Sinopec Finance is a non-banking financial institution established under the approval of the People’s Bank of China, its business is under continuous and strict regulation by the China Banking and Insurance Regulatory Commission as well as Sinopec Group.

Sinopec Finance is required to file its Periodic Regulatory Report to China Banking and Insurance Regulatory Commission (CBIRC). Sinopec Finance also discloses its financial statements three times each year (two non-audited, one audited) on the website of China Foreign Exchange Trade Systems (CFETS), which is under the People’s Bank of China’s. To review the reports (Chinese version only), please search "中国石化财务有限责任公司" on the website www.chinamoney.com.cn.

Sinopec Finance is a joint venture between Sinopec Group and Sinopec Corp.. Sinopec Corp. has 49% interest in Sinopec Finance, with the rest owned by Sinopec Group.

Sinopec Corp. has 49% interest in Sinopec Finance. We also appointed directors in its board of directors to oversight the operation of Sinopec Finance. Sinopec Finance is required to set up various internal controls and risk management measures in relation to the financial services provided in order to ensure safety of the Company’s fund. The relevant regulation, internal control and risk management measures include but not limited to: the Company and Sinopec Finance adopt Risk Control System on Connected Transactions between Sinopec Corp. and Sinopec Finance Company, which includes control systems and risk disposal plans to ensure the monitoring of financial risks for the Company and safeguards the Company’s autonomy in using the fund deposited in Sinopec Finance. We obtained an undertaking from Sinopec Group that in case of an emergency where the Sinopec Finance has difficulty making payments, Sinopec Group will increase the capital of the Sinopec Finance in accordance with the actual need for the purpose of permitting payments to be made. Our Board reviews the risks of deposit with Sinopec Finance twice a year, the results are disclosed in Company’s annual and interim reports.

The Board reviews the risks of deposit with Sinopec Finance twice a year, the results are disclosed in Company’s annual and interim reports.

The continued associated transactions that the Company carries out with Sinopec Group are necessary for the Company’s continuous operations, and are also helpful for its business operation and growth. For the trade with Sinopec Group, the Company needs Sinopec Financial Institutions to serve as its platforms for clearing and settlement both at home and abroad, while Sinopec Finance is the platform for internal settlement, financing and fund management of Sinopec Group. Therefore, by realizing internal settlement and centralized fund management through Sinopec Finance, the Company can gain benefits, including shortening the time required for transfer and turnover of funds, and improving the settlement efficiency. In addition, the Company is enabled to obtain a capital pool to meet its capital requirements in a flexible manner.

Sinopec Finance generally can offer the Company more favourable terms and interest rates as compared to other financial institutions or banks. Under normal circumstances, the deposit interest rate offered by Sinopec Finance will be no lower than that offered by commercial banks for the deposits of the same nature and the same maturity, and the loan interest rate will be no higher than that offered by commercial banks for the loans of the same nature and the same maturity. At the same time, familiar with the Company’s business, Sinopec Finance can provide flexible, convenient and low-cost service to the Company at any time, and it will be difficult for independent commercial banks to provide equivalent services.

Sinopec Finance is a non-banking financial institution under the same supervision of the PBOC and CBIRC as commercial banks. The Company may, at its sole discretion, deposit its funds into or withdraw them from Sinopec Finance without any restrictions, and may, at its sole discretion, deposit such funds into Sinopec Finance or commercial banks at any time in light of market conditions. Meanwhile the Company has the right to withdraw its undue deposits in Sinopec Finance without being fined.

Sinopec Century Bright is a company incorporated in Hong Kong and licensed with limited liability under the Money Lenders Ordinance (Cap. 163 of the Laws of Hong Kong). In 2007, Sinopec Century Bright was approved by the State Administration of Foreign Exchange of the PRC (SAFE) as an offshore settlement center for centralized cash management for members of Sinopec Group. Sinopec Century Bright only provides financial services to Sinopec Group and its members. It is used by the Company as an overseas fund raising and settlement platform.

Sinopec Century Bright holds the Money Lenders Licence and the Money Service Operators Licence issued by Hong Kong Government, and is governed by the Customs and Excise Department and the Companies Registry and other relevant regulatory authorities in Hong Kong. Meanwhile, its business is also under continuous and strict regulation by Sinopec Group.

Sinopec Century Bright is required to setup various internal controls and risk management measures in relation to the financial services provided in order to ensure safety of the Company’s fund. The relevant regulation, internal control and risk management measures include but not limited to: (i) In order to regulate the connected transactions between the Company and Sinopec Century Bright, Sinopec Group adopted Rules on Offshore Fund Management Policy Implementation as well as Interim Measures on Monitoring and Managing Offshore Fund Platform, which systematically established strict restraint towards offshore financial services provided by Sinopec Century Bright; in addition, Sinopec Century Bright adopts Rules on Internal Control System Implementation, which reinforces internal risk control and management, and ensures the safety of the Company’s deposits with Sinopec Century Bright; (ii) Sinopec Century Bright signed a Keep-well Deed with Sinopec Group. Sinopec Group made an undertaking to Sinopec Century Bright that in case of payment difficulties of Sinopec Century Bright, Sinopec Group would ensure Sinopec Century Bright to meet the payment needs through various means. Meanwhile, the Company’s deposit with Sinopec Century Bright is far more less than the amount of loans from Sinopec Century Bright. As at end of June, 2015, our short-term USD debt payable to Sinopec Group was RMB 91.1 billion, which is much larger than the proposed RMB 48 billion daily deposit cap with Sinopec Finance and Sinopec Century Bright in total. In case of any default from Sinopec Century Bright, the actual risk shall be on Sinopec Century Bright, and there shall be no losses incurred on Sinopec Corp.

The Board reviews the risks of deposit with Sinopec Century Bright twice a year, the results are disclosed in Company’s annual and interim reports.

In terms of liquidity, the Sinopec Group was granted credit rating of AA- and Aa3 from Standard & Poor’s and Moody’s respectively, higher than most enterprises, even banks. Sinopec Finance itself was granted as Grade A in terms of industry rating and regulatory rating. Sinopec Century Bright itself was granted credit rating of A+ and A1 from Standard & Poor’s and Moody’s respectively.

The company was set up on February 28, 2000, pursuant to the [Company Law of the People's Republic of China].

Sinopec Group, the sole sponsor of Sinopec Corp, is a super-large petroleum and petrochemical enterprise group the government set up on the basis of the former China Petrochemical Corporation (former Sinopec) in July 1988. Sinopec Group is 100% owned by the state, is a state-authorized investment institution and state holding company.

On October 18 and 19,2000, the company successfully made an initial public offering of 16.78 billion H shares in Hong Kong, New York and London. On July 16, 2001, the company successfully issued 2.8 billion A shares in Shanghai.

Sinopec Corp. is one of the largest integrated petroleum and petrochemical company in China with upstream, midstream and downstream operations. Its principal operations of the company include: exploring for and developing, producing and trading crude oil and natural gas; processing crude oil, producing petroleum products and trading, transporting, distributing and marketing petroleum products; producing, distributing and trading petrochemical products. The marketing area of Sinopec Corp. includes 20 provinces, autonomous regions, municipalities. Among the 20, nine provinces are ranked among the top 10 in per capita GDP.

The Sinopec e-commerce system started operation on August 15, 2000. The URLs are www.sinopec-ec.com and www.sinopec-ec.com.cn.

China Petroleum & Chemical Corporation