contentscompany profile 01about us sfc has two shareholders with a registered capital of rmb 18...

CONTENTSCONTENTSAbout Us 02

Company Profile 03

Address from the Chairman 04

Report from the President 06

Report for Corporate Governance, Internal Control and Risk Management 08

Organization 12

Directors, Supervisors and Executive Management Members 13

Analysis of Financial Position and Operation Results in 2017 14

Auditor’s Report and Financial Statements for 2017 16

Contact Us 22

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This Annual Report is published in both Chinese and English.

In case of disagreement, the Chinese one shall prevail.

02 03

About Us

Sinopec Finance Co., Ltd. (hereinafter referred to as “SFC”)

was founded as a non-bank financial institution, with the

approval of the People's Bank of China, by the former

China Petrochemical Corporation on July 8, 1988, for the

purpose of group wise cash management centralization

and efficiency. SFC’s business is mainly supervised by

China Banking and Insurance Regulatory Commission,

and also regulated by the People's Bank of China, State

Administration of Foreign Exchange, China Securities

Regulatory Commission and other relevant government

agencies. It is a member of China Foreign Exchange

Trade System (CFETS), National Interbank Market, China

Central Depository & Clearing Co., Ltd. (CCDC), Shanghai

Clearing House, National Association of Financial Market

Institutional Investors, Shanghai Commercial Paper

Exchange Corporation LTD., and it is a qualified investor

among the first-batch of IPO pricing inquiring system by

China Securities Regulatory Commission (CSRC).

With the approval of China Banking and Insurance

Regulatory Commission, SFC is mainly engaged in financial

businesses in both Chinese and foreign currencies,

including financial consultancy, credit assurance and

related consulting and intermediary businesses, receipt

and payment for member companies, approved insurance

agency business, guarantee services on member

companies, entrusted loans and investment among

member companies, acceptance and discounting of bills

for member companies, transfer and settlement among

member companies and related settlement and clearance

solutions, taking deposits from member companies, lending

and financial leasing for member companies, undertaking

interbank borrowing, issuing SFC financial bonds by

approval, underwriting member companies’ corporate

bonds, equity investment in financial institutions, investment

in securities, and member companies’ consumer credit,

buyer’s credit and financial leasing.

With the approval of the People's Bank of China, China

Banking and Insurance Regulatory Commission, State

Administration of Foreign Exchange, SFC could open, alter

and cancel sub-accounts in banks for member companies,

handle foreign exchange settlement and foreign exchange

receipt and payment, provide cross-border two way RMB

cash pool service, underwrite debt financing tools of non-

financial enterprises, as well as conduct trial businesses

that extend financial services value chain.

◎ Company Profile About Us01

SFC has two shareholders with a registered capital

of RMB 18 bil l ion (including US$ 60 million), of

which China Petrochemical Corporation and China

Petroleum & Chemical Corporation account for 51%

and 49%, respectively.With the General Shareholders’

Meeting as its highest authority, SFC’s President is

responsible for its operations management under

the leadership of the Board of Directors. There are

fourteen departments at SFC headquarters, namely

Administrat ion Off ice, Sett lement Department,

Capital and Planning Department, Credit Department,

Bills Business Department, International Business

Department, Investment Banking Department, Risk

Control (Legal) Department, Finance and Accounting

Department, IT Department, Internal Audit Department

(Department of Discipline Inspection and Supervision),

F inanc ia l R&D Department , Human Resources

Department, Party Affairs and Employee Relations

Department (Corporate Management Department).

It has 9 branches in Shanghai, Nanjing, Guangzhou,

Shandong, Zhengzhou, Wuhan, Chengdu, Xinjiang and

Tianjin, covering Sinopec’s businesses in oil and gas

exploration and production, refining, chemicals, pipeline

transmission, marketing and sales of oil products and

chemicals, oilfield service and refining & petrochemical

engineering services, and servicing more than 500

member companies of Sinopec Group.

SFC has persistently adhered to the principle of

servicing Sinopec’s core businesses and complied with

regulations since the establishment. With the support

from shareholders and member companies, SFC has fully

capitalized its functions as the centralized management

platform of Sinopec’s funds, the settlement platform and

the fund-raising platform, continuously providing financial

services to member companies. SFC has established a

leading domestic cash pool, extensive service network and

service functions, with its asset size, revenue, total profit,

owner's equity and other indicators ranking in the first tier

among finance companies in China for many consecutive

years. SFC has won titles of the most innovative finance

company, the best service finance company, the best

spot-transaction member of the national interbank foreign

exchange market, and top 100 participants of national

interbank domestic currency trading, and some other

awards for management innovation.

