19,919 million) and the weighted average number of
shares of 121,071,209,646 (2016: 121,071,209,646) during the period.
The calculation of diluted earnings per share for the six-month period ended 30 June 2017 is based on the profit
attributable to ordinary shareholders of the Company (diluted) of RMB 27,913 million (2016: RMB 19,917 million) and the
weighted average number of shares of 121,071,209,646 (2016: 121,071,209,646) calculated as follows:
(i) Profit attributable to ordinary shareholders of the Company (diluted)
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Profit attributable to ordinary shareholders of the Company 27,915 19,919
After tax effect of employee share option scheme of Shanghai Petrochemical (2) (2)
Profit attributable to ordinary shareholders of the Company (diluted) 27,913 19,917
Profit attributable to ordinary shareholders of the Company (diluted)
27,913
19,917
(ii) Weighted average number of shares (diluted)
Six-month periods ended 30 June
2017 2016
Number of shares Number of shares
Weighted average number of shares at 30 June 121,071,209,646 121,071,209,646
Weighted average number of shares (diluted) at 30 June 121,071,209,646 121,071,209,646
121,071,209,646
121,071,209,646
14 PROPERTY, PLANT AND EQUIPMENT
Plants and buildings Oil and gas properties Equipment, machinery and others Total
RMB million RMB million RMB million RMB million
Cost:
Balance at 1 January 2016 107,873 613,134 880,711 1,601,718
Additions 16 1,700 538 2,254
Transferred from construction in progress 1,391 16,341 17,262 34,994
Reclassifications 415 (64) (351) -
Exchange adjustments 39 862 57 958
Reclassification to lease prepayments and other long-term assets (7) - (765) (772)
Disposals (112) - (1,553) (1,665)
Balance at 30 June 2016 109,615 631,973 895,899 1,637,487
Balance at 1 January 2017 114,920 650,685 892,936 1,658,541
Additions 279 493 2,434 3,206
Transferred from construction in progress 1,088 6,857 12,241 20,186
Reclassifications 667 (159) (508) -
Exchange adjustments (57) (1,037) (87) (1,181)
Reclassification to lease prepayments and other long-term assets (635) - (7,195) (7,830)
Disposals (108) (116) (1,993) (2,217)
Balance at 30 June 2017 116,154 656,723 897,828 1,670,705
Accumulated depreciation:
Balance at 1 January 2016 44,469 374,191 449,609 868,269
Depreciation for the period 1,867 20,279 23,225 45,371
Impairment losses for the period 80 - 1,176 1,256
Reclassifications 27 (26) (1) -
Exchange adjustments 14 578 26 618
Reclassification to lease prepayments (1) - (88) (89)
and other long-term assets
Written back on disposals (85) - (1,318) (1,403)
Balance at 30 June 2016 46,371 395,022 472,629 914,022
Balance at 1 January 2017 48,572 435,561 483,814 967,947
Depreciation for the period 1,984 26,422 22,965 51,371
Impairment losses for the period 47 3,487 427 3,961
Reclassifications 133 (124) (9) -
Exchange adjustments (24) (806) (42) (872)
Reclassification to lease prepayments and other long-term assets (162) - (2,060) (2,222)
Written back on disposals (59) (104) (1,611) (1,774)
Balance at 30 June 2017 50,491 464,436 503,484 1,018,411
Net book value:
Balance at 1 January 2016 63,404 238,943 431,102 733,449
Balance at 30 June 2016 63,244 236,951 423,270 723,465
Balance at 1 January 2017 66,348 215,124 409,122 690,594
Balance at 30 June 2017 65,663 192,287 394,344 652,294
1,984
26,422
22,965
51,371
Impairment losses for the period
47
3,487
427
3,961
Reclassifications
133
(124)
(9)
-
Exchange adjustments
(24)
(806)
(42)
(872)
Reclassification to lease prepayments and other long-term assets
(162)
-
(2,060)
(2,222)
Written back on disposals
(59)
(104)
(1,611)
(1,774)
Balance at 30 June 2017
50,491
464,436
503,484
1,018,411
Net book value:
Balance at 1 January 2016
63,404
238,943
431,102
733,449
Balance at 30 June 2016
63,244
236,951
423,270
723,465
Balance at 1 January 2017
66,348
215,124
409,122
690,594
Balance at 30 June 2017
65,663
192,287
394,344
652,294
The additions to oil and gas properties of the Group for the six-month period ended 30 June 2017 included RMB 493 million
(2016: RMB 1,700 million) of estimated dismantlement costs for site restoration (Note 29).
