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IMPORTANT NOTICE
The board of directors (the "Board") of Jilin Chemical Industrial Company
Limited (the "Company") and the directors collectively and individually accept
full responsibility for the authenticity, accuracy and completeness of the
information contained in this interim report and believe that there are no
misrepresentations, misleading statements or material omissions contained in
this interim report.
The Company's financial statements for the first six months of 2003 prepared
under the People's Republic of China (the "PRC") GAAP have been audited by
PricewaterhouseCoopers Zhong Tian CPAs Company Limited, and the financial
statements for the first six months of 2003 prepared under IFRS are unaudited.
The Company's director Mr. Xu Fengli and independent directors Mr. Wang Baifeng,
Mr. Lu Yanfeng and Mr. Rupert Li did not attend the board meeting. Mr. Xu Fengli
appointed chairman Mr. Yu Li, and each of Mr. Wang Baifeng, Mr. Lu Yanfeng and
Mr. Rupert Li appointed independent director Mr. Wang Peirong to attend and vote
on his behalf at the meeting.
The Company's chairman Mr. Yu Li, chief financial officer Mr. Lan Yunsheng and
chief of the finance department Mr. Liao Hongwei accept full responsibility for
the truthfulness and completeness of the financial statements contained in this
interim report.
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Contents
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Pages
COMPANY PROFILE 2
CHANGES IN SHARE CAPITAL AND
SUBSTANTIAL SHAREHOLDERS 5
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT 6
MANAGEMENT DISCUSSION AND ANALYSIS 7
REVIEW OF SIGNIFICANT EVENTS 13
FINANCIAL STATEMENTS
Prepared Under International Financial Reporting Standards (unaudited)
-- Consolidated Profit and Loss Accounts 16
-- Consolidated Balance Sheets 17
-- Consolidated Cash Flow Statements 18
-- Consolidated Statements of Changes in Shareholders' Equity 19
-- Notes to the Financial Statements 20
Prepared Under PRC GAAP (audited)
-- Report of the PRC Auditors 29
-- Consolidated and Company Balance Sheets 30
-- Consolidated and Company Profit and Loss Accounts 32
-- Consolidated and Company Profit Appropriation Statements 33
-- Consolidated and Company Cash Flow Statements 34
-- Notes to the Financial Statements 37
SUPPLEMENTARY INFORMATION
-- Significant Differences between IFRS and PRC GAAP 72
-- Significant Differences between IFRS and US GAAP 75
-- Asset Impairment Provision 79
DOCUMENTS AVAILABLE FOR INSPECTION AND ADDRESS FOR
INSPECTION OF DOCUMENTS 80
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 1
Company Profile
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Chinese Name : [CHINESE CHARACTERS]
English Name : Jilin Chemical Industrial Company Limited
Chinese Abbreviation : [CHINESE CHARACTERS]
English Initials : JCIC
Registered Address : No. 9, Longtan Street, Longtan District, Jilin City, Jilin Province,
PRC
Postal Code : 132021
Web Site : http://www.jcic.com.cn
E-mail of the Company : jcic@jcic.com.cn
Legal Representative : Yu Li
Company Secretary : Zhang Liyan
Contact Address : No. 9, Longtan Street, Longtan District, Jilin City, Jilin Province,
PRC
Telephone Number : (86432) 3903651 3903652
Facsimile Number : (86432) 3028126
E-mail : zly@jcic.com.cn
Newspapers Designated : (China Securities) (Securities Times);
by the Company for Hong Kong (Wen Wei Po) (The Standard)
Information Disclosure
Internet Website Designated : http://www.cninfo.com.cn
by the China Securities
Regulatory Commission
("CSRC") for the Company
to Disclose its Interim Report
Internet Website Designated : http://www.hkex.com.hk
by the Hong Kong
Stock Exchange
Address for Inspection of : Jilin Chemical Industrial Company Limited
the Company's Interim Report The Secretary's Office to the Board of Directors
Hong Kong: Fortune China Public Relations Ltd.
2nd Floor, Xinhua News Agency Building
5 Sharp Street West, Wanchai, Hong Kong
Stock Exchanges Listings : A shares : Shenzhen Stock Exchange
Abbreviation : ST Jihua
Stock Code : 000618
H shares : Hong Kong Stock Exchange
Abbreviation : Jilin Chemical
Stock Code : 0368
ADR : New York Stock Exchange
Stock Code : JCC
Ratio : 1ADR=100H shares
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2 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Company Profile
---------------
OTHER INFORMATION
Business Registration Number : 2200001000906
Taxation Registration Number : Ji Shi Guo Shui: 220203123975078
Ji Di Shui: 220203123975078
Domestic Auditor : PricewaterhouseCoopers Zhong Tian CPAs Company Limited
Certified Public Accountants in the PRC
12th Floor, Shui On Plaza, 333 Huai Hai Zhong Road, Shanghai,
PRC
International Auditor : PricewaterhouseCoopers
22nd Floor, Prince's Building, Central, Hong Kong
FINANCIAL SUMMARY
PREPARED IN ACCORDANCE WITH PRC GAAP
For the six months
ended 30th June,
2003 2002 Increase
RMB RMB (%)
(audited) (unaudited)
Net profit/(loss) 240,972,838 (352,531,041) +168%
Net profit/(loss) before non-operating loss 286,004,192 (237,227,445) +221%
Earnings/(loss) per share 0.07 (0.10) +170%
Return on net assets (%) 7.8% (10.0%) +105%
Net cash flow from operating activities 1,912,198,933 522,521,613 +266%
As at As at
30th June, 31st December, Increase/
2003 2002 Decrease
RMB RMB (%)
(audited) (audited)
Current assets 2,197,011,472 2,364,407,202 -7%
Current liabilities 7,777,307,533 7,621,101,602 +2%
Total assets 13,888,466,267 14,336,230,911 -3%
Shareholders' equity
(excluding minority interests) 3,096,842,064 2,855,869,226 +8%
Net assets per share 0.87 0.80 +9%
Adjusted net assets per share 0.76 0.76 --
Note: Non-operating loss of RMB45,031,354 refers to doubtful debt expenses of
RMB31,859,025, reversal of diminution in value of inventories of
RMB(393,373), loss of RMB1,199,780 on disposal of fixed assets, loss of
RMB6,434,901 from unscheduled plant shutdown, and other loss of
RMB5,931,021.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 3
Company Profile
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PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
For the six months
ended 30th June,
2003 2002
RMB'000 RMB'000
(unaudited) (unaudited)
Net profit/(loss) 242,843 (350,068)
Earnings/(loss) per share RMB0.07 RMB(0.10)
Return on net assets (%) 10.4% (12.7%)
As at As at
30th June, 31st December,
2003 2002
RMB'000 RMB'000
(unaudited) (audited)
Shareholders' equity 2,325,790 2,082,947
Net assets per share RMB0.65 RMB0.58
SIGNIFICANT DIFFERENCES UNDER IFRS AND PRC GAAP
Under IFRS and PRC GAAP, net profit for the six months ended 30th June, 2003
were RMB242.8 million and RMB241.0 million, respectively. The significant
differences between IFRS and PRC GAAP are set out in the "Supplementary
Information" section to this report.
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4 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Changes in Share Capital and Substantial Shareholders
-----------------------------------------------------
CHANGES IN SHARE CAPITAL STRUCTURE
During the reporting period, there was no change in the Company's share capital
structure.
TOTAL NUMBER OF SHAREHOLDERS
As at 30th June, 2003, the Company had a total of 59,668 shareholders.
SUBSTANTIAL SHAREHOLDERS
As at 30th June, 2003, the ten major shareholders of the Company were as
follows:
Increase/
Number of Decrease Percentage
Name of shareholders Class shares held amount of holding
(share) (share) (%)
1. PetroChina Company Limited
("PetroChina") A shares 2,396,300,000 -- 67.2914
2. HKSCC Nominees Limited H shares 807,106,699 +4,274,000 22.6646
3. Hong Kong & Shanghai
Banking Corporation H shares 135,105,300 +10,000 3.7939
(Nominees) Limited
4. LIU Wu Rong A share 2,575,609 -- 0.0723
5. CHEN YU A share 1,700,000 +500,000 0.0477
6. ZHANG LI A share 1,500,000 -100,000 0.0421
7. Northwest Securities
Company Limited A share 1,458,317 -1,892,757 0.0410
8. QIAO LIANG A share 1,400,000 -80,000 0.0393
9. QIAO HONG A share 988,000 +988,000 0.0277
10. ZHAO YING A share 950,000 +950,000 0.0267
Notes:
(1) The Company is not aware of any relationship between the ten largest
shareholders of the Company.
(2) As at 30th June, 2003, PetroChina held 2,396,300,000 state-owned legal
person shares issued by the Company, representing approximately 67.29 per
cent of the Company's total share capital. Shares held by PetroChina in
the Company were not pledged, locked up or held in trust during the six
months ended 30th June, 2003.
(3) HKSCC Nominees Limited acted as nominee, of which there was no
participant, as at 30th June, 2003, whose shareholding accounted for 10
per cent or more of the total number of shares issued by the Company.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 5
Directors, Supervisors, Senior Management
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SHARES HELD BY THE DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
As at 30th June, 2003, each of the directors Mr. Shi Jianxun and Mr. Ni Muhua
and supervisor Mr. Zou Haifeng held 3,550 shares of the Company, respectively,
and there was no change during the reporting period. None of the other
directors, supervisors and senior management held any shares of the Company.
None of the directors, supervisors and senior management (including their spouse
and children under 18 years of age) has been granted or has exercised any rights
to subscribe for shares (or warrants or debentures, if applicable) of the
Company.
APPOINTMENT AND REMOVAL OF DIRECTORS AND SENIOR MANAGEMENT
On 24th April, 2003, the Board approved the resignation of Mr. Xu Yuanxiang from
his position as a director of the Company due to work changes. At the annual
general meeting of the Company held on 24th June, 2003, Mr. Wang Peirong was
elected as an independent director of the Company.
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6 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Management Discussion and Analysis
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OPERATIONS DURING THE REPORTING PERIOD
The Company's principal business consists of the production and sale of
petroleum products, petrochemical and organic chemical products, and synthetic
rubber.
1. Results of operations
Under PRC GAAP, revenue from principal operations of the Company and its
subsidiaries (together, the "Group") during the six months ended 30th
June, 2003 was RMB8,885.1 million, representing an increase of 108 per
cent as compared with the same period of 2002. The Group achieved its goal
of turnaround with a net profit of RMB241 million during the reporting
period.
2. Operations during the reporting period
During the first half of 2003, with the objective of achieving a
turnaround from loss making to profitability, the Company introduced
various measures to meet the criteria of "Act Promptly, Review Carefully,
Commence Early and Begin Effectively" and set out various economic and
technological targets. The Company enhanced its internal management
through continuous strengthening of the supply, production and marketing
of its products according to market demands, and made every effort to
offset the adverse impact of SARS and price decrease in gasoline, diesel
oil and petrochemical products in the second quarter. Through
strengthening its production management and making timely decisions, the
Company's major production facilities operated at full utilization rate
and most of its products were sold at higher prices. During the reporting
period, the Company made significant achievements such that the turnover,
processing volume of crude oil and sales volume achieved the best results
since the establishment of the Company. During the first half of 2003, the
Company processed 2.76 million tons of crude oil and produced 290,000 tons
of ethylene, representing an increase of 52 per cent and 32 per cent,
respectively, as compared with the same period of 2002. Total sales volume
was 2.95 million tons, representing an increase of 66 per cent as compared
with the same period of 2002, including 540,000 tons of gasoline and
950,000 tons of diesel oil, which were up by 86 per cent and 296 per cent,
respectively, as compared with the same period of 2002. Sales volume for
petroleum products, petrochemical and organic chemical products and
synthetic rubber increased by 92 per cent, 41 per cent and 37 per cent,
respectively, and weighted average prices increased by 37 per cent, 31 per
cent and 13 per cent, respectively, as compared with the same period of
2002.
3. Revenue and profit from principal operations
During the six months ended 30th June, 2003, under PRC GAAP, turnover for
petroleum products, which represented more than 10 per cent of the Group's
turnover from its principal activities, was RMB4,324.8 million, accounting
for 49 per cent of the Group's total turnover from its principal business.
Cost of goods sold in respect of petroleum products was RMB3,943.9 million
and the gross margin rate for petroleum products was 9 per cent. Turnover
for petrochemical and organic chemical products was RMB3,957 million,
accounting for 45 per cent of the Group's total turnover from its
principal business. Cost of goods sold in respect of petrochemical and
organic chemical products was RMB3,392.3 million and the gross margin rate
for petrochemical and organic chemical products was 14 per cent.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 7
Management Discussion and Analysis
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The Company's principal business is carried out in the PRC and the Company
is not involved in any industry other than the petrochemical industry.
During the reporting period, there was no change in the Company's
principal business or any other business which had a significant effect on
the Company's net profits.
During the reporting period, there was no entity that contributed more
than 10 per cent to the Group's net profits.
INVESTMENT (PROJECTS NOT FUNDED THROUGH SHARE ISSUE)
During the six months ended 30th June, 2003, the 300,000t/a synthetic ammonia
unit was put into production. As at 30th June, 2003, the total investment in the
project was RMB207.8 million.
RESULTS OF OPERATIONS AND ANALYSIS OF FINANCIAL CONDITIONS
1. Under PRC GAAP
Unit: RMB
For the six months
Items ended 30th June, Increase/
2003 2002 Decrease Reason of
(audited) (unaudited) (%) changes
Income from 8,885,128,786 4,270,057,757 +108 Increase in the sales
principal business price and sales volume
Profit from 756,315,388 258,734,720 +192 Increase in the sales
principal business price and processing
volume of crude oil
Net profit/(loss) 240,972,838 (352,531,041) +168 Increase in the gross
profit of petrochemical
products
Decrease in cash and 16,434,800 5,754,159 +186 Increase in the
cash equivalents repayment of loans
As at As at
30th June, 31st December,
2003 2002
(audited) (audited)
Total assets 13,888,466,267 14,336,230,911 -3 Decrease in inventory
and increase in
provision for bad debt
Shareholders'
equity 3,096,842,064 2,855,869,226 +8 Profit in the reporting
period
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8 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Management Discussion and Analysis
----------------------------------
2. Under IFRS
During the first half of 2003, the Group's turnover was approximately
RMB9,282.9 million, representing an increase of 105 per cent as compared
with the same period of 2002. The increase was mainly due to the increase
in the production volume, sales volume and weighted average prices of the
Group's major products.
1) Segment analysis
(1) Petroleum products
During the first six months ended 30th June, 2003, turnover for
petroleum products increased by 167 per cent to RMB4,021.3
million from RMB1,505.5 million for the same period in 2002,
and accounted for 43 percent of the Company's turnover as
compared with 33 per cent in the first half of 2002. Due to
factors including increases in international crude oil price,
the Company's crude oil processing capability and purchase of
crude oil from Russia, the processing volume of crude oil,
sales volume and weighted average prices of the Company
increased by 52 per cent, 92 per cent and 39 per cent,
respectively, as compared with the same period of 2002 (during
which a once-every-two-years overhaul was carried out) .
(2) Petrochemical and organic chemical products
Turnover for petrochemical and organic chemical products
increased by 81 per cent to RMB3,939.2 million from RMB2,173.5
million for the same period in 2002, and accounted for 42 per
cent of the Company's turnover. The increase of turnover was
mainly due to the increasing demands for the raw materials of
petrochemical products by downstream users, increase in market
price and the higher utilization rate of the Company's
production facilities. Compared with the corresponding period
of 2002 (during which a once-every-two-years overhaul was
carried out), the sales volume and weighted average prices of
these products increased by 41 per cent and 29 per cent,
respectively.
(3) Synthetic rubber
Turnover for synthetic rubber products increased by 54 per cent
to RMB533.8 million from RMB345.8 million for the same period
in 2002, and accounted for 6 percent of the Company's turnover.
The increase in turnover was mainly due to the growth of the
sales volume and weighted average price of these products by 37
per cent and 13 per cent respectively as compared with the same
period of 2002.
2) Cost and expenses
Cost of sales increased by 100 per cent to RMB8,527.4 million in the
first half of 2003 from RMB4,260 million for the same period in 2002.
The increase in the cost of sales was mainly due to the increase in
the sale volume of products, processing volume of crude oil and
prices of crude oil and other raw materials, as well as the
turnaround from loss by the Company and the increase in staff's
salaries. In the first half of 2003, the Company was affected by an
increase in the price of crude oil internationally to RMB1,898 per
ton, representing an increase of 39 per cent from the same period in
2002. The processing volume of crude oil increased by 52 per cent as
compared with the same period of 2002.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 9
Management Discussion and Analysis
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Despite the increase of cost of sales, the Group's gross profit
increased by 184 per cent as compared with the same period of 2002.
This increase was mainly due to the significant increase of the
Group's turnover.
Selling expenses, administrative expenses and other expenses
decreased by 10 per cent to RMB274.7 million in the first half of
2003 from RMB304.9 million for the same period in 2002. This decrease
was mainly due to the loss from the retirement of fixed assets of
RMB110 million in the first half of 2002 and the provision for bad
debts of RMB31.9 million during the reporting period.