SINOPEC FINANCE CO.,LTD. ANNUAL REPORT 2017

04 05

About Us

◎ Address from the Chairman

governance structure was clearly defined, which helped to improve the corporate governance structure. The risk management organization system and risk control measures have been continuously improved, with the 2017 version of internal control system revised, and full life cycle management of the system strengthened. SFC conducted various risk investigations in accordance with regulations, completed nearly one thousand regulatory forms on schedule, meeting all regulatory requirements. Day-to-day internal control, self-examination and audit supervision and inspection were strengthened. SFC has not had any risk events as it always comply with laws and regulations.

Year 2018 is a transition year for implementing “the 13th Five-Year Plan”, the 40th anniversary of China’s Reform and Opening Up, the 35th anniversary of Sinopec and the 30th anniversary of SFC. Standing at this historic point, SFC will pursue high quality development and strive for progress in stability. We will stick to our mission of servicing Sinopec’s core businesses, improve our professional capabilities and strengthen risk management and control. We will work hard to deliver full year targets, generate good return to shareholders and contribute to the sustainable development of Sinopec.

interest rate 10% below the benchmark interest rate

set by the central bank. In the year, a total of RMB

119 billion worth of credit support was provided to

member companies to improve their capital turnover

efficiency and reduce costs.

Enhanced capability of operation and management.

SFC conducted comprehensive analysis of global

economy and financial markets on a monthly basis

and provided financial information for member

companies in a timely manner. We established model

for RMB exchange rate to provide effective guidance

for transactions in the foreign exchange market. The

Fund Transfer Pricing system was improved to pass

on market pressure accurately and on time. The

advantages of professionalism and licenses were

brought into full play and efforts were made to lower

costs. By strengthening balance sheet management

and linkage among capital, credit, investment

banking and foreign exchange, we grasped the

features of market prices and participated in market

transactions flexibly. We made contribution to the

quality improvement and efficiency promotion of

member companies.

Effective regulations for corporate governance

and risk prevention and control. Re-election of the

new session of Board of Directors and Board of

Supervisors was completed. With the revision of

the articles of association of SFC, the statutory

position of Party organization in the corporate

Total profit for the year was RMB 2.095 billion,

increased by RMB 189 million as compared to last

year, an increase of 9.92%. SFC's major indicators

such as assets, revenue, profit, owner's equity were

all in leading position among finance companies

nationwide, and its industrial and supervisory ratings

were both Grade A. New achievements were made in

creating synergies with Sinopec’s main businesses,

market-oriented operation, risk prevention and

control.

Improved capability in servicing core businesses of

Sinopec Group. While ensuring reliable and effective

operation of the three platform functions, namely

cash pool, bills pool and e-commerce payment for

Sinopec Group, SFC strengthened services such

as centralized capital management, settlement,

financing, bills management, foreign exchange etc.

Moreover, SFC not only continuously improved the

efficiency of capital operations of Sinopec Group,

but also helped member companies reduce costs

and increase efficiency. In 2017, SFC saved RMB

3.6 billion for member companies through increased

synergies and providing free settlement and capital

collection, as well as preferential loans, discounting,

purchase and payment of foreign exchange. SFC

leveraged fundraising and financing advantages, and

average daily financing reached RMB 15.5 billion in

the year, which supplemented liquidity and reduced

financing costs. SFC provided preferential credit

support to Sinopec’s wholly-owned enterprises with

Under the leadership of Sinopec’s Leading Member

Group of Party Committee, our shareholders and

the Board of Directors, SFC has hit all its whole-

year targets by focusing on its strategies, servicing

Sinopec’s core businesses, seeking growth in

stability, enhancing awareness and capability of

financial services, and capitalizing expertise and

strengths.

At the end of 2017, total assets of SFC were RMB

178.962 billion, increased by RMB 12.839 billion

as compared to last year, an increase of 7.73%.

The Chairman : Zhao Dong


06 07

About Us

In 2017, SFC operated under the leadership of Sinopec’s Leading Member Group of the Party Committee and the Board of Directors of SFC, seeking progress in stability and enhancing while implementing corporate strategies. Faced with the complex economic and fi nancial situation, it continuously improved capabilities of financial services, strengthened risk prevention and meticulous management, and met all business objectives for the year.

