(A JOINT STOCK LIMITED COMPANY INCORPORATED IN THE
PEOPLE'S REPUBLIC OF CHINA WITH LIMITED LIABILITY)
(STOCK CODE: 0368)
ANNOUNCEMENT
ANNUAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2004
FINANCIAL HIGHLIGHTS (UNDER IFRS)
o Turnover increased to RMB31,857.42 million in 2004 from RMB20,652.81
million in 2003
o Net profit increased to RMB2,544.51 million in 2004 from RMB427.61 million
in 2003
o Earnings per share in 2004 increased to RMB0.71 per share from RMB0.12 in
2003
The board of directors (the "Board") of Jilin Chemical Industrial Company
Limited (the "Company") is pleased to announce the audited consolidated results
and financial position of the Company and its subsidiaries (the "Group") for the
year ended December 31, 2004:
IMPORTANT NOTICE
The Board collectively and individually accepts full responsibility for the
authenticity, accuracy and completeness of the information contained in the
announcement and believes that there are no material omissions from, or
misrepresentations or misleading statements contained in, the announcement.
The Company's directors Xu Fengli, Shi Jianxun, Ni Muhua and Lan Yunsheng did
not attend the board meeting. Directors Xu Fengli, Shi Jianxun, Ni Muhua and Lan
Yunsheng appointed Chairman Yu Li to attend and vote on their behalf in respect
of the resolutions considered at the meeting.
The Company's Chairman Yu Li, deputy chief financial officer Zhang Liyan and
head of the finance department Liao Hongwei accept full responsibility for the
truthfulness and completeness of the financial statements contained in this
announcement.
PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
ITEMS
RMB THOUSANDS EXCEPT FOR PER SHARE DATA 2004 2003 2002 2001 2000
For the year ended December 31
Turnover 31,857,423 20,652,809 13,138,387 12,518,532 13,396,247
Profit/(Loss) before tax 2,356,568 426,123 (1,027,638) (1,815,134) (877,343)
Net profit/(loss) 2,544,510 427,609 (1,023,099) (1,817,369) (835,990)
Earnings/(Loss) per share RMB0.71 RMB0.12 (RMB0.29) (RMB0.51) (RMB0.24)
As at December 31
Total assets 13,594,197 12,665,589 13,665,141 13,829,838 17,973,843
Shareholders' equity 5,055,066 2,510,556 2,082,947 3,106,046 5,873,895
Net assets per share RMB1.42 RMB0.70 RMB0.58 RMB0.87 RMB1.65
PREPARED IN ACCORDANCE WITH PRC GAAP
ITEMS
RMB THOUSANDS EXCEPT FOR PER SHARE DATA 2004 2003 2002
For the year ended December 31
Turnover from principal operations 27,902,787 19,064,872 12,319,139
Net profit/(loss) 2,573,760 423,995 (1,025,733)
Profit/(Loss) per share (fully diluted) RMB0.72 RMB0.12 (RMB0.29)
Profit/(Loss) per share (weighted average) RMB0.72 RMB0.12 (RMB0.29)
Net cash inflows from operating activities per share RMB0.95 RMB1.12 RMB0.52
Return on net assets (fully diluted) 43.97% 12.93% (35.92%)
Return on net assets (weighted average) 56.36% 13.82% (30.45%)
As at December 31
Total assets 14,392,756 13,434,898 14,336,231
Shareholders' equity (excluding minority interests) 5,853,624 3,279,864 2,855,869
Net assets per share RMB1.64 RMB0.92 RMB0.80
Adjusted net assets per share RMB1.61 RMB0.86 RMB0.76
NOTES:
1. The shares outstanding as at December 31, 2004, 2003 and 2002 were
3,561,078,000 shares, 3,561,078,000 shares, and 3,561,078,000 shares,
respectively.
2. The weighted average number of shares for 2004, 2003 and 2002 was
3,561,078,000 shares, 3,561,078,000 shares, and 3,561,078,000 shares,
respectively.
THE DIFFERENCES UNDER PRC GAAP AND IFRS
Effect of significant differences between PRC GAAP and IFRS on net profit is
summarized below:
NET PROFIT
RMB THOUSANDS
YEAR ENDED DECEMBER 31,
2004 2003
RMB RMB
Net profit as reported under PRC GAAP 2,573,760 423,995
Adjustments to conform with IFRS:
- - Depreciation expense due to revaluation
of fixed assets at February 28, 1995 (1,452) (1,452)
- - Depreciation expense on fixed assets due to
difference in exchange gains capitalized (7,311) (7,311)
- - Amortization of housing subsidy cost (9,319) (9,319)
- - Reversal of Amortization of land use rights 21,211 21,696
- - Tax adjustment (32,379) --
Net profit as reported under IFRS 2,544,510 427,609
CHANGES IN SHARE CAPITAL STRUCTURE AND SUBSTANTIAL SHAREHOLDERS
CHANGES IN SHARE CAPITAL STRUCTURE
FOR THE YEAR ENDED DECEMBER 31, 2004
UNIT: '000 SHARES PAR VALUE: RMB1.00
INCREASE/(DECREASE) DURING 2004
AS AT TRANSFERRED AS AT
JANUARY 1, SHARE FROM ADDITIONAL DECEMBER
2004 PLACING BONUS PREMIUM ISSUE OTHERS SUBTOTAL 31, 2004
1. Unlisted shares
Promoter shares of which: 2,396,300 -- -- -- -- -- -- 2,396,300
State-owned shares 2,396,300 -- -- -- -- -- -- 2,396,300
Domestic legal person shares -- -- -- -- -- -- -- --
Foreign legal person shares -- -- -- -- -- -- -- --
Others -- -- -- -- -- -- -- --
Subscribed legal person shares -- -- -- -- -- -- -- --
Employees' shares -- -- -- -- -- -- -- --
Preference shares and others of which:
Transferred or placed shares -- -- -- -- -- -- -- --
Total unlisted shares 2,396,300 -- -- -- -- -- -- 2,396,300
2. Listed shares
Domestic listed RMB ordinary 200,000 -- -- -- -- -- -- 200,000
shares of which:
Held by senior management 17.65 -- -- -- -- -- -- 17.65
Domestic listed foreign shares -- -- -- -- -- -- -- --
Overseas listed foreign shares 964,778 -- -- -- -- -- -- 964,778
Others -- -- -- -- -- -- -- --
Total listed shares 1,164,778 -- -- -- -- -- -- 1,164,778
3. Total number of shares 3,561,078 -- -- -- -- -- -- 3,561,078
SUBSTANTIAL SHAREHOLDERS OF UNLISTED SHARES AND LISTED SHARES
As at December 31, 2004, the ten largest shareholders of the Company were as
follows:
INCREASE/
(DECREASE)
SINCE
NUMBER OF DECEMBER 31, PERCENTAGE
NAME OF SHAREHOLDERS CLASS SHARES HELD 2003 OF HOLDING
(SHARES) (SHARES) (%)
1. PetroChina Company Limited (holder A shares 2,396,300,000 -- 67.2914
of state-owned legal person shares)*
2. HKSCC Nominees Limited H shares 819,844,699 7,524,000 23.0224
3. HSBC Nominees(Hong Kong) Limited H shares 135,627,300 340,000 3.8086
4. Bank of China-Tong Sheng Securities A shares 1,945,697 1,945,697 0.0546
Investment Funds
5. Industrial and Commercial Bank of A shares 1,628,262 1,628,262 0.0457
China-Buo Shi Shares and Securities
Investment Funds
6. Tong De Securities Investment Funds A shares 1,495,641 1,495,641 0.0420
7. Zhang Li A shares 1,470,000 1,470,000 0.0413
8. Qiao Liang A shares 1,450,000 1,450,000 0.0407
9. Qiao Hong A shares 990,000 990,000 0.0278
10. Qiu Mingsheng A shares 893,570 893,570 0.0251
<FN>
NOTES:
1. No relationship was found among the ten largest shareholders of unlisted
and listed shares of the Company.
