en ann041230

Information about en ann041230

Published on October 16, 2007

Author: Freedom

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Privatization of Beijing Yanhua by Sinopec Corp. through Beijing Feitian:  Privatization of Beijing Yanhua by Sinopec Corp. through Beijing Feitian China Petroleum & Chemical Corporation 30 December 2004 Disclaimer:  Disclaimer This presentation and the presentation materials distributed herewith include forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that Sinopec Corp. expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forward-looking statements. Sinopec Corp.'s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, exploration and development outcomes, estimates of proven reserves, market shares, competition, environmental risks, changes in legal, financial and regulatory frameworks, international economic and financial market conditions, political risks, project delay, project approval, cost estimates and other risks and factors beyond our control. In addition, Sinopec Corp. makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements. Financial figures in this presentation are based on International Financial Reporting Standards. Transaction Overview:  Transaction Overview Privatization of Beijing Yanhua by Sinopec Corp. through its wholly owned subsidiary Beijing Feitian Financial Advisers to Sinopec Corp. China International Capital Corporation (Hong Kong) Limited Morgan Stanley Dean Witter Asia Limited Cancellation Price and Form of Payment HKD3.80 per H share of Beijing Yanhua. Total consideration for the H shares approximates RMB4.076bn and will be paid in cash Independent Financial Adviser to Beijing Yanhua Lehman Brothers Asia Investment Limited Effective Date The date of completing deregistration of Beijing Yanhua, after fulfillment of all precedent conditions Include but not limited to: Approvals by shareholders and independent shareholders of Beijing Yanhua (tentatively scheduled on 1 March 2005) and approval by shareholders of Beijing Feitian Approvals by relevant regulatory authorities Financial Adviser to Beijing Yanhua Bear Stearns Asia Limited Slide4:  Turnover by Products (2003) Business Overview of Beijing Yanhua Beijing Yanhua’s major products: Synthetic resins and plastics Synthetic rubber Basic organic chemical products Beijing Yanyua’s major manufacturing facilities: 710,000 ton/year ethylene cracker facility 380,000 ton/year LDPE facility 360,000 ton/year polypropylene facility 160,000 ton/year HDPE facility 240,000 ton/year phenol-acetone facility 80,000 ton/year cis-polybutadiens rubber facility 30,000 ton/year butyl rubber facility, etc. Source: Beijing Yanhua (Total Turnover RMB11.47Bn) RMB, bn Slide5:  Financial Summary of Beijing Yanhua RMB Billion 5.49 0.38 0.19 0.06 7.67 1.57 1.03 0.31 39.7 313.2 442.1 416.7 Turnover EBIT Net Profit EPS (RMB/Share) Cash flow from operations Debt/Capital EBITDA/Interest Expense 0.83 37.6% 9.6 1.53 20.8% 41.0 84.3 -1680bps +31.4x EBITDA 0.83 2.03 144.6 11.47 1.01 0.63 0.19 1.61 33.0% 13.4 1.91 Note:In accordance with International Financial Reporting Standards; 2003 interim results and 2004 interim results are unaudited Total Assets Total Liabilities Net Asset 9.58 4.37 5.21 9.20 2.68 6.52 - 4.1 - 38.7 25.1 9.55 3.89 5.66 9.44 0.53 0.21 0.06 1.04 45.4% 6.8 1.33 10.26 5.24 5.02 2002 1H2003 2003 1H2004 Change(%) Slide6:  Strategic Rationale for Sinopec Corp. Rationalize managerial system, reinforce and centralize internal management Streamline Beijing Yanhua’s business value chain Integrate resources and realize consolidation synergies Effectively eliminate intra-group competition Slide7:  Transaction Procedures Sinopec Corp., Beijing Feitian and Beijing Yanhua held separate board meetings or independent board meetings Joint announcement by Sinopec Corp. and Beijing Yanhua Shareholders’ meeting of Feitian and Shareholders’ and independent shareholders’ meetings of Beijing Yanhua to approve the merger After applications to relevant authorities are approved, Beijing Yanhua will apply for delisting and deregistration, and notify creditors of Beijing Yanhua Beijing Feitian will pay the cancellation price to Beijing Yanhua H shareholders and issue new registered capital to Sinopec Corp; Beijing Yanhuan will be deregistered after which the transaction will be completed Beijing Feitian deregisters when appropriate, Beijing Yanhua’s operation will be merged into Sinopec Corp. 29.99% 70.01% Sinopec Corp. Merged into Issue New Registered Capital Cash Cancellation Price 100% Merger Cash / new registered capital flow Beijing Feitian (Wholly-owned subsidiary) H Shareholders Beijing Yanhua Slide8:  Pricing Principles and Methodologies Applied various commonly adopted valuation methods in the equity markets Methodologies Based on opinions from financial advisors and independent advisor, pricing principles, methodologies and cancellation price were substantially discussed and negotiated at arm’s length between both parties before final agreement was reached Procedures Based on fair and reasonable principles for a win-win transaction To ensure shareholders interests of Sinopec Corp. and achieve EPS accretion To offer reasonable return to Beijing Yanhua’s H shareholders Principles Slide9:  Cancellation Price Cancellation Price to Beijing Yanhua H Shares at HKD3.80 per Share Note: All periods stated above refer to the period including and up to 21 December 2004 Reasonable to both parties according to comparable company analysis Premium offered is reasonable compared the proposed cancellation price and historical trading prices of Beijing Yanhua H shares Source:I/B/E/S Estimates (as of 21 December 2004) Slide10:  Potential Impact on Sinopec Corp. The following is based on consolidated financial results for the six months ended 30 June 2004: Impact on consolidated liabilities and shareholders’ fund Liabilities increases by RMB 4.076bn Minority interests decreases by RMB 1.955bn Sinopec Corp.’s debt/capital ratio slightly increases Existing shareholders’ fund remains unchanged Impact on revenue and expense Consolidated sales revenue remains unchanged Interest expense slightly increases Administration expense moderately decreases Moderate proforma accretion on earnings per share In the long run, this transaction should have positive impact on Sinopec Corp.’s overall profitability Slide11:  Conclusion This transaction would contribute to the continual development of Sinopec Corp. It is also another demonstration of the efforts of Sinopec Corp.’s management to deliver their IPO promises A fair and reasonable transaction to both parties at a cancellation price of HKD3.80 for each Beijing Yanhua H Share: In the long run, this transaction should enhance Sinopec Corp.’s ability to generate profit and hence increase its shareholders’ value A reasonable cash offer price at a premium to Beijing Yanhua’s H shareholders Upon completion of the Merger, Sinopec Corp. will aim to realize synergies in investment, management and resource allocation, as well as enhance overall operating efficiency Transaction Aligns with Sinopec Corp.’s Shareholders’ Interest For Further Information:  http://www.sinopec.com For Further Information Investor Relations Beijing: Tel: (8610) 64990060 Fax: (8610) 64990489 Email: [email protected] Hong Kong: Tel: (852) 28242638 Fax: (852) 28243669 Email: [email protected] New York: Tel: (212) 759 5085 Fax: (212) 759 6882 Email: [email protected] Media Relations Tel: (8610) 64990092 Fax: (8610) 64990093 Email: [email protected]

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