As a result of the above factors, the Group's operating profit
increased to RMB480.8 million in the first half of 2003 from a loss
of RMB39.1 million in the same period of 2002.
Interest expense decreased by 13 per cent from RMB272.1 million in
the first half of 2002 to RMB236.6 million in the first half of 2003.
The decrease was mainly due to a refinancing of higher interest rate
loans with lower interest rate loans.
During the first half of 2003, the Group's net exchange loss was
RMB8.1 million, as compared with a net exchange loss of RMB34.9
million for the same period in 2002. The loss was mainly due to
changes in exchange rate of the Company's foreign currency loans
during the reporting period.
The income from a jointly controlled entity and an associated company
before taxation was RMB2.6 million in the first half of 2003, as
compared with a loss of RMB4.9 million in the first half of 2002.
This change was mainly due to profits generated by the jointly
controlled entity.
In accordance with PRC tax law, the Company has no income taxable so
far as a result of the losses accumulated before the reporting
period.
3) Liquidity and capital resources
The Group depends upon the cash flow from its operations and bank
loans to satisfy its ongoing liquidity and capital requirement.
During the first half of 2003, net cash inflow from operating
activities increased to RMB1,692.6 million from RMB261.4 million for
the same period in 2002. The increase in net cash inflow was
primarily due to profit generated in the first half of 2003 and
strengthening funds control.
Net cash outflow from investing activities decreased to RMB261.9
million in the first half of 2003 from RMB502.3 million in the same
period of 2002. The decrease was primarily due to reduced capital
expenditures during the reporting period.
Net cash outflow from financing activities in the first half of 2003
was RMB1,447.2 million compared with a net cash inflow from financing
activities of RMB235.1 million for the same period in 2002. The
change was primarily due to the increase in the repayment of bank
loans during the reporting period.
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10 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Management Discussion and Analysis
----------------------------------
As at 30th June, 2003, the Group's current assets were RMB2,197
million, current liabilities were RMB7,777.3 million, and negative
working capital was RMB5,580.3 million. The Group reviews its working
capital and liquidity position on a regular basis and has always been
able to satisfy its short term obligations through the refinancing of
its indebtedness and other measures. China Petroleum Finance Company
Limited, a subsidiary of the Company's ultimate holding company, has
provided the Company with a loan facility of RMB8 billion for up to
31st December, 2004. As a result, the Company believes that it has
sufficient resources to meet its foreseeable working capital
requirement. As at 30th June, 2003, the Group's gearing ratio was 56
per cent, compared with 65 per cent as at 31st December, 2002.
(Gearing ratio is the ratio between long term debt and the sum of
shareholders' equity and long term debt).
As at 30th June, 2003, the Group's liquidity ratio was 28 per cent,
quick ratio was 13 per cent and inventory turnover was 578 per cent.
As at 30th June, 2003, the borrowings of the Group decreased by
RMB1,447.2 million to RMB7,916.3 million as compared with 31st
December, 2002, among which short-term borrowings were RMB4,933.1
million, representing a decrease of RMB603.6 million as compared with
31st December, 2002; long-term borrowings were RMB2,983.2 million,
representing a decrease of RMB843.6 million as compared with 31st
December, 2002. These changes reflected the Group's stronger ability
to repay bank loans to reduce the debt ratio as a result of profit
generated during the reporting period and further improvement in its
financial condition.
The Group did not experience seasonal fluctuations in the demand of
capital.
4) Exchange rate risk
As at 30th June, 2003, the Group's short-term loans were all
Renminbi-denominated. Foreign currency-denominated long-term loans
amounted to approximately RMB1,773 million, which were mainly related
to the loan for the ethylene project. Foreign currencies include US
dollar, Japanese Yen, and Euro. The Group's exchange rate risks also
include exchange of foreign currencies to Renminbi for the payment of
imported materials and equipment. Dividends of H shares shall be paid
in foreign currency. The Company believes that the fluctuations in
foreign exchange rates will have a significant impact on the Company.
During the six months ended 30th June, 2003, the Group's foreign
exchange loss was RMB8.08 million.
5) Employees
As at 30th June, 2003, the number of employees of the Company was
22,340. The employees' remuneration for the reporting period was
RMB310.8 million.
6) Pledge on assets
The Group did not have charges over its principal assets as at 30th
June, 2003.
7) Contingent liability
The Group did not have any contingent liability as at 30th June,
2003.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 11
Management Discussion and Analysis
- ----------------------------------
PROSPECTUS
The Board expects the price of petrochemical products to remain at
the current level in the second half of 2003 and the price of crude
oil not to experience significant fluctuation. The Company will focus
on the maintenance of safe and stable production operations; the
improvement in the sourcing of major resources including domestic
crude oil, Russian crude oil, residue and ethylene; the adjustment of
product mix to ensure high utilization rate and sustained
profitability; the speeding up in the implementation of plants
upgrade so as to achieve cost and energy consumption reduction (for
water, gas and electricity) to meet production targets. The Company
will combine the business concepts where "sales shall be dependent on
profitability; production shall be dependent on sales; efficient
sales and profitability through sales". The Company will further
strengthen its marketing and sales development of certain products
such as EPR, AES, alcohol, ether and liquid ammonia with the aim of
obtaining maximum economic benefits. The Company will enhance its
materials purchasing system for crude oil and naphtha to ensure that
materials are supplied in bulk at favourable rates and in a timely
manner for production purposes. The Company will also strengthen the
management of its funds through strict control over expenses and
focus on adjusting and restructuring its loans and repay loans which
bear higher interest rates. The Company will also seek to improve its
financial budget and the economic analysis of its activities, and
further control its costs through management at the work shifts,
production plants and factories level.
In the second half of 2003, on the premise that the price of crude
oil will not increase significantly and the petrochemical market will
not experience significant fluctuation, the Company, bearing in mind
its tasks of turning around loss to achieve sustained profit and cost
control, will make every effort to achieve profitability for the full
year of 2003.
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12 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Review of Significant Events
----------------------------
1. CORPORATE GOVERNANCE STRUCTURE
The Company's corporate governance structure was in compliance with the
requirements of the Listed Company Governance Guidelines.
2. PROPOSED INTERIM DISTRIBUTION AND TRANSFER FROM COMMON RESERVE TO SHARE
CAPITAL
The Directors resolved not to declare any interim dividend and did not
make any transfer from the common reserves to the Company's share capital
during the first six months ended 30th June, 2003.
3. PREVIOUS YEAR's Profit Distribution
According to the Company's 2002 annual general meeting of the Company, no
dividend was declared and no transfer was made from the common reserve to
the Company's share capital for 2002.
4. The Company was not involved in any material litigation or arbitration
during the reporting period.
5. During the reporting period, there were no acquisitions, sales or
restructuring involving the Company.
6. SIGNIFICANT CONNECTED TRANSACTIONS
The fees paid by the Company for welfare and supporting services rendered
by Jilin Chemical Group Corporation ("JCGC") were based on the State
prices, market prices or actual cost as provided for in the service
agreement entered into between the Company and JCGC. The other connected
transactions between the Company and JCGC were based on normal commercial
terms or on terms that were fair and reasonable so far as the shareholders
of the Company are concerned. The connected transactions between the
Company and PetroChina were based on the terms approved by shareholders at
the extraordinary shareholders meeting held on 30th December, 2001. Such
connected transactions are necessary for the Company's business.
7. MATERIAL CONTRACTS AND ITS PERFORMANCE
(1) During the reporting period, the Company did not enter into any
trust arrangement, entrustment contract or lease in respect of the
assets of any third party nor did any third party enter into any
trust arrangement, entrustment contract or lease arrangement in
respect of the assets of the Company.
(2) The Company did not enter into any material guarantees during the
reporting period and there were no material guarantees previously
entered into which were subsisting during the reporting period.
(3) During the reporting period, the Company did not entrust any
third party with the administration of its cash assets.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 13
Review of Significant Events
- ----------------------------
8. The Company and its shareholders with shareholding of 5 per cent or more
had not made any undertakings that will have significant impact on the
Company's operating results and financial condition.
9. AUDITORS
The financial statements prepared under the PRC GAAP have been audited by
PricewaterhouseCoopers Zhong Tian CPAs Company Limited. The certified
public accountants are Mr. Zhou Zhonghui and Mr. Li Dan.
It is estimated that the audit fee for the full year of 2003 will be
approximately RMB4 million.
10. During the reporting period, neither the Company, the Board nor the
directors of the Company had been investigated, received administrative
punishment or press censure by the China Securities Regulatory Commission,
nor had it or he been publicly reprimanded by other government
administrative departments or the stock exchanges.
11. PURCHASE, SALE AND REDEMPTION OF SHARES
During the reporting period, there was no purchase, sale, redemption or
cancellation of the Company's listed shares.
12. CODE OF BEST PRACTICE
To the knowledge of directors, the Company had complied with the
requirements of the Code of Best Practice during the reporting period. The
code of Best Practice is set out in Appendix 14 to the Listing Rules
published by the HK Stock Exchange.
13. TRUST DEPOSITS AND TRUST LOANS
As at 30th June, 2003, the Company did not have any trust deposits and
trust loans with any financial institutions which were due but had not
been recovered and did not encounter any difficulty in making withdrawal.
14. HOUSING REFORMS
In 1998, the Company incurred a loss of RMB84.09 million due to the
discount offered to its employees to purchase staff accommodations.
In accordance with IFRS, the loss was capitalized. The staff cost
associated with the Company's employee housing reform programs was
amortized on a straight-line basis over the remaining expected average
employment period of the relevant employees.
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14 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Review of Significant Events
----------------------------
From 1st January, 1998 to 30th June, 2003, the total amount amortized was
RMB35.91 million. The amount amortized in the first half of 2003 was
RMB4.6 million. As at 30th June, 2003, the above remaining deferred staff
cost was approximately RMB48.18 million. In the opinion of the Board, if
the aforesaid deferred staff cost was completely written off in the first
half of 2003, the net assets of the Company as at 30th June, 2003 would be
reduced by approximately RMB48.18 million. Other than the employees'
housing reform programme mentioned above, the Company has not implemented
any employees' housing plan.
15. APPLICATION FOR THE RESUMPTION OF TRADING OF A SHARES
After the announcement of the interim results for the six months ended
30th June, 2003, the Company will have satisfied the requirements for
resumption of trading as stipulated in the Listing Rules of the Shenzhen
Stock Exchange and the Board has resolved to apply for the resumption of
trading of its A shares. Once approved, the Company's A shares will resume
trading on the Shenzhen Stock Exchange.
16. OTHER EVENTS
An announcement regarding the suspension of the shares of the Company was
published in the China Securities and the Securities Times on April 30,
2003, and posted on the website of http://www.cninfo.com.cn which can be
viewed after the input of the Company's stock code.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 15
Financial Statements
- --------------------
The Board hereby announces the audited interim results of the Company and the
Group for the six months ended 30th June, 2003 prepared under the PRC GAAP and
the unaudited interim results prepared under the IFRS. The Company's Audit
Committee and management have reviewed the accounting principles, accounting
standards and measures adopted by the Group, and have reviewed the relevant
auditing affairs, internal supervision and financial reports, including the
audited financial statement prepared under the PRC GAAP and the unaudited
financial statement prepared under IFRS and the additional information in
respect thereof for the six months ended 30th June, 2003.
UNAUDITED CONSOLIDATED INTERIM CONDENSED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30TH JUNE, 2003
(Prepared under IFRS)
(Amounts in thousands except for per share data)
Six months ended 30th June,
2003 2002
Notes RMB RMB
Turnover 2 9,282,866 4,525,618
Cost of sales (8,527,355) (4,259,866)
---------- ----------
Gross profit 755,511 265,752
Distribution costs (14,910) (13,453)
Administrative expenses (253,128) (181,886)
Shut down of manufacturing assets 4 -- (110,040)
Other operating expenses, net (6,629) 517
---------- ----------
Operating profit(loss) 3 480,844 (39,110)
Interest expense 5 (236,587) (272,064)
Interest income 2,606 412
Exchange loss (8,632) (38,031)
Exchange gain 548 3,112
Share of profit/(loss) of jointly controlled entities 2,825 (4,766)
Share of loss of an associated company (223) (149)
---------- ----------
Profit/(loss) before taxation 241,381 (350,596)
Taxation 6 -- (352)
---------- ----------
Profit/(loss) before minority interests 241,381 (350,948)
Minority interests 1,462 880
---------- ----------
Profit/(loss) attributable to shareholders 242,843 (350,068)
========== ==========
Basic and diluted earnings per share 7 RMB0.07 (RMB0.10)
========== ==========
Dividend 8 -- --
========== ==========
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
16 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
UNAUDITED CONSOLIDATED INTERIM CONDENSED BALANCE SHEET
AS OF JUNE 30, 2003
(Prepared under IFRS)
(Amounts in thousands)
June 30, December 31,
2003 2002
Notes RMB RMB
NON-CURRENT ASSETS
Property, plant and equipment 9 10,177,100 10,687,084
Interests in jointly controlled entities 46,883 44,058
Investment in an associated company 18,686 18,909
Intangible assets 9 677,734 448,852
---------- ----------
10,920,403 11,198,903
---------- ----------
CURRENT ASSETS
Inventories 1,198,083 1,394,228
Value added tax recoverable -- 101,830
Accounts receivable 10 594,975 684,925
Prepaid expenses and other current assets 387,584 252,450
Cash and cash equivalents 16,370 32,805
---------- ----------
2,197,012 2,466,238
---------- ----------
CURRENT LIABILITIES
Accounts payable and accrued liabilities 11 2,844,255 2,186,248
Short-term borrowings 12 4,933,054 5,536,685
---------- ----------
7,777,309 7,722,933
---------- ----------
NET CURRENT LIABILITIES (5,580,297) (5,256,695)
---------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 5,340,106 5,942,208
========== ==========
FINANCED BY:
Share capital 3,561,078 3,561,078
Reserves 2,101,318 2,101,804
Accumulated losses (3,336,606) (3,579,935)
---------- ----------
Shareholders' equity 2,325,790 2,082,947
---------- ----------
Minority interests 31,093 32,456
---------- ----------
NON-CURRENT LIABILITIES
Long-term borrowings 12 2,983,223 3,826,805
---------- ----------
5,340,106 5,942,208
========== ==========
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 17
Financial Statements
- --------------------
UNAUDITED CONSOLIDATED INTERIM CONDENSED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Prepared under IFRS)
(Amounts in thousands)
Six months ended June 30,
2003 2002
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/(loss) for the period 242,843 (350,068)
Depreciation and amortisation 488,684 466,380
Provision for impairment of accounts receivables 31,859 -
Loss on disposal of property, plant and equipment 1,200 107,417
(Increase)/decrease in receivables (27,213) 169,967
Decrease/(increase) in inventories 196,538 (200,865)
Increase in payables 710,006 153,810
Other, net 48,714 (85,258)
---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,692,631 261,383
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (207,853) (507,202)
Acquisition of Jilian (a) (54,000) -
Proceeds from disposal of property, plant and equipment -- 3,088
Dividends received -- 1,860
---------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (261,853) (502,254)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 2,605,947 1,951,685
Repayments of borrowings (4,053,160) (1,715,985)
Dividends paid to minority interests -- (583)
---------- ---------
NET CASH (USED FOR)/PROVIDED
BY FINANCING ACTIVITIES (1,447,213) 235,117
---------- ---------
Decrease in cash and cash equivalents (16,435) (5,754)
Cash and cash equivalents at beginning of period 32,805 36,917
---------- ---------
Cash and cash equivalents at end of period 16,370 31,163
========== =========
(a) Prior to December 2002, the Company had a 65% equity interest in Jilian
(Jilin) Petrochemicals Limited ("Jilian"). In December 2002, the Company
acquired the remaining 35% equity interest in Jilian for a consideration
of RMB135,000 and integrated its business into the Company's. Jilian was
subsequently dissolved in the same month and thereafter became a branch of
the Company. RMB54,000 of the consideration which had not been paid as of
December 31, 2002 was paid during the six months ended June 30, 2003.
The accompanying notes are an integral part of these financial statements.
- -------------------------------------------------------------------------------
18 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
UNAUDITED CONSOLIDATED INTERIM CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Prepared under IFRS)
(Amounts in thousands)
Share Accumulated
capital losses Reserves Total
RMB RMB RMB RMB
Balance at January 1, 2002 3,561,078 (2,558,558) 2,103,526 3,106,046
Net loss for the period -- (350,068) -- (350,068)
Transfer to accumulated losses on
realisation of revaluation reserve -- 486 (486) --
Transfer from accumulated losses
to reserves -- (378) 378 --
--------- ---------- --------- ---------
Balance at June 30, 2002 3,561,078 (2,908,518) 2,103,418 2,755,978
========= ========== ========= =========
Balance at January 1, 2003 3,561,078 (3,579,935) 2,101,804 2,082,947
Net profit for the period -- 242,843 -- 242,843
Transfer to accumulated losses on
realisation of revaluation reserve -- 486 (486) --
--------- ---------- --------- ---------
Balance at June 30, 2003 3,561,078 (3,336,606) 2,101,318 2,325,790
========= ========== ========= =========
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 19
Financial Statements
- --------------------
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30TH JUNE, 2003
(Amounts in thousands unless otherwise stated)
1. Accounting Policies
The unaudited consolidated interim condensed financial statements are
prepared in accordance with IAS 34 "Interim Financial Reporting". The
accounting policies used in the preparation of the consolidated interim
condensed financial statements are consistent with those used in the
preparation of the financial statements for the year ended 31st December,
2002.