2. The Company's shares held by PetroChina Company Limited ("PetroChina") are
unlisted shares, the rest of the shares of the Company are listed shares.
3. The legal representative of PetroChina is Mr. Chen Geng. PetroChina was
established on November 5, 1999 and has a registered capital of
RMB175,824,176,000. The total share capital of PetroChina is
175,824,176,000 shares, of which state-owned shares amounted to
158,241,758,000 shares and foreign invested shares (H shares and ADSs)
amounted to 17,582,418,000 shares, representing 90% and 10% of the
aggregate shares in issue, respectively. PetroChina's principal businesses
consist of the exploration and production of crude oil and natural gas,
crude oil refining, pipeline transportation and the production and sale of
petrochemical products and natural gas products. No shares of the Company
held by PetroChina were pledged in 2004.
</FN>
China National Petroleum Corporation ("CNPC") is the controlling shareholder of
PetroChina, holding 90% of the total share capital of PetroChina. CNPC was
established in July 1998 with a registered capital of RMB114.9 billion. Mr. Chen
Geng is the legal representative of CNPC. The business scope of CNPC consists of
exploration, production and sale of crude oil and natural gas, the production
and sale of petroleum and petrochemical products, the transmission of natural
gas, the construction of international and domestic petroleum projects, and the
import and export of petroleum technology.
The above shareholders' interests as at December 31, 2004 had been recorded in
the register of the Company kept pursuant to Section 336 of the Securities and
Futures Ordinance.
As at December 31, 2004, there were no shareholders for whom HKSCC Nominees
Limited and HSBC Nominees (Hong Kong) Limited acted as agents, whose
shareholding accounted for more than 5% of the total number of issued shares of
the Company.
SUBSTANTIAL SHAREHOLDERS OF LISTED SHARES
As at December 31, 2004, the ten largest shareholders of listed shares of the
Company were as follows:
NAME OF SHAREHOLDERS CLASS NUMBER OF
SHARES HELD
(SHARES)
1. HKSCC Nominees Limited H shares 819,844,699
2. HSBC Nominees(Hong Kong) Limited H shares 135,627,300
3. Bank of China-Tong Sheng
Securities Investment Funds A shares 1,945,697
4. Industrial and Commercial
Bank of China-Buo Shi Shares
and Securities Investment Funds A shares 1,628,262
5. Tong De Securities Investment Funds A shares 1,495,641
6. Zhang Li A shares 1,470,000
7. Qiao Liang A shares 1,450,000
8. Qiao Hong A shares 990,000
9. Qiu Mingsheng A shares 893,570
10. Zhao Ying A shares 880,000
NOTE:No relationship was found among the ten largest shareholders of listed
shares of the Company, nor was concert action which falls under the
description of the "Administration of Disclosure of Information on the
Change of Shareholdings in Listed Companies Procedures" found. Neither is
the Company aware of any relationship between the ten largest shareholders
of listed shares of the Company and the ten largest shareholders or that
they are parties to any concert action.
CHANGE OF CONTROLLING SHAREHOLDER
During the reporting period, there was no change in the controlling shareholder
of the Company.
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
1. According to the articles of association of the Company, the remuneration
of directors and supervisors of the Company is paid pursuant to the
relevant regulations of wages and bonuses of the Company and within the
scope approved by the shareholders in general meeting. Currently, the
Company has not administered annual remuneration packages for its senior
management. Members of senior management of the Company are paid according
to the regulations relating to wages and bonuses of the Company.
2. Each of the executive directors and supervisors of the Company has entered
into a service agreement for an initial term of three years.
3. The total remuneration paid to the directors, supervisors and senior
management of the Company in 2004 amounted to RMB530,888, RMB232,701 and
RMB292,740, respectively. Total remuneration paid to the top three senior
managers amounted to RMB292,740, and the total remuneration paid to the top
three directors amounted to RMB450,888. The remuneration paid to the
independent directors amounted to RMB80,000. Among the total remuneration
paid to directors, supervisors and senior management of the Company, three
persons were paid between RMB200,000 to RMB250,000, two persons were paid
between RMB100,000 to RMB200,000, and five persons were paid under
RMB100,000.
4. Directors Yu Li, Xu Fengli, Lan Yunsheng, Ni Muhua and Jiang Jixiang,
supervisors Zou Haifeng, Yang Jigang and Li Shumin were paid by the
controlling shareholder of the Company.
