SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934

For the month of March, 2017

CHINA PETROLEUM & CHEMICAL CORPORATION
22 Chaoyangmen North Street,
Chaoyang District, Beijing, 100728
People's Republic of China
Tel: (8610) 59960114

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F                 Form 40-F _____

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes ____                         No    ✓  

(If "Yes" is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b): 82-__________. )
N/A


This Form 6-K consists of:

1.          An announcement regarding nomination of supervisor of China Petroleum & Chemical Corporation (the “Registrant”);
2.          An announcement regarding positive profit alert for the first quarterly results of 2017 of the Registrant; and
3.          An announcement regarding 2016 annual results of the Registrant;

Each made by the Registrant on March 24, 2017.
 
 

Announcement 1
 
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibilities for the contents of this notice, 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 notice.

CHINA PETROLEUM & CHEMICAL CORPORATION
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 00386)

Nomination of Supervisor

The Board and all its directors warrant that there are no material omissions from, or misrepresentations or misleading statements contained in, this announcement, and severally and jointly accept full responsibility for the authenticity, accuracy and completeness of the information contained in this announcement.

The board of directors (the “Board”) of China Petroleum & Chemical Corporation (“Sinopec Corp. or “Company”) announces that, on 24 March 2017, the Board has reviewed and approved the proposal in relation to the nomination of Mr. Zhao Dong as a candidate for non-employee representative supervisor for the sixth session of the board of supervisors of the Company (the “Board of Supervisors”) as recommended by China Petrochemical Corporation, the controlling shareholder of the Company. The election of the candidate for non-employee representative supervisor is subject to the shareholders’ approval by way of ordinary resolution at the 2016 annual general meeting of the Company (the “AGM”).

The biographical details of Mr. Zhao are set out below:

Zhao Dong, aged 46. Mr. Zhao is a professor-level senior accountant with a doctor’s degree. He was appointed as chief accountant and manager of financial assets department of CNPC International (Nile) Ltd. in July 2002; deputy chief accountant and executive deputy director of financial and capital operation department of China National Oil and Gas Exploration and Development Corporation in January 2005; deputy chief accountant and manager of financial and capital operation department of China National Oil and Gas Exploration and Development Corporation in April 2005; chief accountant of China National Oil and Gas Exploration and Development Corporation in June 2008; chief accountant of China National Oil and Gas Exploration and Development Corporation and chief financial officer of PetroChina International Investment Company Limited in October 2009.

— 1 —


He was appointed as vice general manager of CNPC Nile Company in September 2012 and general manager of CNPC Nile Company in August 2013. Mr. Zhao was appointed as chief financial officer of PetroChina Company Limited in November 2015. He has been a member of the Leading Party Member Group and chief accountant of China Petrochemical Corporation since November 2016.

Once the nomination of Mr. Zhao is approved at the AGM, Mr. Zhao will enter into a service contract with Sinopec Corp. Pursuant to provisions in the service contract, the term of Mr. Zhao shall start from the date on which his nomination is approved by the AGM to the date when the term of the Board of Supervisors expires. Mr. Zhao, as a supervisor of Sinopec Corp., will not receive any remuneration from the Company.

Other than disclosed above, Mr. Zhao did not hold any directorships in any other listed public companies in the last three years and he had no relationship with any other directors, supervisors, senior management or substantial shareholders or controlling shareholder of Sinopec Corp.

As at the date of this announcement, Mr. Zhao does not have any interest in the shares of Sinopec Corp. within the meaning of Part XV of the Securities and Futures Ordinance. He has not received any regulatory sanction imposed by the China Securities Regulatory Commission, stock exchanges or any other government authority.

Save as disclosed herein, there are no other matters in relation to the nomination of Mr. Zhao which shall be disclosed to the shareholders of Sinopec Corp. and The Stock Exchange of Hong Kong Limited or matters which would require disclosure under Rules 13.51(2)(h) to 13.51(2)(v) of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

 
By Order of the Board
 
China Petroleum & Chemical Corporation
 
Huang Wensheng
 
Vice President and Secretary to the Board of Directors

Beijing, the PRC,
24 March 2017

As of the date of this announcement, directors of Sinopec Corp. are: Wang Yupu*, Dai Houliang#, Wang Zhigang#, Zhang Haichao#, Jiao Fangzheng#, Ma Yongsheng#, Jiang Xiaoming+, Andrew Y. Yan+, Tang Min+ and Fan Gang+.

# Executive Director
* Non-executive Director
+ Independent Non-executive Director
 

 
— 2 —

Announcement 2
 
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibilities for the contents of this notice, 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 notice.
 
CHINA PETROLEUM & CHEMICAL CORPORATION
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 00386)

Positive Profit Alert in respect of the First Quarterly Results of 2017

The Board of Directors of the Company and all its directors warrant that there are no misrepresentations, misleading statements or material omissions contained in this announcement and severally and jointly accept full responsibility for the authenticity, accuracy and completeness of the information contained in this announcement.

I.
Estimated Results of this Period

1.
Period of the Estimated Results

From 1 January 2017 to 31 March 2017.

2.
Estimated Results

Based on preliminary calculations by the financial department of China Petroleum & Chemical Corporation (the “Company”) and in accordance with PRC Accounting Standards for Business Enterprises, it is estimated that the net profit attributable to shareholders of the Companty for the first quarter of 2017 will increase by approximately 150% as compared with the corresponding period of the preceding year.

3.
The estimated results have not been audited.

II.
Results for the Corresponding Period of the Preceding Year

1.
Net profit attributable to the shareholders of the Company: RMB 6,185 million.

2.
Basic earnings per share: RMB 0.051.

— 1 —


III.
Main Reasons for the Estimated Results of this Period

The price of international crude oil in the first quarter of this year increased significantly, which helps the upstream segment to reduce its losses as compared with the corresponding period last year; and market demand for middle and downstream products remained stable, and profitablility increased as compared with the corresponding period last year.

IV.
Other Matters

The above estimated data represents figures of preliminary calculations only. Please refer to the 2017 first quarterly report to be officially disclosed by the Company for specific and accurate financial data.

 
By Order of the Board
 
China Petroleum & Chemical Corporation
 
Huang Wensheng
 
Vice President and Secretary to the Board of Directors

Beijing, the PRC
24 March 2017
 
As of the date of this announcement, directors of the Company are: Wang Yupu*, Dai Houliang#, Wang Zhigang#, Zhang Haichao#, Jiao Fangzheng#, Ma Yongsheng#, Jiang Xiaoming+, Andrew Y. Yan+, Tang Min+ and Fan Gang+.


# Executive Director
* Non-executive Director
+ Independent Non-executive Director
 


Announcement 3
 
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility 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.

CHINA PETROLEUM & CHEMICAL CORPORATION
(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 2016

1.
Important Notice

1.1
The board of directors, the board of supervisors, directors, supervisors and senior management of China Petroleum & Chemical Corporation (“Sinopec Corp.”) warrant that there are no false representations, misleading statements or material omissions in this announcement, and jointly and severally accept full responsibility for the authenticity, accuracy and completeness of the information contained in this announcement.

This announcement is a summary of the annual report of Sinopec Corp. for the year ended 31 December 2016 (the “Annual Report”). The entire report can be downloaded from the websites of The Stock Exchange of Hong Kong Limited (“Hong Kong Stock Exchange”) (www.hkexnews.hk) and Sinopec Corp. (www.sinopec.com.cn). Investors should read the Annual Report for more details.

1.2
The Annual Report has been approved unanimously at the 12th Meeting of the Sixth Session of the Board of Directors of Sinopec Corp. No Director has any disagreement as to, or the inability to warrant, the authenticity, accuracy and completeness of the Annual Report.

1.3
The annual financial statements for the year ended 31 December 2016 (the “reporting period”) of Sinopec Corp. and its subsidiaries (together, the “Company”) prepared in accordance with the China Accounting Standards for Business Enterprises (“ASBE”) and International Financial Reporting Standards (“IFRS”) have been audited by Pricewaterhousecoopers Zhong Tian LLP and Pricewaterhousecoopers respectively. Both firms have issued standard unqualified auditor’s reports.

1.4
Mr. Wang Yupu, Chairman of the Board of directors, Mr. Dai Houliang, Vice Chairman and President, and Mr. Wang Dehua, Chief Financial Officer and Head of the Financial Department warrant the authenticity and completeness of the financial statements contained in the Annual Report.

1

2.
Basic Information about Sinopec Corp.
 
2.1
Basic information of Sinopec Corp.

Stock name
 
SINOPEC CORP
 
SINOPEC CORP
 
SINOPEC CORP
 
SINOPEC CORP
Stock code
 
00386
 
SNP
 
SNP
 
600028
Place of listing
 
Hong Kong
 
New York
 
London
 
Shanghai
   
Stock Exchange
 
Stock Exchange
 
Stock Exchange
 
Stock Exchange
Registered address and office address
 
22 Chaoyangmen North Street, Chaoyang District, Beijing, China
Postcode
 
100728
Website
 
www.sinopec.com
E-mail
 
ir@sinopec.com

2.2
Contact persons of Sinopec Corp. and means of communication

   
Authorised representatives
 
Secretary to the Board of Directors
 
Representative on Securities Matters
                 
Name
 
Mr. Dai Houliang
 
Mr. Huang Wensheng
 
Mr. Huang Wensheng
 
Mr. Zheng Baomin
Address
 
22 Chaoyangmen North Street, Chaoyang District, Beijing, China
Tel
 
86-10-5996 0028
 
86-10-5996 0028
 
86-10-5996 0028
 
86-10-5996 0028
Fax
 
86-10-5996 0386
 
86-10-5996 0386
 
86-10-5996 0386
 
86-10-5996 0386
E-mail
 
ir@sinopec.com

3
Principal Financial Data and Indicators

3.1
Principal Financial Data and Indicators Prepared in Accordance with China Accounting Standards for Business Enterprises (“ASBE”) for the year ended 31 December 2016 of the Company.