15 CONSTRUCTION IN PROGRESS
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Balance at 1 January 129,581 152,325
Additions 16,373 15,500
Dry hole costs written off (3,937) (3,619)
Transferred to property, plant and equipment (20,186) (34,994)
Reclassification to lease prepayments and other long-term assets (2,261) (2,390)
Impairment losses for the period - (1)
Disposal (3) (66)
Exchange adjustments (19) 35
Balance at 30 June 119,548 126,790
Disposal
(3)
(66)
Exchange adjustments
(19)
35
Balance at 30 June
119,548
126,790
As at 30 June 2017, the amount of capitalised cost of exploratory wells included in construction in progress related to the
exploration and production segment was RMB 9,683 million (2016: RMB 12,629 million). The geological and geophysical costs
paid during the six-month period ended 30 June 2017 were RMB 1,046 million (2016: RMB 1,047 million).
16 GOODWILL
30 June 31 December
2017 2016
RMB million RMB million
Cost 13,988 14,016
Less: Accumulated impairment losses (7,663) (7,663)
6,325 6,353
6,325
6,353
Impairment tests for cash-generating units containing goodwill
Goodwill is allocated to the following Group's cash-generating units:
Principal activities 30 June 31 December
2017 2016
RMB million RMB million
Sinopec Beijing Yanshan Petrochemical Branch Manufacturing of intermediate petrochemical
("Sinopec Yanshan") products and petroleum products 1,157 1,157
Sinopec Zhenhai Refining and Chemical Branch Manufacturing of intermediate petrochemical
("Sinopec Zhenhai") products and petroleum products 4,043 4,043
Sinopec (Hong Kong) Limited Trading of petrochemical products 913 941
Other units without individually significant goodwill 212 212
6,325 6,353
212
212
6,325
6,353
Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The
recoverable amounts of the above cash generating units are determined based on value in use calculations. These
calculations use cash flow projections based on financial budgets approved by management covering a one-year period and
pre-tax discount rates primarily ranging from 10.7% to 11.3% (2016: 10.4% to 11.0%). Cash flows beyond the one-year period
are maintained constant. Based on the estimated recoverable amount, no impairment loss was recognised.
Key assumptions used for cash flow forecasts for these entities are the gross margin and sales volume. Management
determined the budgeted gross margin based on the gross margin achieved in the period immediately before the budget period
and management's expectation on the future trend of the prices of crude oil and petrochemical products. The sales volume
was based on the production capacity and/or the sales volume in the period immediately before the budget period.
17 INTEREST IN ASSOCIATES
The Group's investments in associates are with companies primarily engaged in the oil and gas, petrochemical, and marketing
and distribution operations in the PRC.