1 Steady improvement in quality and efficiency

Total assets of SFC were RMB 178.962 billion by the end of 2017, increased by RMB 12.839 billion as compared to last year, an increase of 7.73%. Total revenue was RMB 3.536 billion, increased by RMB 1.094 billion and up by 44.80%. Total profit was RMB 2.095 billion, increased by RMB 189 million, an increase of 9.92%.

In 2017, SFC assisted member companies in reducing costs, promoting efficiency and achieving sound development. We saved RMB 3.6 billion for member companies through increased synergies and reduced costs and fees by providing free settlement and capital collection, as well as preferential loans, discounting, purchase and payment of foreign exchange. SFC's major indicators such as assets, revenue, profi t, owner's equity were all in leading position among fi nance companies nationwide, and its industrial and supervisory ratings were both Grade A. As of the end of 2017, all indicators were consistent

services for the entire value chain was provided, which not only supported member companies to be more competitive but also increased SFC’s profi tability.

We benefi ted from securities investment. With enhancement on market analysis and based on the capital position of SFC, we consistently adhered to prudent investment strategies and invested in low-risk products such as banks’ wealth investment products, public funds, and asset management of securities companies. With continuous optimization of asset allocation, our return on securities investment exceeded 5%.

We reduced cost for foreign exchange business. We gave full play to the expertise of on-floor trading members, and continued to improve the ability of analyzing and making forecast of the foreign exchange market, leading to reduced overall cost of purchasing foreign exchange for member companies. The cumulative foreign exchange transactions in the year exceeded US$ 50 billion, and more than RMB 600 million cost of purchasing and paying foreign exchanges was saved. SFC has been repeatedly awarded as “best spot transaction member of national interbank foreign exchange market”.

Branch companies’ services were elevated. With nine branch companies significantly improved services to member companies in their regions, the settlement business grew 18.5% year-on-year, and satisfaction rating by member companies and external customers continued to exceed 99.9%.

We further enhanced risk management and control. With the establishment and effective implementation of a sound risk management system and an internal control system, there has been no risk event at SFC. Meanwhile, we also actively took advantage of financial expertise and gave advice to member companies on preventing and controlling risks related to interest rates, exchange rates, and debts, helping member companies avoid and control risks.

3 Party construction and corporate culture

Through studying and implementing the spirit of the 19th

National Congress of the Communist Party of China and further conducting the responsibility for administering and managing the Party, we revised specific measures for the policy-making system regarding deciding signifi cant matters, appointment and dismissal of key officers, and arrangement of signifi cant projects, and use of large-scale funds. Further, SFC has improved the Party construction structure which was a “four-in-one” model incorporating Party aff airs offi ce, Party and employee relations, disciplinary inspection and audit, and

human resources. In addition, employment mechanism and HR management for training and selection of outstanding young leaders have been established and improved; the middle-level cadre teams were adjusted and optimized as well. With continued efforts devoted to strengthening the building of basic-level Party organizations, we have continued to deepen the construction of Party integrity and anti-corruption work, established supervision structure, and formulated specific measures for the “non-corruptible” institutional mechanisms. SFC vigorously promoted the outstanding traditions of petroleum and petrochemical industry and extensively implemented cultural and sports activities for the mass. It also maintained a good environment with a clear, enterprising and ambitious atmosphere.

Better-than-expected results were achieved by SFC in all respects in 2017 in the face of severe financial market fluctuations, strict regulatory policies, rising financing costs and increased difficulties in financing. We credit all achievements to the leadership of Sinopec’s Leading Member Group of Party Committee and the Board of Directors of SFC, the support from relevant national regulatory authorities and all member companies. Equally important, the dedication and hard work of all employees of SFC also made achievements possible.

Standing at this signifi cant point, SFC will earnestly implement the strategies set by Sinopec and the Board of Directors of SFC in 2018. We will pursue high-quality development and make progress while maintaining stability. We will strengthen centralized management of capital, financing, credit, foreign exchange, and other businesses that better service the core businesses of Sinopec. We will also make every effort to prevent risks and constantly improve internal management, and persevere in strengthening both Party building and team building. We will provide customers with high-quality and premium services, deliver sound performance to shareholders and make greater contributions to the overall sustainable development of Sinopec.

◎ Report from the President

The President: Zhang Baolong

with regulatory requirements, of which the capital adequacy ratio was 24.41% and the non-performing loan ratio was zero.