 
As at
31 December
2016
 
As at
31 December
2015
 
Changes from
the end of
the last year
 
As at
31 December
2014
 
Items
RMB million
 
RMB million
 
%
 
RMB million
 
                 
Total assets
   
1,498,609
     
1,447,268
     
3.5
     
1,455,594
 
Total equity attributable to shareholders of the Company
   
712,232
     
677,538
     
5.1
     
596,697
 


2

   
Year ended 31 December
 
   
2016
   
2015
   
Changes over the same period
of last year
   
2014
 
Items
 
RMB million
   
RMB million
   
%
   
RMB million
 
                         
Net cash flow from operating activities
   
214,543
     
165,740
     
29.4
     
148,019
 
Operating income
   
1,930,911
     
2,020,375
     
(4.4
)
   
2,827,566
 
Net profit attributable to equity shareholders of the Company
   
46,416
     
32,281
     
43.8
     
47,603
 
Net profit attributable to equity shareholders of the Company after deducting extraordinary gain/loss items
   
29,713
     
28,901
     
2.8
     
43,238
 
Weighted average return on net assets (%)
   
6.68
     
5.07
   
1.61 Percentage
points
     
8.14
 
Basic earnings per share (RMB)
   
0.383
     
0.267
     
43.4
     
0.407
 
Diluted earnings per share (RMB)
   
0.383
     
0.267
     
43.4
     
0.406
 

 
For the year of 2016
 
 
First
 
Second
 
Third
 
Fourth
     
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Total
 
Items
RMB
million
 
RMB
million
 
RMB
million
 
RMB
million
 
RMB
million
 
                     
Operating income
   
414,061
     
465,159
     
484,725
     
566,966
     
1,930,911
 
Net profit attributable to equity shareholders of the Company
   
6,190
     
13,060
     
9,916
     
17,250
     
46,416
 
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses
   
6,403
     
11,887
     
10,047
     
1,376
     
29,713
 
Net cash flow from operating activities
   
34,285
     
41,827
     
55,588
     
82,843
     
214,543
 


3

3.2
Principal Financial Data and Indicators Prepared in Accordance with International Financial Reporting Standards (“IFRS”) for the year ended 31 December 2016 of the Company

   
Year ended 31 December
 
   
2016
   
2015
   
2014
   
2013
   
2012
 
Items
 
RMB million
   
RMB million
   
RMB million
   
RMB million
   
RMB million
 
                               
Turnover and other operating revenues
   
1,930,911
     
2,020,375
     
2,827,566
     
2,881,928
     
2,787,684
 
Operating profit
   
77,193
     
56,822
     
73,439
     
96,763
     
98,604
 
Profit before taxation
   
80,151
     
56,411
     
65,818
     
95,444
     
91,012
 
Net profit attributable to owners of the Company
   
46,672
     
32,512
     
46,639
     
66,348
     
64,082
 
Basic earnings per share (RMB)
   
0.385
     
0.269
     
0.399
     
0.571
     
0.568
 
Diluted earnings per share (RMB)
   
0.385
     
0.269
     
0.399
     
0.536
     
0.546
 
Return on capital employed (%)
   
7.30
     
5.23
     
6.06
     
8.03
     
9.10
 
Return on net assets (%)
   
6.56
     
4.81
     
7.84
     
11.62
     
12.48
 
Net cash generated from operating activities per share (RMB)
   
1.772
     
1.371
     
1.267
     
1.305
     
1.264
 

 
As of 31 December
 
2016
2015
2014
2013
2012
Items
RMB million
RMB million
RMB million
RMB million
RMB million
           
Non-current assets
1,086,348
1,113,611
1,094,035
1,012,703
895,761
Net current liabilities
73,282
129,175
242,892
197,440
146,743
Non-current liabilities
181,831
196,275
201,540
189,485
196,617
Non-controlling interests
120,241
111,964
54,348
54,691
39,086
Total equity attributable to the owners of the Company
710,994
676,197
595,255
571,087
513,315
Net assets per share (RMB)
5.873
5.585
5.033
4.899
5.912
Adjusted net assets per share (RMB)
5.808
5.517
4.969
4.860
5.846


4

3.3
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)
   
   
2016
 
2015
 
Amount
 
Percentage
   
Items
 
RMB million
 
RMB million
 
RMB million
 
(%)
 
Reasons for change
Cash at bank and on hand
 
142,497
 
69,666
 
72,831
 
104.5
 
Significant Improvement on operating cash flow and decreased investment as compared with 2015, resulted in surplus cash
Long term equity investment
 
116,812
 
84,293
 
32,519
 
38.6
 
Mainly due to sale of equity in Sichuan-to-East China Pipeline Co., resulted in RMB 22.8 billion increase in long term equity in associates.
Short-term borrowings
 
30,374
 
74,729
 
(44,355)
 
(59.4)
 
Mainly due to increase in profits and decrease in demand for external funds, and the repayment of part of the short-term borrowings
Notes payable
 
5,828
 
3,566
 
2,262
 
63.4
 
The Company optimised its operating funds, and based on its trust worthy creditability, increased its credit line in using the notes
Accounts payable
 
174,301
 
130,558
 
43,743
 
33.5
 
Mainly due to the increase in trading volume of the trading business, resulted in an increase of RMB 30.5 billion in the accounts payable to the third parties.
Tax payable
 
52,886
 
32,492
 
20,394
 
62.8
 
Mainly due to significant increase in profit from refineries as well as the impact of timing of the taxes submitted by enterprises
Short term bonds payable
 
6,000
 
30,000
 
(24,000)
 
(80.0)
 
Mainly due to the maturity of RMB 30 billion super short term financing papers, and issuance of RMB 12 billion super short term papers in 2016, with the year-end balance of RMB 6 billion
Income of investment
 
30,779
 
8,876
 
21,903
 
246.8
 
Mainly due to increased income from reorganisation of pipeline assets


5

4.
Changes in Share Capital and Shareholdings of the Principal Shareholders

4.1
Changes in the share capital

There is no change on the number and nature of shares of Sinopec Corp. during the reporting period

4.2
Number of shareholders and their shareholdings

As of 31 December 2016, the total number of shareholders of Sinopec Corp. was 609,380 including 603,151 holders of domestic A shares and 6,229 holders of overseas H shares. As of 28 February 2017, the total number of shareholders of Sinopec Corp. was 579,998. Sinopec Corp. has complied with requirement for minimum public float under The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”).

(1)
Shareholdings of top ten shareholders

The shareholdings of top ten shareholders as of 31 December 2016 are listed as below:

Unit: Share

Name of shareholders
 
Nature of Shareholders
 
Percentage of shareholdings
%
   
Total number of shares held
   
Changes of shareholding1
   
shares subject to pledges or lock-up
 
                             
China Petrochemical Corporation
 
State-owned Share
   
70.86
     
85,792,671,101
     
0
     
0
 
HKSCC Nominees Limited2
 
H Share
   
20.96
     
25,379,653,053
     
5,311,433
   
Unknown
 
中國證券金融股份有限公司
 
A Share
   
1.54
     
1,861,425,318
     
96,593,005
     
0
 
HKSCC Nominees Limited
 
A Share
   
0.30
     
361,151,404
     
284,218,172
     
0
 
中央匯金資產管理有限責任公司
 
A Share
   
0.27
     
322,037,900
     
0
     
0
 
工銀瑞信基金-工商銀行-特定客戶資產管理
 
A Share
   
0.12
     
139,961,578
     
139,961,578
     
0
 
國泰君安證券股份有限公司
 
A Share
   
0.11
     
131,135,206
     
(3,402,700
)
   
0
 
交通銀行股份有限公司-滙豐晉信雙核策略
混合型券投基金
 
A Share
   
0.08
     
91,545,992
     
68,870,234
     
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
   
0.06
     
77,858,630
     
1,220,850
     
0
 
長江證券股份有限公司
 
A Share
   
0.06
     
71,197,295
     
23,928,471
     
0
 

Note 1:
As compared with the number of shares held as of 31 December 2015.

Note 2:
Sinopec Century Bright Capital Investment Limited, an overseas wholly-owned subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares, accounting for 0.46% of the total issued share capital of Sinopec Crop. Those shareholdings are included in the total number of the shares held by HKSCC Nominees Limited.


6

Statement on the connected relationship or acting in concert among the above-mentioned shareholders:

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)

Name of shareholders
 
Status of shareholders
 
Number of shares interests held or regarded as held (H Share)
 
Approximate percentage of Sinopec Corp.’s issued share capital (H Share)
           
(%)
             
BlackRock, Inc.
 