The Group's principal associates are as follows:
Name of company % of ownershipinterests Principal activities Measurementmethod Country ofincorporation Principal placeof business
Sinopec Sichuan To East China Gas 50.00 Operation of natural gas Equity method PRC PRC
Pipeline Co., Ltd. ("Pipeline Ltd") pipelines and auxiliary facilities
Sinopec Finance Company Limited 49.00 Provision of non-banking Equity method PRC PRC
("Sinopec Finance") financial services
Zhongtian Synergetic Energy Company Limited 38.75 Manufacturing of coal-chemical products Equity method PRC PRC
("Zhongtian Synergetic Energy")
China Aviation Oil Supply Company 29.00 Marketing and distribution of Equity method PRC PRC
Limited ("China Aviation Oil") refined petroleum products
Caspian Investments Resources 50.00 Crude oil and natural gas Equity method British Virgin The Republic of
Ltd. ("CIR") extraction Islands Kazakhstan
Ltd. ("CIR")
extraction
Islands
Kazakhstan
Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal
associates:
Pipeline Ltd Sinopec Finance Zhongtian Synergetic Energy China Aviation Oil CIR
30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Current assets 13,252 11,835 150,790 149,457 8,686 7,292 16,698 13,115 5,477 5,120
Non-current assets 24,656 25,395 15,274 16,478 50,828 50,301 5,653 5,671 3,099 3,842
Current liabilities (4,367) (5,009) (141,825) (142,386) (7,220) (8,078) (7,496) (6,297) (949) (928)
Non-current liabilities (4) (4) (80) (88) (34,906) (32,137) (400) (417) (835) (883)
Net assets 33,537 32,217 24,159 23,461 17,388 17,378 14,455 12,072 6,792 7,151
Net assets attributable to 33,537 32,217 24,159 23,461 17,388 17,378 12,694 10,743 6,792 7,151
owners of the Company
Net assets attributable to - - - - - - 1,761 1,329 - -
non-controlling interests
Share of net assets from associates 16,769 16,109 11,838 11,496 6,738 6,734 3,681 3,115 3,396 3,576
Other (i) 6,691 6,691 - - - - - - - -
Carrying Amounts 23,460 22,800 11,838 11,496 6,738 6,734 3,681 3,115 3,396 3,576
1,761
1,329
-
-
Share of net assets from associates
16,769
16,109
11,838
11,496
6,738
6,734
3,681
3,115
3,396
3,576
Other (i)
6,691
6,691
-
-
-
-
-
-
-
-
Carrying Amounts
23,460
22,800
11,838
11,496
6,738
6,734
3,681
3,115
3,396
3,576
Summarised statement of comprehensive income
Six-month periods ended 30 June Pipeline Ltd (ii) Sinopec Finance Zhongtian Synergetic Energy (iii) China Aviation Oil CIR
2017 2017 2016 2017 2016 2017 2016 2017 2016
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Turnover 3,037 1,641 1,217 - - 49,099 32,021 1,289 931
Profit/(loss) for the periods 1,284 720 720 - - 2,475 1,973 (197) (905)
Other comprehensive (loss)/income - (22) (31) - - - - (162) 199
Total comprehensive income/(loss) 1,284 698 689 - - 2,475 1,973 (359) (706)
Dividends declared by associates - - - - - - - - -
Share of profit/(loss) from associates 642 353 353 - - 613 496 (99) (453)
Share of other comprehensive - (11) (15) - - - - (81) 100
(loss)/income from associates
-
-
-
Share of profit/(loss) from associates
642
353
353
-
-
613
496
(99)
(453)
Share of other comprehensive
(loss)/income from associates
-
(11)
(15)
-
-
-
-
(81)
100
The share of profit and other comprehensive income for the six-month period ended 30 June 2017 in all individually
immaterial associates accounted for using equity method in aggregate was RMB 1,109 million (2016: RMB 660 million) and 81
million (2016: other comprehensive loss RMB 103 million) respectively. As at 30 June 2017, the carrying amount of all
individually immaterial associates accounted for using equity method in aggregate was RMB 18,989 million (31 December 2016:
RMB 18,395 million).
Note:
(i) Other reflects the excess of fair value of the consideration transferred over the Group's share of net fair value of
the investee's identifiable assets and liabilities as of the transaction date.
(ii) On 12 December 2016, the Group entered into the Capital Injection Agreement in relation to Sinopec Sichuan To East
China Gas Pipeline Co., Ltd. ("Pipeline Ltd."), a wholly-owned subsidiary of the Group, with China Life Insurance Company
Limited ("China Life") and SDIC Communications Holding Co., Ltd. ("SDIC Holding") (the "Capital Injection Agreement").