2 Enhanced operation and management

We strengthened fund-raising and financing capabilities. Money market operations were intensified and financing channels were continuously broadened, leading to increased liquidity and reduced financing costs. Credit line from 45 fi nancial institutions totaled RMB 214.2 billion. Average daily financing was RMB 15.5 billion, the cost of which was over 150 bps lower than that of super short-term commercial paper for the same period. SFC was awarded the “top 100 fi rms of national interbank domestic currency trading” for 15 consecutive years.

We provided high quality settlement and cash pool services. The cash pool of Sinopec has been operating safely and effi ciently for nine consecutive years since its establishment. As of the end of 2017, we had managed 2,370 accounts of Chinese and foreign currencies with 28.35 million transactions settled in 2017 and involving RMB 41.49 trillion, a year-on-year increase of 8.46% and 15.48%, respectively. Average daily transactions were 98,000 with daily transaction value of RMB 164.3 billion.

We off ered eff ective service of bills pool. Bills management of Sinopec has been further enhanced to prevent risks through SFC’s cooperation with banks in bills lifecycle management, such as bill trusteeship, inquiries, and collections. A total of 34,000 bills totaling RMB 33.2 billion were processed throughout the year. By preferred-rate discounting, fees reduction and margin exemption, cost reduction for member companies of Sinopec was more than RMB 400 million. SFC was among the first Chinese finance companies to become online member of the commercial papers exchange.

We had a sound start of e-commerce payment platform business. We pushed forward the building of e-commerce payment platform for Sinopec jointly with partner banks with a view to supporting Sinopec EPEC and Chememall. In the past year of test run of payment platform, 7,716 customers’ documents were reviewed and RMB 95 billion of online transactions were made with the partner banks, effectively solving B2B online payment problems.

We recorded growth in scale and profit for credit business. Internal market was fully expanded and the level of credit services was improved as well. With steady expansion of loan scale and serving Sinopec’s core businesses, credit support worth of RMB 119 billion was provided to member companies throughout the year. On the basis of risk prevention, fi nancial


08 09

About Us

In 2017, SFC not only thoroughly implemented the spirit of

the Central Economic Work Conference and the National

Conference on Financial Work, but also earnestly abided by

relevant regulations of the People's Bank of China, China

Banking Regulatory Commission, and other regulatory

authorities, and all resolutions of its Board of Directors. With

the strengthening of management and the improvement

in systems, SFC further improved corporate governance,

internal control and risk management.

1 Corporate Governance

SFC has established a corporate governance structure,

of which the General Shareholders’ Meeting is the

highest authority, the Board of Directors is responsible

for major business decisions, the Board of Supervisors

is responsible for supervision and evaluation, and the

Executive Management is responsible for day-to-day

operations. In addition, SFC has abided by provisions

of laws and regulations such as the Company Law and

executed corporate governance systems such as the Articles

of Association and rules of procedures of the General

Shareholders’ Meeting, the Board of Directors, the Board

of Supervisors, and the Executive Management. In addition,

rights and responsibilities of various governance bodies

are clearly defined, mutually and effectively checked and

balanced, ensuring efficient performance of duties. The

operations and management decisions of SFC are scientific,

and the supervision and operation are effective and robust.

General Shareholders’ Meeting is SFC’s highest authority.

It is composed of two shareholders, China Petrochemical

Corporation (accounting for 51% of equity and hereinafter

referred to as Sinopec Group) and China Petroleum &

Chemical Corporation (accounting for 49% of equity and

hereinafter referred to as Sinopec Corp.), and responsible

for: electing and replacing directors and supervisors who

represent shareholders; deliberating and approving reports

of the Board of Directors and the Board of Supervisors;

deliberating and approving annual profit distribution and

profit and loss disposal plan; resolutions for increase

or decrease of registered capital and contribution,

consolidation, separation and change of corporation form,

as well as dissolution and liquidation, issuance of bonds; and

amending the Articles of Association.

The Board of Directors is the decision-making body of SFC.

It is composed of nine members (including one employee

director) of which the Chairman is Mr. Zhao Dong who

acts as member of Sinopec’s Leading Member Group of

Party Committee, CFO of Sinopec Group, and Chairman

of the Board of Supervisors of Sinopec Corp. It shall be

responsible for: convening General Shareholders’ Meeting

to which it reports work and executes resolutions; reviewing

and approving the development plan and annual business

plan, external equity investment plan, organizational design

plan, special award and punishment plan, and annual budget

and final accounts plan; deliberating profit distribution and

profit and loss disposal plan; appointing senior executives;

formulating plans for SFC to increase or decrease its

registered capital and issuance of bonds, amendment to

the Articles of Association, etc. The Board of Directors has

a Strategy Committee, a Risk Management Committee, an

Audit Committee, all of which are responsible to the Board

of Directors.