Interest of corporation controlled
 
2,278,374,418(L)
 
8.93(L)
   
by the substantial shareholder
 
1,558,000(S)
 
0.01(S)
JPMorgan Chase & Co.
 
Beneficial owner
 
492,573,324(L)
 
1.93(L)
       
158,634,692(S)
 
0.62(S)
   
Investment manager
 
31,602,000(L)
 
0.12(L)
   
Trustee (exclusive of passive trustee)
 
20,400(L)
 
0.00(L)
   
Custodian corporation/ approved lending agent
 
908,006,153(L)
 
3.56(L)
Schroders Plc
 
Investment manager
 
1,275,857,318(L)
 
5.00(L)

(L): Long position, (S): Short position

4.3
Changes in the controlling shareholder and the de facto controller

There was no change in the controlling shareholder and the de facto controller of Sinopec Corp. during 2016.

(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. Wang Yupu. Through re-organisation 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, utility services including water and power and social services.

7

Shares of other listed companies directly held by China Petrochemical Corporation

Name of Company
 
Numberof
Shares Held
   
Shareholding
Percentage
 
             
Sinopec Engineering (Group) Co. Ltd
   
2,907,856,000
     
65.67
%
Sinopec Oilfield Service Corporation
   
9,224,327,662
     
65.22
%
Sinopec Oilfield Equipment Corporation
   
351,351,000
     
58.74
%
China Merchants Energy Shipping Co., Ltd
   
912,886,426
     
17.23
%

(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

 
China Petrochemical
Corporation
 
   
71.32% *
 
Sinopec Corp.

*:
Inclusive of 553,150,000 H shares held by Sinopec Century Bright Capital Investment Ltd. (overseas wholly-owned subsidiary of China Petrochemical Corporation) through HKSCC Nominees Limited.
 
5.
Business Review and Prospects

Business Review
In 2016, global economic recovery continued to be weak, while China’s economy maintained its stable growth, with gross domestic product (GDP) up by 6.7%. International oil prices fluctuated above their lowest levels. With abundant supply, domestic oil products market witnessed strong competition. Demand for chemicals grew steadily, and China’s environmental regulations became more stringent. The Company actively addressed market changes through a focus on growth quality, profitability and restructuring. We pressed ahead with measures to address market development, optimisation, cost reduction and risk control, coordinating all aspects of our work, which helped deliver operating results that were better than expected.

8

5.1
Market Review

(1)
Crude oil market
In 2016, international crude oil prices bottomed out and fluctuated upwards, yet still remained at a low level. The average spot price of Platt’s Brent for the year was USD 43.69 per barrel, down by 16.7% from the previous year.


(2)
Refined Oil Products Market
In 2016, domestic demand for refined oil products maintained its growth while the structure of consumption continued to change, and market supply was in surplus. According to our statistics, apparent consumption of refined oil products (including gasoline, diesel and kerosene) was 288 million tonnes, up by 4.3% from the previous year, with gasoline up by 11.9%, kerosene up by 11.0% and diesel down by 2.2%. The government further improved the pricing mechanism for refined oil products by setting the floor price. In 2016, the government made 15 price adjustments with 10 increases and 5 decreases.

(3)
Chemical Products Market
In 2016, domestic demand for chemicals grew steadily. According to our statistics, domestic apparent consumption of ethylene equivalent was up by 3.0% from the previous year, and consumption of synthetic resin, synthetic fiber and synthetic rubber rose by 5.1%, 2.6% and 7.5%, respectively. Domestic chemical product prices decreased compared with the previous year, but experienced an upward trend, in line with movements of international chemical product prices.

9

5.2
Production & Operations Review

(1)
Exploration and Production
In 2016, faced with low oil prices and coped with harsh conditions in the upstream sector, we strengthened measures to rein in costs and address our weaknesses. At the same time, we gave priority to high-efficiency exploration activities and made a number of important new discoveries in the Xinjiang Tahe Basin, the Beibu Gulf in Guangxi and the Yin-E Basin in Neimongol, along with new shale gas findings in the Yongchuan block in Sichuan. In development, we adopted a profit-oriented approach, adjusting the development structure, enhancing cost discipline, and cutting low-efficiency oil production and high-cost EOR operations. We implemented Phase Two of Fuling Shale Gas development project and increased our production of natural gas. We also completed the mixed ownership reform of Sichuan-to-East China Pipeline Co. and improved our asset profitability. The Company’s production of oil and gas declined to 431.29 million barrels of oil equivalent, with domestic crude production down by 14.6% from the previous year and natural gas production up by 4.3%.

Summary of Operations for the Exploration and Production Segment

   
2016
   
2015
   
2014
   
Change from
2015 to 2016 (%)
 
                         
Oil and gas production (mmboe)
   
431.29
     
471.91
     
480.22
     
(8.6
)
Crude oil production (mmbbls)
   
303.51
     
349.47
     
360.73
     
(13.2
)
China
   
253.15
     
296.34
     
310.87
     
(14.6
)
Overseas
   
50.36
     
53.13
     
49.86
     
(5.2
)
Natural gas production (bcf)
   
766.12
     
734.79
     
716.35
     
4.3
 


10

(2)
Refining
In 2016, the Company completed GB V automobile gasoline and diesel quality upgrading program ahead of schedule and actively promoting VI automobile gasoline and diesel quality upgrading in Beijing. We advanced the adjustment of our product structure and increased output of gasoline (especially premium gasoline) and kerosene, with the diesel-to-gasoline ratio further declining to 1.19. We actively responded to the challenges of abundant market supply, and succeeded in maintaining the utilisation rate at a high level. Meanwhile, through superior feedstock optimisation by our international trading business, we further cut crude procurement costs and achieved moderate increases in product exports. We brought our centralised marketing advantages fully into play to further improve margins for LPG, asphalt and other products. In 2016, the company processed 236 million tonnes of crude and produced 149 million tonnes of refined oil products, up by 0.53% from the previous year, with gasoline up by 4.4% and kerosene up by 4.6%.

Summary of Operations for the Refining Segment
Unit: million tonnes

                     
Change from
 
   
2016
   
2015
   
2014
   
2015 to 2016 (%)
 
                         
Refinery throughput
   
235.53
     
236.49
     
235.38
     
(0.4
)
Gasoline, diesel and kerosene production
   
149.17
     
148.38
     
146.23
     
0.5
 
Gasoline
   
56.36
     
53.98
     
51.22
     
4.4
 
Diesel
   
67.34
     
70.05
     
74.26
     
(3.9
)
Kerosene
   
25.47
     
24.35
     
20.75
     
4.6
 
Light chemical feedstock production
   
38.54
     
38.81
     
39.17
     
(0.7
)
Light product yield (%)
   
76.33
     
76.50
     
76.52
   
(0.17) percentage
points
 
Refinery yield (%)
   
94.70
     
94.75
     
94.66
   
(0.05) percentage
points
 

Note:
Includes 100% of the production of domestic joint ventures.

11

(3)
Marketing and distribution
In 2016, the company actively responded to changes in the market environment to bring our advantages in integrated business and distribution network into full play, achieving solid operating results. We optimised internal and external resources and achieved growth in both total sales volume and retail scale. We made timely adjustments to our marketing strategies, promoted effective supply and further expanded the retail volume of premium gasoline. We also improved our marketing network by accelerating the planning and construction of service stations and refined oil product pipelines. We expanded natural gas retail business for automobiles by expediting the construction and operation of CNG/LNG stations, achieving 25% growth in sales volume of natural gas for automobiles. In 2016, the total sales volume of oil products was 195 million tonnes, of which domestic sales accounted for 173 million tonnes. Our emerging business maintained its rapid growth with increased scale and profits. Emerging business transaction volume reached RMB 35.1 billion, up by 41.4% from the previous year.

Summary of Operations for the Marketing and Distribution Segment

                     
Change from
 
   
2016
   
2015
   
2014
   
2015 to 2016 (%)
 
                         
Total sales volume of oil products (million tonnes)
   
194.84
     
189.33
     
189.17
     
2.9
 
Total domestic sales volume of oil products (million tonnes)
   
172.70
     
171.37
     
170.97
     
0.8
 
Retail sales (million tonnes)
   
120.14
     
119.03
     
117.84
     
0.9
 
Direct sales and distribution (million tonnes)
   
52.56
     
52.34
     
53.13
     
0.4
 
Annual average throughput per station (tonne/station)
   
3,926
     
3,896
     
3,858
     
0.8
 

   
31 December
2016
   
31 December
2015
   
31 December
2014
   
Change from the end of the
previous year
to the end of the reporting
period (%)
 
                         
Total number of service stations under the Sinopec brand
   
30,603
     
30,560
     
30,551
     
0.1
 
Number of company-operated stations
   
30,597
     
30,547
     
30,538
     
0.2
 


12

(4)
Chemicals
In 2016, we accelerated development of basic and high-end chemicals to promote effective supply, and we optimised the operations of our facilities based on their profit margins. The Company fine-tuned its chemical feedstock mix to lower costs, optimised product mix by maximising production of high-value-added products tailored to market demands, and intensified its efforts to enhance research and development, production, marketing and sales of high value added new products, achieving good results. Ethylene output was 11.059 million tonnes, with the differential ratio of synthetic fiber reaching 86.5% and the specialty and new products as a percentage of synthetic resins reaching 61.4%. By implementing low-inventory and differentiated marketing strategies, our full-year chemical sales volume increased by 11.3% from the previous year to 69.96 million tonnes, with all produced chemicals sold.

