Annual Report 2012

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Financial Statements (International) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued) Long-term debts comprise: 170 Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION The Group The Company Interest rate and final maturity 2012 2011 2012 2011 RMB millions RMB millions RMB millions RMB millions Third parties’ debts Long-term bank loans Renminbi denominated Interest rates ranging from interest free to 6.9% per annum at 31 December 2012 with maturities through 2025 16,770 19,620 15,407 19,460 Japanese Yen denominated Interest rates 2.6% per annum at 31 December 2012 with maturities through 2024 785 1,179 785 1,179 US Dollar denominated Interest rates ranging from interest free to 1.55% per annum at 31 December 2012 with maturities through 2031 353 415 229 253 17,908 21,214 16,421 20,892 Long-term other loans Renminbi denominated Interest free per annum at 31 December 2012 with maturities through 2014 208 208 140 140 US Dollar denominated Interest rates ranging from interest free to 4.89% per annum at 31 December 2012 with maturities through 2015 19 23 10 14 227 231 150 154 Corporate bonds Renminbi denominated Fixed interest rate ranging from 3.75% to 5.68% per annum at 31 December 2012 with maturity through 2022 (b) 60,000 78,500 60,000 78,500 Convertible bonds Hong Kong Dollar denominated Convertible bonds with maturity in 2014 (c) 10,956 10,415 10,956 10,415 Renminbi denominated Bonds with Warrants with maturity in 2014 (d) 28,327 27,095 28,327 27,095 Convertible bonds with maturity in 2017 (e) 22,566 22,627 22,566 22,627 61,849 60,137 61,849 60,137 Total third parties’ long-term debts 139,984 160,082 138,420 159,683 Less: Current portion (15,466) (43,188) (15,356) (43,081) 124,518 116,894 123,064 116,602 Long-term loans from Sinopec Group Company and fellow subsidiaries Renminbi denominated Interest rates ranging from interest free to 6.98% per annum at 31 December 2012 with maturities through 2020 37,700 37,763 37,455 37,518 US Dollar denominated Interest rates 2.06% per annum at 31 December 2012 with maturity in 2013 186 — 178 — Total Long-term loans from Sinopec Group Company and fellow subsidiaries 37,886 37,763 37,633 37,518 Less: Current portion (288) (200) (288) (200) 37,598 37,563 37,345 37,318 162,116 154,457 160,409 153,920 Short-term and long-term bank loans, long-term other loans and loans from Sinopec Group Company and fellow subsidiaries are primarily unsecured and carried at amortised cost.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2012 29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued) Notes: (a) The Company issued 270-day corporate bonds of face value RMB 5 billion to corporate investors in the PRC debenture market on 25 July 2012 at par value of RMB 100. The effective yield of the 270-day corporate bonds is 3.11% per annum. The Company issued 90-day corporate bonds of face value RMB 5 billion to corporate investors in the PRC debenture market on 25 October 2012 at par value of RMB 100. The effective yield of the 90-day corporate bonds is 3.70% per annum. The Company issued 180-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 8 November 2012 at par value of RMB 100. The effective yield of the 180-day corporate bonds is 3.88% per annum. The Company issued 270-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 19 November 2012 at par value of RMB 100. The effective yield of the 270-day corporate bonds is 3.90% per annum. (b) These corporate bonds are guaranteed by Sinopec Group Company and are carried at amortised cost. (c) On 24 April 2007, the Company issued zero coupon convertible bonds due 2014 with an aggregate principal amount of HKD 11.7 billion (the “2007 Convertible Bonds”). The holders can convert the 2007 Convertible Bonds into shares of the Company from 4 June 2007 onwards at a price of HKD10.76 per share, subject to adjustment for subdivision or consolidation of shares, bonus issues, rights issues, capital distribution, change of control and other events which have a dilutive effect on the issued share capital of the Company (“the Conversion Option”). Unless previously redeemed, converted or purchased and cancelled, the 2007 Convertible Bonds will be redeemed on the maturity date at 121.069% of the principal amount. The Company has an early redemption option at any time after 24 April 2011 (subject to certain criteria) (the “Early Redemption Option”) and a cash settlement option when the holders exercise their conversion right (the “Cash Settlement Option”). During the year ended 31 December 2011, the Company redeemed part of the 2007 Convertible Bonds upon certain holders’ request, with the principal amount of HKD 39 million. During the year ended 31 December 2012, the conversion price of the 2007 Convertible Bonds was adjusted to HKD 10.60 per share as the result of dividend distribution. As at 31 December 2012, the carrying amounts of the liability component and the derivative component, representing the Conversion Options, the Early Redemption Option and the Cash Settlement Option, of the 2007 Convertible Bonds were RMB 10,842 million (2011: RMB 10,345 million) and RMB 114 million (2011: RMB 70 million), respectively. No conversion of the 2007 Convertible Bonds occurred for the year ended 31 December 2012. As at 31 December 2012 and 2011, the fair value of the derivative component of the 2007 Convertible Bonds was calculated using the Black-Scholes Model. The following are the major inputs used in the Black-Scholes Model: 2012 2011 Stock price of H shares HKD 8.78 HKD 8.17 Conversion price HKD 10.60 HKD 10.76 Option