Jilin Chemical Industrial Company Limited Announces 2004 Annual
Results HONG KONG, March 17 /Xinhua-PRNewswire-FirstCall/ -- Jilin
Chemical Industrial Company Limited (HKSE: 0368, NYSE: JCC)
announced its audited results for the year ended December 31, 2004,
based on its financial statements prepared in accordance with
International Financial Reporting Standards (IFRS). Turnover for
2004 was RMB31,857 million (approximately US$3,849 million),
representing an increase of 54.3% as compared with 2003. The
Company experienced a net profit of RMB2,545 million (approximately
US$307 million) compared with net profit of RMB428 million
(approximately US$52 million) in 2003. Net profit per share in 2004
was RMB0.71 (approximately US$0.09) compared with profit per share
of RMB0.12 (approximately US$ 0.01)in 2003. The Board has resolved
not to declare any final dividend for the year ended December 31,
2004. Notwithstanding several unfavorable market factors such as
price rises in raw materials such as crude oil and a shortage of
rail capacity in China, the Group introduced a series of measures
to improve corporate management, enhance the operation of
production facilities, strengthen internal control systems, improve
marketing strategies and strengthen financial management. In 2004
the Company achieved a historical high in various key production
benchmarks with respect to the processing volume of crude oil,
sales volume of products, as well as the output of ethylene,
gasoline and diesel oil. The selling price of the Group's products
increased substantially from 2003. All these factors effectively
mitigated the adverse impact on production costs of an increase
from the prices of raw materials. As a result, the operating
results of the Group improved substantially in 2004 as compared to
2003. Looking forward to 2005, the Company anticipates that
international crude oil prices will continue to fluctuate within a
higher price range. The average price of the Company's products may
be lower than in 2004, which will generally both opportunities as
well as challenges for the Company. The domestic economy is
expected to continue to develop at a relatively stable but fast
pace, and various policies in connection with the promotion of
established industrial production facilities in north-eastern China
by the State are expected to be further implemented. Fluctuations
in the prices of raw materials such as crude oil within a higher
price range should keep pressure on production costs. Scheduled
maintenance of the Company's facilities should shorten the period
of production, thus creating challenges for the Company achieving
objectives in 2005 similar to 2004. To address these challenges,
the Company plans to operate in accordance with the following
principles: 1. Further pursue the business concept where
"enterprises shall operate according to market demand; production
plans shall be changed in line with the market development; and all
works shall be done for the purpose of achieving efficient results"
to fully strengthen the Company's business operations. 2. Further
pursue the safety concept where "objective standards of production
for a refinery enterprise shall be complied with, stringent safety
management shall be implemented and safety shall be ensured" to
improve the safety of production in all aspects. 3. Further pursue
the management concept of "People-oriented, strict and
micro-management" to fully strengthen the "Three Foundations" work
of the Company. 4. Further strengthen the concept of risk control.
In conclusion, the Company plans to continue to pursue the
principles of "Unity, Determination and Contribution" which have
helped the Company move from loss-making to profitable, and shall
identify and seize opportunities to expand its business by removing
any obstacles ahead and by adopting active and flexible business
strategies, so that all annual production and operation targets of
this year could be achieved and good operating results could be
maintained to reward its shareholders. Jilin Chemical is one of the
largest producers of basic chemicals and chemical raw materials,
and one of the largest diversified chemical enterprises in the PRC.
Its primary business comprises the production of petroleum
products, petrochemical and organic chemical products, synthetic
rubber products, chemical fertilizers and other chemical products.
* In this statement, amounts in Renminbi have been converted into
United States dollars at the rate of US$1.00=RMB8.2765, as
announced by the People's Bank of China as of December 31, 2004.