SHAREHOLDING OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT IN THE COMPANY AS
AT DECEMBER 31, 2004
NUMBER OF NUMBER OF
SHARES AS AT SHARES AS AT
JANUARY 1, DECEMBER 31,
NAME POSITION SEX AGE 2004 2004
(SHARE) (SHARE) SERVICE TERM
Yu Li Chairman male 45 0 0 2004.4.20-2007.4.19
Xu Fengli Deputy chairman male 58 0 0 2004.4.20-2007.4.19
Shi Jianxun Director male 60 3,550 3,550 2004.4.20-2007.4.19
Zhang Xingfu Director male 52 0 0 2004.4.20-2007.4.19
Lan Yunsheng Director male 47 0 0 2004.4.20-2007.4.19
Ni Muhua Director male 54 3,550 3,550 2004.4.20-2007.4.19
Jiang Jixiang Director male 52 0 0 2004.4.20-2007.4.19
LY Yanfeng Independent director male 45 0 0 2004.4.20-2007.4.19
Wang Peirong Independent director male 49 0 0 2004.4.20-2007.4.19
Fanny Li Independent director female 43 0 0 2004.4.20-2007.4.19
Zhou Henglong Independent director male 43 0 0 2004.4.20-2007.4.19
Zou Haifeng Chairman of the Board male 59 3,550 3,550 2004.4.20-2007.4.19
of Supervisors
Yang Jigang Supervisor male 42 0 0 2004.4.20-2007.4.19
Yan Weidong Supervisor male 58 0 0 2004.4.20-2007.4.19
Li Shumin Supervisor male 55 7,000 7,000 2004.4.20-2007.4.19
Wang Huaiqing Supervisor male 48 0 0 2004.4.20-2007.4.19
Li Chongjie Deputy general manager male 42 0 0
Zhang Liyan Company secretary female 54 0 0
THE COMPANY'S CORPORATE GOVERNANCE STRUCTURE
INDEPENDENT DIRECTORS AND THEIR DUTIES
The Company established an independent directors system according to the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
and Standards of Corporate Governance of Listed Companies. At present, the Board
of the Company has four independent directors, each of them is familiar with the
Company's business and operating status. They have carried out their duties
faithfully, participated personally (or through authorization) in board meetings
and rendered their independent advice.
During 2004, the independent directors considered and approved the connected
transactions conducted in the first half of 2004 and the year of 2004. The audit
committee comprising the independent directors of the Company held a meeting at
which the audit report for 2004 was considered and the views of the independent
directors were submitted to the Board.
AUDIT COMMITTEE
The audit committee and senior management of the Company considered the
accounting principles used by the Group and discussed in detail matters relating
to audit, internal supervisory control and financial statements, including the
annual report for 2004.
DIRECTORS' REPORT
SCOPE AND RESULTS OF OPERATIONS OF PRINCIPAL BUSINESS ACTIVITIES
I. RESULTS OF OPERATIONS
The Group is principally engaged in the production and sale of petroleum
products, petrochemical and organic chemical products and synthetic rubber,
with its major operations carried out in the PRC and all of its products
are sold domestically.
The Company continued to achieve a growth in profits for the year 2004,
with its approach focusing on "People-oriented, strict and micro
management", as well as improvement of standards in all aspects. During the
year, by taking full advantage of the policies for promoting established
industrial production facilities in north-eastern China and an increase in
the prices of petrochemical products, the Company, based on the principles
of ensuring work safety, "People-oriented, strict and micro management",
pragmaticism and hard work, achieved a historical high in its operating
results and stepped into a new phase in achieving a continual growth in
profits.
For the year ended December 31, 2004, under PRC GAAP, the Group recorded
sales revenue from its principal operations of RMB27,902.79 million,
representing an increase of 46.4% as compared to 2003, and a net profit of
RMB2,573.76 million, representing an increase of 507% as compared to 2003.
Under IFRS, the Group recorded a turnover from its principal operations of
RMB31,857.42 million, representing an increase of 54% as compared to 2003,
and a net profit of RMB2,544.51 million, representing an increase of 495%
as compared to 2003.
Under PRC GAAP, during the year 2004, products which accounted for over 10%
of the Group's total sales revenue from its principal operations included:
petroleum products achieved sales revenues of RMB14,076.50 million
(representing 50.4% of the Group's total sales revenue from its principal
operations), cost of goods sold was RMB13,754.34 million and the gross
profit margin was 2%; petrochemical and organic chemical products achieved
sales revenues of RMB11,743.84 million (representing 42.1% of the Group's
sales revenues from its principal operations), cost of goods sold was
RMB8,325.20 million and the gross profit margin was 29.1%.
II. DISCUSSION AND ANALYSIS OF THE GROUP'S OVERALL OPERATIONS (UNDER PRC GAAP)
In 2004, the Group's sales revenues from its principal operations increased
by RMB8,837.92 million to RMB27,902.79 million as compared to 2003, of
which sales revenue of petroleum products increased by RMB4,128.33 million,
sales revenue of petrochemical and organic chemical products increased by
RMB3,929.56 million and sales revenue of synthetic rubber products
increased by RMB279.85 million.
1. Sales revenue of petroleum products increased by 41.5% from
RMB9,948.17 million in 2003 to RMB14,076.50 million in 2004. The
increase in sales revenue was mainly attributable to the following
reasons:
(1) the processing volume of crude oil of the Company increased by
13.3% from 5.66 million tons in 2003 to 6.41 million tons in
2004;
(2) the sales volume of diesel oil of the Company grew by 29.9% from
2.11 million tons in 2003 to 2.74 million tons in 2004;
(3) the sales volume of petroleum products stood at 5.47 million tons
and the weighted average selling price of such products was
RMB2,574 per ton, representing an increase of 24.9% and 13.4%,
respectively, as compared to the previous year.
2. Sales revenue of petrochemical and organic chemical products increased
by 50.3% from RMB7,814.27 million in 2003 to RMB11,743.83 million in
2004. The increase in sales revenue was mainly due to the rising
international crude oil price and the increased demand for
petrochemical products in the domestic market. As a result, the market
price of domestic petrochemical products increased substantially. The
weighted average selling price and the sales volume of such products
increased by 47.3% and 2%, respectively, as compared to the previous
year.
3. Sales revenue of synthetic rubber products increased by 24.6% from
RMB1,136.99 million in 2003 to RMB1,416.84 million in 2004. The
increase in turnover was mainly attributable to the growth in the
weighted average selling price of such products by 22.2%, as compared
to the previous year.
In 2004, the finance cost of the Group decreased by RMB187.58 million from
RMB464.99 million in 2003 to RMB277.41 million in 2004, of which interest
expense decreased by 37.2% from RMB429.78 million in 2003 to RMB270.07
million in 2004. The decrease was mainly due to the refinancing of higher
interest rate loans with lower interest rate loans and the reduction of
interest-bearing liabilities. The Group's net exchange loss was RMB8.65
million, as compared to a net exchange loss of RMB36.61 million in 2003.