adjusted spread 150 basis points 200 basis points Average risk free rate 0.39% 0.72% Average expected life 1.3 years 2.3 years Any change in the major inputs into the Black-Sholes Model will result in changes in the fair value of the derivative component. The changes in the fair value of the derivative component from 31 December 2011 to 31 December 2012 resulted in an unrealised loss of RMB 43 million (2011: an unrealised gain RMB 259 million), which has been recorded in the “finance costs” section of the consolidated income statement for year ended 31 December 2012. The initial carrying amount of the liability component of the 2007 Convertible Bonds is the residual amount, which is after deducting the allocated issuance cost of the 2007 Convertible Bonds relating to the liability component and the fair value of the derivative component as at 24 April 2007. Interest expense is calculated using the effective interest method by applying the effective interest rate of 4.19% to the adjusted liability component. Should the aforesaid derivative component not been separated out and the entire 2007 Convertible Bonds been considered as the liability component, the effective interest rate would have been 3.03%. (d) On 26 February 2008, the Company issued bonds with stock warrants due 2014 with an aggregate principal amount of RMB 30 billion in the PRC (the “Bonds with Warrants”). The Bonds with Warrants, which bear a fixed interest rate of 0.80% per annum payable annually, were issued at par value of RMB 100. The Bonds with Warrants are guaranteed by Sinopec Group Company. The initial recognition of the liability component of the Bond with Warrants is measured as the present value of the future interest and principal payments, discounted at the market rate of interest applicable at the time of initial recognition to similar liabilities that do not have a conversion option or other derivative components (“market interest rate”). Interest expense is calculated using the effective interest method by applying the market interest rate of 5.40% to the liability component. 171 CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2012 Financial Statements (International)
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CONTENTS 2 Company Profile 3 Princi
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PRINCIPAL FINANCIAL DATA AND INDICA
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2 FINANCIAL INFORMATION EXTRACTED F
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(2) Information disclosed by the sh
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Sinopec Corp.’s development accel
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Business Review and Prospects BUSIN
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MANAGEMENT’S DISCUSSION AND ANALY
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The following table shows the opera
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In 2012, refining margin was RMB 15
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As at 31 December 2012, the Company
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(2) Financial data prepared under A
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(2) THE PROPOSED ISSUANCE OF A SHAR
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Significant Events SIGNIFICANT EVEN
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CONNECTED TRANSACTIONS 1 AGREEMENTS
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Decision-making procedures: The maj
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Corporate Governance CORPORATE GOVE
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REPORT OF THE BOARD OF DIRECTORS Th
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6 DIVIDEND During this report perio
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16 RISK FACTORS In the course of it
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Firstly, the Board of Directors dil
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DIRECTORS, SUPERVISORS, SENIOR MANA
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Li Chunguang Dai Houliang Liu Yun L
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The Members of the Fourth Session o
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Zou Huiping Zou Huiping, aged 52, S
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The Members of the Fourth Session o
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Lei Dianwu Ling Yiqun Lei Dianwu, a
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THE BREAKDOWN ACCORDING TO THE MEMB
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REPORT OF THE PRC AUDITOR All Share
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BALANCE SHEET as at 31 December 201
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INCOME STATEMENT for the year ended
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CASH FLOW STATEMENT for the year en
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STATEMENT OF CHANGES IN EQUITY for
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NOTES TO THE FINANCIAL STATEMENTS (
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Page 121 and 122: NOTES TO THE FINANCIAL STATEMENTS (
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Page 139 and 140: CONSOLIDATED BALANCE SHEET as at 31
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Page 195 and 196: (D) SUPPLEMENTAL INFORMATION ON OIL
Page 198 and 199: Corporate Information CORPORATE INF
Page 200: Confirmation from fhe Directors and
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Annual Report 2012

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