Costs that incur unevenly during the financial year are anticipated or
deferred in the interim report only if it would also be appropriate to
anticipate or defer such costs at the end of the financial year.
Income tax expense is recognised based on the best estimate of the
weighted average annual income tax rate expected for the full financial
year. The estimated weighted average annual tax rate used for the
six-month period from 1st January, 2003 to 30th June, 2003 is 33 per cent
(the estimated weighted average tax rate used for the six-month period
from 1st January, 2002 to 30th June, 2002 was 33 per cent).
These unaudited consolidated interim condensed financial statements should
be read in conjunction with the 2002 annual financial statements.
The results of operations for the six months ended June 30, 2003 are not
necessarily indicative of the results to be expected for the full year
ending December 31, 2003.
- --------------------------------------------------------------------------------
20 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
2. Segment Information
Six months ended 30th June, 2003
Petro- Chemical
chemical fertilisers Other
and organic and Synthetic products
Petroleum chemical inorganic rubber and
products products products products services Total
RMB RMB RMB RMB RMB RMB
Revenues 4,021,317 3,939,206 67,166 533,830 721,347 9,282,866
--------- --------- ------ ------- ------- ---------
Segment results 26,321 369,918 (37,652) 137,885 (15,628) 480,844
Finance costs, net (242,065)
Share of profit of a jointly
controlled entity -- 2,825 -- -- -- 2,825
Share of loss of an
associated company -- -- -- -- (223) (223)
---------
Profit before taxation 241,381
=========
Six months ended 30th June, 2002
Petro- Chemical
chemical fertilisers Other
and organic and Synthetic products
Petroleum chemical inorganic rubber and
products products products products services Total
RMB RMB RMB RMB RMB RMB
Revenues 1,505,511 2,173,454 77,562 345,840 423,251 4,525,618
--------- --------- ------ ------- ------- ---------
Segment results (126,163) 115,060 (98,751) 75,863 (5,119) (39,110)
Finance costs, net (306,571)
Share of loss of jointly
controlled entities -- (4,766) -- -- -- (4,766)
Share of loss of an
associated company -- -- -- -- (149) (149)
----------
Loss before taxation (350,596)
==========
All assets and operations of the Group are located in the PRC, which is
considered as one geographic location in an economic environment with
similar risks and returns. Accordingly, no geographic segment information
is presented.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 21
Financial Statements
- --------------------
3. Operating Profit/(loss)
The following items have been charged/(credited) to operating
profit/(loss) during the period:
Six months ended 30th June,
2003 2002
RMB RMB
Depreciation of property, plant and equipment 449,636 430,973
Loss on disposal of property, plant and equipment 1,200 107,417
Provision for impairment of receivables
(included in "administrative expenses") 31,859 --
Reversal of diminution in value of inventories (393) --
Amortisation of intangible assets 39,048 35,407
Research and development expenditure 1,200 3,246
Employee compensation costs 310,800 190,170
4. Shut Down Of Manufacturing Assets
During the period ended June 30, 2002 the Group recorded direct charges
totalling RMB110,040 representing property, plant and equipment
permanently withdrawn from use as a result of management decisions to shut
down certain less efficient manufacturing facilities. The costs to
dismantle or to remove the related shut-down facilities were minimal and
have been included in the profit and loss account.
5. Interest Expense
Six months ended 30th June,
2003 2002
RMB RMB
Interest expense 260,022 295,117
Less: Amount capitalised (23,435) (23,053)
------- -------
236,587 272,064
======= =======
6. Taxation
Six months ended 30th June,
2003 2002
RMB RMB
PRC income tax -- 352
------- -------
-- 352
======= =======
In accordance with PRC tax regulations, tax losses can be carried forward for a
period of 5 years. As the recoverability of these tax losses is uncertain, the
resulting deferred tax benefit arising from these tax losses has not been
recognised in the financial statements.
There is no taxation charge as the Group has sufficient tax losses brought
forward to offset against any current taxable income for the period.
- --------------------------------------------------------------------------------
22 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
7. Basic And Diluted Earnings Per Share
Basic and diluted earnings per share for the six months ended 30th June,
2003 have been computed by dividing the profit attributable to
shareholders of RMB242,843 (2002: loss attributable to shareholders of
RMB350,068) by the number of 3,561,078,000 shares issued and outstanding
for the period.
8. Dividend
The directors do not recommend the payment of an interim dividend for the
six months ended 30th June, 2003 (2002: nil).
9. Property, Plant And Equipment And Intangible Assets
Property, plant
and equipment Intangible assets
RMB RMB
Net book value:
At January 1, 2003 10,687,084 448,852
Additions 208,782 --
Transfers (a) (267,930) 267,930
Disposals (1,200) --
Depreciation/amortisation (449,636) (39,048)
---------- -------
At June 30, 2003 10,177,100 677,734
========== =======
Capital commitments contracted but not provided for:
At June 30, 2003 10,240 --
At December 31, 2002 94,256 --
(a) The intangible asset is the technical know-how relating to the
synthetic ammonia facilities. The synthetic ammonia facilities were
acquired from a German supplier and the construction costs include
an identifiable know-how of USD32,370,000. When the Group paid the
construction cost to the supplier in prior years, the total amount
was recorded in construction in progress (included in property,
plant and equipment), When the facilities were completed and reached
their usable condition in June 2003, the Group transferred the
amount from construction in progress to equipment and intangible
assets, respectively, based on the construction contract.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 23
Financial Statements
- --------------------
10. Accounts Receivable
June 30, December 31,
2003 2002
RMB RMB
Due from third parties 914,979 935,890
Due from related parties
-- PetroChina Group Companies 210,588 242,924
-- CNPC Group Companies -- 691
-- JCGC Group Companies 342,598 346,503
-- Associated company 23,884 24,132
--------- ---------
1,492,049 1,550,140
Less: Provision for impairment loss (897,074) (865,215)
--------- ---------
594,975 684,925
========= =========
Amounts due from related parties are interest free and unsecured. Related
parties are offered credit terms of no more than 30 days.
The ageing analysis of accounts receivable at June 30, 2003 is as follows:
June 30, December 31,
2003 2002
RMB RMB
Within 1 year 231,918 270,587
Between 1 to 2 years 26,041 40,315
Between 2 to 3 years 116,224 706,552
Over 3 years 1,117,866 532,686
--------- ---------
1,492,049 1,550,140
========= =========
Commencing 2002, the Group altered its credit management policy and
implemented a cash sales policy for the majority of its customers. Certain
selected customers are offered credit terms of no more than 30 days.
- --------------------------------------------------------------------------------
24 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
11. Accounts Payable And Accrued Liabilities
June 30, December 31,
2003 2002
RMB RMB
Trade payables 1,302,008 1,226,079
Advances from customers 163,858 251,377
Salaries and welfare payable 164,758 95,411
Other payables and accrued liabilities 339,233 243,511
Amounts due to related parties
-- PetroChina Group Companies 643,530 58,086
-- CNPC Group Companies 62 1,527
-- JCGC Group Companies 229,157 310,257
-- Associated company 1,649 --
--------- ---------
2,844,255 2,186,248
========= =========
Amounts due to related parties are interest free, unsecured and repayable
in accordance with normal commercial terms.
The ageing analysis of trade payables at June 30, 2003 is as follows:
June 30, December 31,
2003 2002
RMB RMB
Within 1 year 1,210,382 1,029,725
Between 1 to 2 years 53,688 126,373
Between 2 to 3 years 9,518 22,784
Over 3 years 28,420 47,197
--------- ---------
1,302,008 1,226,079
========= =========
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 25
Financial Statements
- --------------------
12. Borrowings
June 30, December 31,
2003 2002
RMB RMB
Short-term borrowings 4,933,054 5,536,685
Long-term borrowings 2,983,223 3,826,805
--------- ---------
7,916,277 9,363,490
========= =========
The movements in borrowings can be analysed as follows:
RMB
Balance at January 1, 2003 9,363,490
New borrowings 2,605,947
Repayments of borrowings (4,053,160)
----------
Balance at June 30, 2003 7,916,277
==========
June 30, December 31,
2003 2002
RMB RMB
Unsecured long-term borrowings 4,532,897 5,487,030
Current portion of long-term borrowings (1,549,674) (1,660,225)
---------- ----------
2,983,223 3,826,805
========== ==========
The analysis of the above long-term
borrowings is as follows:
Wholly repayable within five years 3,971,178 4,891,143
Not wholly repayable within five years 561,719 595,887
---------- ----------
4,532,897 5,487,030
Current portion of long-term borrowings (1,549,674) (1,660,225)
---------- ----------
2,983,223 3,826,805
========== ==========
- --------------------------------------------------------------------------------
26 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
12 Borrowings (Cont'd)
Details of long-term borrowings are as follows:
Interest rate and June 30, December 31,
final maturity 2003 2002
RMB RMB
Renminbi denominated loans Floating interest rate at
5.42% to 6.03% per
annum as of June 30,
2003, with maturities
through 2007 2,759,850 2,959,850
US dollar denominated loans Floating interest
rate at 0% to 8.66% per
annum as of June 30,
2003, with maturities
through 2012 1,508,996 2,176,960
Japanese Yen denominated Floating interest rate at
loans 4.10% to 5.30% per
annum as of June 30,
2003, with maturities
through 2008 207,985 248,010
EURO denominated loans Floating interest rate at
2.00% to 8.30% per
annum as of June 30,
2003, with maturities
through 2006 56,066 102,210
--------- ---------
4,532,897 5,487,030
========= =========
The Group's long-term borrowings are repayable as follows:
June 30, December 31,
2003 2002
RMB RMB
Within one year 1,549,674 1,660,225
In the second year 751,958 1,215,761
In the third to fifth year 1,669,546 2,015,157
After the fifth year 561,719 595,887
--------- ---------
4,532,897 5,487,030
========= =========
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 27
Financial Statements
- --------------------
13. Related Party Transactions
Six months ended June 30,
2003 2002
RMB RMB
CNPC Group Companies
Interest expense 162,656 194,110
JCGC Group Companies
Sale of goods 436,180 258,500
Sub-contracting fees 2,420 5,550
Construction of fixed assets 22,609 46,641
Purchase of raw materials and spare parts 59,371 73,431
Fees for welfare and support services 98,200 49,421
PetroChina Group Companies
Purchase of crude oil 4,132,060 2,444,808
Purchase of materials 641,224 297,304
Sale of gasoline 1,350,858 530,276
Sale of diesel oil 2,344,456 784,842
Sale of petrochemical goods 1,614,840 817,313
Jilian (Jilin) Petrochemicals Limited
Sale of petrochemical goods -- 133,103
- --------------------------------------------------------------------------------
28 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
Report of the PRC Auditors
PwC Shen Zi (2003) No. 1557
To the Shareholders of
Jilin Chemical Industrial Company Limited
We have accepted the appointment to audit the balance sheets of Jilin Chemical
Industrial Company Limited (the "Company") and its subsidiaries (the "Group") as
at 30th June, 2003 and the profit and loss accounts, profit appropriation
statements and cash flow statements of the Company and the Group, respectively,
for the six months then ended. The Company's management is responsible for the
preparation of these financial statements. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with China Certified Public Accountants'
Independent Auditing Standards. Those Standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements of the Group and Company present
fairly, in all material respects, the financial position of the Company and the
Group at 30th June, 2003 and their results of operations and cash flows for the
six months then ended in accordance with the Accounting Standards for Business
Enterprises and the Accounting Systems for Business Enterprises of the People's
Republic of China.
PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd.
31st July, 2003
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 29
Financial Statements
- --------------------
BALANCE SHEETS AS AT JUNE 30, 2003
(Prepared under PRC GAAP)
In Rmb Yuan
June 30, December 31, June 30, December 31,
2003 2002 2003 2002
Group Group Company Company
ASSETS
CURRENT ASSETS
Cash and bank (Note V-1) 16,369,841 32,804,641 12,758,582 29,575,296
Short-term investments
Notes receivable (Note V-2) 5,670,368 6,355,009 4,574,368 6,355,009
Dividend receivable
Interest receivable
Accounts receivable (Note V-3) 589,304,946 678,569,672 659,495,170 703,699,081
Other receivables (Note V-4) 58,438,146 53,421,209 36,080,752 34,320,967
Advances to suppliers (Note
V-5) 316,986,864 181,636,501 316,756,119 181,392,379
Subsidy receivable
Inventories (Note V-6) 1,198,082,667 1,394,227,961 1,182,350,205 1,385,901,762
Prepaid expenses (Note V-7) 12,158,640 17,392,209 11,854,938 16,749,750
Long-term bond investments
maturing within one year
Other current assets
-------------- -------------- -------------- --------------
Total current assets 2,197,011,472 2,364,407,202 2,223,870,134 2,357,994,244
-------------- -------------- -------------- --------------
LONG-TERM INVESTMENTS
Long-term equity investments
(Note V-8) 65,568,959 62,967,330 172,483,876 173,718,909
Long-term bond investments
-------------- -------------- -------------- --------------
Total long-term investments 65,568,959 62,967,330 172,483,876 173,718,909
-------------- -------------- -------------- --------------
Including: Consolidation
difference
FIXED ASSETS
Fixed assets-cost 15,708,268,556 14,256,524,163 15,339,511,602 13,888,213,906
Less: Accumulated
depreciation (5,467,509,076)(5,044,779,819)(5,318,803,360)(4,907,349,217)
-------------- -------------- -------------- --------------
Fixed assets-net book value 10,240,759,480 9,211,744,344 10,020,708,242 8,980,864,689
Less: Impairment of fixed
assets (323,843,932) (323,843,932) (309,861,188) (309,861,188)
-------------- -------------- -------------- --------------
Fixed assets-net book amount
(Note V-9) 9,916,915,548 8,887,900,412 9,710,847,054 8,671,003,501
Construction materials 2,362,490 4,525,097 2,362,490 4,525,097
Construction in progress
(Note V-10) 79,161,926 1,590,672,260 79,161,926 1,590,672,260
Fixed assets pending disposal
-------------- -------------- -------------- --------------
Total fixed assets 9,998,439,964 10,483,097,769 9,792,371,470 10,266,200,858
-------------- -------------- -------------- --------------
INTANGIBLE AND OTHER ASSETS
Intangible assets (Note V-11) 1,525,843,758 1,303,212,386 1,524,739,674 1,302,048,855
Long-term deferred expenses
(Note V-12) 101,602,114 122,546,224 101,602,114 122,546,224
Other long-term assets
-------------- -------------- -------------- --------------
Total intangible and other
assets 1,627,445,872 1,425,758,610 1,626,341,788 1,424,595,079
-------------- -------------- -------------- --------------
DEFERRED TAXES
Deferred tax assets
-------------- -------------- -------------- --------------
TOTAL ASSETS 13,888,466,267 14,336,230,911 13,815,067,268 14,222,509,090
============== ============== ============== ==============
The accompanying notes form an integral part of these financial statements.
- --------------------------------------------------------------------------------
30 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
BALANCE SHEETS AS AT JUNE 30, 2003 (Cont'd)
(Prepared under PRC GAAP)
In Rmb Yuan
June 30, December 31, June 30, December 31,
2003 2002 2003 2002
Group Group Company Company
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term loans (Note V-13) 3,383,380,000 3,876,460,000 3,333,780,000 3,792,860,000
Notes payable
Accounts payable (Note V-14) 1,498,613,355 1,424,133,274 1,507,515,328 1,422,262,548
Advances from customers
(Note V-14) 695,039,324 257,236,354 688,310,448 246,439,988
Salaries payable 128,293,801 73,643,339 114,500,243 64,289,563
Welfare payable 36,464,268 21,767,283 28,219,563 15,227,441
Dividend payable
Taxes payable (Note V-15) 131,981,409 (86,116,348) 131,247,303 (86,999,589)
Other levies payable
Other payables (Note V-14) 204,544,172 365,354,975 236,174,744 396,753,167
Accrued expenses (Note V-16) 149,317,308 28,397,947 145,580,208 28,397,947
Provisions
Long-term liabilities due
within one year (Note V-17) 1,549,673,896 1,660,224,778 1,549,673,896 1,660,224,778
Other current liabilities
-------------- -------------- -------------- --------------
Total current liabilities 7,777,307,533 7,621,101,602 7,735,001,733 7,539,455,843
-------------- -------------- -------------- --------------
LONG-TERM LIABILITIES
Long-term loans (Note V-18) 2,621,935,627 2,935,908,319 2,621,935,627 2,935,908,319
Debentures payable
Payables due after one year
Special project payables
Other long-term liabilities
(Note V-19) 361,287,844 890,896,547 361,287,844 890,896,547
-------------- -------------- -------------- --------------
Total long-term liabilities 2,983,223,471 3,826,804,866 2,983,223,471 3,826,804,866
-------------- -------------- -------------- --------------
DEFERRED TAXES
Deferred tax liabilities
TOTAL LIABILITIES 10,760,531,004 11,447,906,468 10,718,225,204 11,366,260,709
MINORITY INTERESTS 31,093,199 32,455,217 -- --
SHAREHOLDERS' EQUITY
Share capital (Note V-20) 3,561,078,000 3,561,078,000 3,561,078,000 3,561,078,000
Capital surplus (Note V-21) 2,293,618,886 2,293,618,886 2,293,618,886 2,293,618,886
Statutory common reserve fund
(Note V-22) 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 (Note V-23) (3,459,297,539)(3,700,270,377)(3,451,585,070)(3,692,178,753)
Foreign exchange difference
reserve
-------------- -------------- -------------- --------------
Total shareholders' equity 3,096,842,064 2,855,869,226 3,096,842,064 2,856,248,381
-------------- -------------- -------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 13,888,466,267 14,336,230,911 13,815,067,268 14,222,509,090
============== ============== ============== ==============
The accompanying notes form an integral part of these financial statements.
