Stock Code: China Petroleum & Chemical Corporation(600028) stock abbreviation: China Petroleum & Chemical Corporation(600028) Announcement No.: 202209
China Petroleum & Chemical Corporation(600028)
Announcement on provision for impairment
China Petroleum & Chemical Corporation(600028) the board of directors and all directors guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.
China Petroleum & Chemical Corporation(600028) (hereinafter referred to as ” China Petroleum & Chemical Corporation(600028) ” or “the company”) held the 7th Meeting of the 8th board of directors on March 25, 2022, deliberated and adopted the proposal on the provision for impairment in 2021. Now the specific conditions of the provision for impairment are announced as follows:
1、 Overview of provision for impairment
In order to objectively reflect the company’s financial situation and operating results in 2021, according to the relevant provisions of China’s accounting standards for business enterprises and based on the principle of prudence, the company conducted a detailed inventory and inventory of its assets, and conducted an impairment test on the assets with signs of impairment. According to the test, the provision for impairment accrued by the company in 2021 totaled 15.687 billion yuan.
2、 Description of specific conditions of withdrawing impairment provision
1. Basis and method of provision for impairment
(1) According to the accounting standards for Business Enterprises No. 1 – Inventory: it is measured according to the lower of the cost and net realizable value on the balance sheet date. When the net realizable value is lower than the cost, the inventory falling price reserves are accrued.
(2) According to the accounting standards for Business Enterprises No. 8 – asset impairment: if there are signs of asset impairment, its recoverable amount shall be estimated. The recoverable amount shall be determined according to the higher one between the net amount of the fair value of the asset minus the disposal expenses and the present value of the expected future cash flow of the asset. If the measurement result of the recoverable amount shows that the recoverable amount of the asset is lower than its book value, the book value of the asset shall be written down to the recoverable amount, and the written down amount shall be recognized as asset impairment loss and included in the current profit and loss, and the corresponding asset impairment provision shall be withdrawn at the same time.
(3) According to the accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments: for financial assets measured at amortized cost and financing receivables measured at fair value and whose changes are included in other comprehensive income, the loss reserves are recognized on the basis of expected credit losses.
2. Details of provision for impairment
In 2021, due to market price fluctuation of some products, shutdown or loss of individual production units, the company accrued impairment reserves of RMB 15.687 billion in total in accordance with Chinese accounting standards for business enterprises and relevant accounting policies of the company, mainly including fixed asset impairment reserves of RMB 9.42 billion, inventory depreciation reserves of RMB 3.148 billion and bad debt reserves of RMB 2.464 billion.
3、 Impact of provision for impairment on the company’s financial position
In 2021, the company made a total of 15.687 billion yuan of impairment provision for the above matters. The full amount of impairment provision is included in the company’s operating performance in 2021, which will reduce the company’s consolidated net profit of 15.476 billion yuan (including reversal) in 2021.
It is hereby announced.
Huang Wensheng, vice president and Secretary of the board of directors appointed by the board of directors, March 25, 2022