The reduction of RMB27.96 million in net exchange loss was mainly due to
the changes in exchange rates of the Group's foreign currency loans during
the reporting period.
The Group recorded an investment income of RMB40.51 million in 2004 as
compared to an investment loss of RMB4.34 million in 2003. The increase was
primarily attributable to the profits generated by its jointly controlled
entity and associated company. The net non-operating expenses reduced by
RMB31.87 million to RMB8.38 million, as compared to 2003, and the reduction
was primarily attributable to the increase of gain on disposal of fixed
assets during the year.
In 2004, the Group was subject to an income tax of RMB177.35 million
payable under PRC GAAP. In accordance with the requirement of the "Notice
Regarding Tax Credits for Enterprise Income Tax Available to Technology
Upgrade of Equipment manufactured in the PRC", the Company was subject to a
reduced income tax for the purchase of PRC-manufactured equipment in the
amount of RMB65.56 million. According to the tax effect accounting method,
deferred tax assets recognized from provisions made for impairment of
assets and the retirement of assets amounted to RMB435.20 million while
accelerated depreciation and deferred tax liabilities recognized from
amortization totaled RMB119.62 million. As a result, the deferred income
tax credit so recognized and the net total annual income tax credit
amounted to RMB315.58 million and RMB203.80 million, respectively.
In 2004, minority interests of the Group were RMB16.52 million, as compared
to RMB1.76 million in 2003. The increase was mainly due to the loss
suffered by its subsidiaries.
Based on the aforesaid, the net profit of the Group increased by
RMB2,149.77 million to RMB2,573.76 million in 2004, as compared to 2003.
III. PROBLEMS EXPERIENCED IN BUSINESS OPERATIONS AND SOLUTIONS
Given the unfavorable factors such as price rise in raw materials such as
crude oil and pressure over for rail transportation, the Group introduced a
series of measures to improve corporate management, enhance the operation
of production facilities, strengthen the internal control systems, improve
marketing strategies and strengthen financial management, and achieved a
historical high in various key production benchmarks in aspects of the
processing volume of cruel 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, which resulted in a
sales and payment recovery rate of 100%, respectively. All these factors
effectively mitigated the adverse impact of an increase in the prices of
raw materials on the production cost. As a result, the operating results of
the Group improved substantially in 2004 as compared to 2003.
IV. INVESTMENT
In 2004, the Company completed an energy saving project for the 150,000
tons/year ethylene facility and the technology upgrade project for the
reduction of pressure and mechanical fault. The total investment completed
as at December 31, 2004 was RMB440.43 million. The Company expects that its
total investment will amount to approximately RMB200.00 million in 2005.
During the reporting period, the Company has not utilized capital obtained
from fund-raising activities in investment projects nor has it delayed the
utilization of funds obtained prior to 2004 to investment projects in 2004.
V. PROSPECTS
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 that in 2004,
which will generally present opportunities as well as challenges for the
Company. From a macroscopic point of view, the global economic recovery is
expected to speed up and both demand and supply of petrochemical products
in international market is expected to be strong. It is expected that the
gross domestic product of the PRC will reach its target as an increase of
about 8%. 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 will also be further implemented. From a
microscopic point of view, the Company will further strengthen its
"People-oriented, strict and micro-management", improve various management
systems such as its on-site, operational, development and team management
systems, and has reached a more mature stage where growth is achieved at a
faster pace. However, with the end of the transition period of China's
accession to WTO, the domestic market will be fully opened for the
wholesale and retail of finished oil products and competition between
domestic and international players in this field is expected to intensify.
Fluctuation in the price of raw materials such as crude oil within a higher
price range will inevitably give rise to the increase in production cost.
Moreover, the overhaul scheduled by the Company will relatively shorten the
period of production, thus adding onto the difficulties of the Company for
attaining the objectives for the year. Therefore, the Company is
experiencing a great challenge in its production and operations in 2005. As
such, the Company will carry out its operations for the year in accordance
with the following principles:
1. Further pursue the business concept where "enterprises shall operate
according to market demand; production plan 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. The Company shall be market-oriented by
improving its business plans and updating statistics, and shall
strengthen its financial management to increase the return on capital
and to avoid operational risk in an effective and efficient manner. It
shall improve supply and sales arrangement by strengthening logistic
management, reduce costs by every possible means and increase sales
and income so as to achieve 100% for both the production/sales ratio
and payment recovery rate. The Company shall strengthen the management
for both contracts and equity interests by strictly implementing the
"Three Examination" contract review system and regulatory requirements
with the aim of cancelling "ST" in respect of A shares of the Company,
and to build up a good image of the Company.
2. Further pursue the safety concept where "objective standards of
production for a refinery enterprise shall be complied, stringent
safety management shall be implemented and safety shall be ensured" to
improve the safety of production in all aspects. The Company shall
strengthen education on safety by sub-dividing and finalizing safety
production responsibilities, strictly carrying out inspector
examination systems and ensuring that the production facilities
operate in a safe, stable and good manner, on long-term basis and at a
full utilization rate. The Company shall make improvements and
adjustments to its production plans and formulate its production and
operation plans in a timely manner in view of the market changes and
product margins. It shall improve the allocation of raw materials,
product mix and production facilities with further control over
production process as well as the examination on the stability of
operations, and further improvement on the overall management of
production so as to maximize the total output of products. Based on
the principles of effecting a safe and well-organized overhaul, and
operating the key production facilities in a safe and stable manner,
the Company plans to process 7 million tons of crude oil by using its
production facilities with a utilization rate of over 99% and achieve
a ratio of effective usage of key equipment of 100%.
3. Further pursue the management concept of "People-oriented, strict and
micro-management" to fully strengthen the "Three Foundations" work of
the Company. The Company will make full use of the innovative and
effective management method of "Six Examinations and Six Adjustments"
to achieve sophisticated development management, detailed on-site
management, cost-effective operational management, and well-organized
team management. As a result, the overall management of the Company
can be continuously enhanced.
4. Further strengthen the concept of risk control. In accordance with the
Sarbanes-Oxley Act, the applicable provisions for ownership framework
set out by Committee of Sponsoring Organisations of the Treadway
Committee ("COSO") and all legal and regulatory requirements, the
Company shall build upon its existing management system and take five
elements of COSO as a framework, combine its management system with
Occupational Health, Safety and Environment (OHSE) and comprehensive
quality management systems to govern its business flow, improve its
internal control, speed up the progress for the establishment of an
internal control system that meets the actual management needs of the
Company.
