China Petroleum & Chemical Corporation(600028) Shanghai Petrochemical Co., Ltd
Continuous risk assessment report on connected transactions with China Petroleum & Chemical Corporation(600028) Finance Co., Ltd
China Petroleum & Chemical Corporation(600028) Shanghai Petrochemical Co., Ltd. (hereinafter referred to as “the company”) has examined the financial license, business license and other certificates of China Petroleum & Chemical Corporation(600028) Finance Co., Ltd. (hereinafter referred to as “Sinopec finance company”) and reviewed the regular financial reports of Sinopec finance company in accordance with the requirements of self regulatory guidelines for listed companies on Shanghai Stock Exchange No. 5 – transactions and connected transactions, The business qualification, business and risk status of Sinopec finance company have been continuously evaluated. Combined with the actual business development of the company, the report is as follows:
1、 Basic information of Sinopec finance company
Sinopec Finance Corporation is a non bank financial institution established with the approval of the people’s Bank of China. It was exclusively initiated by the former China Petroleum & Chemical Corporation(600028) head office and officially established on July 8, 1988. Jiang Yongfu, the legal representative of Sinopec finance company, was founded with a registered capital of 300 million yuan. After seven capital increases, the current registered capital is 18 billion yuan. The shareholders are Petrochina Company Limited(601857) Chemical Group Co., Ltd. (51%) and China Petroleum & Chemical Corporation(600028) (49%). Sinopec finance company is headquartered in Beijing and has 9 branches in Shanghai, Nanjing, Guangzhou, Shandong, Zhengzhou, Wuhan, Chengdu, Xinjiang and Tianjin. Sinopec finance company has been rated as the highest grade a company in the finance industry since 2015. The business scope is to handle financial and financing consulting, credit assurance and related consulting and agency business for member units; Assist member units to realize the receipt and payment of transaction funds; Provide guarantee to member units; Handle entrusted loans and entrusted investment between member units; Handle bill acceptance and discount for member companies; Handle the internal transfer settlement between member units and the corresponding settlement and clearing scheme design; Absorbing deposits from member units; Handle loans and financial leases for member units; Engage in interbank lending; Issue financial corporate bonds upon approval; Underwriting corporate bonds of member units; Equity investment in financial institutions; Securities investment; Consumer credit, buyer’s credit and financial leasing of products of member units; Approved insurance agency business.
2、 Operation management and risk management of Sinopec finance company
After inspection, Sinopec finance company standardized its business behavior and strengthened its internal management in strict accordance with the company law of the people’s Republic of China, the accounting standards for business enterprises, the measures for the administration of enterprise group financial companies, relevant national financial regulations and rules and the articles of association.
According to the understanding and evaluation of the risk management of Sinopec finance company, as of December 31, 2021, no major defects were found in the risk control system of capital, credit, audit and information management related to the financial statements.
According to the measures for the administration of financial companies of enterprise groups, as of December 31, 2021, all regulatory indicators of Sinopec financial company have met the specified requirements.
After evaluation, the company believes that the risk management system and internal control system of Sinopec finance company in 2021 are sound and effective. In terms of capital management, Sinopec finance company has well controlled the risk of capital flow; In terms of credit business, Sinopec finance company has established corresponding credit business risk control procedures, and the overall risk is controlled at a reasonable level.
3、 Overall fund revenue and expenditure of the company during the reporting period
In 2021, the net cash flow from the company’s operating activities was 4.06 billion yuan, an increase of 2.309 billion yuan year-on-year; The net cash flow from investment activities was -2.359 billion yuan, and the net outflow decreased by 1.529 billion yuan year-on-year; The net cash flow from financing activities was -3.503 billion yuan, and the net outflow increased by 5.113 billion yuan year-on-year. The balance of cash and cash equivalents of the company was 5.112 billion yuan, a decrease of 1.804 billion yuan over the beginning of the year.
4、 Monetary capital and loans of the company during the reporting period
(I) at the end of 2021, the company’s monetary capital balance was 12.499 billion yuan, of which 03 million yuan was deposited in Sinopec finance company, accounting for 0.03%; The balance deposited in external banks was 12.495 billion yuan, accounting for 99.97%. In accordance with the relevant provisions of the internal control system, the company has assessed the risk of the funds deposited in Sinopec finance company and believes that in the daily operation process, the funds deposited in Sinopec finance company are mainly used to ensure liquidity and can be withdrawn and used in full. Under normal circumstances, the company’s capital interest rate in Sinopec finance company is not lower than that of similar deposits in major commercial banks in the same period, and the capital balance is reasonably controlled. The company has no foreign investment and financial management.
(II) at the end of 2021, the balance of interest paying debt of the company was 2.260 billion yuan, of which the loan of Sinopec finance company was 700 million yuan, accounting for 30.98%; External banks amounted to 1.56 billion yuan, accounting for 69.02%. The loan of Sinopec finance company is a entrusted loan of 700 million yuan granted by China Petroleum & Chemical Corporation(600028) through Sinopec finance company. No abnormality was found in the entrusted loan business.
(III) credit business or other financial business. During the reporting period, Sinopec finance company provided capital settlement services and commercial bill business for the company and its holding subsidiaries, and the rate standard was not higher than that of similar businesses of major commercial banks. Unit: RMB 10000
Total amount of related party business type actual amount at the end of the period
Sinopec finance ultimate holding company credit business 4750047500 57500
Subsidiaries of the company
Note: the actual amount of notes issued in the whole year.
The above business transactions are carried out in accordance with the comprehensive service framework agreement signed between the company and Petrochina Company Limited(601857) Chemical Group Co., Ltd. the price of related party transactions is fair, and the transaction amount and balance meet the needs of the company’s operation and development.
5、 Risk assessment opinions
Based on the above analysis and judgment, the company believes that:
(I) Sinopec finance company has legal and valid financial license and business license;
(II) it is not found that Sinopec finance company violates the provisions of the measures for the administration of enterprise group finance companies issued by Bank Of China Limited(601988) Insurance Regulatory Commission, and the asset liability ratio of Sinopec finance company meets the requirements of the measures;
(III) no abnormality is found in the connected transactions between the company and Sinopec finance company, no major defect is found in the risk management of Sinopec finance company, and no situation that may lead to significant risks of the company is found.
(IV) since its establishment, Sinopec finance company has operated in strict accordance with the provisions of the measures for the management of enterprise group finance companies, and there are no major defects in the risk management of Sinopec finance company. The financial business between the company and Sinopec finance company has controllable risks at present;
(V) the capital exchange between the company and Sinopec finance company will not affect the normal production and operation of the company. The company’s capital in Sinopec finance company is independent and safe, there is no risk of occupation, complies with relevant regulatory regulations, and there is no damage to the rights and interests of the company and shareholders.
China Petroleum & Chemical Corporation(600028) Shanghai Petrochemical Co., Ltd. March 23, 2022