Person in charge of accounting Person in charge of accounting
Legal representative: General manager: function (Chief accountant): department:
Yu Li Shi Jianxun Lan Yunsheng Liao Hongwei
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 31
Financial Statements
- --------------------
PROFIT AND LOSS ACCOUNTS FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Prepared under PRC GAAP)
In Rmb Yuan
2003 (1-6) 2002 (1-6) 2003 (1-6) 2002 (1-6)
Items Group Group Company Company
(Unaudited) (Unaudited)
1. SALES REVENUE (Note V-24) 8,885,128,786 4,270,057,757 8,835,299,367 4,229,890,817
Less: Cost of sales (Note
V-25) (7,802,301,759)(3,848,482,144)(7,770,491,789)(3,823,707,081)
Sales tax and other
levies (Note V-26) (326,511,639) (162,840,893) (326,511,639) (162,840,893)
-------------- -------------- -------------- --------------
2. GROSS PROFIT ON SALES 756,315,388 258,734,720 738,295,939 243,342,843
Add: Other operating profit 3,182,806 11,398,269 11,927,329 15,758,290
Less: Selling expenses (14,910,036) (13,452,431) (14,847,499) (10,677,016)
General and
administrative expenses (244,546,602) (176,934,371) (233,908,546) (168,890,091)
Financial expenses, net
(Note V-27) (244,032,163) (306,570,325) (240,776,916) (303,058,952)
-------------- -------------- -------------- --------------
3. OPERATING PROFIT/(LOSS) 256,009,393 (226,824,138) 260,690,307 (223,524,926)
Add: Investment income/(loss)
(Note V-28) 2,601,629 (4,915,624) (1,235,033) (7,792,288)
Subsidy income 502,000 -- 502,000 --
Non-operating income 284,874 2,649,230 224,556 2,649,230
Less: Non-operating expenses
(Note V-29) (19,887,076) (123,968,075) (19,588,147) (123,657,612)
-------------- -------------- -------------- --------------
4. TOTAL PROFIT/(LOSS) 239,510,820 (353,058,607) 240,593,683 (352,325,596)
Less: Income tax (Note V-30) -- (351,996) -- --
Minority interests 1,462,018 879,562 -- --
-------------- -------------- -------------- --------------
5. NET PROFIT/(LOSS) 240,972,838 (352,531,041) 240,593,683 (352,325,596)
============== ============== ============== ==============
Supplementary Information
2003 (1-6) 2002 (1-6)
Group Company Group Company
(Unaudited) (Unaudited)
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 -- -- -- --
The accompanying notes form an integral part of these financial statements.
Person in charge of accounting Person in charge of accounting
Legal representative: General manager: function (Chief accountant): department:
Yu Li Shi Jianxun Lan Yunsheng Liao Hongwei
- --------------------------------------------------------------------------------
32 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
PROFIT APPROPRIATION STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Prepared under PRC GAAP)
In Rmb Yuan
2003 (1-6) 2002 (1-6) 2003 (1-6) 2002 (1-6)
Items Group Group Company Company
(Unaudited) (Unaudited)
1. NET PROFIT/(LOSS) 240,972,838 (352,531,041) 240,593,683 (352,325,596)
Add: Accumulated losses at
the beginning of
the period (3,700,270,377) (2,674,016,796) (3,692,178,753) (2,666,061,079)
Transfer from other
sources
-------------- -------------- -------------- --------------
2. ACCUMULATED LOSSES (3,459,297,539) (3,026,547,837) (3,451,585,070) (3,018,386,675)
Less: Transfer
to statutory
common reserve fund -- (378,181) -- --
Transfer to statutory
common welfare fund
Transfer to staff and
workers' bonus and
welfare fund -- (142,839) -- --
-------------- -------------- -------------- --------------
3. ACCUMULATED LOSSES (3,459,297,539) (3,027,068,857) (3,451,585,070) (3,018,386,675)
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 PERIOD (3,459,297,539) (3,027,068,857) (3,451,585,070) (3,018,386,675)
============== ============== ============== ==============
The accompanying notes form an integral part of these financial statements.
Person in charge of accounting Person in charge of accounting
Legal representative: General manager: function (Chief accountant): department:
Yu Li Shi Jianxun Lan Yunsheng Liao Hongwei
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 33
Financial Statements
- --------------------
CASH FLOW STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Prepared under PRC GAAP)
In Rmb Yuan
2003 (1-6) 2002 (1-6) 2003 (1-6) 2002 (1-6)
Items Group Group Company Company
(Unaudited) (Unaudited)
1. Cash flows from operating activities
Cash received from sale of goods or
rendering of services 11,908,843,011 5,845,413,644 11,786,033,145 5,759,160,611
Refund of tax 502,000 -- 502,000 --
Cash received relating to other
operating activities 2,649,983 798,065 2,019,502 228,726
-------------- -------------- -------------- --------------
Sub-total of cash inflows 11,911,994,994 5,846,211,709 11,788,554,647 5,759,389,337
-------------- -------------- -------------- --------------
Cash paid for goods and services (9,051,827,111) (4,673,956,744) (9,005,453,099) (4,651,109,717)
Cash paid to and on behalf of
employees (150,202,553) (190,173,535) (131,067,198) (184,363,533)
Payment of all types of taxes (593,663,007) (393,120,719) (582,892,448) (383,599,238)
Cash paid relating to other
operating activities (204,103,390) (66,439,098) (193,439,296) (50,660,596)
-------------- -------------- -------------- --------------
Sub-total of cash outflows (9,999,796,061) (5,323,690,096) (9,912,852,041) (5,269,733,084)
Net cash flows from operating
activities 1,912,198,933 522,521,613 1,875,702,606 489,656,253
-------------- -------------- -------------- ---------------
2. Cash flows from investing
activities
Cash received from sale of investments
Cash received from return of
investments -- 1,860,000 -- 23,160,296
Net cash received from disposal of
fixed assets 240,713 3,088,147 220,320 3,088,147
Cash received relating to other
investing activities
-------------- -------------- -------------- --------------
Sub-total of cash inflows 240,713 4,948,147 220,320 26,248,443
-------------- -------------- -------------- --------------
Cash paid to acquire fixed assets,
intangible
assets and other long-term assets (207,853,068) (507,202,221) (207,656,498) (495,883,377)
Cash paid to acquire investments (54,000,000) -- (54,000,000) --
Cash paid relating to other
investing activities
-------------- -------------- -------------- --------------
Sub-total of cash outflows (261,853,068) (507,202,221) (261,656,498) (495,883,377)
-------------- -------------- -------------- --------------
Net cash flows from investing
activities (261,612,355) (502,254,074) (261,436,178) (469,634,934)
-------------- -------------- -------------- --------------
- --------------------------------------------------------------------------------
34 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
CASH FLOW STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (Cont'd)
(Prepared under PRC GAAP)
In Rmb Yuan
2003 (1-6) 2002 (1-6) 2003 (1-6) 2002 (1-6)
Items Group Group Company Company
(Unaudited) (Unaudited)
3. Cash flows from financing
activities
Proceeds from issuing shares
Including: Cash received from
minority shareholders
Proceeds from borrowings 2,605,946,898 1,951,685,139 2,566,346,898 1,937,685,139
Cash received relating to other
financing activities
-------------- -------------- -------------- --------------
Sub-total of cash inflows 2,605,946,898 1,951,685,139 2,566,346,898 1,937,685,139
-------------- -------------- -------------- --------------
Repayment of borrowings (4,053,159,175) (1,715,985,498) (3,979,559,175) (1,701,985,498)
Cash paid for interest expense and
distribution of dividends (219,809,101) (261,721,339) (217,870,865) (257,062,871)
Including: Dividends paid to minority
shareholders -- (582,591) -- --
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 (4,272,968,276) (1,977,706,837) (4,197,430,040) (1,959,048,369)
-------------- -------------- -------------- --------------
Net cash flows from financing
activities (1,667,021,378) (26,021,698) (1,631,083,142) (21,363,230)
-------------- -------------- -------------- --------------
4. Effect of foreign exchange rate
changes on cash
-------------- -------------- -------------- --------------
5. Net decrease in cash and cash
equivalents (16,434,800) (5,754,159) (16,816,714) (1,341,911)
============== ============== ============== ==============
The accompanying notes form an integral part of these financial statements.
Person in charge of accounting Person in charge of accounting
Legal representative: General manager: function (Chief accountant): department:
Yu Li Shi Jianxun Lan Yunsheng Liao Hongwei
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 35
Financial Statements
- --------------------
CASH FLOW STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (Cont'd)
Supplementary Information
In Rmb Yuan
2003 (1-6) 2002 (1-6) 2003 (1-6) 2002 (1-6)
Items Group Group Company Company
(Unaudited) (Unaudited)
1. Reconciliation of net
profit/(loss) to cash flows
from operating activities
Net profit/(loss) 240,972,838 (352,531,041) 240,593,683 (352,325,596)
Add:Minority interests (1,462,018) (879,562) -- --
Provision for impairment of assets 31,465,652 -- 31,228,655 --
Depreciation of fixed assets 423,148,242 341,885,084 411,693,390 331,677,158
Amortization of intangible assets 45,298,355 42,394,092 45,238,908 42,347,157
Amortization of long-term
deferred expenses 22,107,234 84,704,139 22,107,234 84,704,139
Decrease in prepaid expenses 5,233,569 6,055,436 4,894,812 6,490,447
Increase in accrued expenses 104,141,778 34,006,926 100,404,678 32,305,604
Gain on disposal of fixed assets (240,713) (2,623,190) (220,320) (2,623,190)
Loss on scrapping of fixed assets 1,199,780 110,040,000 1,179,632 110,040,000
Financial expenses 236,586,684 272,063,883 234,648,448 267,983,171
Investment loss/(income) (2,601,629) 4,915,624 1,235,033 7,792,288
Deferred tax debit
Decrease/(Increase) in inventories 196,538,667 (200,864,914) 204,181,927 (182,366,848)
Increase/(Decrease) in
operating receivables (82,486,958) 116,320,706 (122,757,985) 81,008,341
Increase in operating payables 692,297,452 67,034,430 701,274,511 62,623,582
-------------- -------------- -------------- --------------
Net cash flows from operating
activities 1,912,198,933 522,521,613 1,875,702,606 489,656,253
============== ============== ============== ==============
2. Investing and financing activities
that do not involve cash
receipts and payments
Investments in the form of
fixed assets
Convertible bonds maturing
within one year
Finance lease of fixed assets
-------------- -------------- -------------- --------------
3. Net decreases in cash and
cash equivalents
Cash at the end of the period 16,369,841 31,162,843 12,758,582 23,819,438
Less: Cash at the beginning
of the period (32,804,641) (36,917,002) (29,575,296) (25,161,349)
Cash equivalents at the end
of the period
Less: Cash equivalents at the
beginning of the period
-------------- -------------- -------------- --------------
Net decreases in cash and
cash equivalents (16,434,800) (5,754,159) (16,816,714) (1,341,911)
============== ============== ============== ==============
The accompanying notes form an integral part of these financial statements.
Person in charge of accounting Person in charge of accounting
Legal representative: General manager: function (Chief accountant): department:
Yu Li Shi Jianxun Lan Yunsheng Liao Hongwei
- --------------------------------------------------------------------------------
36 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(All amounts are stated in Rmb Yuan unless otherwise stated)
I. CORPORATE INFORMATION
Jilin Chemical Industrial Company Limited (the "Company") was established
in the People's Republic of China (the "PRC") on December 13, 1994 as a
joint stock limited company upon the restructuring of Jilin Chemical
Industrial Corporation. The principal activities of the Company are the
production and sale of petroleum products, petrochemical and organic
chemical products, synthetic rubber products, chemical fertilizers and
inorganic chemical products, and other related products, and the provision
of related services.
In accordance with the restructuring agreement, the Company issued
2,396,300,000 state-owned shares with a par value of RMB1.00 each to Jilin
Chemical Industrial Corporation to take over the assets and liabilities of
the principal production units, certain ancillary functions and a
subsidiary of Jilin Chemical Industrial Corporation. Jilin Chemical
Industrial Corporation then changed its name to Jilin Chemical Group
Corporation ("JCGC") and became the Company's immediate holding company.
As a state-owned enterprise, JCGC was originally controlled and
administered by Jilin provincial government, as well as supervised by the
National Administration of Petroleum and Chemical Industries. According to
the restructuring regulations promulgated by the State Council of the PRC,
JCGC, together with certain oil fields and oil distribution companies,
became wholly-owned subsidiaries of China National Petroleum Corporation
("CNPC") since July 1, 1998. Therefore, CNPC becomes the ultimate holding
company of the Company through its control over JCGC. Since then, the
Company has been receiving continuing support from CNPC for its working
capital requirements. At the date of this report, China Petroleum Finance
Company Limited ("CP Finance"), subsidiary of CNPC, has agreed to provide
credit facilities of RMB8 billion to the Company (see Note V 13).
In 1999, CNPC and its subsidiaries underwent a corporate restructuring
(the "Corporate Restructuring"). According to the Corporate Restructuring,
CNPC transferred the 2,396,300,000 state-owned shares of the Company owned
by JCGC, together with certain assets and business undertakings of JCGC,
to PetroChina Company Limited ("PetroChina"), a wholly-owned subsidiary of
CNPC established on November 5, 1999. Accordingly, PetroChina becomes the
Company's immediate holding company.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 37
Financial Statements
- --------------------
II. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND BASIS OF
PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
1 Basis of preparation of the financial statements
The financial statements have been prepared in accordance with the
Accounting Standards for Business Enterprises and the Accounting
Systems for Business Enterprises and related regulations as
promulgated by the Ministry of Finance of the People's Republic of
China.
2. Accounting period
The Group's accounting period starts on January 1 and ends on
December 31.
3. Reporting currency
The Group uses the Renminbi ("RMB") as its reporting currency.
4. Basis of accounting
The Group uses the accrual method as its basis of accounting. Assets
are recorded at their acquisition costs. Subsequently, if the assets
are impaired, impairment provisions are made accordingly.
5. Foreign currency transactions
Transactions denominated in foreign currencies are translated into
RMB at the exchange rates stipulated by the People's Bank of China
prevailing at the transaction dates. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are
translated into RMB at the exchange rates stipulated by the People's
Bank of China at the balance sheet date. Exchange differences
arising from these translations are taken to the profit and loss
account, except for those relating to funds borrowed to finance the
acquisition of fixed assets during the construction period which
have been capitalized.
6. Cash and cash equivalents
For the purposes of the cash flow statements, cash refers to all
cash on hand and deposits held at call with banks. Cash equivalents
refer to short-term, highly liquid investments (with original
maturities of 3 months or less) that are readily convertible into
known amounts of cash and which are subject to an insignificant risk
of changes in value.
Restricted cash, including time deposits with original maturities in
excess of three months, and deposits that have been pledged are not
included as cash and cash equivalents in the cash flow statements.
7. Receivables and provision for bad debts
Receivables refer to accounts receivable and other receivables.
Provision for bad debts is made for possible bad debt losses using
the "allowance method". Specific provisions are made based on a
detailed review of the collectibility of the receivable balances.
- --------------------------------------------------------------------------------
38 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
Bad debts are recognized and accounts receivable are written off
against the provision for bad debts where there is objective
evidence (including liquidation, bankruptcy, negative equity, and
significant cash flow problems of debtors, etc.) indicating that the
accounts receivable are uncollectible.
8. Inventories
Inventories, which comprise raw materials, work in progress,
finished goods, low value consumables and packing materials, are
stated at cost. The cost of raw materials used and the sale of
finished goods are accounted for on the weighted average basis. The
cost of low value consumables and packing materials are charged to
production overhead expenditures upon usage. Finished goods and work
in progress comprise raw materials, direct labor and an appropriate
allocation of all indirect production overhead expenditures based on
normal operating capacity.