In conclusion, the Company shall continue to pursue the belief of "Unity,
Determination and Contribution" which has led the Company from loss making
to profitability, 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.
PROPOSED PROFIT APPROPRIATION AND DIVIDENDS
Under PRC GAAP, the net profit of the Company for the year ended December 31,
2004 was RMB2,573.76 million, the accumulated losses as at January 1, 2004 was
RMB3,268.56 million, the accumulated losses as at December 31, 2004 were
RMB694.80 million. Under IFRS, the net profit for the year ended December 31,
2004 was RMB2,553.19 million, the accumulated losses as at January 1, 2004 were
RMB3,118.62 million and the accumulated losses as at December 31, 2004 was
RMB564.46 million. The profit generated in 2004 will be used to offset
accumulated losses. According to the above profit distribution plan, the Board
has resolved not to declare any final dividend for 2004 nor transfer common
reserves to the Company's share capital. According to the regulations of the
China Securities Regulatory Commission and the Shenzhen Stock Exchange, the
Company's independent directors published their opinion regarding the proposed
profit appropriation for 2004 and agreed to the proposed profit appropriation.
The above proposal will be presented to the Company's shareholders for approval
at the 2004 Annual General Meeting.
PURCHASE, SALES AND REDEMPTION OF SHARES
For the year ended December 31, 2004, there was no purchase, sale or redemption
by the Company, or by any of its subsidiaries, of the shares of the Company.
COMPLIANCE WITH CODE OF BEST PRACTICE
During 2004, to the knowledge of the Board, the Company has complied with the
Code of Best Practice which incorporates items set out in Appendix 14 to The
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited.
The detailed annual results of the Company, including all the materials required
by paragraphs 45(1)-45(3) of Appendix 16 of The Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited ("Hong Kong Stock
Exchange"), will be released shortly on the website of Hong Kong Stock Exchange,
http://www.hkex.com.hk.
DISCLOSURE OF SIGNIFICANT EVENTS
1. The Group was not involved in any material litigation or arbitration during
the year ended December 31, 2004.
2. There was no merger, acquisition or restructuring involving the Company for
the year ended December 31, 2004.
3. MATERIAL CONTRACTS
(1) During 2004, the Company has not entered into any trust arrangement,
sub-contracting or leasing of assets belonging to a third party and no
third party has entered into any trust arrangement, sub-contracting or
leased assets of the Company.
(2) During 2004, the Company did not incur material guarantee events.
(3) During 2004, the Company did not entrust any party with cash assets
administration.
4. The Company or shareholders holding more than 5% of the Company's
registered share capital have no matters relating to undertakings.
5. During 2004, PricewaterhouseCoopers (certified public accountants in Hong
Kong) and PricewaterhouseCoopers Zhong Tian CPAs Ltd. Co., (registered
accountants in the PRC) were re-appointed as the Company's international
and domestic auditors. Up to the year ended December 31, 2004,
PricewaterhouseCoopers Zhong Tian CPAs Ltd. Co., has provided audit
services to the Company for four years. The remuneration paid to
PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian CPAs Ltd. Co.,
was RMB3.5 million during 2004.
6. The Company, the Board and directors of the Company have not received any
reprimand, penalties or complaints from or faced investigation by the China
Securities Regulatory Commission, or any public reprimand from any other
stock exchange during the year.
7. OTHER EVENTS
According to the audited financial statements for 2004, the Company's net
assets per share of RMB1.64 as at December 31, 2004 was over the par value
of RMB1.00 per share. The Company applied to the Shenzhen Stock Exchange
for withdrawal of the special treatment in accordance with Rules Governing
the Listing of Stock on Shenzhen Stock Exchange, such that the abbreviation
of the Company's A shares will change from "ST Jihua" to "Jilin Chemical"
and the price movement of the Company's A shares will change from 5%
restriction to 10% restriction.
FINANCIAL REPORT
A 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
CHEMICAL
PETROCHEMICAL FERTILIZERS OTHER
AND ORGANIC AND SYNTHETIC PRODUCTS
YEAR ENDED PETROLEUM CHEMICAL INORGANIC RUBBER AND
DECEMBER 31, 2004 PRODUCTS PRODUCTS CHEMICALS PRODUCTS SERVICES TOTAL
RMB RMB RMB RMB RMB RMB
PROFIT AND LOSS
Sales (including intersegment) 18,079,875 13,550,409 664,246 1,793,689 3,666,195 37,754,414
Less: Intersegment 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 Amortization 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 current liabilities 594,431 3,054,582 552,913 130,489 210,350 4,542,765
Borrowings 3,982,090
Total liabilities 8,524,855
Segment capital expenditure on
property, plant and equipment
and on intangible assets 263,201 189,023 11,462 65,136 13,219 542,041
B PREPARED UNDER PRC GAAP
BALANCE SHEETS
AS AT DECEMBER 31, 2004
(IN RMB YUAN)
DECEMBER 31, December 31, DECEMBER 31, December 31,
2004 2003 2004 2003
ASSETS GROUP Group COMPANY Company
CURRENT ASSETS
Cash and bank 14,629,219 35,498,819 11,819,321 30,675,068
Short-term investments -- -- -- --