The Strategy Committee of the Board of Directors is

composed of five members of which Mr. Zhao Dong is the

Chairman. It is responsible for long-term development and

strategic planning, major investment and financing plans,

major capital operation projects, strategic planning of IT

and technology and other major issues concerning the

development of SFC, and it makes recommendations to the

Board of Directors.

The Risk Management Committee of the Board of Directors

◎Report for Corporate Governance, Internal Control and Risk Management

is composed of three members of which the Chairman is Mr.

Wang Dehua, Chief Financial Officer and Director General of

the Finance Department of Sinopec Corp. It is responsible

for putting forward policies in respect of risk management,

and regularly assessing risks of SFC, and reviewing the risk

management report of SFC.

The Audit Committee of the Board of Directors is composed

of three members of which the Chairman is Mr. Ye Guohua,

Director General of Finance Department of Sinopec

Group. It is responsible for supervising internal audit and

implementation; reviewing SFC’s financial information and

disclosure; reviewing internal control; reviewing internal

audit report; and conducting appraisal of, appointment and

dismissal of the head of Internal Audit Department of SFC.

The Board of Supervisors is the supervisory and assessment

authority of SFC. It has four members (including one

employee supervisor) of which Mr. Zou Huiping, Director

General of Audit Department of Sinopec Group, acts as

the Chairman. It is responsible for checking the finance

and accounting work of SFC; supervising the performance

of directors and senior executives; proposing performance

evaluation mechanism for, and evaluate performance

of directors and supervisors; proposing to convene

extraordinary shareholders’ meetings, and to convene and

preside over General Shareholders' Meeting when the Board

of Directors fails to perform the duties of the same; and

proposing resolutions to the General Shareholders’ Meeting.

The Executive Management, under the leadership of the

Board of Directors, is headed by the President, and Vice

Presidents and other senior executives assist the work of

the President. The President is responsible for proposing the

development plan and annual business plan of SFC, external

equity investment plan, profit distribution and profit and loss

disposal plan; reporting on the work of the previous year;

formulating organizational structure plan of SFC, recruiting,

rewarding and punishing employees of SFC; formulating

and implementing rules and regulations of SFC; entering

into external agreements and other documents on behalf of

SFC. The Executive Management sets up Asset & Liability

Management Committee, Loans Review Committee, Risk

Management Committee, each of which is responsible for

deliberation and decision-making of related issues.

The General Shareholders’ Meeting, the Board of Directors,

and the Board of Supervisors convene meetings to perform

their duties in accordance with the rules of procedure and

decision-making procedures. In 2017, 4 meetings of the

General Shareholders’ Meeting, 2 meetings of the Board

of Directors, 2 meetings of the Board of Supervisors, and

1 meeting of each committee under the Board of Directors

were held. All members of the Board of Directors, Board of

Supervisors and senior executive management of SFC have

rich experiences in financial and accounting management

with profound professional background. In 2017, they

well performed duties with due diligence and stringently

implemented corporate governance, providing support for

the sustainable and steady development of SFC.

2. Internal Control and Risk Management

External Supervision

The daily management of SFC is subject to on-site and

off-site supervision by Beijing Bureau of China Banking

and Insurance Regulatory Commission. Meanwhile, SFC is

also subject to supervision of the People's Bank of China,

the State Administration of Foreign Exchange and other

national agencies. SFC’s development has been vigorously

supported by regulatory authorities, and its operating

performance and risk management have also won positive

recognition from the regulatory authorities. As of the end of

2017, SFC’s financial position was excellent with a capital

adequacy ratio of 24.41%, a non-performing asset ratio of

0.01% and a non-performing loan ratio of 0. The reserve

adequacy ratio for asset impairment was 170.37%, and

the reserve adequacy ratio for loan loss was 131.31%.

Meanwhile, the ratio of inter-bank borrowing ratio was

58.6%, the guarantee ratio was 30.6%, the investment ratio

was 67.84%, the ratio of self-owned fixed assets was 0.21%,

and the liquidity ratio was 86.88%. all these indicators met

regulatory requirements.

Internal Control System

Pursuant to the regulatory requirements and demand of

internal governance, SFC has compiled the Internal Control

Manual which achieved full-factor internal control based

on development strategies and compliance goals, asset

integrity goals, financial reporting goals, and operating

efficiency goals from the perspective of internal environment,

risk assessment, control activities, information and

communication, and internal supervision, etc.