Inventories are stated at the lower of cost and net realizable
value. Provision for loss on realization of inventories is made
based on the excess of their original costs over their net
realizable value. Net realizable value is the estimated selling
price in the ordinary course of business less the estimated costs of
completion, selling expenses and related taxes.
9. Long-term investments
Long-term investments represent investments in other enterprises
that the Company intends to hold for more than one year.
The cost of long-term investments is stated at the actual amount
paid (or book value of invested assets) including related taxes.
Investments in entities in which the Company owns not less than 20%
of the voting rights, or owns less than 20% of the voting rights but
in which the Company is in a position to exercise significant
influence on the financial and operating policies, are accounted for
using the equity method. Investments in entities in which the
Company owns less than 20% of the voting rights, or owns more than
20% of the voting rights but in which the Company has no significant
influence on the financial and operating policies, are stated at
cost.
Entities accounted for using the equity method include subsidiaries,
jointly controlled entities, and associated companies. Subsidiaries
refer to those entities in which the Company directly or indirectly
owns more than 50% of the voting rights, or owns less than 50% of
the voting rights but has the power to govern their financial and
operating policies and consequently is able to obtain benefits from
the operating activities of these entities. Jointly controlled
entities refer to entities which are jointly controlled by the
Company and its joint venture partners. Associated companies refer
to entities in which the Company has significant influence.
When equity method is adopted for long-term equity investments, the
difference between the original investment cost and the share of the
invested company's net assets is recognized as "equity investment
difference", which is amortized on the straight-line basis over 10
years.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 39
Financial Statements
- --------------------
Provision for diminution in value of long-term investments is made
when the recoverable amount of the investments is lower than their
carrying amount due to continuing decrease in their market prices or
a deterioration in the invested companies' operations which are not
expected to be recovered in the foreseeable future.
10. Fixed assets and depreciation
Fixed assets refer to buildings, plant and equipment relating to the
production and operation of the Company with useful lives of more
than one year and individual cost of more than RMB2,000.
Fixed assets purchased or constructed are recorded at cost, or at
the appraised amount as approved by the state assets administration
authorities pursuant to the Company's restructuring.
Costs for major re-construction, extension and improvements of fixed
assets are capitalized. Costs for repair and maintenance of fixed
assets are expensed as incurred.
Depreciation of fixed assets is calculated on the straight-line
basis over the estimated useful lives, after taking into account
their residual value. For those fixed assets against which provision
for impairment has been made, the depreciation rates are determined
based on the net book amounts of these assets and their remaining
useful lives.
The categories, estimated useful life, residual value and annual
depreciation rate of fixed assets are as follows:
Estimated Estimated Annual
useful life value residual depreciation rate
Buildings 10 to 45 years 3% 2.15-- 9.70%
Plant and machinery 10 to 28 years 3% 3.46-- 9.70%
Equipment 8 to 28 years 3% 3.46--12.13%
Motor vehicles 12 years 3% 8.00%
Fixed assets are stated at the lower of the carrying amount and
recoverable amount. An impairment provision, representing the excess
of the carrying amount over the recoverable amount, is made when the
economic benefits that the fixed assets can bring to the Group are
negatively impacted. An impairment provision of the whole carrying
amount is made when the fixed assets could not bring any economic
benefits to the Group.
11. Construction in progress
Construction in progress represents capital assets under
construction or installation and is stated at cost. Cost comprises
original cost of equipment, construction cost, installation cost,
other direct costs including borrowing costs on specific loans to
finance the capital assets before they reach usable condition.
Construction in progress is transferred to fixed assets when it has
reached its expected usable condition.
- --------------------------------------------------------------------------------
40 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
An impairment provision, based on the excess of the carrying amount
over the recoverable amount, is made when the construction in
progress has been discontinued for a long period of time and is not
expected to restart in the foreseeable future, or the construction
project has become functionally or technologically obsolete, and an
uncertainty exists as to whether the project can bring future
economic benefits to the Group.
12. Borrowing costs
Borrowing costs including interest incurred, amortization of
discounts or premiums, ancillary costs incurred, and exchange
differences in connection with specific borrowings pertaining to the
acquisition or construction of fixed assets are capitalized as part
of the cost of the fixed assets if the capital expenditures and
borrowing costs have been incurred; and the activities that are
necessary to prepare the asset for its intended use have been
commenced. Capitalization of borrowing costs ceases when the fixed
assets have reached their expected usable condition. Borrowing costs
incurred thereafter are recognized as expenses in the period in
which they are incurred.
The amount of interest costs capitalized is determined based on the
cumulative expenditures incurred for the acquisition or construction
of a fixed asset and the weighted average interest rate, and is
limited to the actual amount of interest incurred on the specific
borrowings during the period. Exchange differences and ancillary
costs arising from specific borrowings are capitalized based on the
actual amounts incurred.
All other borrowing costs are recorded as financial expenses as
incurred.
13. Intangible assets and amortization
Intangible assets include land use rights and technical know-how.
Land use rights are stated at acquisition cost, or at the appraised
amount as approved by the state assets administration authorities
pursuant to the Group's restructuring. Land use rights are amortized
using the straight-line method over a period of 50 years.
Commencing January 1, 2001, the cost of land use rights purchased or
obtained by way of payment of a land use fee is stated at the actual
amount paid and is recorded as intangible assets. The carrying value
of land use rights will be transferred to construction in progress
when the land is developed for self-use projects.
Technical know-how represents the purchased cost of technical
know-how relating to certain production facilities. The costs of
know-how are included as part of the total contract price of the
construction contract and are distinguishable. They are amortized
using the straight-line method over the estimated useful life
starting from the date when the underlying facilities are completed
and ready for their intended use.
An impairment provision, representing the excess of the carrying
amount over the recoverable amount, is made when the economic
benefits that the intangible assets can bring to the Group are
negatively impacted. An impairment provision of the whole carrying
amount is made when the intangible assets could not bring any
economic benefits to the Group.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 41
Financial Statements
- --------------------
14. Long-term deferred expenses
Long-term deferred expenses refer to those expenses which have been
paid and should be amortized over one year (not including one year)
and mainly include catalyst. Long-term deferred expenses are
amortized on the straight-line basis over the beneficial period.
The unamortized balance of deferred expenses is expensed when the
project can no longer bring any economic benefits to the Group.
15. Provisions
Provisions are recognized when the Group has a present obligation as
a result of past events, it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the related amount can be
made.
16. Employee social security benefits
The Group participates in employee social security plans, including
pension, medical, housing and other welfare benefits, organized by
government authorities in accordance with relevant regulations.
Except for the above social security benefits, the Group has no
other material commitment with respect to employee welfare benefits.
According to the relevant regulations, premium and welfare benefit
contributions accrued and remitted to the social welfare authorities
are calculated based on percentages of the total salaries of
employees, subject to certain ceilings. Contributions to the plans
are charged to the profit and loss account as incurred.
17. Revenue recognition
Sales--
Sales are recognized when the significant risk and rewards of
ownership of products are transferred to the buyer; the Group
retains neither continuing managerial involvement nor effective
control over the products; the economic benefits arising from the
transaction can flow into the Group; and the related cost and
revenue can be reliably measured.
Cash discounts are recorded as financial expenses when incurred.
Sales discounts are netted off against sales when incurred.
Service income--
Service income is recognized when services are rendered and
completed in the same accounting period. For services started in one
year and completed in the following year, revenue is recognized
using the percentage of completion method at the balance sheet date
if the outcome of the service transaction can be reliably estimated.
- --------------------------------------------------------------------------------
42 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
Other revenues are recognized on the following bases:
Interest income--
recognized on a time proportion basis based on the amounts deposited
and the effective yield;
Subsidy income--
recognized when received.
18. Accounting for income tax
The Group accounts for enterprise and local income taxes using the
liability method under the deferred tax method. Cumulative income
taxes at the end of each period are adjusted by applying the
currently enacted tax rates on timing differences.
Deferred income tax assets are recognized to the extent that it is
probable that taxable income will be available against which timing
differences can be utilized in the near future. Other timing
differences are treated as permanent differences.
19. Basis of consolidation
Consolidated financial statements include the financial statements
of the Company and its consolidated subsidiaries and are prepared in
accordance with the circular (1995) No. 11 "Provisional Regulations
on Consolidated Financial Statements" and other relevant regulations
issued by the Ministry of Finance of the People's Republic of China.
The Company starts to consolidate the revenue, cost and profit of
its subsidiaries from the date it acquires effective control of the
subsidiaries; and ceases to consolidate from the date effective
control is lost. All material transactions, balances and unrealized
profits between the Company and its consolidated subsidiaries have
been eliminated in preparing the consolidated financial statements.
Minority interests in the consolidated financial statements refer to
the portion of the consolidated subsidiaries' equity that the Group
does not own.
In the event that the accounting policies of the consolidated
subsidiaries are not consistent with those of the Company, and the
difference caused by the inconsistency has a significant impact on
the consolidated financial statements, adjustment is made to ensure
compliance with the Company's accounting policies.
In accordance with the circular (1996) No. 2 "Comments on the
Consolidation Scope for the Purpose of Consolidated Financial
Statements", subsidiaries and jointly controlled entities whose
revenue is below 10% of that of the Company, total assets below 10%
of those of the Company and total profit below 10% of that of the
Company are not consolidated.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 43
Financial Statements
- --------------------
III. TAXATION
The principal types of taxes applicable to the Group are as follows:
(i) Value added tax ("VAT")-- the Group's sales revenue is subject to
VAT at 17%. VAT payable is the net difference between periodic
output VAT and deductible input VAT.
(ii) Business tax ("BT")-- the Group's gross service income is subject to
BT at 5%.
(iii) Consumption tax ("CT")-- the Group's sales of gasoline and diesel
oil are subject to CT at RMB277.6 per ton and RMB117.6 per ton,
respectively.
(iv) Income tax-- the Group is subject to income tax at 33% of its
taxable income.
(v) City construction and maintenance tax ("CCMT")-- the Group is
subject to CCMT at 7% of the total VAT, BT and CT payable.
(vi) Education levy ("EL")-- the Group is subject to EL at 3% of the
total VAT, BT and CT payable.
Jilin Winsway Chemical Industrial Store and Transport Limited ("Winsway"),
a subsidiary of the Company, is a sino-foreign equity joint venture and is
eligible for a tax holiday of full exemption from income tax for the first
two years starting from its first profitable year of operation, which is
1996, followed by a 50% reduction in the income tax rate (ie: 15%) from
the third to fifth years in accordance with the tax regulations. In
accordance with circular (1999) No. 172 issued by State Administration of
Taxation, foreign investment enterprises located in the mid-west area are
eligible to a reduced tax rate of 15% for three years after the expiry of
the tax holiday. Accordingly, Winsway is subject to income tax at 15% for
the three years from 2001.
Jilin City Songmei Acetic Co., Ltd. ("Songmei"), another subsidiary of the
Company, is a sino-foreign cooperative joint venture and is eligible for a
tax holiday of full exemption from income tax for the first two years
starting from its first profitable year of operation followed by a 50%
reduction in the income tax rate from the third to fifth years in
accordance with the tax regulations. Songmei is exempted from income tax
for 2000 and 2001, being the first two profitable years. In 2002 and 2003,
Songmei is subject to income tax at 15%.
Jilin Jihua Jianxiu Company Limited ("Jianxiu"), a subsidiary of the
Company established in 2001, is subject to income tax at 33%.
Jilin Province BASF JCIC NPG Co., Ltd. ("BASF"), a jointly controlled
entity of the Company, is a sino-foreign equity joint venture and is
eligible for a tax holiday of full exemption from income tax for the first
two years starting from its first profitable year of operation followed by
a 50% reduction in the income tax rate from the third to fifth years. BASF
commenced operation in 1998, and has incurred losses from 1998 to June
2003, accordingly no provision for income tax is required.
Jilin Lianli Trading Company Limited ("Lianli"), an associated company
established in 2001, is subject to income tax at 33%.
- --------------------------------------------------------------------------------
44 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
IV. MAJOR SUBSIDIARIES AND JOINTLY CONTROLLED ENTITIES
Registered/ Investment Percentage of Remarks
Name of enterprise paid-in capital Business scope amount equity held
Subsidiaries
Winsway 51,454,000 Provision of 36,154,000 70% Consolidated
transportation services entity
for chemical materials
and products
Songmei 72,000,000 Manufacturing of 47,660,421 66% Consolidated
acetic acid entity
Jianxiu 45,200,000 Machinery repair 44,537,759 99% Consolidated
and installation entity
Jilin Xinghua 25,668,000 Manufacturing of 19,250,000 75% Unconsolidated
Nitrochloro-benzene nitrochloro-benzene entity (note i)
Company Limited ("Xinghua")
Jointly controlled entities
BASF 150,000,000 Manufacturing of 60,066,150 40% Unconsolidated
petrochemical products entity (note ii)
(i) Xinghua has ceased its production and started liquidation in 2000 as
it incurred substantial losses and had a negative equity. By the end
of 2000, the assets and liabilities of Xinghua have been written
down to nil. In accordance with circular (1995) No. 11 promulgated
by the Ministry of Finance of the People's Republic of China, the
financial statements of Xinghua are not consolidated, and the
long-term investment in Xinghua was written off.
(ii) According to BSAF's articles of association, BSAF is jointly
controlled by the Company and the other joint venture partner.
Therefore, BSAF is a jointly controlled entity of the Company. As
the amounts of revenue and total profit for the six months ended
June 30, 2003 and total assets as at June 30, 2003 of BSAF are less
than 10% of the respective amounts of the Company, the financial
statements of BASF are not consolidated and are accounted for using
the equity method of accounting in accordance with circular (1996)
No. 2 "Comments on the Consolidation Scope for the Purpose of
Consolidated Financial Statements".
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 45
Financial Statements
- --------------------
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
June 30, December 31,
2003 2002
Cash on hand 49,873 6,902
Cash in bank 16,319,968 32,797,739
---------- ----------
16,369,841 32,804,641
========== ==========
Cash held in foreign currencies at June 30, 2003 is as follows:
Currency Amount Exchange rate Rmb equivalent
USD 119,135 8.2774 986,128
HK 143,599 1.0612 152,387
---------
1,138,515
=========
2. Notes receivable
Notes receivable represent bank acceptances generated from sales
transactions. At June 30, 2003, no notes receivable were pledged (December
31, 2002: nil).
3. Accounts receivable
June 30, December 31,
2003 2002
Accounts receivable 1,486,378,736 1,543,784,437
Less: Provision for bad debts (897,073,790) (865,214,765)
------------- -------------
589,304,946 678,569,672
============= =============
(a) Analysis of accounts receivable's ageing and provision for bad debts:
June 30, 2003 December 31, 2002
Provision for Provision for
Balance % bad debts Balance % bad debts
Ageing:
Within 1 year 226,246,880 15 -- 264,232,426 17 --
1-2 years 26,041,077 2 (2,989,204) 40,315,395 3 (18,149,672)
2-3 years 116,224,281 8 (50,004,131) 706,550,892 45 (314,379,369)
More than 3 years 1,117,866,498 75 (844,080,455) 532,685,724 35 (532,685,724)
------------- --- ------------ ------------- --- ------------
1,486,378,736 100 (897,073,790) 1,543,784,437 100 (865,214,765)
============= === ============ ============= === ============
- --------------------------------------------------------------------------------
46 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
There was no significant write-off of accounts receivable for the
six months ended June 30, 2003 (six months ended June 30, 2002:
nil).
(b) Except for the receivables due from PetroChina Group Companies as
disclosed in Note VII (g), there are no balances due from
shareholders who hold more than 5% (including 5%) of the shares of
the Company included in accounts receivable.
(c) At June 30, 2003, the total balance of the five largest accounts
receivable was RMB681,345,191, representing 46% of the total
accounts receivable balance.
(d) The Group's provisioning policy for doubtful debts is based on a
detailed review of the collectibility of the receivable balances at
period end. This provisioning policy and the basis for recognition
of receivables have been consistently applied. At June 30, 2003,
accounts receivable aged over 3 years which have not been provided
for mainly comprise receivables due from JCGC of RMB146.79 million
and third party debtors of RMB127 million, respectively. Based on a
detailed review of the collectibility of the above unprovided
receivable balances at June 30, 2003, management considers that
there has been no change in the assessment results from prior years
as these debtors are under stable operation status, have good
historical repayment records and have complied with the debt
repayment schedules as agreed with the Group. Accordingly, no
provision is required.