Summary of Operations for the Chemicals Segment

Unit: thousand tonnes

                     
Change from
 
   
2016
   
2015
   
2014
   
2015 to 2016 (%)
 
                         
Ethylene
   
11,059
     
11,118
     
10,698
     
(0.5
)
Synthetic resin
   
15,201
     
15,065
     
14,639
     
0.9
 
Synthetic rubber
   
857
     
843
     
939
     
1.7
 
Synthetic fiber monomer and polymer
   
9,275
     
8,994
     
8,383
     
3.1
 
Synthetic fiber
   
1,242
     
1,282
     
1,315
     
(3.1
)

Note: Includes 100% of the production of domestic joint ventures.

13

(5)
Research and Development
In 2016, the Company pushed ahead with its innovation-driven strategy, continuing to advance its R&D activities with notable results. In our upstream business, our development in shale gas exploration technologies enabled us to make breakthroughs in shale gas exploration in Yongchuan, Chongqing, the breakthrough in Ordovician oil and gas reservoir formation theory and exploration technologies led us to the discovery of the Shunbei field. In refining, we applied technologies such as for production of high-octane gasoline from FCC diesel. In chemicals, we commercialised the production of ethylene glycol from syngas, adopted butadiene tail-gas selective hydrogenation technologies, employed technologies to produce light olefins from coal as well as olefin catalytic cracking technologies, and developed new products including environmentally friendly polypropylene resin with high stiffness and tenacity, and a specialty resin used in high-performance medical spun-bond non-woven fabrics. In 2016, the Company filed 5,612 patent applications at home and abroad, of which 3,942 were granted. The Company also won four second prizes in the National Technology and Innovation Awards and one golden award and nine excellent patent awards in China’s Patent Award competition.

(6)
Health, Safety and the Environment
In 2016, the Company fully followed its safe production and accountability scheme, strengthened the identification and control of risks, completed the rectification of potential hazards from oil and gas pipelines, further push forward management on potential hazards from oil storage tanks, reinforced on-site supervision and management, and achieved overall safe production and operations. We standardised measures to enhance worker protection and improved occupational health safeguards for our employees. By implementing its green, low-carbon strategy, the Company established a more stringent environmental protection management system, completed Clear Water, Blue Sky environmental protection project, and met emission reduction targets for major pollutants. Compared with last year, energy intensity was reduced by 1.59%, industrial water consumption was down by 1.1%, COD in discharged water was down by 3.86%, sulfur dioxide emissions were down by 4.84%, and all hazardous chemicals, discharged water, gas, and solid wastes were properly treated. For more detailed information, please refer to our Communication on Progress for Sustainable Development.

14

(7)
Capital Expenditures
In 2016, focusing on quality and profitability of investment, the Company continuously optimised its investment projects. Total capital expenditures were RMB 76.456 billion. Capital expenditures for the exploration and production segment were RMB 32.187 billion, mainly for Fuling shale gas and Yuanba gas field development projects and LNG terminal projects in Guangxi and Tianjin, as well as overseas projects. Capital expenditures for the refining segment were RMB 14.347 billion, mainly for gasoline and diesel quality upgrading projects, adjustments in the product mix and refinery revamping projects. Capital expenditures for the marketing and distribution segment were RMB 18.493 billion, mainly for constructing and renovating service stations and building refined oil product pipelines, depots and storage facilities, as well as for rectification of safety hazards. Capital expenditures for the chemicals segment were RMB 8.849 billion, mainly for adjustment of the feedstock and product structure, the Ningdong coal chemical project and the Zhongtianhechuang coal to chemical project. Capital expenditures for the corporate and others segment were RMB 2.58 billion, mainly for R&D facilities and information technology application projects.

5.3
Business Prospects

(1)
Market Outlook
Looking ahead to 2017, we expect even more uncertainty in the global economy while China’s economy maintains its steady growth. International oil prices are expected to fluctuate at a low level, with domestic demand for refined oil products continuing to grow as the consumption structure undergoes further adjustments. Domestic demand for petrochemical products will increase steadily as the consumption structure gradually shifts towards the high end.

(2)
Operations
In 2017, bearing in mind structural reforms on the supply side, the Company will focus on enhancing quality and profitability of our assets, cost reduction, market expansion, structural adjustments, reforms, and consolidating the basis for further growth. We will undertake the following work during the year:

15

Exploration and Production: We will maintain exploration activities, optimising our plans to achieve high-efficiency exploration. Our goal will be discovery of low-cost, large-scale reserves to expand our resources. In oil development, we will fine-tune development plans based on oil price trends and promote oilfield development by increasing the volume and profitability of both incremental and existing reserves. In gas development, we will advance key projects for capacity construction, refine the management of developed gas fields and optimise gas production and marketing plans. In 2017, we plan to produce 294 million barrels of crude oil, of which overseas production will account for 46 million barrels. We plan to produce 879.9 billion cubic feet of natural gas.

Refining: We will continue with our market-oriented, profitability-driven strategy to optimise crude oil procurement and resource allocation and to lower our purchasing costs. We will comprehensively adjust our production plans to ensure safe and reliable operations. We will enhance our product structure by increasing the production of jet fuel and gasoline (especially premium gasoline) and further lowering the diesel-to-gasoline ratio. We will accelerate the quality and supply of GB VI gasoline and diesel in Beijing and GB V regular diesel in other area. In 2017, we plan to process 240 million tonnes of crude and produce 150 million tonnes of oil products.

Marketing and Distribution: We will intensify our marketing strategy of balancing profits and volume, with the priority on profits. We will undertake measures to fully explore markets, expand our retail volume and increase our market share. We will further improve our marketing network to reinforce our advantages. We will accelerate construction of gas stations to strengthen our presence in the CNG/LNG market. We will step up the promotion of key merchandise and self-branding and boost the growth of our emerging business. We will explore building a new type of customer service center, employ techniques of Big Data analysis to conduct precision marketing and further our transformation into a modern comprehensive services provider. In 2017, we plan to sell 175 million tonnes of oil products in the domestic market.

Chemicals: We will continue to adjust our feedstock mix to lower costs, fine-tune our product slate to deliver more popular, profitable and high-value-added products, optimise our facility utilisation rate, shut down facilities which have no marginal contributions. We will deepen the adjustment on sector structure, through advancing the development of fine chemicals and biochemicals, and improving operations of our coal-chemical projects. Meanwhile, we will enhance our strategies of product differentiation and precision marketing, and provide our customers with full process solutions and value-added services. In 2017, we plan to produce 11.66 million tonnes of ethylene.

16

Research and Development: We will continue to implement our strategy of development driven by innovation, improving mechanisms for technological innovation and fast-tracking key technical breakthroughs. In exploration and production, we will focus on increasing reserves and production and pushing ahead with breakthroughs in enhanced oil recovery technologies and development of difficult-to-tap reserves. In refining, R&D initiatives will address processing of heavy crude oil, quality upgrading of oil products and optimisation of product slate. In chemicals we will focus on adjustments in our product mix along with further progress in R&D for basic chemicals, synthetic materials, coal-chemicals, fine chemicals and bio-chemicals. We also expect to make progress in safety, environmental and energy-conserving technologies as well as prospective and basic research to enhance our capabilities for innovation and to achieve new R&D breakthroughs.

Capital Expenditures: In 2017, we will devote attention to the quality and profitability of investments, and optimise our investment projects. Capital expenditures for the year are budgeted at RMB 110.2 billion. The exploration and production segment will account for expenditures of RMB 50.5 billion, mainly for Phase II of Fuling shale gas development, Tianjin LNG project, and gas storage project, and overseas oil and gas project development. The refining segment will account for RMB 22.8 billion, mainly for building of refining bases, structural adjustments in the refining business, and revamping of refineries as well as GB VI quality upgrading of oil products. The marketing and distribution segment will account for RMB 18 billion, mainly for revamping service stations, improving pipeline network, building oil tank farms and removing safety hazards. The chemicals segment will account for RMB 15.1 billion, mainly for the integrated refining and chemical project in Zhanjiang of Guangdong Province, the integrated refining and chemical project in Gulei of Fujian Province and the high-efficiency and environmentally friendly aromatics project in Hainan refinery. The corporate and others segment will account for RMB 3.8 billion, mainly for R&D and Information technology projects.
 
17

 
6.
Management Discussion and Analysis
The following discussion and analysis should be read in conjunction with the Company’s audited financial statements in this announcement and the Annual Report and the accompanying notes. Parts of the following concerned 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.

6.1
Consolidated Results of Operations
In 2016, the Company’s turnover and other operating revenues were RMB 1,930.9 billion, decreased by 4.4% compared with that of 2015. The operating profit was RMB 77.2 billion, representing a year on year increase of 35.9%.