Notes receivable 10,545,237 31,487,455 9,456,637 30,847,455
Dividend receivable -- -- -- --
Interest receivable -- -- -- --
Accounts receivable 254,700,444 153,268,657 322,568,028 228,521,231
Other receivables 45,075,155 35,615,442 19,094,936 15,026,666
Advances to suppliers 376,959,411 219,531,546 376,874,901 218,715,694
Subsidy receivable -- -- -- --
Inventories 2,606,053,383 1,568,092,833 2,566,518,007 1,524,683,504
Prepaid expenses 19,856,484 12,395,263 19,474,862 12,003,154
Long-term bond investments
maturing within one year -- -- -- --
Other current assets -- -- -- --
TOTAL CURRENT ASSETS 3,327,819,333 2,055,890,015 3,325,806,692 2,060,472,772
LONG-TERM INVESTMENTS
Long-term equity investments 99,139,594 58,630,291 169,469,728 161,027,860
Long-term bond investments -- -- -- --
TOTAL LONG-TERM INVESTMENTS 99,139,594 58,630,291 169,469,728 161,027,860
Including: Consolidation difference
FIXED ASSETS
Fixed assets-cost 16,196,975,563 15,922,817,553 15,822,513,692 15,551,363,296
Less: Accumulated depreciation (6,719,916,853) (5,879,358,440) (6,545,147,557) (5,719,658,380)
Fixed assets-net book value 9,477,058,710 10,043,459,113 9,277,366,135 9,831,704,916
Less: Impairment of fixed assets (282,023,248) (323,843,932) (269,931,112) (309,861,188)
Fixed assets-net book amount 9,195,035,462 9,719,615,181 9,007,435,023 9,521,843,728
Construction materials 2,837,473 3,130,000 2,837,473 3,130,000
Construction in progress 42,555,665 32,361,820 42,555,665 32,361,820
Fixed assets pending disposal -- -- -- --
TOTAL FIXED ASSETS 9,240,428,600 9,755,107,001 9,052,828,161 9,557,335,548
INTANGIBLE AND OTHER ASSETS
Intangible assets 1,345,139,741 1,463,518,889 1,343,581,225 1,462,399,217
Long-term deferred expenses 64,648,462 101,751,642 64,648,462 101,751,642
Other long-term assets -- -- -- --
TOTAL INTANGIBLE AND OTHER ASSETS 1,409,788,203 1,565,270,531 1,408,229,687 1,564,150,859
DEFERRED TAXES
Deferred tax assets 315,580,641 -- 315,580,641 --
TOTAL ASSETS 14,392,756,371 13,434,897,838 14,271,914,909 13,342,987,039
DECEMBER 31, December 31, DECEMBER 31, December 31,
LIABILITIES AND 2004 2003 2004 2003
SHAREHOLDERS' EQUITY GROUP Group COMPANY Company
CURRENT LIABILITIES
Short-term loans 2,918,970,000 3,204,600,000 2,874,330,000 3,155,000,000
Notes payable -- -- -- --
Accounts payable 1,891,153,893 1,844,980,631 1,864,805,946 1,861,455,634
Advances from customers 2,137,105,902 1,271,055,240 2,119,941,248 1,244,157,924
Salaries payable 139,240,168 124,125,535 139,183,607 124,125,535
Welfare payable 57,854,011 34,342,677 48,261,501 27,310,869
Dividend payable -- -- -- --
Taxes payable 154,334,897 174,919,468 150,912,286 181,634,303
Other levies payable -- -- -- --
Other payables 137,027,193 111,184,160 131,685,926 110,412,394
Accrued expenses 26,049,897 53,728,325 26,049,897 53,728,325
Provisions -- -- -- --
Long-term liabilities due within
one year 167,105,430 897,399,277 167,105,430 897,399,277
Other current liabilities -- -- -- --
TOTAL CURRENT LIABILITIES 7,628,841,391 7,716,335,313 7,522,275,841 7,655,224,261
LONG-TERM LIABILITIES
Long-term loans 682,499,114 2,077,640,306 682,499,114 2,077,640,306
Debentures payable -- -- -- --
Payables due after one year -- -- -- --
Special project payables -- -- -- --
Other long-term liabilities 213,515,526 330,258,094 213,515,526 330,258,094
TOTAL LONG-TERM LIABILITIES 896,014,640 2,407,898,400 896,014,640 2,407,898,400
DEFERRED TAXES
Deferred tax liabilities -- -- -- --
TOTAL LIABILITIES 8,524,856,031 10,124,233,713 8,418,290,481 10,063,122,661
MINORITY INTERESTS 14,275,912 30,799,747 -- --
SHAREHOLDERS' EQUITY
Share capital 3,561,078,000 3,561,078,000 3,561,078,000 3,561,078,000
Capital surplus 2,293,618,886 2,293,618,886 2,293,618,886 2,293,618,886
Statutory common reserve fund 701,442,717 701,442,717 693,730,248 693,730,248
Including: Statutory common
welfare fund 126,834,279 126,834,279 125,287,623 125,287,623
Accumulated losses (702,515,175) (3,276,275,225) (694,802,706) (3,268,562,756)
Foreign exchange difference reserve -- -- -- --
TOTAL SHAREHOLDERS' EQUITY 5,853,624,428 3,279,864,378 5,853,624,428 3,279,864,378
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 14,392,756,371 13,434,897,838 14,271,914,909 13,342,987,039
PROFIT AND LOSS ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2004
(IN RMB YUAN)
2004 2003 2004 2003
ITEMS GROUP Group COMPANY Company
1. SALES REVENUE 27,902,786,502 19,064,871,852 27,865,067,353 18,987,356,043
LESS: Cost of sales (23,884,903,088) (16,811,354,227) (23,820,659,441) (16,766,786,845)
Sales tax and other levies (728,022,767) (663,823,149) (728,022,767) (663,823,149)
2. GROSS PROFIT ON SALES 3,289,860,647 1,589,694,476 3,316,385,145 1,556,746,049
ADD: Other operating loss (54,161,881) (53,964,910) (61,427,912) (42,063,603)
LESS: Selling expenses (24,585,845) (29,337,792) (24,278,421) (28,948,053)
General and administrative
expenses (612,394,717) (574,810,872) (588,118,886) (550,750,478)
Financial expenses, net (277,411,445) (464,994,136) (270,812,410) (459,490,497)
3. OPERATING PROFIT 2,321,306,759 466,586,766 2,371,747,516 475,493,418
ADD: Investment income/(loss) 40,509,303 (4,337,039) 8,441,868 (12,691,049)
Subsidy income -- 502,000 -- 502,000
Non-operating income 76,854,281 13,432,589 74,712,368 13,372,271
LESS: Non-operating expenses (85,229,818) (53,674,526) (85,135,655) (53,060,643)
4. TOTAL PROFIT 2,353,440,525 422,509,790 2,369,766,097 423,615,997