4. Other receivables
June 30, December 31,
2003 2002
Other receivables 134,676,463 129,659,526
Less: Provision for bad debts (76,238,317) (76,238,317)
----------- -----------
58,438,146 53,421,209
=========== ===========
(a) Analysis of other receivables' ageing and provision for bad debts:
June 30, 2003 December 31, 2002
Provision for Provision for
Balance % bad debts Balance % bad debts
Ageing:
Within 1 year 19,226,120 14 -- 12,383,063 10 --
1-2 years 17,557,830 13 (2,332,782) 21,214,364 16 (4,152,505)
2-3 years 31,453,435 24 (7,466,457) 71,820,950 55 (47,844,663)
More than 3 years 66,439,078 49 (66,439,078) 24,241,149 19 (24,241,149)
----------- --- ----------- ----------- --- -----------
134,676,463 100 (76,238,317) 129,659,526 100 (76,238,317)
=========== === =========== =========== === ===========
There was no significant write-off of other receivables for the six
months ended June 30, 2003 (six months ended June 30, 2002: nil).
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 47
Financial Statements
- --------------------
(b) There are no balances due from shareholders who hold more than 5%
(including 5%) of the shares of the Company included in other
receivables.
(c) At June 30, 2003, the total balance of the five largest other
receivables was RMB32,011,142, representing 24% of the total other
receivables balance.
5. Advances to suppliers
(a) Ageing analysis of advances to suppliers is as follows:
June 30, 2003 December 31, 2002
Balance % Balance %
Ageing:
Within 1 year 313,310,654 99 165,512,391 91
1-2 years 2,410,875 1 5,590,195 3
2-3 years 640,265 -- 7,107,879 4
More than 3 years 625,070 -- 3,426,036 2
----------- --- ----------- ---
316,986,864 100 181,636,501 100
=========== === =========== ===
Advances to suppliers aged over one year mainly include advance
payments to acquire plant and machinery.
(b) There are no balances included in advances to suppliers which are
due from shareholders who hold more than 5% (including 5%) of the
shares of the Company.
- --------------------------------------------------------------------------------
48 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
6. Inventories
December 31, June 30,
2002 2003
Cost:
Raw materials 545,795,573 464,344,993
Work in progress 256,221,000 278,134,569
Finished goods 326,050,136 194,332,874
Spare parts 436,587,400 432,073,017
Low value consumables
and packing materials 8,337,412 7,567,401
------------- -------------
1,572,991,521 1,376,452,854
------------- -------------
Provision for diminution
in value of inventories:
Additions Deduction
Raw materials (46,670,167) (8,204,868) -- (54,875,035)
Work in progress (8,360,704) -- 5,261,110 (3,099,594)
Finished goods (27,515,961) (3,092,698) -- (30,608,659)
Spare parts (96,216,728) -- 6,957,180 (89,259,548)
Low value consumables and
packing materials -- (527,351) -- (527,351)
------------- ----------- ---------- -------------
(178,763,560) (11,824,917) 12,218,290 (178,370,187)
------------- =========== ========== -------------
1,394,227,961 1,198,082,667
============= =============
7. Prepaid expenses
January 1, June 30,
2003 Additions Amortization 2003
Catalyst 7,688,911 23,256,856 (20,917,704) 10,028,063
Insurance premium 2,219,339 1,051,347 (1,979,069) 1,291,617
Other 7,483,959 8,119,089 (14,764,088) 838,960
---------- ---------- ----------- ----------
17,392,209 32,427,292 (37,660,861) 12,158,640
========== ========== =========== ==========
The useful lives of above catalyst are all within one year.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 49
Financial Statements
8. Long-term equity investments
January 1, June 30,
2003 Additions Decrease 2003
Jointly controlled entity 44,058,852 2,824,155 -- 46,883,007
Associated company 18,908,478 -- (222,526) 18,685,952
---------- --------- -------- ----------
62,967,330 2,824,155 (222,526) 65,568,959
========== ========= ======== ==========
There is no problem on the realization of these long-term investments or
transferability of investment income to the Company.
(a) Details of long-term investments:
Percentage of
equity held Original investment
Name of Investment January 1, June 30, January 1, June 30,
enterprise period 2003 2003 2003 Additions Decrease 2003
% %
Jointly
controlled entity
BASF November 18, 1995
to March 30, 2005 40 40 60,066,150 -- -- 60,066,150
Associated
company
Lianli March 22, 2001
to March 22, 2006 47 47 20,042,147 -- -- 20,042,147
---------- ---- ---- ----------
80,108,297 -- -- 80,108,297
========== ==== ==== ==========
(b) The movements of long-term investments accounted for using the
equity method of accounting are as follows:
January 1, Share of June 30,
2003 Additional Reduction in net profit/ Dividend 2003
book value investment investment (loss) received book value
Jointly controlled
entity
BASF 44,058,852 -- -- 2,824,155 -- 46,883,007
Associated company
Lianli 18,908,478 -- -- (222,526) -- 18,685,952
---------- ---- ---- --------- ---- ----------
62,967,330 -- -- 2,601,629 -- 65,568,959
========== ==== ==== ========= ==== ==========
- --------------------------------------------------------------------------------
50 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
9. Fixed assets and accumulated depreciation
Plant and Motor
Buildings machinery Equipment vehicles Total
Cost
January 1, 2003 1,650,837,321 10,145,471,769 2,317,555,082 142,659,991 14,256,524,163
Additions (Note V 10) -- 1,452,752,024 611,134 -- 1,453,363,158
Disposals -- (1,178,403) (440,362) -- (1,618,765)
------------- -------------- ------------- ----------- --------------
June 30, 2003 1,650,837,321 11,597,045,390 2,317,725,854 142,659,991 15,708,268,556
------------- -------------- ------------- ----------- --------------
Accumulated
depreciation
January 1, 2003 567,645,469 2,810,099,346 1,585,998,968 81,036,036 5,044,779,819
Depreciation 41,532,003 286,701,577 87,453,834 7,460,828 423,148,242
Disposals -- -- (418,985) -- (418,985)
------------- -------------- ------------- ----------- --------------
June 30, 2003 609,177,472 3,096,800,923 1,673,033,817 88,496,864 5,467,509,076
------------- -------------- ------------- ----------- --------------
Net book value
June 30, 2003 1,041,659,849 8,500,244,467 644,692,037 54,163,127 10,240,759,480
------------- -------------- ------------- ----------- --------------
December 31, 2002 1,083,191,852 7,335,372,423 731,556,114 61,623,955 9,211,744,344
------------- -------------- ------------- ----------- --------------
Impairment of
fixed assets
January 1, 2003 58,153,374 208,243,922 52,908,460 4,538,176 323,843,932
Additions -- -- -- -- --
------------- -------------- ------------- ----------- --------------
June 30, 2003 58,153,374 208,243,922 52,908,460 4,538,176 323,843,932
------------- -------------- ------------- ----------- --------------
Net book amount
June 30, 2003 983,506,475 8,292,000,545 591,783,577 49,624,951 9,916,915,548
============= ============== ============= =========== ==============
December 31, 2002 1,025,038,478 7,127,128,501 678,647,654 57,085,779 8,887,900,412
============= ============== ============= =========== ==============
As at June 30, 2003, the cost of fully depreciated fixed assets still in
use amounted to RMB519,370,075.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 51
Financial Statements
- --------------------
10. Construction in progress
Total
additions
Transfer to Source as a
January 1, Transfer to intangible June 30, of % of
Name of project Budget 2003 Additions fixed assets assets 2003 funds budget
Synthetic ammonia
facilities 1,612,640,000 1,463,206,434 154,654,225 (1,349,930,932) (267,929,727) -- Borrowings/ 100%
working
capital
AES facilities 86,308,900 76,746,828 12,384,643 (89,131,471) -- -- Working 103%
capital
Other (b) 81,841,000 50,718,998 42,743,683 (14,300,755) -- 79,161,926
------------- ------------- ----------- -------------- ------------ ----------
1,780,789,900 1,590,672,260 209,782,551 (1,453,363,158) (267,929,727) 79,161,926
=============
Including:
Interest ---------------------------------------------------------------------
capitalized 121,891,984 23,435,183 (145,327,167) -- --
---------------------------------------------------------------------
1,590,672,260 79,161,926
============= ==========
(a) The annual capitalization rate used for determining the amount of
interest capitalized as construction in progress for the six months
ended June 30, 2003 is 5.50% (six months ended June 30, 2002:
5.50%).
(b) Other projects represent construction in progress with individual
cost of less than RMB15 million.
(c) At June 30, 2003, there was no significant impairment for
construction in progress (December 31, 2002: nil).
- --------------------------------------------------------------------------------
52 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
11. Intangible assets
Technical
Land use rights know-how Total
Cost
January 1, 2003 1,149,201,148 639,883,526 1,789,084,674
Additions (Note V 10) -- 267,929,727 267,929,727
------------- ------------ -------------
June 30, 2003 1,149,201,148 907,813,253 2,057,014,401
Accumulated amortization
January 1, 2003 189,972,278 295,900,010 485,872,288
Amortization 11,644,665 33,653,690 45,298,355
------------- ------------ -------------
June 30, 2003 201,616,943 329,553,700 531,170,643
------------- ------------ -------------
Net book value
June 30, 2003 947,584,205 578,259,553 1,525,843,758
============= ============ =============
December 31, 2002 959,228,870 343,983,516 1,303,212,386
============= ============ =============
Remaining years of amortization 42 - 49 years 5 - 10 years
============= ============
Pursuant to an approval document dated November 23, 1994 issued by the
State Land Administration Bureau, the Company was granted the right to use
the land and erect buildings on the land for a period of 50 years
commencing October 1, 1994.
The additions of intangible assets after the establishment of the Company
were all acquired from third parties.
At June 30, 2003, there was no significant impairment for intangible
assets (December 31, 2002: nil).
12. Long-term deferred expenses
Remaining
Accumulated January 1, June 30, years of
Cost amortization 2003 Additions Amortization 2003 amortization
Catalyst 209,767,975 108,653,023 121,559,812 1,163,124 (21,607,984) 101,114,952 1-5
Other 11,322,461 10,835,299 986,412 -- (499,250) 487,162 1-2
----------- ----------- ----------- --------- ----------- ----------- ---
221,090,436 119,488,322 122,546,224 1,163,124 (22,107,234) 101,602,114
=========== =========== =========== ========= =========== ===========
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 53
Financial Statements
- --------------------
13. Short-term loans
June 30, December 31,
2003 2002
Guaranteed loans-- RMB 49,600,000 64,600,000
Secured loans-- RMB -- 120,000,000
Unsecured loans-- RMB 3,333,780,000 3,691,860,000
------------- -------------
3,383,380,000 3,876,460,000
============= =============
At June 30, 2003, guaranteed loans totaling RMB49.6 million were
guaranteed by Jilin Merchandise Group. At December 31, 2002, guaranteed
loans totaling RMB49.6 million were guaranteed by Jilin Merchandise Group,
the remaining guaranteed loans were guaranteed by JCGC.
Pursuant to the loan facility commitment letter of April 11, 2003, CP
Finance has confirmed to provide RMB8 billion credit facilities to the
Company for a period up to December 31, 2004. At June 30, 2003, total
borrowings from CP Finance amounted to RMB3.33 billion.
14. Accounts payable, advances from customers and other payables
Except for the payables due to PetroChina Group Companies as disclosed
in Note VII (g), there are no balances included in accounts payable,
advances from customers and other payables which are due to shareholders
who hold more than 5% (including 5%) of the shares of the Company.
Except for certain payables in respect of construction in progress, a
portion of which was aged over 3 years, there were no balances included in
other payables of which the age exceeded 3 years at the period end. There
were no balances included in advances from customers of which the age
exceeded 1 year at the period end.
15. Taxes payable
June 30, December 31,
2003 2002
Value added tax 78,897,210 (101,830,461)
Business tax 574,905 1,525,313
City construction and maintenance tax (3,419,291) (5,123,248)
Consumption tax 52,444,242 14,955,219
Income tax 2,809,745 2,809,745
Property tax 18,527 40,019
Land use tax 936,266 65,808
Other (280,195) 1,441,257
----------- ------------
131,981,409 (86,116,348)
=========== ============
- --------------------------------------------------------------------------------
54 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
16. Accrued expenses
June 30, December 31,
2003 2002
Interest expense on loans 45,175,530 28,397,947
Repair and maintenance expenses 56,193,056 --
Public administration expenses 25,860,000 --
Other 22,088,722 --
------------- -------------
149,317,308 28,397,947
============= =============
17. Long-term liabilities due within one year
June 30, December 31,
2003 2002
Long-term loans due within one year (Note V 18)
Guaranteed loans -- USD 157,467,498 156,866,458
Unsecured loans -- RMB 1,276,450,000 1,195,950,000
-- USD 6,206,799 12,413,447
------------- -------------
1,440,124,297 1,365,229,905
============= =============
Other long-term liabilities due within
one year (Note V 19)
Guaranteed loans-- USD 46,287,759 202,819,359
-- JPY 47,242,898 55,687,083
-- EUR 16,018,942 36,488,431
------------- -------------
109,549,599 294,994,873
------------- -------------
1,549,673,896 1,660,224,778
============= =============
18. Long-term loans
June 30, December 31,
2003 2002
Guaranteed loans 1,061,476,675 1,094,950,298
Unsecured loans 1,560,458,952 1,840,958,021
------------- -------------
2,621,935,627 2,935,908,319
============= =============
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 55
Financial Statements
- --------------------
Details of long-term loans at June 30, 2003 are as follows:
Foreign
Name of Balance at currency Exchange Interest
lender June 30, 2003 Currency amount rate rate% Due date Conditions
Commercial and Industrial Bank 17,650,000 RMB 6.03 July 15, 2003 Unsecured
of China, Jihua sub-branch
Commercial and Industrial Bank 9,500,000 RMB 6.03 December 29, 2004 Unsecured
of China, Jihua sub-branch
CP Finance 405,800,000 RMB 5.59 November 15, 2003 Unsecured
CP Finance 100,000,000 RMB 5.67 October 30, 2003 Unsecured
CP Finance 90,000,000 RMB 5.59 March 15, 2004 Unsecured
CP Finance 663,000,000 RMB 5.59 December 18, 2003 Unsecured
CP Finance 1,000,000,000 RMB 5.42 March 8, 2007 Unsecured
CP Finance 185,900,000 RMB 5.59 July 10, 2004 Unsecured
CP Finance 200,000,000 RMB 5.59 July 26, 2004 Unsecured
CP Finance 88,000,000 RMB 5.59 September 20, 2004 Unsecured
Construction Bank of China,
Jilin Branch 175,155,992 USD 21,160,750 8.2774 8.66 September 30, 2009 Guaranteed by
JCGC
Construction Bank of China,
Jilin Branch 130,441,226 USD 15,758,720 8.2774 8.42 July 31, 2010 Guaranteed by
JCGC
Development Bank of China 117,413,421 USD 14,184,819 8.2774 5.50 December 27, 2006 Guaranteed by
PetroChina
Development Bank of China 795,933,534 USD 96,157,432 8.2774 5.50 April 1, 2012 Guaranteed by
PetroChina
Bank of China, Changchun sub-branch 6,206,799 USD 749,849 8.2774 8.30 August 28, 2003 Unsecured
Bank of China, Changchun sub-branch 77,058,952 USD 9,309,560 8.2774 -- September 9, 2029 Unsecured
-------------
4,062,059,924
-------------
Current portion of long-term loans (1,440,124,297)
(Note V 17) -------------
2,621,935,627
=============
- --------------------------------------------------------------------------------
56 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
19. Other long-term liabilities
Other long-term liabilities include unsecured long-term loans from JCGC.
June 30, December 31,
2003 2002 Interest rate
Payables to JCGC
-- Ethylene Project loans 470,837,443 1,185,891,420 2.00%-- 8.38%
Other long-term liabilities due
within one year (Note V 17) (109,549,599) (294,994,873)
------------ ------------
361,287,844 890,896,547
============ ============
The Ethylene Project loans include loans denominated in US Dollar,
Japanese Yen and Euro. These loans mature on September 30, 2008.
June 30, 2003 December 31, 2002
Original RMB Original RMB
currency equivalent currency equivalent
US Dollar 24,982,010 206,786,090 100,959,548 835,672,463
Japanese Yen 3,002,093,750 207,985,055 3,592,525,000 248,009,963
Euro 5,923,602 56,066,298 11,835,224 102,208,994
------------- ----------- ------------- -------------
470,837,443 1,185,891,420
=========== =============
20. Share capital
June 30, December 31,
2003 2002
(Shares in (Shares in
thousand) thousand)
Non-listed shares:
-- State-owned shares 2,396,300 2,396,300
------------- -------------
Listed shares:
-- H shares and ADSs 964,778 964,778
-- A shares 200,000 200,000
------------- -------------
1,164,778 1,164,778
------------- -------------
Total 3,561,078 3,561,078
============= =============
Total share capital (Rmb) 3,561,078,000 3,561,078,000
============= =============
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 57
Financial Statements
- --------------------
(a) The Company issued 893,027,000 shares, with a par value of RMB1.00
each, in overseas stock exchanges on May 23, 1995, of which
89,302,700 shares were H shares and 8,037,243 shares were American
Depositary Shares ("ADSs") (1 ADS = 100 H shares). The issue prices
for the H shares and ADSs were HK$1.589 per H share and US$20.75 per
ADS, respectively.