Forward-looking Statements: This press release contains statements
of a forward-looking nature. These statements are made under the
"safe harbor" provisions of the U.S. Private Securities Litigation
Reform Act of 1995. You can identify these forward-looking
statements by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates", "shall" and
similar statements. The accuracy of these statements may be
impacted by a number of business risks and uncertainties that could
cause actual results to differ materially from those projected or
anticipated, including risks related to: the risk that the PRC
economy may not grow at the same rate in future periods as it has
in the last several years, or at all, including as a result of the
PRC government's macro-economic control measures to curb
over-heating; uncertainty as to global economic growth in future
periods; the risk that prices of the Company's raw materials,
particularly crude oil, will continue to increase; not be able to
raise its prices accordingly which would adversely affect the
Company's profitability; the risk that new marketing and sales
strategies and improvements to various management systems may not
be effective; the risk that the Company may not be able to improve
its safety or archive its often objectives for 2005; the risk that
fluctuations in demand for the Company's products may cause the
Company to either over-invest or under-invest in production
capacity in its major production categories; the risk that
investments in new technologies and development cycles may not
produce the benefits anticipated by management; the risk that the
trading price of the Company's shares may decrease for a variety of
reasons, some of which may be beyond the control of management;
competition in the Company's existing and potential markets; and
other risks outlined in the Company's filings with the U.S.
Securities and Exchange Commission. The Company does not undertake
any obligation to update this forward-looking information, except
as required under applicable law. Financial report Financial
Statements prepared under IFRS Consolidated Profit and Loss Account
For the year ended December 31, 2004 (Amounts in thousands except
for per share data) 2004 2003 Notes RMB RMB Turnover 1,7 31,857,423
20,652,809 Cost of sales (28,821,880) (19,125,842) Gross profit
3,035,543 1,526,967 Distribution costs (24,586) (29,338)
Administrative expenses (440,660) (574,051) Other operating
income/(expenses) 22,731 (28,260) Operating profit 2 2,593,028
895,318 Interest expense (270,071) (429,782) Interest income 1,753
1,531 Exchange loss (19,337) (37,153) Exchange gain 10,685 546
Share of profit of a jointly controlled entity 36,113 9,664 Share
of profit/(loss) of an associated company 4,397 (14,001) Profit
before taxation 2,356,568 426,123 Taxation 3 171,418 (270) Profit
before minority interests 2,527,986 425,853 Minority interests
16,524 1,756 Profit attributable to shareholders 4 2,544,510
427,609 Basic and diluted profit per share 5 RMB0.71 RMB0.12
Dividend 6 - - 1 Turnover Turnover represents revenues from the
sale of petroleum, petrochemical and chemical products. Analysis of
turnover by segment is shown in Note 7. 2 Operating Profit 2004
2003 RMB RMB Operating profit is arrived at after crediting and
charging the following items: Crediting Government grants and
subsidies - 502 Charging Amortization of intangible assets 110,086
101,642 Auditors' remuneration 3,500 4,250 Cost of inventories
(approximates cost of sales) recognized as expense 28,708,451
19,125,842 Depreciation on property, plant and equipment 1,037,192
930,365 Employee compensation costs (including directors' and
supervisors' emoluments) 747,770 625,700 Net (profit)/loss on
disposals of property, plant and equipment (26,412) 26,379
Operating lease rentals on land and buildings 7,680 10,501
Operating lease rentals on plant and machinery 27,733 2,463
Provision for impairment of property, plant and equipment (included
in "cost of sales") 7,220 - Provision for impairment of intangible
assets (included in "cost of sales") 6,698 - Provision for
impairment of receivables (included in "administrative expenses")
11,050 100,713 Provision for impairment of prepaid expenses and
other current assets (included in "other operating expenses") 1,372
- Inventory writedowns (included in "cost of sales") 77,544 12,856
Repair and maintenance 351,938 264,613 Research and development
expenditure 2,726 1,764 3 Taxation 2004 2003 RMB RMB PRC income tax
111,784 270 Deferred tax (283,202) - (171,418) 270 In accordance
with the relevant PRC income tax rules and regulations, the enacted
PRC income tax rate applicable to the Group is 33% (2003: 33%).