LESS: Income tax 203,795,690 (270,108) 203,993,953 --
Minority interests 16,523,835 1,755,470 -- --
5. NET PROFIT 2,573,760,050 423,995,152 2,573,760,050 423,615,997
SUPPLEMENTARY INFORMATION
2004 2003
GROUP COMPANY Group Company
1. Income from sale and disposal of
departments or investees -- -- -- --
2. Loss from natural catastrophe -- -- -- --
3. Increase in total profit resulting from
change in accounting policies -- -- -- --
4. Increase in total profit resulting from
change in accounting estimates -- -- -- --
5. Loss from debt restructuring -- -- -- --
6. Other -- -- -- --
PROFIT APPROPRIATION STATEMENTS
FOR YEAR ENDED DECEMBER 31, 2004
(IN RMB YUAN)
2004 2003 2004 2003
ITEMS GROUP Group COMPANY Company
1. NET PROFIT 2,573,760,050 423,995,152 2,573,760,050 423,615,997
ADD: Accumulated losses at the
beginning of the year (3,276,275,225) (3,700,270,377) (3,268,562,756) (3,692,178,753)
Transfer from other sources -- -- -- --
2. ACCUMULATED LOSSES (702,515,175) (3,276,275,225) (694,802,706) (3,268,562,756)
LESS: Transfer to statutory
common reserve fund -- -- -- --
Transfer to statutory
common welfare fund -- -- -- --
Transfer to staff and workers'
bonus and welfare fund -- -- -- --
3. ACCUMULATED LOSSES (702,515,175) (3,276,275,225) (694,802,706) (3,268,562,756)
LESS: Dividend for preference stocks -- -- -- --
Transfer to discretionary
common reserve fund -- -- -- --
Dividend for common stocks -- -- -- --
Dividend for common stocks
transferred to capital -- -- -- --
4. ACCUMULATED LOSSES AT
THE END OF THE YEAR (702,515,175) (3,276,275,225) (694,802,706) (3,268,562,756)
CASH FLOW STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2004
(IN RMB YUAN)
2004 2003 2004 2003
ITEMS GROUP Group COMPANY Company
1. CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sale of goods or
rendering of services 34,339,225,120 26,059,285,021 34,118,606,354 25,812,840,772
Government grants -- 502,000 -- 502,000
Cash received relating to other
operating activities 4,317,299 1,628,325 9,050,668 3,785,329
SUB-TOTAL OF CASH INFLOWS 34,343,542,419 26,061,415,346 34,127,657,022 25,817,128,101
Cash paid for goods and services (28,406,626,351) (19,853,797,998) (28,313,185,838) (19,708,996,536)
Cash paid to and on behalf of
employees (554,644,033) (432,322,410) (482,321,296) (401,460,600)
Payment of all types of taxes (1,738,994,156) (1,299,564,630) (1,722,245,226) (1,282,201,359)
Cash paid relating to other
operating activities (270,749,194) (469,520,643) (253,296,751) (460,860,469)
SUB-TOTAL OF CASH OUTFLOWS (30,971,013,734) (22,055,205,681) (30,771,049,111 (21,853,518,964)
NET CASH FLOWS FROM OPERATING
ACTIVITIES 3,372,528,685 4,006,209,665 3,356,607,911 3,963,609,137
2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from sale of investments -- -- -- --
Cash received from return of
investments -- -- -- --
Net cash received from disposal of
fixed assets 74,290,268 13,335,348 72,178,273 13,285,031
Cash received relating to other
investing activities -- -- -- --
SUB-TOTAL OF CASH INFLOWS 74,290,268 13,335,348 72,178,273 13,285,031
Cash paid to acquire fixed assets,
intangible assets and other
long-term assets (642,131,733) (681,471,929) (629,866,868) (677,634,391)
Cash paid to acquire investments -- (54,000,000) -- (54,000,000)
Cash paid relating to other
investing activities -- -- -- --
SUB-TOTAL OF CASH OUTFLOWS (642,131,733) (735,471,929) (629,866,868) (731,634,391)
NET CASH FLOWS FROM INVESTING
ACTIVITIES (567,841,465) (722,136,581) (557,688,595) (718,349,360)
3. CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing shares -- 100,000 -- --
Including: Cash received from
minority shareholders -- 100,000 -- --
Proceeds from borrowings 9,004,240,367 5,440,491,995 8,959,600,367 5,351,291,995
Cash received relating to other
financing activities -- -- -- --
SUB-TOTAL OF CASH INFLOWS 9,004,240,367 5,440,591,995 8,959,600,367 5,351,291,995
Repayment of borrowings (11,532,047,974) (8,294,083,962) (11,482,447,974) (8,170,883,962)
Cash paid for interest expense and
distribution of dividends (297,749,213) (427,886,939) (294,927,456) (424,568,038)
Including: Dividends paid to minority
shareholders -- -- -- --
Cash paid relating to other financing
activities -- -- -- --
Including: Cash paid to minority
shareholders due to
reduction of capital of
subsidiaries -- -- -- --
SUB-TOTAL OF CASH OUTFLOWS (11,829,797,187) (8,721,970,901) (11,777,375,430) (8,595,452,000)
NET CASH FLOWS FROM FINANCING
ACTIVITIES (2,825,556,820) (3,281,378,906) (2,817,775,063) (3,244,160,005)
4. EFFECT OF FOREIGN EXCHANGE RATE
CHANGES ON CASH -- -- -- --
5. NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (20,869,600) 2,694,178 (18,855,747) 1,099,772
SUPPLEMENTARY INFORMATION
2004 2003 2004 2003
GROUP Group COMPANY Company
1. RECONCILIATION OF NET PROFIT TO CASH
FLOWS FROM OPERATING ACTIVITIES
Net profit 2,573,760,050 423,995,152 2,573,760,050 423,615,997
ADD: Minority interests (16,523,835) (1,755,470) -- --
Provision for impairment of assets 103,884,647 113,568,960 102,547,603 113,568,960
Depreciation of fixed assets 968,250,527 863,572,274 945,948,808 840,730,347
Amortization of intangible assets 121,977,554 114,018,037 121,784,090 113,918,558
Amortization of long-term
deferred expenses 60,177,738 58,029,674 60,177,738 58,029,674
(Increase)/decrease in prepaid
expenses (7,461,221) 4,996,946 (7,471,708) 4,746,596