SFC implemented the internal control system in 2007 and

has constantly improved the system according to regulatory

requirements, its management needs and changes in

business process. It also updates the system dynamically,

and up to now, a total of 11 versions of Internal Control Manual have been published.


10 11

About Us

The Inspection, Evaluation and Assessment Measures for Internal Control was compiled by SFC in an attempt to

continuously enforce the internal control system. SFC

conducts comprehensive inspection and evaluation of

internal control to identify weaknesses in the design and

implementation of internal control process, and rectify

and improve in a timely manner to ensure its effectiveness

through quarterly self-examination tests, audit inspections,

and special inspections for internal control.

Risk Management

Risk Management Structure. SFC has established a

relatively complete risk management structure. The Board

of Directors is responsible for formulating risk management

strategies for SFC, approving risk management policies and

procedures, determining risk preference and risk limits, and

reviewing risk management reports. The Board of Directors’

special committees, such as Risk Management Committee

and Audit Committee, are responsible for performing risk

management and internal audit functions. The Executive

Management and its committees thereunder, such as Risk

Management Committee, Asset and Liability Management

Committee, and Loans Review Committee, implement risk

management policies of the Board of Directors and strictly

perform their respective duties. The Risk Control (Legal)

Department is responsible for coordinating risk management

of SFC and actively promoting the orderly development

of all work. The Internal Audit Department organizes on-

site inspection and assessment, and earnestly performs its

duties of audit supervision and inspection. Each functional

department and each branch company will implement various

risk management policies and measures in accordance with

their respective duties, authority and business practices,

and identify and control risks. Business departments and

branch companies are the first line of defense against

risks, risk control departments are the second line of

defense, and the internal audit department is the third line

of defense. Through such structure, SFC has clearly defined

responsibilities of each line of defense to ensure that all risk

management policies and measures are implemented in an

effective manner.

Risk management structure of SFC:

Credit Risk Management. SFC established the decision-

making mechanism of Loans Review Committee, conducted

comprehensive credit management and strict pre-lending

investigation, in-process loans review, and post-lending

tracking. In addition, technical measures such as customer

credit ratings were adopted to continuously improve the

functions of credit customer service system and achieve

scientific decision-making, full-flow management, and

online control in respect of the credit business. As SFC’s

credit business customers are mainly member companies,

and the counterparties in the financial industry are mainly

large financial institutions with long-term cooperation with

SFC, its credit risk is relatively low and controllable. As of

the end of 2017, SFC had no non-performing loans or credit

defaults.

Market Risk Management. SFC always invests in value

and implements prudent investment strategies. It not only

strengthens market analysis, but also invests mainly in

low-risk products such as bank-issued financial products,

public funds, and asset management products of securities

companies according to its capital position. In addition,

intensified management of quota and stop-loss & take-

profit mechanism, and investment risks were strictly

controlled. All SFC’s foreign exchange transactions strictly

complied with the actual needs of member companies

and spot foreign exchange settlement was conducted to

control exchange rate risk. Meanwhile, SFC continued to

improve internal transfer pricing of fund and product pricing

management, strengthened market study and sensitivity

analysis, for the purpose of effectively preventing interest

rate risks.

Liquidity Risk Management. SFC established a regular

meeting mechanism of Asset and Liability Management

Committee, focused on increasing the scale of deposits

and diversified financing channels. With strengthening of

implementation, tracking and assessment of funds plan,

SFC was able to adjust fund position. Meanwhile, liquidity

contingency plans were formulated and stress tests were

carried regularly. A liquidity monitoring system which could

effectively prevent liquidity risks was developed to monitor

and alert liquidity conditions in real time. SFC’s liquidity ratio

has always remained at a reasonable level, above the 25%

regulatory threshold.

Operational Risks Management. SFC continued to improve

its internal control system. As of the end of 2017, more

than 190 systems and 90 internal control processes

had been established to cover various business areas.

Meanwhile, work standards and norms were clarified, and

proper split of front desk, middle and back-office were

implemented, and management of incompatible jobs were

strengthened. In addition, professional ethics education was

strengthened to increase consciousness of responsibility of

all employees. We not only continued to strengthen business

authorization management but also strictly enforced the

internal approval and decision-making procedures. The

back-office management, self-inspection of internal control

and audit inspections were strengthened to ensure effective

implementation of rules and regulations. Business support

capabilities of the information systems were continuously

improved, the proportion of manual work was lowered, and

the source of operational risks was controlled. In 2017, we

achieved zero input mistakes and zero losses in fund.