(b) The Company issued 71,751,000 H shares, with a par value of RMB1.00
each, to overseas underwriters in the form of 717,510 ADSs on June
17, 1995. The issue price was US$ 20.75 per ADS. These ADSs were
issued pursuant to the exercise of the over-allotment option by the
underwriters in accordance with the underwriting agreement dated May
23, 1995.
(b) Pursuant to the approval of China Securities Regulatory Commission
Zhengjianfazi 1996 No. 234, the Company issued 50,000,000 A shares,
with a par value of RMB1.00 each, of which 30,000,000 shares were
issued to the public at RMB3.5 per share and the remaining
20,000,000 shares were issued to the Company's employees at the same
price. The 30,000,000 A shares issued to the public were traded on
the Shenzhen Stock Exchange on October 15, 1996 and the 20,000,000 A
shares issued to the employees were traded on the Shenzhen Stock
Exchange on April 15, 1997.
(d) Pursuant to a document issued by China Securities Regulatory
Commission on December 13, 1999, approval was granted to the Company
to issue an additional 150,000,000 A shares with a par value of
RMB1.00 each, of which 22,500,000 shares were issued to investment
funds and the remaining 127,500,000 shares were issued to the
Company's A shareholders at a ratio of 1:2.55 shares for each share
held by such shareholders. The Company issued these shares in
January 2000 at a price of RMB3.3 per share. The gross proceeds from
the issue totaled RMB495,000,000; after deducting issue expenses,
the net proceeds amounted to RMB485,520,000. The Company's total
number of issued shares increased from 3,411,078,000 shares to
3,561,078,000 shares.
21. Capital surplus
January 1, Additions Decrease June 30,
2003 2003
Share premium 2,281,092,338 -- -- 2,281,092,338
Reserve for non-cash
donations received 8,408,898 -- -- 8,408,898
Reserve for equity
investments 4,106,100 -- -- 4,106,100
Other 11,550 -- -- 11,550
------------- ----------- --------- -------------
2,293,618,886 -- -- 2,293,618,886
============= =========== ========= =============
- --------------------------------------------------------------------------------
58 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
22. Common reserve funds
Statutory Statutory Discretionary
common common common
reserve fund welfare fund reserve fund Total
January 1, 2003 160,154,718 126,834,279 414,453,720 701,442,717
Additions -- -- -- --
----------- ----------- ----------- -----------
June 30, 2003 160,154,718 126,834,279 414,453,720 701,442,717
=========== =========== =========== ===========
According to the Company Law of the People's Republic of China, the
Company's Articles of Association and resolutions of the Board of
Directors, the Company is required to transfer 10% of each year's net
profit (after netting off prior years' losses) to the statutory common
reserve fund until the fund balance reaches 50% of the registered share
capital after which the transfer may cease. Upon approval by the relevant
authorities, this reserve can be used to make up losses or to increase
share capital. Other than using the reserve to make up losses, the balance
remaining after the use of this reserve to increase capital should not be
less than 25% of the registered share capital.
In addition, the Company is required to transfer 5% to 10% of each year's
net profit (after netting off prior years' losses) to the statutory common
welfare fund. This reserve can only be used for employees' collective
welfare benefits and is not available for distribution to shareholders.
When the funds from the statutory common welfare fund are utilized, the
amount utilized is transferred from this fund to the discretionary common
reserve fund. The amount utilized is either capitalized as assets or
expensed.
The Board of Directors may propose, subject to the approval of the
shareholders' general meeting, the transfer to the discretionary common
reserve fund. Upon obtaining the relevant approvals, this reserve can be
used to make up prior years' losses or to increase share capital.
23. Accumulated losses
Accumulated losses at January 1, 2003 (3,700,270,377)
Add: Net profit for the period 240,972,828
--------------
Accumulated losses at June 30, 2003 (3,459,297,539)
==============
In accordance with the PRC Company Law and the Articles of Association of
the Company, the Company is required to appropriate net profit after
taxation in the following order:
(i) to offset accumulated losses;
(ii) to transfer 10% of profit after taxation to the statutory common
reserve fund;
(iii) to transfer 5% to 10% of profit after taxation to the statutory
common welfare fund;
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 59
Financial Statements
- --------------------
(iv) to transfer to discretionary common reserve fund according to the
approval of the shareholders' general meeting;
(v) to distribute common stock dividend.
24. Sales revenue
The Group's principal activities consist of the processing of crude oil
and coal into petroleum products, petrochemical and organic chemical
products, synthetic rubber products, chemical fertilizers and inorganic
chemical products for sale in the PRC.
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Petroleum products 4,324,838,536 1,645,651,456
Petrochemical and organic chemical products 3,956,956,173 2,193,178,739
Synthetic rubber products 535,906,626 348,246,471
Chemical fertilizers and inorganic chemical products 67,427,451 78,099,432
Other products and services -- 4,881,659
------------- -------------
8,885,128,786 4,270,057,757
============= =============
The sales to the five largest customers of the Group for the period ended
June 30, 2003 amounted to RMB5,860,474,177, representing 66% of Group's
total sales.
25. Cost of sales
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Petroleum products 3,943,879,309 1,454,961,867
Petrochemical and organic chemical products 3,392,251,735 1,962,327,329
Synthetic rubber products 387,096,479 254,703,327
Chemical fertilizers and inorganic chemical products 79,074,236 172,877,338
Other products and services -- 3,612,283
------------- -------------
7,802,301,759 3,848,482,144
============= =============
26. Sales tax and other levies
Sales tax and other levies mainly include consumption tax, city
construction and maintenance tax, and education levy.
- --------------------------------------------------------------------------------
60 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
27. Financial expenses, net
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Interest expense 236,586,684 272,063,883
Less: Interest income (2,605,822) (412,025)
Exchange loss 8,631,734 38,030,062
Less: Exchange gain (548,284) (3,111,595)
Other 1,967,851 --
----------- -----------
244,032,163 306,570,325
=========== ===========
28. Investment income/(loss)
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Share of profit/(loss) of a jointly controlled entity 2,824,155 (4,766,492)
Share of loss of an associated company (222,526) (149,132)
--------- ----------
2,601,629 (4,915,624)
========= ==========
29. Non-operating expenses
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Loss on disposal of fixed assets 1,199,780 110,040,000
Loss on temporary shutdown 6,434,901 5,780,656
Flood fund 6,036,500 6,015,249
Other 6,215,895 2,132,170
---------- -----------
19,887,076 123,968,075
========== ===========
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 61
Financial Statements
- --------------------
30. Income tax
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Income tax:
-- Company -- --
-- Subsidiaries -- 351,996
Deferred tax -- --
---------- -----------
-- 351,996
========== ===========
- --------------------------------------------------------------------------------
62 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
VI. NOTES TO THE FINANCIAL STATEMENTS OF THE COMPANY
1. Accounts receivable
June 30, December 31,
2003 2002
Accounts receivable 1,556,565,403 1,568,910,289
Less: Provision for bad debts (897,070,233) (865,211,208)
------------- -------------
659,495,170 703,699,081
============= =============
(a) Analysis of accounts receivable's ageing and provision for bad debts:
June 30, 2003 December 31, 2002
Provision for Provision for
Balance % bad debts Balance % bad debts
Ageing:
Within 1 year 299,232,013 19 -- 290,024,637 18 --
1-2 years 23,908,970 2 (2,989,204) 40,315,395 3 (18,149,672)
2-3 years 115,557,922 7 (50,000,574) 705,884,533 45 (314,375,812)
More than 3 years 1,117,866,498 72 (844,080,455) 532,685,724 34 (532,685,724)
------------- --- ------------ ------------- --- ------------
1,556,565,403 100 (897,070,233) 1,568,910,289 100 (865,211,208)
============= === ============ ============= === ============
There was no significant write-off of accounts receivable for the
six months ended June 30, 2003 (six months ended June 30, 2002:
nil).
(b) Except for the receivables due from PetroChina Group Companies as
disclosed in Note VII (g), there are no balances due from
shareholders who hold more than 5% (including 5%) of the shares of
the Company included in accounts receivable.
(c) At June 30, 2003, the total balance of the five largest accounts
receivable was RMB681,345,191, representing 44% of the total
accounts receivable balance.
(d) The Company's provisioning policy for doubtful debts is based on a
detailed review of the collectibility of the receivable balances at
period end. This provisioning policy and the basis for recognition
of receivables have been consistently applied. At June 30, 2003,
accounts receivable aged over 3 years which have not been provided
for mainly comprise receivables due from JCGC of RMB146.79 million
and third party debtors of RMB127 million, respectively. Based on a
detailed review of the collectibility of the above unprovided
receivable balances at June 30, 2003, management considers that
there has been no change in the assessment results from prior years
as these debtors are under stable operation status, have good
historical repayment records and have complied with the debt
repayment schedules as agreed with the Company. Accordingly, no
provision is required.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 63
Financial Statements
- --------------------
2. Other receivables
June 30, December
2003 31, 2002
Other receivables 112,319,069 110,559,284
Less: Provision for bad debts (76,238,317) (76,238,317)
----------- -----------
36,080,752 34,320,967
=========== ===========
(a) Analysis of other receivables' ageing and provision for bad debts:
June 30, 2003 December 31, 2002
Provision for Provision for
Balance % bad debts Balance % bad debts
Ageing:
Within 1 year 14,806,120 13 -- 11,722,821 11 --
1-2 years 4,487,830 4 (2,332,782) 4,774,364 4 (4,152,505)
2-3 years 26,586,041 24 (7,466,457) 69,820,950 63 (47,844,663)
More than 3 years 66,439,078 59 (66,439,078) 24,241,149 22 (24,241,149)
----------- --- ----------- ----------- --- -----------
112,319,069 100 (76,238,317) 110,559,284 100 (76,238,317)
=========== === =========== =========== === ===========
There was no significant write-off of other receivables for the six
months ended June 30, 2003 (six months ended June 30, 2002: nil).
(b) There are no balances due from shareholders who hold more than 5%
(including 5%) of the shares of the Company included in other
receivables.
(c) At June 30, 2003, the total balance of the five largest other
receivables was RMB13,581,691, representing 12% of the total other
receivables balance.
3. Long-term equity investments
January 1, June 30,
2003 Additions Decrease 2003
Subsidiaries (Note (1)) 110,751,579 -- (3,836,662) 106,914,917
Jointly controlled
entity (Note (2)) 44,058,852 2,824,155 -- 46,883,007
Associated company
(Note (2)) 18,908,478 -- (222,526) 18,685,952
----------- --------- ---------- -----------
173,718,909 2,824,155 (4,059,188) 172,483,876
=========== ========= ========== ===========
- --------------------------------------------------------------------------------
64 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
(1) Subsidiaries
(a) Details of long-term investments:
Percentage of equity held Original investment
Name of January 1, June 30, January 1, June 30,
enterprise Investment period 2003 2003 2003 Additions 2003
% %
Winsway August 7, 1995 to
August 6, 2005 70 70 36,154,000 -- 36,154,000
Songmei December 26, 1997 to
December 25, 2017 66 66 47,660,421 -- 47,660,421
Jianxiu February 12, 2001 to
February 12, 2008 99 99 44,537,759 -- 44,537,759
Xinghua February 21, 1991 to
February 20, 2011 75 75 19,250,000 -- 19,250,000
----------- ---- ------------
147,602,180 -- 147,602,180
=========== ==== ===========
(b) The movements of investments in subsidiaries accounted for using the
equity method of accounting are as follows:
January 1, 2003 Additional Share of Dividend June 30, 2003
book value investment net loss received book value
Winsway 36,390,766 -- (1,086,865) -- 35,303,901
Songmei 45,195,204 -- (2,385,729) -- 42,809,475
Jianxiu 29,165,609 -- (364,068) -- 28,801,541
Xinghua -- -- -- -- --
----------- ---- ---------- ---- -----------
110,751,579 -- (3,836,662) -- 106,914,917
=========== ==== ========== ==== ===========
The status of Xinghua is described in Note IV 1.
(2) See Note V 8 for investments in jointly controlled entity and associated
company.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 65
Financial Statements
- --------------------
4. Sales revenue
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Petroleum products 4,324,838,536 1,645,651,456
Petrochemical and organic chemical products 3,907,126,754 2,153,011,799
Synthetic rubber products 535,906,626 348,246,471
Chemical fertilizers and inorganic chemical products 67,427,451 78,099,432
Other products and services -- 4,881,659
------------- -------------
8,835,299,367 4,229,890,817
============= =============
5. Cost of sales
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Petroleum products 3,943,879,309 1,454,961,867
Petrochemical and organic chemical products 3,360,468,765 1,937,552,266
Synthetic rubber products 387,096,479 254,703,327
Chemical fertilizers and inorganic chemical products 79,047,236 172,877,338
Other products and services -- 3,612,283
------------- -------------
7,770,491,789 3,823,707,081
============= =============
6. Investment income/(loss)
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
Share of profit/(loss) of a jointly controlled entity 2,824,155 (4,766,492)
Share of loss of an associated company (222,526) (149,132)
Share of loss of subsidiaries (3,836,662) (2,876,664)
---------- ----------
(1,235,033) (7,792,288)
========== ==========
- --------------------------------------------------------------------------------
66 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
VII. RELATED COMPANIES AND RELATED PARTY TRANSACTIONS
(a) Related companies in which control exists:
Name of Place of Principal Relationship with Nature of the Legal
enterprise registration activities the Company enterprise representative
CNPC PRC Exploration, development, Ultimate holding State-owned Ma Fucai
production and sale of company enterprise
natural resources
PetroChina PRC Exploration, manufacture Immediate holding Joint stock Ma Fucai
and sale of petroleum company limited company
and natural gas; pipeline
transportation,
manufacture and sale of
petrochemical products
Winsway PRC Transportation of Subsidiary Sino-foreign equity Ni Muhua
petrochemical products joint venture
Songmei PRC Manufacture of acetic acid Subsidiary Sino-foreign Ni Muhua
co-operative
joint venture
Jianxiu PRC Machinery repair Subsidiary Joint venture Zhang Xingfu
and installation
(b) Registered capital (and its movements) of related companies in which control
exists:
January 1, June 30,
Name 2003 Additions Decrease 2003
RMB'0000 RMB'0000 RMB'0000 RMB'0000
CNPC 11,490,000 -- -- 11,490,000
PetroChina 17,582,418 -- -- 17,582,418
Winsway 5,145 -- -- 5,145
Songmei 7,200 -- -- 7,200
Jianxiu 4,520 -- -- 4,520
(c) Registered capital of the Company held by the related company which controls
the Company:
Name January 1, 2003 Additions Decrease June 30, 2003
RMB'0000 % RMB'0000 % RMB'0000 % RMB'0000 %
PetroChina 239,630 67 -- -- -- -- 239,630 67
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 67
Financial Statements
- --------------------
(d) Movements of the capital or equity of subsidiaries directly held by the
Company:
Capital or Capital or
equity held equity held
at January at June
1, 2003 % Additions % Reduction % 30, 2003 %
Winsway 36,154,000 70 -- -- -- -- 36,154,000 70
Songmei 47,660,421 66 -- -- -- -- 47,660,421 66
Jianxiu 44,537,759 99 -- -- -- -- 44,537,759 99
(e) Related companies in which no control exists:
Equity
Nature of the Date of Place of Registered percentage held Principal
Name enterprise registration registration capital Currency at June 30, 2003 activities
RMB'0000
Jointly controlled entity
-- BASF Sino-foreign joint 1995.11.18 Jilin 15,000 RMB 40% Manufacturing of
venture petrochemical
products
Associated company
- -- Lianli State-owned 2001.3.22 Jilin 4,221 RMB 47% Wholesale
and retail of
petrochemical
products
Besides the above jointly controlled entity and associated company, CP
Finance, JCGC and its subsidiaries and the Company are subsidiaries of
CNPC.
- --------------------------------------------------------------------------------
68 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
(f) Significant related party transactions
Six months Six months
ended ended
June 30, 2003 June 30, 2002
(Unaudited)
CNPC Group Companies
Interest expense 162,656,186 194,110,000
Loan 2,552,040,000 1,733,370,000
Insurance program 19,333,263 17,215,017
Purchase of raw materials 8,126,000 838,297
JCGC Group Companies
Sale of goods 436,180,413 258,500,010
Sub-contracting fees 2,420,171 5,550,311
Construction of fixed assets 22,609,016 46,641,020
Purchase of raw materials and spare parts 59,370,609 73,431,030
Fees for welfare and support services 98,199,791 49,420,793
Expenses paid on behalf 1,029,800 785,000
PetroChina Group Companies
Purchase of crude oil 4,132,059,694 2,444,807,804
Purchase of raw materials 641,223,966 297,304,280
Sale of gasoline 1,350,858,001 530,275,790
Sale of diesel oil 2,344,455,610 784,842,019
Sale of petrochemical goods 1,614,840,153 817,312,876
Expenses paid on behalf -- 2,200,000
Lianli
Sale of goods 20,094,310 8,107,814
Jilian (Jilin) Petrochemicals Limited (1)
Sale of petrochemical goods -- 133,102,564
The prices of the transactions between the Group and related companies are
primarily based on market prices.