Increase in accrued expenses -- -- -- --
Gain on disposal of fixed assets (74,290,268) (13,335,348) (72,178,273) (13,285,031)
Loss on scrapping of fixed assets 47,878,367 39,714,147 47,784,207 39,648,698
Financial expenses 270,070,785 429,782,134 267,249,028 426,463,233
Investment (income)/loss (40,509,303) 4,337,039 (8,441,868) 12,691,049
Deferred tax assets (315,580,641) -- (315,580,641) --
Increase in inventories (1,115,504,793) (186,720,730) (1,118,704,503) (151,637,600)
(Increase)/decrease in operating
receivables (249,049,275) 223,216,189 (235,892,783) 175,793,288
Increase in operating payables 1,045,448,353 1,932,790,661 995,626,163 1,919,325,368
NET CASH FLOWS FROM OPERATING
ACTIVITIES 3,372,528,685 4,006,209,665 3,356,607,911 3,963,609,137
2. INVESTING AND FINANCING ACTIVITIES
THAT DO NOT INVOLVE CASH RECEIPTS AND
PAYMENTS
Purchase of fixed assets -- 159,500,000 -- 159,500,000
Convertible bonds maturing within
one year -- -- -- --
Finance lease of fixed assets -- -- -- --
3. NET INCREASE/(DECREASE)
IN CASH AND CASH EQUIVALENTS
Cash at the end of the year 14,629,219 35,498,819 11,819,321 30,675,068
LESS: Cash at the beginning of the year (35,498,819) (32,804,641) (30,675,068) (29,575,296)
Cash equivalents at the end of
the year -- -- -- --
LESS: Cash equivalents at the beginning
of the year -- -- -- --
Net (decrease)/increase in cash and
cash equivalents (20,869,600) 2,694,178 (18,855,747) 1,099,772
SUPPLEMENTARY INFORMATION
ASSET IMPAIRMENT PROVISION
AS AT DECEMBER 31, 2004
(IN RMB YUAN)
REVERAL CAUSED BY
AS AT JANUARY 1, 2004 CURRENT YEAR ADDITION INCREASE OF ASSETS VALUE
ITEMS GROUP COMPANY GROUP COMPANY GROUP COMPANY
1. BAD DEBT PROVISION 940,414,318 940,410,761 12,422,128 11,759,327 -- --
Including: Accounts receivable 868,271,165 868,267,608 11,050,304 10,387,503 -- --
Other receivables 72,143,153 72,143,153 1,371,824 1,371,824 -- --
2. PROVISION FOR IMPAIRMENT
OF SHORT-TERM INVESTMENTS
Including: Equity investments
Bond investments
3. INVENTORY PROVISION 178,752,836 178,752,836 87,210,545 86,536,302 -- --
Including: Raw materials 58,579,019 58,579,019 12,241,643 12,241,643 -- --
Work in progress 7,149,932 7,149,932 -- -- -- --
Finished goods 21,714,235 21,714,235 674,243 -- -- --
Spare parts 90,362,644 90,362,644 74,294,659 74,294,659 -- --
Low value
consumables and
packing materials 947,006 947,006 -- -- -- --
4. PROVISION FOR IMPAIRMENT
OF LONG-TERM INVESTMENTS
Including:Long-term equity
investments
Long-term bond investments
5. PROVISION FOR IMPAIRMENT
OF FIXED ASSETS 323,843,932 309,861,188 -- -- -- --
Including: Buildings 58,153,374 57,553,374 -- -- -- --
Machinery 208,243,922 206,691,178 -- -- -- --
Equipment 52,908,460 44,378,460 -- -- -- --
Motor vehicles 4,538,176 1,238,176 -- -- -- --
6. PROVISION FOR IMPAIRMENT
OF INTANGIBLE ASSETS -- -- 6,698,195 6,698,195 -- --
Including: Technical know-how -- -- 6,698,195 6,698,195 -- --
Land use right -- -- -- -- -- --
7. PROVISION FOR IMPAIRMENT
OF CONSTRUCTION IN
PROGRESS -- -- 7,220,081 7,220,081 -- --
8 PROVISION FOR TRUST LOAN
CURRENT YEAR REDUCTION
OTHER TRANSFER-OUT AS AT
(NOTE) TOTAL DECEMBER 31, 2004
ITEMS GROUP COMPANY GROUP COMPANY GROUP COMPANY
1. BAD DEBT PROVISION (238,013,393) (238,013,393) (238,013,393) (238,013,393) 714,823,053 714,156,695
Including: Accounts receivable (237,879,702) (237,879,702) (237,879,702) (237,879,702) 641,441,767 640,775,409
Other receivables (133,691) (133,691) (133,691) (133,691) 73,381,286 73,381,286
2. PROVISION FOR IMPAIRMENT
OF SHORT-TERM INVESTMENTS
Including: Equity investments
Bond investments
3. INVENTORY PROVISION (9,666,302) (9,666,302) (9,666,302) (9,666,302) 256,297,079 255,622,836
Including: Raw materials -- -- -- -- 70,820,662 70,820,662
Work in progress (1,506,078) (1,506,078) (1,506,078) (1,506,078) 5,643,854 5,643,854
Finished goods (6,178,349) (6,178,349) 6,178,349) (6,178,349) 16,210,129 15,535,886
Spare parts (1,394,902) (1,394,902) (1,394,902) (1,394,902) 163,262,401 163,262,401
Low value
consumables and
packing materials -- (586,973) (586,973) (586,973) 360,033 360,033
4. PROVISION FOR IMPAIRMENT
OF LONG-TERM INVESTMENTS
Including:Long-term equity
investments
Long-term bond
investments
5. PROVISION FOR IMPAIRMENT
OF FIXED ASSETS (41,820,684) (39,930,076) (41,820,684) (39,930,076) 282,023,248 269,931,112
Including: Buildings (4,148,584) (3,233,227) (4,148,584) (3,233,227) 54,004,790 54,320,147
Machinery (31,758,961) (31,440,522) (31,758,961) (31,440,522) 176,484,961 175,250,656
Equipment (5,911,563) (5,254,751) (5,911,563) (5,254,751) 46,996,897 39,123,709
Motor vehicles (1,576) (1,576) (1,576) (1,576) 4,536,600 1,236,600
6. PROVISION FOR IMPAIRMENT
OF INTANGIBLE ASSETS -- -- -- -- 6,698,195 6,698,195
Including: Technical know-how -- -- -- -- 6,698,195 6,698,195
Land use right -- -- -- -- -- --
7. PROVISION FOR IMPAIRMENT
OF CONSTRUCTION IN
PROGRESS -- -- -- -- 7,220,081 7,220,081
8 PROVISION FOR TRUST LOAN
<FN>
NOTE:
(1) The reduction in bad debt provision in 2004 represents the write-off of
receivables against the related bad debt provision due to bankrupcy of the
debtors.
(2) The other transfer-out of inventory provision in 2004 represents the
utilization of the provision due to sale or usage of the inventories.
(3) The other transfer-out of provision for impairment of fixed assets in 2004
is due to the disposal or scrapping of fixed assets provided in prior
years.
</FN>