The following table sets forth the main revenue and expenses from the Company’s consolidated financial statements:

   
Year ended 31 December
 
   
2016
   
2015
   
Change (%)
 
   
RMB million
   
RMB million
       
                   
Turnover and other operating revenues
   
1,930,911
     
2,020,375
     
(4.4
)
Turnover
   
1,880,190
     
1,977,877
     
(4.9
)
Other operating revenues
   
50,721
     
42,498
     
19.3
 
Operating expenses
   
(1,853,718
)
   
(1,963,553
)
   
(5.6
)
Purchased crude oil, product and operating supplies and expenses
   
(1,379,691
)
   
(1,494,046
)
   
(7.7
)
Selling, general and administrative expenses
   
(64,360
)
   
(69,491
)
   
(7.4
)
Depreciation, depletion and amortisation
   
(108,425
)
   
(96,460
)
   
12.4
 
Exploration expenses, including dry holes
   
(11,035
)
   
(10,459
)
   
5.5
 
Personnel expenses
   
(63,887
)
   
(56,619
)
   
12.8
 
Taxes other than income tax
   
(232,006
)
   
(236,349
)
   
(1.8
)
Other operating income/(expense), net
   
5,686
     
(129
)
   
 
                         
Operating profit
   
77,193
     
56,822
     
35.9
 
Net finance costs
   
(6,611
)
   
(9,239
)
   
(28.4
)
Investment income and share of profits less losses from associates and joint ventures
   
9,569
     
8,828
     
8.4
 
Profit before taxation
   
80,151
     
56,411
     
42.1
 
Tax expense
   
(20,707
)
   
(12,613
)
   
64.2
 
                         
Profit for the year
   
59,444
     
43,798
     
35.7
 
                         
Attributable to:
                       
Owners of the Company
   
46,672
     
32,512
     
43.6
 
Non-controlling interests
   
12,772
     
11,286
     
13.2
 


18

(1)
Turnover and other operating revenues
In 2016, the Company’s turnover was RMB 1,880.2 billion, representing a decrease of 4.9% over 2015. This was mainly attributable to the decline of crude oil and petrochemical products prices.

The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company’s major products in 2016 and 2015:

             
   
Sales volume (thousand tonnes)
   
Average realised price
(RMB/tonne, RMB/thousand cubic meters
 
   
Year ended 31 December
         
Year ended 31 December
       
   
2016
   
2015
   
Change (%)
   
2016
   
2015
   
Change (%)
 
                                     
Crude oil
   
6,808
     
9,674
     
(29.6
)
   
1,628
     
2,019
     
(19.4
)
Natural gas (million cubic meters)
   
19,008
     
18,440
     
3.1
     
1,258
     
1,519
     
(17.2
)
Gasoline
   
77,480
     
69,749
     
11.1
     
6,386
     
6,749
     
(5.4
)
Diesel
   
91,492
     
95,472
     
(4.2
)
   
4,482
     
4,937
     
(9.2
)
Kerosene
   
25,164
     
23,028
     
9.3
     
2,807
     
3,387
     
(17.1
)
Basic chemical feedstock
   
32,248
     
29,608
     
8.9
     
4,054
     
4,175
     
(2.9
)
Monomer and polymer for synthetic fibre
   
7,146
     
6,071
     
17.7
     
5,325
     
5,796
     
(8.1
)
Synthetic resin
   
12,223
     
11,989
     
2.0
     
7,488
     
7,771
     
(3.6
)
Synthetic fibre
   
1,369
     
1,380
     
(0.8
)
   
7,113
     
7,740
     
(8.1
)
Synthetic rubber
   
1,098
     
1,104
     
(0.5
)
   
9,608
     
8,778
     
9.5
 
Chemical fertiliser
   
714
     
243
     
193.8
     
1,612
     
1,823
     
(11.6
)

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 2016, the turnover from crude oil, natural gas and other upstream products sold externally amounted to RMB 47.4 billion, a decrease of 17.8% over 2015. The change was mainly due to the decrease of crude oil prices and sales volume in 2016.

In 2016, petroleum products (mainly consisting of oil products and other refined petroleum products) sold by Refining Segment and Marketing and Distribution Segment achieved external sales revenues of RMB 1,130.4 billion, accounting for 58.5% of the Company’s turnover and other operating revenues, representing a decrease of 6.3% over 2015 mainly due to the decline of various refined oil products prices. The sales revenue of gasoline, diesel and kerosene was RMB 975.6 billion, representing a decrease of 4.4% over 2015, and accounting for 86.3% of the total sales revenue of petroleum products. Turnover of other refined petroleum products was RMB 154.8 billion, representing a decrease of 17.0% compared with 2015, accounting for 13.7% of the total sales revenue of petroleum products.

19

The Company’s external sales revenue of chemical products was RMB 284.3 billion, representing an increase of 2.8% over 2015, accounting for 14.7% of the Company’s total turnover and other operating revenues. This was mainly due to the increase of chemical products sales volume.

(2)
Operating expenses
In 2016, the Company’s operating expenses were RMB 1,853.7 billion, decreased by 5.6% compared with 2015. The operating expenses mainly consisted of the following:

Purchased crude oil, products and operating supplies and expenses were RMB 1,379.7 billion, representing a decrease of 7.7% over the same period of 2015, accounting for 74.4% of the total operating expenses, of which:

Crude oil purchasing expenses were RMB 373.7 billion, representing a decrease of 20.4% over the same period of 2015. Throughput of crude oil purchased externally in 2016 was 202.40 million tonnes (excluding the volume processed for third parties), representing a decrease of 1.9% over the same period of 2015. The average cost of crude oil purchased externally was RMB 2,084 per tonne, representing a drop of 19.6% over 2015.

The Company’s other purchasing expenses were RMB 1,006.0 billion, representing a decrease of 1.8% over the same period of 2015. This was mainly due to the decline in prices of externally purchased raw materials.

Selling, general and administrative expenses were RMB 64.4 billion, representing an decrease of 7.4% over 2015. That was mainly due to that the Company promoted the reform of employment system, adjusted the cost and tax accounting, and continuously enhanced cost control.

Depreciation, depletion and amortisation were RMB 108.4 billion, representing an increase of 12.4% as compared with 2015. That was mainly due to the significant increase in depreciation and depletion rate as a result of oil and gas reserve revision in the exploration and production segment corresponding to decreased oil price.

Exploration expenses were RMB 11.0 billion, representing an increase of 5.5% year on year. That was mainly due to that the Company maintained its exploration intensity in low oil price environment.

Personnel expenses were RMB 63.9 billion, representing an increase of 12.8% over 2015. That was mainly due to that that the Company promoted the reform of employment system since 2016.

20

Taxes other than income tax were RMB 232.0 billion, representing a decrease of 1.8% compared with 2015. Mainly due to the decrease in consumption tax by RMB 4.9 billion as a result of decreased production of diesel, and decrease in resource tax by RMB 1.0 billion as a result of drop in crude prices over the same period of 2015.

Other operating income/(expense), net were RMB 5.7 billion, decreasing 5.8 billion over the same period of 2015. That was mainly due to the non-operating income from reorganisation and capital injection of Sichuan-to-East China Pipeline Co., and the increase of impairment of assets.

(3)
Operating profit was RMB 77.2 billion, representing an increase of 35.9% compared with 2015. This is mainly due to outstanding performance of the Company’s downstream business as we fully tapped potential from our integrated business. It effectively offset the negative impact of low oil prices.

(4)
Net finance costs were RMB 6.6 billion, representing a decrease of 28.4% over 2015, of which: interest expense increased by RMB 1.1 billion over 2015 as a result of the replacement of debt denominated in US dollars by debt denominated in RMB (inclusive of replacing borrowings in US dollars and decrease exposure to US dollars); net losses from foreign exchange was RMB 600 million, decreased by RMB 3.2 billion as compared with 2015; interest income increased by RMB 200 million as a result of increased interest income compared with the same period of 2015.

(5)
Profit before taxation was RMB 80.2 billion, representing an increase of 42.1% year on year.

(6)
Tax expense was RMB 20.7 billion, representing an increase of 64.2% year on year. That was mainly due to a substantial increase in profit over the same period of 2015.

(7)
Profit attributable to non-controlling interests was RMB 12.8 billion, representing an increase of RMB 1.5 billion comparing with 2015.

(8)
Profit attributable to owners of the Company was RMB 46.7 billion, representing an increase of 43.6% year on year.

21

6.2
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
31 December
2016
   
As of
31 December
2015
   
Change
 
                   
Total assets
   
1,498,609
     
1,447,268
     
51,341
 
Current assets
   
412,261
     
333,657
     
78,604
 
Non-current assets
   
1,086,348
     
1,113,611
     
(27,263
)
Total liabilities
   
667,374
     
659,107
     
8,267
 
Current liabilities
   
485,543
     
462,832
     
22,711
 
Non-current liabilities
   
181,831
     
196,275
     
(14,444
)
Total equity attributable to owners of the Company
   
710,994
     
676,197
     
34,797
 
Share capital
   
121,071
     
121,071
     
 
Reserves
   
589,923
     
555,126
     
34,797
 
Non-controlling interests
   
120,241
     
111,964
     
8,277
 
Total equity
   
831,235
     
788,161
     
43,074
 

As of 31 December 2016, the Company’s total assets were RMB 1,498.6 billion, representing an increase of RMB 51.3 billion compared with that of the end of 2015, of which:

Current assets were RMB 412.3 billion, representing an increase of RMB 78.6 billion compared with that of the end of 2015, of which, cash and cash equivalent, and time deposit in financial institutions increased by RMB 72.8 billion, mainly due to significant increase in cash flow from operating activities, decrease in investment, abundant surplus in cash, as well as increase in inventory by RMB 10.9 billion.