Information Systems Risk Management. SFC actively

promoted the development and construction of information

systems. A total of 22 information systems were built and

put into use in succession, which covered all operation and

management activities. It strengthened information systems

operation, maintenance and pre-operational maintenance,

and real-time monitoring to ensure that all major systems

perform well. It also conducted security assessment to

eliminate hidden risks. Internal and external interconnection

and application boundary firewalls were upgraded.

Systemic emergency management was strengthened and all

emergency plans were improved. With the implementation

of integrated emergency drills for information systems, the

level of business continuity management were effectively

improved. Major information systems of SFC operated

securely and steadily throughout the year, achieving

industry-leading status.

Compliance Risk Management. SFC strengthened the

awareness of compliance of all employees, education and

implementation of laws and regulations, regulatory provisions,

and rules. It strictly complied with regulatory requirements to

carry out various compliance tasks to effectively improve its

compliance. Besides, contract management and legal review

were strict to promote legal risks prevention and control, so

as to provide effective support for corporate management

as per laws and regulations. In 2017, SFC did not have any

legal disputes or events in connection with legal risks. All

operations and management activities were carried out by

SFC in accordance with laws and regulations.

In 2018, SFC will further strengthen corporate governance

mechanism, give full play to the functions of the General

Shareholders’ Meeting, the Board of Directors, the Board

of Supervisors, and the Executive Management, and

comprehensively increase the level of corporate governance.

Meanwhile, SFC will stick to the principle of risks prevention

and control as lifeline to enhance awareness of risk

prevention and control. In addition, SFC will also strengthen

its capabilities of risk management and control to ensure its

stable operation and sustainable development.

Internal Audit

Department

The Boardof Directors

Risk Management

Committee

Audit CommitteePresident and

the Executive Management

Asset & Liability Management

Committee

Functional Departments

Branch Companies

Risk Management

Committee

Risk Control(Legal) Department

Loans Review

Committee


12 13

About Us

◎ Organization ◎ Directors, Supervisors and Executive Management Members

Board of Directors

Chairman:

Zhao Dong, Member of Party Committee and CFO of Sinopec Group, and Chairman of the Board

of Supervisors of Sinopec Corp.

Vice Chairman:

Wang Dehua, CFO and Director General of Finance Department of Sinopec Corp.

Directors:

Ye Guohua, Director General of Finance Department of Sinopec Group.

Xie Zhenglin, Director General of Capital Operation Department of Sinopec Corp.

Zhang Baolong, Secretary of the Party Committee & President of Sinopec Finance Co., Ltd.

Ye Huiqing, Deputy Director General and CFO of Oil Products Sales Department of Sinopec Corp.

Hou Guomin, Deputy Director General and CFO of Chemical Department of Sinopec Corp.

Wang Zhixiang, CFO of Sinopec Gas Company.

Cheng Zhong, Vice President of Sinopec Finance Co., Ltd.

Board of Supervisors

Chairman:

Zou Huiping, Director General of Auditing Department of Sinopec Group.

Supervisors:

Wang Hongchen: CFO of Sinopec Research Institute of Petroleum Engineering.

Jia Yiqun: CFO of Sinopec Engineering (Group) Co., Ltd.

Chai Ying: Director of Internal Audit Department of Sinopec Finance Co., Ltd.

Executive Management Members:

Zhang Baolong, Secretary of the Party Committee & President of Sinopec Finance Co., Ltd.

Gao Zhongyuan, Member of the Party Committee & Vice President of Sinopec Finance Co., Ltd.

Cheng Zhong, Member of the Party Committee & Vice President of Sinopec Finance Co., Ltd.

Wang An, Deputy Secretary of the Party Committee, Secretary of the Discipline Inspection

Commission, and Chairman of the Trade Union of Sinopec Finance Co., Ltd.

Zhang Yuhong, Member of the Party Committee & Vice President of Sinopec Finance Co., Ltd.