Thereafter, the Group's equity interest in Pipeline Ltd was diluted from 100% to 50%. Consequently, the Group has
deconsolidated Pipeline Ltd and started accounting for its 50% equity interest in Pipeline Ltd as an investment in
associate company. Management is in the process of allocating the fair value to identifiable assets and liabilities of
Pipeline Ltd. The accompanying summarised financial information of Pipeline Ltd is based on management's preliminary fair
value allocation which may be subject to further update.
(iii) The main asset of Zhongtian Synergetic Energy was under construction during the period ended 30 June 2017.
18 INTEREST IN JOINT VENTURES
The Group's principal interests in joint ventures are as follows:
Principal
Name of entity % of ownershipinterests Principal activities Measurementmethod Country ofincorporation place ofbusiness
Fujian Refining & Petrochemical 50.00 Manufacturing refining Equity method PRC PRC
Company Limited ("FREP") oil products
BASF-YPC Company Limited 40.00 Manufacturing and distribution Equity method PRC PRC
("BASF-YPC") of petrochemical products
Mansarovar Energy Colombia Ltd. 50.00 Crude oil and natural Equity method British Bermuda Colombia
("Mansarovar") gas extraction
Taihu Limited ("Taihu") 49.00 Crude oil and natural Equity method Cyprus Russia
gas extraction
Yanbu Aramco Sinopec Refining 37.50 Petroleum refining and Equity method Saudi Arabia Saudi Arabia
Company Ltd. ("YASREF") processing business
processing business
Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
FREP BASF-YPC Mansarovar Taihu YASREF
30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Current assets
Cash and cash equivalents 11,220 8,172 2,362 1,394 373 499 1,267 1,165 2,560 1,259
Other current assets 8,254 10,269 5,019 4,852 522 569 1,572 1,616 9,115 6,826
Total current assets 19,474 18,441 7,381 6,246 895 1,068 2,839 2,781 11,675 8,085
Non-current assets 20,773 21,903 12,611 13,530 4,065 4,050 7,430 8,279 54,773 57,054
Current liabilities
Current financial liabilities (i) (1,686) (1,781) (371) (783) - - (47) (334) (1,133) (1,187)
Other current liabilities (3,229) (4,643) (2,220) (2,107) (351) (599) (1,524) (1,616) (9,656) (6,466)
Total current liabilities (4,915) (6,424) (2,591) (2,890) (351) (599) (1,571) (1,950) (10,789) (7,653)
Non-current liabilities
Non-current financial liabilities(ii) (18,521) (19,985) (1,174) (1,492) - - (54) (49) (41,361) (43,028)
Other non-current liabilities (237) (252) (10) (10) (1,485) (895) (1,125) (2,130) (952) (1,004)
Total non-current liabilities (18,758) (20,237) (1,184) (1,502) (1,485) (895) (1,179) (2,179) (42,313) (44,032)
Net assets 16,574 13,683 16,217 15,384 3,124 3,624 7,519 6,931 13,346 13,454
Net assets attributable to 16,574 13,683 16,217 15,384 3,124 3,624 7,258 6,690 13,346 13,454
owners of the Company
Net assets attributable to - - - - - - 261 241 - -
non-controlling interests
Share of net assets from joint ventures 8,287 6,842 6,487 6,154 1,562 1,812 3,556 3,278 5,005 5,045
Other (iii) - - - - - - 637 743 - -
Carrying Amounts 8,287 6,842 6,487 6,154 1,562 1,812 4,193 4,021 5,005 5,045
6,931
13,346
13,454
Net assets attributable to
owners of the Company
16,574
13,683
16,217
15,384
3,124
3,624
7,258
6,690
13,346
13,454
Net assets attributable to
non-controlling interests
-
-
-
-
-
-
261
241
-
-
Share of net assets from joint ventures
8,287
6,842
6,487
6,154
1,562
1,812
3,556
3,278
5,005
5,045
Other (iii)
-
-
-
-
-
-
637
743
-
-
Carrying Amounts
8,287
6,842
6,487
6,154
1,562
1,812
4,193
4,021
5,005
5,045
18 INTEREST IN JOINT VENTURES (Continued)
Summarised statement of comprehensive income
Six-month periods ended 30 June FREP BASF-YPC Mansarovar Taihu YASREF
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Turnover 24,412 20,176 10,440 7,860 852 496 5,933 4,418 28,509 20,476