Non-current assets were RMB 1,086.3 billion, representing a decrease of RMB 27.3 billion as compared with that of the end of 2015. This was mainly due to the fact that property, plant and equipment (net) decreased by RMB 42.9 billion, construction in progress decreased by RMB 22.7 billion, equity of associates and joint ventures increased by RMB 32.5 billion (the Company sold 50% equity in Sichuan-to-East China Pipeline Co., with the remaining 50% equity corresponding to RMB 22.8 billion switched to item of interests in associates);

The Company’s total liabilities were RMB 667.4 billion, representing an increase of RMB 8.3 billion compared with that of the end of 2015, of which:

22

Current liabilities were RMB 485.5 billion, representing an increase of RMB 22.7 billion as compared with that of the end of 2015. This was mainly due to increase in accounts payable by RMB 43.7 billion, short-term debts and borrowings from China Petrochemical Corp and its subsidiaries decreased by RMB 40.6 billion, other accounts payable and taxes payable increased by RMB 17.3 billion.

Non-current liabilities were RMB 181.8 billion, representing a decrease of RMB 14.4 billion compared with that of the end of 2015. This was mainly due to long-term debts decreased by RMB 22.8 billion, estimated liabilities increased by RMB 6.1 billion.

Total equity attributable to owners of the Company was RMB 711.0 billion, representing an increase of RMB 34.8 billion compared with that of the end of 2015, which was mainly due to the increase in reserves by RMB 34.8 billion.

(2)
Cash Flow
The following table sets forth the major items in the consolidated cash flow statements for 2016 and 2015.

Unit: RMB million

Major items of cash flows
 
Year ended 31 December
 
   
2016
   
2015
 
             
Net cash generated from operating activities
   
214,543
     
165,740
 
Net cash used in investing activities
   
(66,217
)
   
(116,719
)
Net cash generated from/(used in) financing activities
   
(93,047
)
   
9,093
 

In 2016, the net cash generated from operating activities of the company was RMB 214.5 billion, representing an increase of RMB 48.8 billion as compared with 2015. This was mainly due to the increase in profit before tax by RMB 23.7 billion, depreciation, depletion and amortization increased by RMB 12.0 billion, and asset impairment increased by RMB 8.3 billion over the same period of 2015. Meanwhile, due to strict control on occupation of funds, occupation of working capital decreased significantly compared with 2015.

In 2016, the net cash used in investing activities was RMB 66.2 billion, representing a decrease of RMB 50.5 billion over 2015. This was mainly due to the decrease of RMB 30.0 billion in capital expenditure over the same period of 2015 as well as RMB 13.2 billion received as proceeds from the sale of equity in Sinopec Sichuan-to-East China Nature Gas tPipeline Co., Ltd.

23


In 2016, the net cash used in the Company’s financing activities was RMB 93.0 billion, representing an increase of RMB 102.1 billion over 2015. This was mainly due to the impact of RMB 105.0 billion from the capital introduction of Sinopec Marketing Co., Ltd. in 2015; the significant reduction in interest bearing debts for two consecutive years, of which, the Company repaid RMB 62.6 billion and RMB 63.0 billion in 2015 and 2016, respectively.

At the end of 2016, the cash and cash equivalents were RMB 124.5 billion.

(3)
Research & development expenses and environmental expenditures
Research & development expenses refer to the expenses recognised as expenditures when they occur. In 2016, the expenditure for research & development was RMB 5.94 billion.

Environmental expenditures refer to the normal routine pollutant discharge fees paid by the Company, excluding capitalised cost of pollutant treatment properties. In 2016, the Company paid environmental expenditures of RMB 6.36 billion.

(4)
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 fair values
Unit: RMB million

Items
 
Beginning of the year
   
End of the year
   
Profits and losses from variation of fair values in the current year
   
Accumulated variation of fair values recorded as equity
   
Impairment loss provision of the current year
 
Funding source
                                       
Available-for-sale financial assets
   
261
     
262
     
     
56
     
 
Self-owned fund
Stock
   
261
     
262
     
     
56
     
   
Derivative financial instruments
   
403
     
314
     
(160
)
   
     
 
Self-owned fund
Cash flow hedging instruments
   
4,722
     
(4,024
)
   
11
     
(3,813
)
   
 
Self-owned fund
Total
   
5,386
     
(3,448
)
   
(149
)
   
(3,757
)
   
   


24


6.3
Analysis of financial statements prepared under ASBE

(1)
Under ASBE, the operating income and operating profit or loss by reportable segments were as follows:

   
Year ended 31 December
 
   
2016
   
2015
 
   
RMB million
   
RMB million
 
             
Operating income
           
Exploration and Production Segment
   
115,939
     
138,653
 
Refining Segment
   
855,786
     
926,616
 
Marketing and Distribution Segment
   
1,052,857
     
1,106,666
 
Chemicals Segment
   
335,114
     
328,871
 
Corporate and Others
   
739,947
     
783,874
 
Elimination of inter-segment sales
   
(1,168,732
)
   
(1,264,305
)
                 
Consolidated operating income
   
1,930,911
     
2,020,375
 
                 
Operating profit/(loss)
               
Exploration and Production Segment
   
(58,531
)
   
(18,511
)
Refining Segment
   
55,808
     
19,423
 
Marketing and Distribution Segment
   
32,385
     
27,299
 
Chemicals Segment
   
20,769
     
19,516
 
Corporate and Others
   
2,912
     
(678
)
Elimination of inter-segment sales
   
1,581
     
4,566
 
Financial expenses, investment income and loss from changes in fair value
   
23,952
     
631
 
                 
Consolidated operating profit
   
78,876
     
52,246
 
                 
Net profit attributable to equity shareholders of the Company
   
46,416
     
32,281
 

Operating profit: In 2016, the operating profit of the Company was RMB 78.9 billion, representing an increase of RMB 26.6 billion as compared with 2015.

Net profit: In 2016, the net profit attributable to the equity shareholders of the Company was RMB 46.4 billion, representing an increase of RMB 14.1 billion or 43.8% comparing with 2015.

25



(2)
Financial data prepared under ASBE

   
As of 31
   
As of 31
       
   
December 2016
   
December 2015
   
Change
 
   
RMB million
   
RMB million
       
                   
Total assets
   
1,498,609
     
1,447,268
     
51,341
 
Long-term liabilities
   
180,541
     
194,871
     
(14,330
)
Shareholders’ equity
   
832,525
     
789,565
     
42,960
 

At the end of 2016, the Company’s total assets were RMB 1,498.6 billion, representing an increase of RMB 51.3 billion compared with that of the end of 2015. This was mainly due to the following factors: a) cash and cash equivalents increased by RMB 72.8 billion; b) long term equity investment increased by RMB 32.5 billion; c) intangible assets and other non-current assets increased by RMB 5.9 billion; d) fixed assets and construction in progress decreased by RMB 65.6 billion.

At the end of 2016, the Company’s long-term liabilities were RMB 180.5 billion, representing a decrease of RMB 14.3 billion compared with that of the end of 2015. This was mainly due to the following factors: a) bonds payable decreased by RMB 28.3 billion; b) long-term loans increased by RMB 6.0 billion; c) provision increased by RMB 6.1 billion; d) other non-current liabilities increased by RMB 2.5 billion.

At the end of 2016, the shareholders’ equity of the Company was RMB 832.5 billion, representing an increase of RMB 43.0 billion compared with that of the end of 2015. This was mainly due to the undistributed profit increased by RMB 29.5 billion, other comprehensive income increased by RMB 7.1 billion, capital reserve decreased by RMB 2.1 billion for this period.

26


(3)
The results of the principal operations by segments

Segments
 
Operation
income
RMB million
   
Operation
cost
RMB million
   
Gross profit margin* (%)
   
Increase/ (decrease) of operation
income on a year-on-year basis (%)
   
Increase/ (decrease) of operation
cost on a year-on-year basis (%)
   
Increase/ (decrease) of gross profit
margin on a year-on-year basis (%)
 
                                     
Exploration and Production
   
115,939
     
128,469
     
(15.3
)
   
(16.4
)
   
9.8
     
(26.5
)
Refining
   
855,786
     
556,081
     
9.1
     
(7.6
)
   
(15.5
)
   
4.6
 
Marketing and Distribution
   
1,052,857
     
961,907
     
8.4
     
(4.9
)
   
(5.9
)
   
1.0
 
Chemicals
   
335,114
     
289,572
     
13.0
     
1.9
     
(0.2
)
   
1.7
 
Corporate and Others
   
739,947
     
726,449
     
1.8
     
(5.6
)
   
(6.2
)
   
0.7
 
Elimination of inter-segment sales
   
(1,168,732
)
   
(1,170,313
)
   
N/A
     
N/A
     
N/A
     
N/A
 
                                                 
Total
   
1,930,911
     
1,492,165
     
10.7
     
(4.4
)
   
(6.5
)
   
1.3
 

*:
Gross profit margin = (operation income – operation cost, tax and surcharges)/operation income.

