Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended 31 December 2012
54 FINANCIAL INSTRUMENTS (Continued)
Equity price risk
The Group is exposed to equity price risk arising from changes in the Company’s own share price to the extent that the Company’s own equity
instruments underlie the fair values of derivatives of the Group. As at 31 December 2012, the Group’s exposure to equity price risk is the derivatives
embedded in the 2007 Convertible Bonds and the 2011 Convertible Bonds issued by the Company as disclosed in Note 29(iii) and (v) respectively.
As at 31 December 2012, it is estimated that an increase of 20% in the Company’s own share price would decrease the Group’s profit for the
year and retained earnings by approximately RMB 2,007 million (2011: RMB 2,159 million); a decrease of 20% in the Company’s own share price
would increase the Group’s profit for the year and retained earnings by approximately RMB 1,448 million (2011: RMB 1,628 million). The sensitivity
analysis has been determined assuming that the changes in the Company’s own share price had occurred at the balance sheet date and that all
other variables remain constant. The analysis is performed on the same basis for 2011.
Fair values
(i) Financial instruments carried at fair value
The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
of the fair value hierarchy. With the fair value of each financial instrument categorised in its entirely based on the lowest level of input that is
significant to that fair value measurement. The levels are defined as follows:
• Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
• Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which
all significant inputs are directly or indirectly based on observable market data.
• Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
At 31 December 2012
The Group The Company
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB RMB RMB RMB RMB
millions millions millions millions millions millions millions millions
Assets
Available-for-sale financial assets:
– Listed 83 — — 83 13 — — 13
Derivative financial instruments:
– Derivative financial assets 82 1,111 — 1,193 — — — —
165 1,111 — 1,276 13 — — 13
Liabilities
Derivative financial instruments:
– Embedded derivative component
of the Convertible Bonds — 2,576 — 2,576 — 2,576 — 2,576
– Other derivative financial liabilities 92 1,016 — 1,108 — 36 — 36
92 3,592 — 3,684 — 2,612 — 2,612
At 31 December 2011
The Group The Company
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB RMB RMB RMB RMB
millions millions millions millions millions millions millions millions
Assets
Available-for-sale financial assets:
– Listed 55 — — 55 13 — — 13
– Non-listed — 200 — 200 — — — —
Derivative financial instruments:
– Derivative financial assets 133 758 — 891 — — — —
188 958 — 1,146 13 — — 13
Liabilities
Derivative financial instruments:
– Embedded derivative component
of the convertible bonds — 2,680 — 2,680 — 2,680 — 2,680
– Other derivative financial liabilities 79 810 — 889 — 188 — 188
79 3,490 — 3,569 — 2,868 — 2,868
During the years ended 31 December 2012 and 2011, there were no transfers between instruments in Level 1 and Level 2.
131
CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2012
Financial Statements (PRC)