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14 15

Analysis of Financial Position and Operation Results in 2017

02 Analysis of Financial Position and Operation Results in 2017

Unit: RMB 10,000

Year 2012 2013 2014 2015 2016 2017

Pre-tax profit 182,850 180,477 340,290 456,696 190,574 209,476

After-tax profit 137,399 140,936 252,164 348,444 142,877 153,296

Interest income 300,201 270,652 245,902 229,713 215,972 314,924

Investment income 34,673 47,044 224,775 285,291 70,165 85,460

Interest expenses 127,742 136,296 71,662 64,979 99,697 181，171

Operation and administrative expenses

22,322 22,403 20,413 18,330 18,553 18,617

Realized taxes and fees 64,122 61，187 86,360 115,361 97,725 69,069

Total assets 12,454,442 12,196,701 12,399,023 17,030,473 16,612,311 17,896,191

Loans and entrusted loans 10,349,832 9,726,671 10,745,230 12,584,057 10,871,851 12,053,866

Total liabilities 10,876,149 10,538,374 10,539,368 14,809,801 14,256,863 15,421,445

Deposits and entrusted deposits

7,779,637 9,222,041 8,612,829 12,690,799 13,486,338 13,884,875

Owner's equity 1,578,293 1，658,327 1,859,655 2,220,672 2,355,448 2,474,746

Financial Summary

Analysis of Financial Situation and Operation Results

Faced with the complex economic and

financial situation in 2017, SFC gave full play

to the advantages of financial institutions,

cont inuously enhanced awareness and

capabilities of financial services and actively

responded to various difficulties and challenges

aligning with the transformation of Sinopec,

as well as the reform and development tasks

such as quality improvement and efficiency

promotion. In addition, SFC not only actively

adapted to the changes in the financial

markets but also continuously improved the

level of market-oriented operations. With the

steady progress of its business management,

all business objectives for the year were

successfully met.

In 2017, total profit of SFC was RMB 2.095

billion, increased by RMB 189 million as

compared to last year, an increase of 9.92%.

Its total assets were RMB 178.962 billion as of

end of 2017, increased by RMB 12.839 billion

as compared to last year, an increase of 7.73%.

The return of equity was 6.35%, the liquidity

ratio was 86.88% and the capital adequacy ratio

was 24.41%. The non-performing asset ratio

was zero with reserve adequacy ratio for asset

impaiment of 170.37%.


16 17

03 Auditor' s Report and Financial Statements for 2017

· Auditor' s Report and Financial Statements for 2017


18 19



20 21



22 2322

· Contact Us

04

Headquarters of Sinopec Finance

Co., Ltd.

Address: No. 22 Chaoyangmen North

Street, Chaoyang District, Beijing, 100728

Tel: 010－59966700

Fax: 010－59760508

Shanghai Branch

Address: 25F, Times Square, No. 500

Zhangyang Road, Pudong New Area,

Shanghai, 200122

Tel: 021－58367877

Fax: 021－58367659

Nanjing Branch

Address: No. 45 Zhongshan North Road,

Nanjing, 210008

Tel: 025－83322901

Fax: 025－83322960

Guangzhou Branch

Address: Room 1701-1711, Tower A,

Sinopec Building, No. 191 Tiyu West Road,

Guangzhou, 510620

Tel: 020-38081728

Fax: 020-38081730

Shandong Branch

Address: 26F, Huaren International Building,

No. 2A Shandong Road, Shinan District,

Qingdao, 266071

Tel: 0532－83096195

Fax: 0532－83096198

Zhengzhou Branch

Address: 16F, PetroChina Xin’ao Building,

No. 2 Shangwu Inner Ring Road, Zhengdong

New District, Zhengzhou, 450000

Tel: 0371－60126969

Fax: 0371－60236000

Wuhan Branch

Address: 28F, Jianyin Building, No. 709

Jianshe Avenue, Jianghan District, Wuhan,

430015

Tel: 027－85495937

Fax: 027－85495900

Chengdu Branch

Address: 6F, Tower A, Sinopec Southwest

Research Base, Jitai Road, High-tech

District (South Zone), Chengdu, Sichuan,

610094

Tel: 028－65286665

Fax：028－65286666

Xinjiang Branch

Address: Room C601 Offi ce Building, China

Sinopec Northwest Petroleum Research and

Production Park, No. 466 Changchun South

Road, High-tech District, Urumqi, 830011

Tel: 0991－3163001

Fax: 0991－3163029

Tianjin Branch

Address: 26F, Jinhuang Building, No. 20

Nanjing Road, Hexi District, Tianjin, 300042

Tel: 022－58780887

Fax: 022－58780870

Contact Us

SINOPEC FINANCE CO., LTD.

Add.: No. 22, Chaoyangmen North Street, ChaoyangDistrict, Beijing.

Postcode: 100728

Tel: 010 － 59966700

http: http://www.sfc.sinopec.com

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