7.
Significant Events

Significant Asset and Equity Sale

On 2 August 2016, the 7th meeting of sixth session of the board of directors of Sinopec Corp. considered and approved the proposal to introduce capital to invest in Sichuan-to-East China natural gas pipeline project, and agreed to take the Sichuan-to-East China Pipeline Co. as the platform to introduce capital publicly. On 12 December 2016, Sinopec Natural Gas Co., Ltd. (“Natural Gas Company”), a wholly-owned subsidiary of Sinopec Corp., entered into the capital injection agreement in relation to Sichuan-to-East China Pipeline Co. with China Life Insurance Company Limited (“China Life”) and SDIC Communications Holding Co., Ltd. (“SDIC Communications”). China life and SDIC Communications subscribed a total of 50% equity interest in Sichuan-to-East China Pipeline Co., a wholly-owned subsidiary of Natural Gas Company, in cash with an aggregate amount of RMB 22.8 billion, among which China Life paid RMB 20 billion and SDIC Communications paid RMB 2.8 billion. Upon the completion of capital injection, the registered capital of Sichuan-to-East China Pipeline Co. increased from RMB 100 million to RMB 200 million, and each of Natural Gas Company, China Life and SDIC Communication will hold 50%, 43.86% and 6.14% equity interest in Sichuan-to-East China Pipeline Co., respectively. For more details, please refer to the announcement published in the China Securities Journal, the Shanghai Securities News and the Securities Times by Sinopec Corp. on 13 December 2016 and the announcement published on the website of the Hong Kong Stock Exchange on 12 December 2016.

27


8.
Connected Transactions

8.1
Actual Connected Transactions entered into by the Company during the Year
Sinopec Corp. and China Petrochemical Corporation have implemented the relevant framework agreements in relation to the continuing connected transactions, including Mutual Supply Agreement, Cultural, Educational, Hygiene and Community Services Agreement, Land Use Rights Leasing Agreement, Properties Leasing Agreement, Intellectual Property Licence Agreements and SPI Fund Document.

Pursuant to the above-mentioned agreements on continuing connected transactions, the aggregate amount of the continuing connected transactions of the Company during the year was RMB 260.704 billion. Among the transaction amount, purchases expenses amounted to RMB 179.82 billion, representing 9.32% of the total amount of this type of transaction for the reporting period, including purchases of products and services (procurement, storage, exploration and development services, and production-related services) of RMB 161.317 billion, purchases of auxiliary and community services of RMB 6.584 billion. The housing rent paid by the Company amounted to RMB 449 million. The rent for use of land was RMB 10.474 billion. Interest expenses amounted to RMB 996 million. The sales income amounted to RMB 80.884 billion, representing 4.04% of the total amount of this type of transaction for the reporting period, including RMB 80.634 billion for sales of products and services, RMB 41 million for agency commission income, and RMB 209 million for interest income.

The amounts of the above continuing connected transactions between the Company and Sinopec Group did not exceed the caps for the continuing connected transactions as approved by the general meeting of shareholders and the Board.

Principle of pricing for the continuing connected transactions:

(a)
The government-prescribed price will apply;

(b)
when there is no government-prescribed price but there is a government-guidance price, the government-guidance price will apply;

(c)
when there is neither a government-prescribed price nor a government-guidance price, the market price will apply; or

(d)
when none of the above is applicable, the price for the provision of the products or services is to be agreed upon by the relevant parties, and shall be the reasonable cost incurred in providing the products or services plus 6% or less of such cost.

For details of the pricing principle, please refer to relevant announcements published on 27 August 2015 in the China Securities Journal, the Shanghai Securities News and the Securities Times and on the websites of the Shanghai Stock Exchange and the Hong Kong Stock Exchange.

28


Decision-making procedures:

The major 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 internal control procedures, adjusts the scope and amount of continuing connected transactions and the caps for the amount exempted from disclosure every three years, and will be announced and implemented 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 34 to the financial statements prepared under the IFRS in the 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 in 2016 were approved at the 12th meeting of the sixth session of the Board and has complied with the disclosure 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.

29


(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.

8.2
Other significant connected transactions occured this year
There are no other significant connected transactions during the reporting period.

9.
Report of the Board of Directors

9.1
Proposals for dividend distribution
At the 12th meeting of the sixth session of the Board, the Board approved the proposal to distribute a final cash dividend of RMB 0.17 (tax inclusive) per share, combining with an interim distributed dividend of RMB0.079 (tax inclusive) per share, the total dividend for the whole year is RMB 0.249 (tax included) per share.

The dividend will be denominated and declared in RMB, and distributed to the domestic shareholders and investors participating in the Shanghai-Hong Kong Stock Connect Program in RMB and to the overseas shareholders in Hong Kong Dollar. The exchange rate for the dividend calculation 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 of such dividend. The final dividend will be distributed before the end of August 2017. The arrangement of the payment of the final dividend will be published in due course.

In accordance with the Enterprise Income Tax Law of the People’s Republic of China which came into effect on 1 January 2008 and its implementation regulations, 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 cash dividends or issuing bonus shares by way of capitalisation from retained earnings. Any H Shares of the Sinopec Corp. which is not registered under the name of an individual shareholder, including those registered under HKSCC Nominees Limited, other nominees, agents or trustees, or other organizations or groups, shall be deemed as shares held by nonresident enterprise shareholders. Therefore, on this basis, enterprise income tax shall be withheld from dividends payable to such shareholders. If holders of H Shares intend to change its 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.
 
30

 
If the individual holders of the H shares who are Hong Kong or Macau residents or residents of the countries which had an agreed tax rate of 10% for the 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%. Should the individual holders of the H Shares are residents of the countries which had an agreed tax rate of less than 10% with China under the 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 the H Shares wish to reclaim the extra amount withheld (Extra Amount) due to the application of 10% tax rate, Sinopec Corp. would apply for the relevant agreed preferential tax treatment provided that the relevant shareholders submit the evidence required by the notice of the tax agreement to the share register of Sinopec Corp. in a timely manner. Sinopec Corp. will assist with the tax refund after the approval of the competent tax authority. Should the individual holders of the H Shares are residents of the 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 agreement. In the case that the individual holders of the H Shares are residents of the countries which had an agreed tax rate of 20% with China, or which has 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):

For domestic investors investing in the H Shares of Sinopec Corp. through Shanghai-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 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 tax authorities for the withholding. For investors who are tax residents of other countries, whose country of domicile is a country having 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.

31


9.2
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 takes the first position 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 utilization of its resources, and endowed the Company with strong resistance against risks, as well as remarkable capabilities in sustaining profitability.

The Company enjoys a favorable positioning with its operations located close to the consumer markets. Along with the steady growth in the Chinese economy, sales volume of both oil products and chemical products of the Company has been increasing steadily over the years; through continuous and specialized marketing efforts, the Company’s capability in international operations and market expansion has been further enhanced.

The Company owns a team of professionals and expertise engaged 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 favorable operational cost advantage in its downstream businesses.

The Company has formulated a well-established technology system and mechanism, and owns competent teams specialised in scientific research 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, chemicals 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 strong capability for technical innovations.

The Company always attaches great importance to fulfilling social responsibilities, and carries out the green and low carbon development strategy to pursue a sustainable development. Moreover, the Company enjoys an outstanding brand name, plays an important role in the economy and is a renowned and reputable company in China.

32


9.3
Major suppliers and customers
During this reporting period, the total purchases from the top five crude oil suppliers of the Company accounted for 56.6% of the total purchases of crude oil by the Company, of which the purchases from the largest supplier accounted for 18.7% of the total purchases of crude oil by the Company.

The total sales to the five largest customers of the Company accounted for 7.4% of the total sales of the Company, of which sales to the largest customer accounted for 3.0% of the total sales. Sinopec Group, the controlling shareholder of Sinopec Crop., is one of the five largest customers.

During the reporting period, other than disclosed above, all the top five crude oil suppliers and the other largest customers of the Company were independent third parties. There were no supplier, customer, employee and others that have a significant impact on the Company and on which the Company’s success depends.

