Privatization of ZRCC by Sinopec Corp. - PowerPoint PPT Presentation

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Privatization of ZRCC by Sinopec Corp.
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Privatization of ZRCC by Sinopec Corp.

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  1. Privatization of ZRCC by Sinopec Corp. China Petroleum & Chemical Corporation 14 November 2005

  2. 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, 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.

  3. Transaction Overview Proposed Transaction Privatization of ZRCC by Sinopec Corp. through Ningbo Yonglian Cancellation Price and Form of Payment Cash payment of HK$10.60 per H share of ZRCC, total consideration for the H shares approximatelyHK$7,672 million Include but not limited to: • Approval by shareholders and independent shareholders of ZRCC • Approval by relevant regulatory authorities Conditions Precedent Financial Adviser to Sinopec Corp. China International Capital Corporation (Hong Kong) Limited Financial Adviser to ZRCC Lehman Brothers Asia Investment Limited Independent Financial Adviser to ZRCC N M Rothschild China Holding AG

  4. BusinessOverview of ZRCC ‘000 Tonnes USD/Barrel RMB/Tonnes Source:Annual/Interim Report of ZRCC

  5. Financial Highlights of ZRCC 1H2005 1H2004 Change (%) 2004 2003 Change (%) (RMB,Million) Note:2004 interim results and 2005 interim results are unaudited

  6. Strategic Rationale for Transaction • Integration of ZRCC’s oil refining business into Sinopec Corp’s value chain • Synergy effects in capital allocation, investment, branding, resources, marketing, distribution channels, etc. • Elimination of related party transactions and of intra-group competition • Consolidation and simplification of management structure and efficiency improvement

  7. Transaction Procedures • Key Events: • 12 November 2005, boards of Sinopec Corp. and ZRCC approved the transaction • Mid January 2006, shareholders and independent shareholders meetings will be held to seek approval for the transaction • After approval by relevant regulatory authorities, ZRCC will apply for delisting and deregistration, and pay the consideration to its H share shareholders Sinopec Corp. Issue New Registered Capital 100% 71.3% H Shareholders H 股股东 UNIPEC 28.7% 90% Cash Cancellation Price 10% Merged into ZRCC Ningbo Yonglian Cash/new registered capital flow

  8. Pricing Principle and Methodology Based on principle of fairness for a win-win transaction Principle Applied various commonly adopted valuation methods in capital markets Methodology Based on opinions from financial advisors, pricing principle, methodology and cancellation price were substantially discussed and negotiated at arm’s length between both parties before final agreement was reached Procedure

  9. Cancellation Price Cancellation Price to H share shareholders of ZRCC at HKD10.60 per Share • Implied Multiples • Premium of proposed Cancellation Price over historical trading prices of ZRCC H shares • This transaction meets Sinopec’s investment criteria and is proposed to be included in the 2006 investment arrangement Source:ZRCC 2004 Annual Report; All periods stated above refer to the period up to and including 2 November 2005

  10. Conclusion • This transaction is consistent with the corporate strategy of Sinopec Corp. • Cancellation Price is fair to shareholders of both parties • Upon completion of the Merger, Sinopec Corp. will further realize synergies in investment, management and resources allocation, and enhance overall operating efficiency

  11. For Further Information Investor Relations Beijing: Tel: (8610) 64990067Fax: (8610) 64990489 Email: Hong Kong: Tel: (852) 28242638Fax: (852) 28243669 Email: New York: Tel: (212) 759 5085 Fax: (212) 759 6882 Email: Media Relations Tel: (8610) 64990092 Fax: (8610) 64990093 Email: