Jilin Chemical Industrial Company Limited Announces 2003 Annual
Results HONG KONG, April 20 /PRNewswire-FirstCall/ -- Jilin
Chemical Industrial Company Limited (HKSE: 0368, NYSE: JCC) (the
"Company") held the first Extraordinary General Meeting for 2004,
at which Yu Li, Shi Jianxun, Zhang Xingfu, XuFengli, Lan Yunsheng,
Ni Muhua, Jiang Jixiang, L� Yanfeng, Wang Peirong, Zhou Henglong
and Fanny Li were elected as directors of the 4th Board of
Directors of the Company,(the "Board") for a term of three years
with effect from April 20,2004; Zou Haifeng, Yang Jigang, Yan
Weidong and Li Shumin were elected as the supervisors
(representatives of shareholders) of the 4th Board of Supervisors
of the company. Wang Huaiqing was democratically elected by the
company's employees as the employee's representative in the Board
of Supervisors. The above supervisors were elected for a term three
years with effect from April 20,2004. The Company held the board
meeting on April 20, 2004, at which Mr. Yu Li was elected as
chairman of the Board, Mr. Xu Fengli was elected as deputy chairman
of the Board and the Company announced its audited results for the
year ended December 31, 2003, based on the financial statements
prepared in accordance with International Financial Reporting
Standards (IFRS). Turnover for 2003 was RMB20.7 billion
(approximately US$2.5 billion), representing an increase of 57.2%
as compared with 2002. The Company generated a net profit of
RMB427.6 million (approximately US$51.5 million) compared with net
loss of RMB1.02 billion in 2002. Earnings per share in 2003 was
RMB0.12 compared with loss per share of RMB0.29 in 2002. The Board
has resolved not to declare any final dividend for the year ended
December 31, 2003. Having suffered a loss for three consecutive
years coupled with intensifying competition in the market, the
Company adopted the following strong and effective measures in 2003
to achieve a turnaround from loss making to profitability: 1.
Closely pursue an overall approach of large production scale,
ongoing product improvement and large economies of scale; fully
devote efforts to the improvement of facilities and technologies
that are used in production operation; strengthen control over the
inspection, analysis and production process; and explore in depth
the possibilities of increasing efficiency, saving energy
consumption and reducing wastage in order to ensure that the
Company's production facilities operate at a full utilization rate.
In 2003, the production facilities were in stable operation with a
utilization rate of 99.6%. Production fluctuation and unexpected
suspension of production decreased by 63% as compared with 2002. 2.
Strengthen financial management on a unified basis through strict
controls over capital expenditure and to repay interest-bearing
liabilities to the greatest extent possible, so that the capital of
the Company can be used more effectively and efficiently. In 2003,
interest-bearing liabilities of the Company decreased by
RMB2,853.59 million with a turnover of working capital of 8.6
times. Substantial increase in cash flow has enhanced the financial
situation of the Company. 3. Strengthen materials management and
increase the ability to use bidding for materials procurement;
strengthen overall monitoring and auditing with the aim of reducing
procurement costs. 4. Strengthen business and sales management by
pursuing the business concept where "sales shall be dependent on
profitability; production shall be dependent on sales; sales to
immediately follow production and sales to ensure profitability";
on all aspects of storage, transportation and sales; being
market-oriented; hold seminars for customers on a timely basis for
the promotion and marketing of our products. As a result, the
Company was able to achieve 100% for both its production/sales
ratio and payment recovery rate. 5. Further implement the "Code of
Conduct for Staff" to strictly train and regulate staff to act
professionally and in compliance with such code. The Company
further reformed the system of division of labour, fully
implemented the "Procedures on the Management of Responsibilities
for Risks", offered incentives and rewards for outstanding staff,
and established an effective mechanism to ensure competitiveness
and further improve supervision of staff. As a result, the Company
was able to quicken its pace of development and increase its
dynamism. In 2004, the Company will engage in strict management,
improve its overall regulatory standards and continue to improve
profitability. In the year to come, the Board expects that
international oil prices will fluctuate within a high price range.
The domestic market for petroleum and chemical products will
further develop in line with the international market. It is
anticipated that market competition will intensify. The costs of
energy, raw materials and transportation in China will increase and
rail transportation will come under pressure. All these factors
will make it more difficult for the Company to maintain a balance
over its resources and control over its production operation and
costs. In this regard, the Company will seize the opportunity
provided by the Central Government's support to speed up the pace
of restructuring and renovate old industrial production facilities
in north- eastern China; expand technological development;
implement strict staff management and increase productivity.
Moreover, the Company will formulate new strategies and management
methods for its business and sales operations so that there can be
breakthroughs in all aspects of the operations of the Company. In
2004, the Company expects the crude oil processed by it to reach
more than 5.8 million tons and the production capacity of its major
products to increase based on the solid foundation created in 2003.
The Company expects its production facilities to have a utilization
rate of over 99%. In addition, it is anticipated that the Company
will achieve 100% for both its production/sales ratio and payment
recovery rate. The above proposal will be presented to the
Company's shareholders for approval at the 2003 Annual General
Meeting to be held on June 17, 2004. Jilin Chemical is one of the
largest producers of basic chemicals and chemical raw materials,
and one of the largest integrated 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=RMB8.2767, as
announced by the People's Bank of China as of December 31, 2003.
Financial report A Financial Statements prepared under IFRS (The
Group's and the Company's accounts prepared under IFRS have been
audited by PricewaterhouseCoopers) Consolidated Profit and Loss
Account For the year ended December 31, 2003 (Amounts in thousand
except for per share data) 2003 2002 Notes RMB RMB Turnover 1, 7
20,652,809 13,138,387 Cost of sales (19,125,842) (12,518,955) Gross
profit 1,526,967 619,432 Distribution costs (29,338) (34,933)
Administrative expenses (574,051) (797,434) Shut down of
manufacturing assets - (283,418) Other operating expenses (28,260)
(9,683) Operating profit/(loss) 2 895,318 (506,036) Interest
expense (429,782) (474,370) Interest income 1,531 1,364 Exchange
loss (37,153) (48,725) Exchange gain 546 7,675 Share of
profit/(loss) of jointly controlled entities 9,664 (7,671) Share of
(loss)/profit of an associated company (14,001) 125 Profit/(Loss)
before taxation 426,123 (1,027,638) Taxation 3 (270) (1,116)
Profit/(Loss) before minority interests 425,853 (1,028,754)
Minority interests 1,756 5,655 Profit/(Loss) attributable to
shareholders 4 427,609 (1,023,099) Basic and diluted profit/(loss)
per share 5 RMB0.12 (RMB0.29) 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 below. 2. Operating Profit/(Loss) 2003 2002 RMB RMB Operating
profit/(loss) is arrived at after crediting and charging the
following items: Crediting Government grants and subsidies 502 -
Charging Amortisation of intangible assets (included in
"administrative expenses") 101,642 79,980 Auditors' remuneration
4,250 3,000 Cost of inventories (approximates cost of sales)
recognised as expense 19,125,842 12,518,955 Depreciation on
property, plant and equipment 930,365 1,028,542 Writedown of
carrying value of property, plant and equipment (included in
"administrative expenses") - 323,844 Employee compensation costs
(including directors' and supervisors' emoluments) 625,700 517,360
Shut down of manufacturing assets - 283,418 Net loss/(profit) on
disposals of property, plant and equipment 26,379 (3,876) Operating
lease rentals on land and buildings 10,501 9,453 Operating lease
rentals on plant and machinery 2,463 - Provision for impairment of
receivables (included in "administrative expenses") 100,713 -
Provision for impairment of prepaid expenses and other current
assets (included in "administrative expenses") - 51,484 Provision
for diminution in value of inventories and inventory writedowns
12,856 139,985 Repair and maintenance 264,613 560,010 Research and
development expenditure 1,764 3,927 3 Taxation 2003 2002 RMB RMB
PRC income tax 270 352 Share of tax of jointly controlled entities
- 767 270 1,116 In accordance with the relevant PRC income tax
rules and regulations, the enacted PRC income tax rate applicable
to the Group is 33% (2002: 33%). Certain subsidiaries and jointly
controlled entities are Sino-foreign joint ventures and are
entitled to cert 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: 2003
2002 RMB RMB Profit/(Loss) before taxation 426,123 (1,027,638) Tax
calculated at a rate of 33% 140,621 (339,121) (Utilisation of
previously unrecognised deferred tax assets)/ unrecognised deferred
tax assets (133,827) 345,141 Other (6,524) (4,904) Tax expense 270
1,116 4 Profit/(Loss) Attributable to Shareholders The profit
attributable to shareholders is dealt with in the financial
statements of the Company to the extent of RMB435,484 for the year
ended December 31, 2003 (2002: Loss of RMB976,198). 5 Basic and
Diluted Profit/(Loss) Per Share Basic and diluted profit per share
for the year ended December 31, 2003 have been computed by dividing
net profit for the year by the weighted average number of
3,561,078,000 (2002: 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 2002 and 2003. 7
Segment Information Petrochemical Chemical Year ended and organic
fertilisers December 31, Petroleum chemical and inorganic 2003
products products chemicals RMB RMB RMB Profit and loss Sales
(including intersegment) 12,906,594 8,595,891 - Less: Intersegment
sales (3,586,528) (812,800) - Total sales to external customers
9,320,066 7,783,091 164,861 Segment results 37,344 721,791
(121,754) Finance costs - net Share of profit of a jointly
controlled entity - 9,664 - Share of loss of an associated company
- - - Profit before taxation Taxation Minority interests Net profit
Depreciation and amortisation 494,535 362,532 9,671 Impairment
charge of current assets (receivables and inventories) Assets and
liabilities Segment assets 2,503,467 7,700,372 848,240 Interests in
a jointly controlled entity - 53,722 - Investment in an associated
company - - - Total assets 2,503,467 7,754,094 848,240 Segment
current liabilities 501,931 2,387,753 454,000 Borrowings Total
liabilities Segment capital expenditure on property, plant and
equipment and on intangible assets 35,042 179,145 179,071 Year
ended Synthetic Other December 31, rubber products 2003 products
and services Total RMB RMB RMB Profit and loss Sales (including
intersegment) 1,133,031 2,560,499 25,360,876 Less: Intersegment
sales - (308,739) (4,708,067) Total sales to external customers
1,133,031 2,251,760 20,652,809 Segment results 356,048 (98,111)
895,318 Finance costs - net (464,858) Share of profit of a jointly
controlled entity - - 9,664 Share of loss of an associated company
- (14,001) (14,001) Profit before taxation 426,123 Taxation (270)
Minority interests 1,756 Net profit 427,609 Depreciation and
amortisation 40,855 124,414 1,032,007 Impairment charge of current
assets (receivables and inventories) 113,569 Assets and liabilities
Segment assets 755,820 799,060 12,606,959 Interests in a jointly
controlled entity - - 53,722 Investment in an associated company -
4,908 4,908 Total assets 755,820 803,968 12,665,589 Segment current
liabilities 95,190 175,462 3,614,336 Borrowings 6,509,897 Total
liabilities 10,124,233 Segment capital expenditure on property,
plant and equipment and on intangible assets 75,241 18,355 486,854
SIGNIFICANT DIFFERENCES BETWEEN IFRS AND ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA ("US GAAP") For
the year ended December 31, 2003 (Amounts in thousands unless
otherwise stated) Effect of significant differences between IFRS
and US GAAP on net profit/(loss) and shareholders' equity is
summarised below: Net profit/(loss) Year ended December 31, 2003
2002 2003 2002 RMB RMB US$ US$ Net profit/(loss) under IFRS 427,609
(1,023,099) 51,664 (123,612) US GAAP adjustments: -- Depreciation
charge on fixed asset revaluation surplus on Restructuring and at
February 28, 1995 11,223 3,593 1,356 434 -- Reduction in loss on
write-off of fixed assets - 2526 - 305 -- Reversal of writedown in
carrying amount (net of minority interests) of fixed assets and
provision for fixed assets impairment (42,700) 322,240 (5,159)
38,933 -- Depreciation charge on writedown in carrying amount (net
of minority interests) of fixed assets and provision for fixed
assets impairment (27,954) - (3377) - -- Depreciation charge on
foreign currency translation difference on interest components
capitalised in fixed assets 1,531 1,531 185 185 -- Depreciation
charge on fixed assets revaluation surplus of Jilin - 7630 - 922
Net profit/(loss) under US GAAP 369,709 (685,579) 44,669 (82,833)
Basic and diluted net profit/(loss) per share RMB0.10 (RMB0.19)
US$0.01 (US$0.02) Shareholders' equity As at December 31, 2003 2002
2003 2002 RMB RMB US$ US$ Shareholders' equity as reported under
IFRS 2,510,556 2,082,947 303,328 251,664 US GAAP adjustments: --
Fixed asset revaluation on Restructuring and at February 28, 1995
(744,007) (744,007) (89,892) (89,892) -- Deferred tax asset on
fixed asset revaluation surplus on Restructuring 235,941 235,941
28,507 28,507 -- Depreciation charge on fixed assets due to
revaluation on Restructuring and at February 28, 1995 665,461
591,426 80,402 71,457 -- Reversal of deferred tax liability on
fixed asset revaluation surplus at February 28, 1995 9,580 9,580
1,157 1,157 -- Reduction in loss on write-off of fixed assets
11,532 11,532 1,393 1,393 -- Reversal of writedown in carrying
amount (net of minority interests) of fixed assets and provision
for fixed assets impairment 279,540 322,240 33,774 38,933 --
Depreciation on writedown in carrying amount (net of minority
interests) of fixed assets and provision for fixed assets
impairment (27,954) - (3377) - -- Foreign currency translation
difference on interest components capitalised in fixed assets
(30,616) (30,616) (3,699) (3,699) -- Depreciation charge on foreign
currency translation difference on interest components capitalised
in fixed assets 10,717 9,186 1,295 1,110 -- Gain on transfer of
fixed assets to Jilin (65,320) (65,320) (7,892) (7,892) --
Depreciation charge on fixed asset revaluation surplus of Jilin -
62812 - 7589 -- Tax adjustment (245,521) (245,521) (29,664)
(29,664) Shareholders' equity as reported under US GAAP 2,609,909
2,240,200 315,332 270,663 Amounts in RMB have been converted into
United States dollars at the respective rates of US$1.00: RMB8.2767
announced by the People's Bank of China as at December 31, 2003. No
representation is made that the RMB amounts could have been or
could be converted into US dollars at that rate. 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. Mabel Tai 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. Mabel Tai of Fortune China Public
Relations Ltd., +1-852-2838-1162, fax, +1-852-2834 5109,
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