Depreciation, depletion and amortisation (1,208) (1,214) (1,042) (1,138) (586) (603) (670) (698) (1,322) (1,354)
Interest income 100 50 14 9 - 2 65 - 9 10
Interest expense (450) (473) (41) (99) - (3) (66) (21) (703) (582)
Profit/(loss) before taxation 3,825 3,707 2,218 951 (442) (804) 787 731 149 619
Tax expense (934) (905) (563) (233) 19 91 (211) (249) 29 28
Profit/(loss) for the periods 2,891 2,802 1,655 718 (423) (713) 576 482 178 647
Other comprehensive (loss)/income - - - - (76) 82 (211) 108 (286) 302
Total comprehensive income/(loss) 2,891 2,802 1,655 718 (499) (631) 365 590 (108) 949
Dividends declared by joint venture - - 329 155 - - - - - -
Share of net profit/(loss) from 1,445 1,401 662 287 (212) (357) 272 228 67 243
joint ventures
Share of other comprehensive - - - - (38) 41 (100) 51 (107) 113
(loss)/income from joint ventures
2,891
2,802
1,655
718
(499)
(631)
365
590
(108)
949
Dividends declared by joint venture
-
-
329
155
-
-
-
-
-
-
Share of net profit/(loss) from
joint ventures
1,445
1,401
662
287
(212)
(357)
272
228
67
243
Share of other comprehensive
(loss)/income from joint ventures
-
-
-
-
(38)
41
(100)
51
(107)
113
The share of profit and other comprehensive income for the six-month period ended 30 June 2017 in all individually
immaterial joint ventures accounted for using equity method in aggregate was RMB 2,799 million (2016: RMB 1,740 million)
and RMB 533 million (2016: other comprehensive loss RMB 88 million) respectively. As at 30 June 2017, the carrying amount
of all individually immaterial joint ventures accounted for using equity method in aggregate was RMB 28,660 million (31
December 2016: RMB 26,822 million).
Note:
(i) Excluding trade accounts payable and other payables.
(ii) Excluding provisions.
(iii) Other reflects the excess of fair value of the consideration transferred over the Group's share of net fair value of
the investee's identifiable assets and liabilities as of the transaction date.
19 AVAILABLE-FOR-SALE FINANCIAL ASSETS
30 June 31 December
2017 2016
RMB million RMB million
Equity securities, listed and at quoted market price 238 262
Other investment, unlisted and at cost 11,116 11,175
11,354 11,437
Less: Impairment loss for investments 29 29
11,325 11,408
29
29
11,325
11,408
Other investment, unlisted and at cost, represents the Group's interests in privately owned enterprises which are mainly
engaged in oil and natural gas activities and chemical production.
The impairment losses relating to investments for the period ended 30 June 2017 amounted to nil (2016: nil).
20 LEASE PREPAYMENTS
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Cost:
Balance at 1 January 68,467 63,324
Additions 215 227
Transferred from construction in progress 1,431 1,877
Transferred from other long-term assets 1,310 379
Exchange adjustments (105) 66
Reclassification to other assets (2,145) (48)
Disposals (238) (25)
Balance at 30 June 68,935 65,800
Accumulated amortisation:
Balance at 1 January 14,226 12,275
Amortisation charge for the period 948 933
Transferred from other long-term assets 476 13
Exchange adjustments (40) 22
Reclassification to other assets (456) -
Written back on disposals (200) (10)
Balance at 30 June 14,954 13,233
Net book value: 53,981 52,567
22
Reclassification to other assets
(456)
-
Written back on disposals
(200)
(10)
Balance at 30 June
14,954
13,233
Net book value:
53,981
52,567
21 LONG-TERM PREPAYMENTS AND OTHER ASSETS
30 June 31 December
2017 2016
RMB million RMB million
Operating rights of service stations 32,855 26,896
Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries 20,843 20,385
Prepayments for construction projects to third parties 3,232 2,234
Others (i) 20,919 20,630
77,849 70,145
20,919
20,630
77,849
70,145
Note:
(i) Others mainly comprise prepaid operating lease charges over one year and catalyst expenditures.
The cost of operating rights of service stations is charged to expense on a straight-line basis over the respective periods
of the rights. The movement of operating rights of service stations is as follows:
Six-month periods ended 30 June
2017 2016
RMB million RMB million
Operating rights of service stations
Cost:
Balance at 1 January 36,908 34,407
Additions 9,016 541
Decreases (1) (6)
Balance at 30 June 45,923 34,942
Accumulated amortisation:
Balance at 1 January 10,012 8,310
Additions 3,057 859
Decreases (1) (4)
Balance at 30 June 13,068 9,165
Net book value at 30 June 32,855 25,777
Decreases
(1)
(4)
Balance at 30 June
13,068
9,165
Net book value at 30 June
32,855
25,777
22 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
30 June 31 December
2017 2016
RMB million RMB million
Amounts due from third parties 43,564 39,994
Amounts due from Sinopec Group Company and fellow subsidiaries 3,207 6,398
Amounts due from associates and joint ventures 4,387 4,580
51,158 50,972
Less: Impairment losses for bad and doubtful debts (598) (683)
Trade accounts receivable, net 50,560 50,289
Bills receivable 9,819 13,197
60,379 63,486
50,289
Bills receivable
9,819
13,197
60,379
63,486
The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as
follows:
30 June 31 December
2017 2016
RMB million RMB million
Within one year 59,894 63,051
Between one and two years 278 233
Between two and three years 23 177
Over three years 184 25
60,379 63,486
184
25
60,379
63,486
Impairment losses for bad and doubtful debts are analysed as follows:
2017 2016
RMB million RMB million
Balance at 1 January 683 525
Provision for the period 39 4
Written back for the period (121) (5)
Written off for the period (1) (11)
Others (2) -
Balance at 30 June 598 513
Others
(2)
-
Balance at 30 June
598
513
Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading
records. Amounts due from Sinopec Group Company and fellow subsidiaries are repayable under the same terms.
Trade accounts receivable and bills receivable (net of impairment losses for bad and doubtful debts) primarily represent
receivables that are neither past due nor impaired. These receivables relate to a wide range of customers for whom there is
no recent history of default.
23 INVENTORIES
30 June 31 December
2017 2016
RMB million RMB million
Crude oil and other raw materials 75,668 75,680
Work in progress 14,475 14,141
Finished goods 74,593 65,772
Spare parts and consumables 3,385 1,838
168,121 157,431
Less: Allowance for diminution in value of inventories (1,063) (920)
167,058 156,511
Less: Allowance for diminution in value of inventories
(1,063)
(920)
167,058
156,511
The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 924,849 million for
the six-month period ended 30 June 2017 (2016: RMB 647,740 million). It includes the write-down of inventories of RMB 204
million (2016: RMB 258 million) and the reversal of write-down of inventories made in prior years of RMB 1 million (2016:
RMB 2 million), which were recorded in purchased crude oil, products and operating supplies and expenses in the
consolidated income statement. The write-down of inventories of RMB 51 million for the period ended 30 June 2017 (2016: RMB
3,034 million) was realised. The write-down of inventories is mainly related to the finished goods in marketing segment.
24 PREPAID EXPENSES AND OTHER CURRENT ASSETS
30 June 31 December
2017 2016
RMB million RMB million
Other Receivables 23,204 26,056
Advances to suppliers 4,154 3,749
Value-added input tax to be deducted 17,252 18,055
Prepaid income tax 160 1,145
Derivative financial instruments 1,130 762
45,900 49,767
Derivative financial instruments
1,130
762
45,900
49,767
25 DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
Deferred tax assets Deferred tax liabilities Net balance
30 June 31 December 30 June 31 December 30 June 31 December
2017 2016 2017 2016 2017 2016
RMB million RMB million RMB million RMB million RMB million RMB million
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