10
Financial statements

10.1
Auditors’ opinion

Financial statements
 
£ Unaudited
 
P Audited
Auditors’ opinion
 
P Standard unqualified opinion
 
£ Not standard opinion


33


10.2
Financial Statements

10.2.1
Financial statements prepared in accordance with the Accounting Standards for Business Enterprises

Consolidated and Parent Balance Sheets

Unit:RMB million

Items
 
At 31 December 2016
   
At 31 December 2015
 
Assets
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Current assets
                       
Cash at bank and on hand
   
142,497
     
98,250
     
69,666
     
46,453
 
Bills receivable
   
13,197
     
471
     
10,964
     
540
 
Accounts receivable
   
50,289
     
38,332
     
56,142
     
29,512
 
Other receivables
   
25,596
     
45,643
     
21,453
     
64,620
 
Prepayments
   
3,749
     
3,454
     
2,920
     
1,296
 
Inventories
   
156,511
     
46,942
     
145,608
     
46,029
 
Other current assets
   
20,422
     
32,743
     
26,904
     
36,559
 
                                 
Total current assets
   
412,261
     
265,835
     
333,657
     
225,009
 
                                 
Non-current assets
                               
Available-for-sale financial assets
   
11,408
     
297
     
10,964
     
297
 
Long-term equity investments
   
116,812
     
268,451
     
84,293
     
219,230
 
Fixed assets
   
690,594
     
373,020
     
733,449
     
439,477
 
Construction in progress
   
129,581
     
49,277
     
152,325
     
72,763
 
Intangible assets
   
85,023
     
7,913
     
81,086
     
8,397
 
Goodwill
   
6,353
     
     
6,271
     
 
Long-term deferred expenses
   
13,537
     
1,980
     
13,919
     
2,154
 
Deferred tax assets
   
7,214
     
     
7,469
     
 
Other non-current assets
   
25,826
     
10,952
     
23,835
     
11,959
 
                                 
Total non-current assets
   
1,086,348
     
711,890
     
1,113,611
     
754,277
 
                                 
Total assets
   
1,498,609
     
977,725
     
1,447,268
     
979,286
 


34

   
At 31 December 2016
   
At 31 December 2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Liabilities and shareholders’ equity
                       
Current liabilities
                       
Short-term loans
   
30,374
     
9,256
     
74,729
     
32,517
 
Bills payable
   
5,828
     
2,761
     
3,566
     
1,852
 
Accounts payable
   
174,301
     
75,787
     
130,558
     
85,182
 
Advances from customers
   
95,928
     
2,360
     
92,688
     
3,151
 
Employee benefits payable
   
1,618
     
312
     
1,185
     
290
 
Taxes payable
   
52,886
     
32,423
     
32,492
     
20,832
 
Other payables
   
79,636
     
113,841
     
86,337
     
86,427
 
Short-term debentures payable
   
6,000
     
6,000
     
30,000
     
30,000
 
Non-current liabilities due within one year
   
38,972
     
38,082
     
11,277
     
5,352
 
                                 
Total current liabilities
   
485,543
     
280,822
     
462,832
     
265,603
 
                                 
Non-current liabilities
                               
Long-term loans
   
62,461
     
58,448
     
56,493
     
54,526
 
Debentures payable
   
54,985
     
36,000
     
83,253
     
65,500
 
Provisions
   
39,298
     
29,767
     
33,186
     
28,968
 
Deferred tax liabilities
   
7,661
     
505
     
8,259
     
177
 
Other non-current liabilities
   
16,136
     
2,607
     
13,680
     
2,238
 
                                 
Total non-current liabilities
   
180,541
     
127,327
     
194,871
     
151,409
 
                                 
Total liabilities
   
666,084
     
408,149
     
657,703
     
417,012
 


35

   
At 31 December 2016
   
At 31 December 2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Liabilities and shareholders’ equity
                       
Shareholders’ equity
                       
Share capital
   
121,071
     
121,071
     
121,071
     
121,071
 
Capital reserve
   
119,525
     
68,769
     
121,576
     
68,716
 
Other comprehensive income
   
(932
)
   
263
     
(7,984
)
   
(145
)
Specific reserve
   
765
     
393
     
612
     
313
 
Surplus reserves
   
196,640
     
196,640
     
196,640
     
196,640
 
Retained earnings
   
275,163
     
182,440
     
245,623
     
175,679
 
                                 
Total equity attributable to shareholders of the Company
   
712,232
     
569,576
     
677,538
     
562,274
 
                                 
Minority interests
   
120,293
     
     
112,027
     
 
                                 
Total shareholders’ equity
   
832,525
     
569,576
     
789,565
     
562,274
 
                                 
Total liabilities and shareholders’ equity
   
1,498,609
     
977,725
     
1,447,268
     
979,286
 
 
36

 
Consolidated and Parent Income Statement

Unit:RMB million

   
Year ended 31 December
   
2016
 
2015
Items
 
Consolidated
 
Parent
 
Consolidated
 
Parent
                 
Operating income
 
1,930,911
 
726,178
 
2,020,375
 
845,285
Less: 
Operating costs
 
1,492,165
 
513,514
 
1,594,070
 
609,596
 
Sales taxes and surcharges
 
232,006
 
158,373
 
236,349
 
172,568
 
Selling and distribution expenses
 
49,550
 
2,365
 
46,921
 
2,628
 
General and administrative expenses
 
74,155
 
41,724
 
72,194
 
41,327
 
Financial expenses
 
6,611
 
3,851
 
8,980
 
6,152
 
Exploration expenses, including dry holes
 
11,035
 
11,012
 
10,459
 
10,430
 
Impairment losses
 
17,076
 
14,044
 
8,767
 
5,052
Add:
(Loss)/Gain from changes in fair value
 
(216)
 
33
 
735
 
(292)
 
Investment income
 
30,779
 
43,519
 
8,876
 
30,582
                 
Operating profit
 
78,876
 
24,847
 
52,246
 
27,822
                 
Add:
Non-operating income
 
4,964
 
3,095
 
6,947
 
4,361
Less:
Non-operating expenses
 
3,963
 
1,813
 
3,100
 
1,482
                 
Profit before taxation
 
79,877
 
26,129
 
56,093
 
30,701
Less:
Income tax expense
 
20,707
 
2,539
 
12,613
 
(179)
                 
Net profit
 
59,170
 
23,590
 
43,480
 
30,880
Including: net profit of acquiree before the consolidation under common control
 
86
 
 
134
 


37

   
Year ended 31 December
 
   
2016
   
2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Attributable to:
                       
Equity shareholders of the Company
   
46,416
     
23,590
     
32,281
     
30,880
 
Minority interests
   
12,754
     
     
11,199
     
 
                                 
Basic earnings per share
   
0.383
     
N/A
     
0.267
     
N/A
 
Diluted earnings per share
   
0.383
     
N/A
     
0.267
     
N/A
 
                                 
Net profit
   
59,170
     
23,590
     
43,480
     
30,880
 
                                 
Other comprehensive income
                               
Items that may be reclassified subsequently to profit or loss(net of tax and after reclassification adjustments):
                               
Cash flow hedges
   
2,014
     
557
     
3,163
     
47
 
Changes in fair value of available-for-sale financial assets
   
(24
)
   
     
62
     
 
Share of other comprehensive income/(loss) of associates and joint ventures entities
   
45
     
(149
)
   
(5,356
)
   
14
 
Foreign currency translation differences
   
4,298
     
     
2,268
     
 
                                 
Total other comprehensive income
   
6,333
     
408
     
137
     
61
 
                                 
Total comprehensive income
   
65,503
     
23,998
     
43,617
     
30,941
 
                                 
Attributable to:
                               
Equity shareholders of the Company
   
53,468
     
23,998
     
31,558
     
30,941
 
Minority interests
   
12,035
     
     
12,059
     
 
 
38

 
Consolidated and Parent Cash Flow Statement

Unit:RMB million

   
Year ended 31 December
 
   
2016
   
2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Cash flows from operating activities:
                       
Cash received from sale of goods and rendering of services
   
2,163,695
     
831,578
     
2,306,162
     
975,387
 
Refund of taxes and levies
   
2,434
     
1,323
     
3,507
     
2,954
 
Other cash received relating to operating activities
   
77,436
     
85,932
     
85,692
     
69,615
 
                                 
Sub-total of cash inflows
   
2,243,565
     
918,833
     
2,395,361
     
1,047,956
 
                                 
Cash paid for goods and services
   
(1,547,868
)
   
(504,152
)
   
(1,731,441
)
   
(643,612
)
Cash paid to and for employees
   
(62,602
)
   
(35,190
)
   
(55,472
)
   
(35,061
)
Payments of taxes and levies
   
(316,062
)
   
(189,577
)
   
(327,421
)
   
(213,949
)
Other cash paid relating to operating activities
   
(102,490
)
   
(50,638
)
   
(115,287
)
   
(165,867
)
                                 
Sub-total of cash outflows
   
(2,029,022
)
   
(779,537
)
   
(2,229,621
)
   
(1,058,489
)
                                 
Net cash flow from operating activities
   
214,543
     
139,296
     
165,740
     
(10,533
)


39

   
Year ended 31 December
 
   
2016
   
2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Cash flows from investing activities:
                       
Cash received from disposal of investments
   
31,489
     
29,002
     
3,353
     
146,685
 
Cash received from returns on investments
   
4,028
     
22,233
     
3,399
     
22,822
 
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
   
440
     
1,885
     
427
     
4,390
 
Other cash received relating to investing activities
   
2,914
     
1,488
     
6,158
     
967
 
Net cash received from disposal of subsidiaries and other business entities
   
2,027
     
2,027
     
     
 
                                 
Sub-total of cash inflows
   
40,898
     
56,635
     
13,337
     
174,864
 
                                 
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
   
(72,847
)
   
(43,765
)
   
(102,698
)
   
(77,403
)
Cash paid for acquisition of investments
   
(16,389
)
   
(39,505
)
   
(23,351
)
   
(29,246
)
Other cash paid relating to investing activities
   
(17,879
)
   
(10,130
)
   
(3,918
)
   
 
Net cash paid for the acquisition of subsidiaries and other business entities
   
     
     
(89
)