Certain subsidiaries and the jointly controlled entity are
Sino-foreign joint ventures and are entitled to certain tax
concessions available to foreign investment production enterprises
operating in the PRC. These tax concessions include a five-year tax
holiday under which these enterprises are exempt from income tax
for the first two years commencing from the first cumulative
profitable year of operation followed by a 50% reduction in the
income tax rate for three years thereafter. The tax on the Group's
profit before taxation differs from the theoretical amount that
would arise using the basic tax rate in the PRC applicable to the
Group as follows: 2004 2003 RMB RMB Profit before taxation
2,356,568 426,123 Tax calculated at a rate of 33% 777,667 140,621
Utilization and recognition of previously unrecognized deferred tax
assets (899,719) (133,827) Approved income tax deduction relating
to capital expenditures (65,561) - Other 16,195 (6,524) Tax expense
(171,418) 270 4 Profit Attributable to Shareholders The profit
attributable to shareholders is dealt with in the financial
statements of the Company to the extent of RMB2,553,194 for the
year ended December 31, 2004 (2003: RMB435,484). 5 Basic and
Diluted Profit per Share Basic and diluted profit per share for the
year ended December 31, 2004 have been computed by dividing net
profit for the year by the weighted average number of 3,561,078,000
(2003: 3,561,078,000) shares issued and outstanding for the year.
There are no dilutive potential ordinary shares. 6 Dividend No
dividend was declared in respect of 2003 and 2004. 7 Segment
Information Petrochemical Chemical and fertilizers organic and
Synthetic Other Total Year ended Petroleum chemical inorganic
rubber products RMB December 31, products products chemicals
products and RMB RMB RMB RMB services RMB Profit and loss Sales
(including inter- segment) 18,079,875 13,550,409 664,246 1,793,689
3,666,195 37,754,414 Less: Inter- segment sales (4,702,040)
(782,150) - - (412,801)(5,896,991) Total sales to external
customers 13,377,835 12,768,259 664,246 1,793,689 3,253,394
31,857,423 Segment results (475,328) 2,939,339 (80,353) 317,016
(107,646) 2,593,028 Finance costs' net - - - - - (276,970) Share of
profit of a jointly controlled entity - 36,113 - - - 36,113 Share
of profit of an associated company - - - - 4,397 4,397 Profit
before taxation 2,356,568 Taxation 171,418 Minority interests
16,524 Net profit 2,544,510 Depreciation and amorti- zation 549,867
377,907 29,290 58,087 132,127 1,147,278 Impairment of property,
plant and equipment - - 4,680 - 2,540 7,220 Impairment of
intangible assets - 6,698 - - - 6,698 Impairment of current assets
(receivables and inventories) 89,966 Assets and liabilities Segment
assets 1,844,441 9,175,528 561,825 991,418 638,643 13,211,855
Interests in a jointly controlled entity - 89,835 - - - 89,835
Investment in an associated company - - - - 9,305 9,305 Deferred
income tax assets 283,202 Total assets 13,594,197 Segment cur- rent
liabil- ities 594,431 3,054,582 552,913 130,489 210,350 4,542,765
Borrowings 3,982,090 Total liabil- ities 8,524,855 Segment cap-
ital expen- diture on property, plant and equipment and on
intangible assets 263,201 189,023 11,462 65,136 13,219 542,041 For
further information, please contact: Jilin Chemical Industrial
Company Limited Tel: (86) 432-390 3651 Mr. Li Chunqing Fax: (86)
432-302 8126 E-mail: Fortune China Public Relations Ltd. Tel: (852)
2838 1162 Ms. Gladys Lee Fax: (852) 2834 5109 E-mail: DATASOURCE:
Jilin Chemical Industrial Company Limited CONTACT: Mr. Li Chunqing
of Jilin Chemical Industrial Company Limited, +86-432-390-3651, Fax
- +86-432-302-8126, ; or Ms. Gladys Lee of Fortune China Public
Relations Ltd., Tel: +852-2838-1162, Fax - +852-2834-5109, , for
Jilin Chemical Industrial Company Limited
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