(1) Before December 2002, Jilian (Jilin) Petrochemicals Limited
("Jilian") was jointly controlled by the Company and the other joint
venture partner. Therefore, Jilian was a jointly controlled entity
of the Company. According to the share transfer agreement between
the Company and the foreign investor of Jilian signed on August 30,
2002, the Company acquired the 35% equity interest owned by the
foreign investor at a consideration of RMB135 million. The Company
applied for the cancellation of the business license of Jilian which
was approved on December 26, 2002. Since then, Jilian was no longer
an independent entity and became a branch of the Company.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 69
Financial Statements
- --------------------
(g) Related party balances
June 30, December 31,
2003 2002
Accounts receivable from
-- PetroChina Group Companies 210,587,906 242,923,710
-- JCGC Group Companies 342,597,749 346,502,613
-- Lianli 23,883,602 24,131,819
Accounts receivable due from related parties
are for goods sold to these companies.
Other receivables from
-- JCGC Group Companies 7,797,805 8,320,638
Other receivables due from related parties
are mainly for expenses paid on their behalf.
Advances to suppliers to
-- JCGC Group Companies 5,786,899 2,772,794
The balance mainly represents advance payments
for import of machinery through JCGC.
Accounts payable to
-- CNPC Group Companies (61,565) (1,526,853)
-- PetroChina Group Companies (116,752,880) (58,086,005)
-- JCGC Group Companies (78,396,654) (121,904,421)
Advances from customers from
-- PetroChina Group Companies (526,777,102) --
-- JCGC Group Companies (4,151,166) (5,382,817)
Other payables to
-- JCGC Group Companies (146,608,756) (182,970,214)
Short-term loans from
-- CP Finance (3,333,780,000) (3,577,860,000)
Long-term loans from
-- CP Finance (2,732,700,000) (2,932,700,000)
Other long-term liabilities from
-- JCGC Group Companies (470,837,443) (1,185,891,420)
- --------------------------------------------------------------------------------
70 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Financial Statements
--------------------
VIII. CAPITAL COMMITMENTS
At the balance sheet date, capital expenditures contracted for but not
recognized in the financial statements are as follows:
June 30, December 31,
2003 2002
Property, plant and equipment 10,240,000 94,256,000
IX. OTHER IMPORTANT MATTER
The Company has recorded losses for three consecutive years from 2000 to
2002. Following the announcement of the Company's audited results for
2002, its A shares were suspended from trading on the Shenzhen Stock
Exchange (the "Exchange") pursuant to the relevant provisions of the China
Securities Regulatory Commission and the Exchange. Resumption of trading
will depend on a number of factors including but not limited to the
Company's profitability in the first half year of 2003.
- --------------------------------------------------------------------------------
JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 71
Supplementary Information
- -------------------------
SIGNIFICANT DIFFERENCES BETWEEN IFRS AND PRC GAAP
(Amounts in thousands unless otherwise stated)
Effect of significant differences between PRC GAAP and IFRS on net profit/(loss)
and shareholders' equity is summarised below.
Net profit/(loss)
Six months ended June 30,
2003 2002
Notes RMB RMB
Net profit/(loss) as reported under PRC GAAP 240,973 (352,531)
Adjustments to conform with IFRS:
-- Depreciation expense due to revaluation of
fixed assets at February 28, 1995 (i) (726) (726)
-- Depreciation expense on fixed assets due to
difference in exchange gains capitalised (iii) (3,655) (3,655)
-- Appropriation to staff bonus and welfare fund (iv) -- (143)
-- Amortisation of housing subsidy cost (v) (4,660) (4,660)
-- Reversal of amortisation of land use rights (vi) 10,911 11,647
------- --------
Net profit/(loss) as reported under IFRS 242,843 (350,068)
======= ========
- --------------------------------------------------------------------------------
72 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Supplementary Information
-------------------------
Shareholders' equity
June 30, December 31,
2003 2002
Notes RMB RMB
Shareholders' equity as reported under PRC GAAP 3,096,842 2,855,869
Adjustments to conform with IFRS:
-- Surplus on revaluation of fixed assets
at February 28, 1995 (i) 29,033 29,033
-- Deferred tax effect on revaluation surplus
on revaluation of fixed assets
at February 28, 1995 (i) (9,580) (9,580)
-- Depreciation expense due to revaluation
at February 28, 1995 (i) (12,099) (11,373)
-- Difference in loss on write-off of fixed assets
due to revaluation at February 28, 1995 (ii) (6,309) (6,309)
-- Exchange gains in respect of funds borrowed
for fixed assets (iii) 112,471 112,471
-- Depreciation expense on fixed assets due to
difference in exchange gains capitalised (iii) (46,039) (42,384)
-- Housing subsidy cost (v) 48,180 52,840
-- Deferred tax effect on housing subsidy cost (v) (23,587) (23,587)
-- Adjustment of land use rights
at January 1, 2001 (vi) (896,289) (907,200)
-- Tax adjustment (vii) 33,167 33,167
--------- ---------
Shareholders' equity as reported under IFRS 2,325,790 2,082,947
========= =========
(i) In connection with the application for listing of the Company's shares on
The Stock Exchange of Hong Kong Limited, the Company engaged American
Appraisal Hong Kong Limited, independent valuers in Hong Kong, to perform
a valuation of all of the Group's fixed assets as of February 28, 1995.
The valuation resulted in a surplus of RMB29,033. The surplus arising from
the valuation was credited to revaluation reserve. Depreciation expense
under IFRS includes the effect of revaluation of fixed assets at
February 28, 1995. Under PRC GAAP, this revaluation, which was not
officially approved as part of the 1994 Restructuring, was not recognised.
Accordingly, depreciation charge calculated under PRC GAAP is lower than
that under IFRS.
(ii) In prior years, certain fixed assets including those revalued at
February 28, 1995 were written off in connection with the shut down of
manufacturing assets. As the effect of the February 28, 1995 has not been
recognised under PRC GAAP, additional loss on write-off of fixed assets
relating to the surplus arising from the February 28, 1995 revaluation was
recorded in the IFRS financial statements.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 73
Supplementary Information
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(iii) Under IFRS, foreign currency translation differences relating to
borrowings to the extent that they are adjustments to the interest costs
of funds used to finance the construction of fixed assets are capitalised.
Under PRC GAAP, all foreign currency translation differences relating to
funds borrowed to finance the construction of fixed assets are capitalised
during the construction period. Accordingly, the cost of the underlying
fixed assets as reported in the IFRS financial statements is greater than
that as determined under PRC GAAP, and thus resulted in additional
depreciation charge.
(iv) In 2002, a subsidiary of the Company (a Sino-foreign joint venture) made
an appropriation from retained earnings to the staff and workers' bonus
and welfare fund in accordance with the relevant rules and regulations in
the PRC. Under IFRS, such appropriation is charged to the profit and loss
account.
(v) As a result of the reorganisation of CNPC and PetroChina, PetroChina
agreed to bear the cost of housing subsidy and accordingly the relevant
payable to JCGC of RMB84,089, after netting off deferred tax of RMB23,587,
was credited to capital reserve under IFRS. Under PRC GAAP, the payable of
RMB84,089 was offset against housing subsidy cost brought forward of
RMB75,681 and the balance of RMB8,408 was credited to capital reserve.
Consequently, there is no amortisation of housing subsidy cost under PRC
GAAP.
(vi) Under PRC GAAP, land use rights are recognised at the appraised value and
amortised over 50 years. With effect from January 1, 2001, the Company has
applied IAS 17 " Leases", as clarified by IAS 40 "Investment Property", to
the accounting for land use rights. The Company has therefore reclassified
land use rights as operating leases and is now reflecting the carrying
value of land use rights at historical cost of RMB nil. Consequently,
there is no amortisation of land use rights under IFRS commencing 2001.
(vii) Adjustment of deferred tax effect in (i) and (v) above.
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74 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Supplementary Information
-------------------------
SIGNIFICANT DIFFERENCES BETWEEN IFRS AND US GAAP
(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)
Six months ended June 30,
2003 2002 2003 2002
Notes RMB RMB US$ US$
Net profit/(loss) under IFRS 242,843 (350,068) 29,338 (42,292)
US GAAP adjustments:
-- Depreciation charge on
fixed asset revaluation
surplus on Restructuring
and at February 28, 1995 (i) 5,611 4,886 678 590
-- Depreciation charge on
foreign currency
translation difference on
interest components
capitalised in fixed assets (ii) 765 765 92 92
-- Depreciation charge on fixed
assets revaluation surplus of
Jilian (iii) -- 3,815 -- 462
Net profit/(loss) under US GAAP 249,219 (340,602) 30,108 (41,148)
======= ======== ====== =======
Basic and diluted earnings
per share RMB0.07 (RMB0.10) US$0.01 (US$0.01)
======= ======== ====== =======
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 75
Supplementary Information
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Shareholders' equity
June 30, December 31, June 30, December 31,
2003 2002 2003 2002
Notes RMB RMB US$ US$
Shareholders' equity as reported
under IFRS 2,325,790 2,082,947 280,981 251,643
US GAAP adjustments:
-- Fixed asset revaluation on
Restructuring and at
February 28, 1995 (i) (744,007) (744,007) (89,884) (89,884)
-- Deferred tax asset on fixed
asset revaluation surplus on
Restructuring (i) 235,941 235,941 28,504 28,504
-- Depreciation charge on fixed
assets due to revaluation
on Restructuring and at
February 28, 1995 (i) 659,849 591,426 79,717 71,451
-- Reversal of deferred tax liability
on fixed asset revaluation
surplus at February 28, 1995 (i) 9,580 9,580 1,157 1,157
-- Reduction in loss on write-off of
fixed assets (i) 11,532 11,532 1,393 1,393
-- Reversal of writedown in carrying
amount (net of minority
interests) of fixed assets (i) 322,240 322,240 38,930 38,930
-- Foreign currency translation
difference on interest
components capitalised in
fixed assets (ii) (30,616) (30,616) (3,699) (3,699)
-- Depreciation charge on foreign
currency translation difference
on interest components
capitalised in fixed assets (ii) 9,951 9,186 1,202 1,110
-- Gain on transfer of fixed assets
to Jilian (iii) (65,320) (65,320) (7,891) (7,891)
-- Depreciation charge on fixed
asset revaluation surplus of
Jilian (iii) -- 62,812 -- 7,588
-- Tax adjustment (iv) (245,521) (245,521) (29,661) (29,661)
--------- --------- ------- -------
Shareholders' equity as reported
under US GAAP 2,489,419 2,240,200 300,749 270,641
--------- --------- ------- -------
--------- --------- ------- -------
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76 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Supplementary Information
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(i) Revaluation of fixed assets
On September 30, 1994, the fixed assets transferred to the Company by
Jilin Chemical Industrial Corporation as part of the Restructuring were
appraised, as required by the relevant PRC regulations, by a firm of
independent valuers registered in the PRC. The revaluation of the fixed
assets transferred resulted in RMB714,974 in excess of the prior carrying
value and was recorded in share capital and capital reserve and not as a
revaluation reserve. The depreciation charge on the revaluation surplus
for the six months ended June 30, 2003 was RMB4,885 (2002: RMB4,160),
including the depreciation charge of RMB3,815 on the revaluation surplus
of Jilian (previously a jointly controlled entity of the Company)
reclassified since 2003 as a result of the Company's acquisition of the
remaining 35% equity interest in Jilian in December 2002. For purposes of
reconciling to the US GAAP financial data, the effect of the revaluation
and the related depreciation charge is reversed. A deferred tax asset of
RMB235,941 (2002: RMB235,941) relating to the reversal of the revaluation
effect was established, together with a corresponding increase in
shareholders' equity.
On February 28, 1995, the Group's fixed assets were further revalued by a
firm of independent valuers registered in Hong Kong to satisfy the Hong
Kong Stock Exchange listing requirements. This revaluation, which resulted
in an additional revaluation surplus of RMB29,033, was not recognised by
the PRC authorities and was therefore not recorded in the statutory
accounting books. A deferred tax liability of RMB9,580 was created under
IFRS with a corresponding decrease in revaluation surplus. The
depreciation charge on the revaluation surplus for the six months ended
June 30, 2003 was RMB726 (2002: RMB726). For purposes of reconciling to
the US GAAP financial data, the revaluation surplus, the related
depreciation charge and the tax effect are reversed.
In prior years, certain fixed assets with a net book value of RMB283,418
(RMB2,526 related to revaluation surplus recorded in share capital and
capital reserve) were written off as a charge to the income statement in
connection with the shut down of manufacturing assets. For purposes of
reconciling to the US GAAP financial data, the effect of the revaluation
relating to the write-off of fixed assets is reversed.
As at December 31, 2002, the directors of the Company compared the
carrying amount of the Group's property, plant and equipment to their
estimate of its fair value, and on the basis of this review, made an
adjustment to reduce the carrying amount by RMB323,844. Under IFRS, the
adjustment arising from the comparison, net of minority interests of
RMB1,604, amounting to RMB322,240 was charged to the income statement. For
purposes of reconciling to the US GAAP financial data, the write-down
adjustment is reversed since the related undiscounted cash flows
adequately recover the carrying value of these assets despite a decrease
in fair value.
(ii) Foreign exchange losses
Under US GAAP, foreign exchange losses are expensed in the period in which
they occur.
Under IFRS, the Group capitalised foreign currency translation difference
relating to borrowings to the extent that these are adjustments to the
interest costs of funds used to finance the construction of fixed assets
during the period of construction. For purposes of reconciling to the US
GAAP financial data, the effect of the capitalised foreign currency
translation difference and the related depreciation charge is reversed.
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 77
Supplementary Information
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(iii) Fixed assets transferred to Jilian
During the period ended December 31, 1994, certain fixed assets of the
Company were appraised and transferred to Jilian, which was 65% owned and
jointly controlled by the Company prior to December 2002 when the Company
acquired the 35% minority interest. At the time of the 1994 transfer, the
Company retained 65% of revaluation surplus arising from the appraisal of
these assets which amounted to RMB121,309 within the revaluation reserve
and recognized a gain of RMB65,320, representing 35% of revaluation
surplus, from the transfer to the other joint venture partner of a 35%
interest in the fixed assets. The depreciation charge on the revaluation
surplus related to these assets for the six months ended June 30, 2003 was
RMB3,815 (2002: RMB3,815). For purposes of reconciling to the US GAAP
financial data, the effect of the revaluation, the related depreciation
charge and the gain on the transfer is reversed. In addition, as the
Company acquired the remaining 35% equity interest in Jilian in December
2002, Jilian has become a branch of the Company. Therefore, since 2003,
the reversed depreciation charge on the revaluation surplus for Jilian's
fixed assets has been included in the Company's depreciation charge on
fixed assets due to revaluation on Restructuring and at February 28, 1995
for the reconciliation to US GAAP.
(iv) Tax adjustment
As there is uncertainty as to whether the deferred tax asset established
in (i) above can be fully realised, a valuation allowance for the deferred
tax asset is made.
(v) Amounts in Renminbi have been converted into United States dollars at the
respective rates of US$1.00: RMB8.2774 announced by the People's Bank of
China as at June 30, 2003. No representation is made that the Renminbi
amounts could have been, or could be converted into US dollars at that
rate.
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78 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003
Supplementary Information
-------------------------
ASSET IMPAIRMENT PROVISION AS AT JUNE 30, 2003
As at Current
Items January 1, 2003 period addition
Group Company Group Company
1. Bad debt provision 941,453,082 941,449,525 31,859,025 31,859,025
Including: Accounts receivable 865,214,765 865,211,208 31,859,025 31,859,025
Other receivables 76,238,317 76,238,317 -- --
2. Provision for impairment of short-term investments
Including: Equity investments
Bond investments
3. Inventory provision1 78,763,560 178,763,560 11,824,917 11,587,920
Including: Raw materials 46,670,167 46,670,167 8,204,868 8,204,868
Work in progress 8,360,704 8,360,704 -- --
Finished goods 27,515,961 27,515,961 3,092,698 2,855,701
Spare parts 96,216,728 96,216,728 -- --
Low value consumables
and packing materials -- -- 527,351 527,351
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
Including: Technical know-how
Patent
7. Provision for impairment of construction in progress
8. Provision for trust loan
Current
Items period reduction As at June 30, 2003
Group Company Group Company
1. Bad debt provision -- -- 973,312,107 973,308,550
Including: Accounts receivable -- -- 897,073,790 897,070,233
Other receivables -- -- 76,238,317 76,238,317
2. Provision for impairment of short-term investments
Including: Equity investments
Bond investments
3. Inventory provision1 (12,218,290) (12,218,290) 178,370,187 178,133,190
Including: Raw materials -- -- 54,875,035 54,875,035
Work in progress (5,261,110) (5,261,110) 3,099,594 3,099,594
Finished goods -- -- 30,608,659 30,371,662
Spare parts (6,957,180) (6,957,180) 89,259,548 89,259,548
Low value consumables
and packing materials -- -- 527,351 527,351
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
Including: Technical know-how
Patent
7. Provision for impairment of construction in progress
8. Provision for trust loan
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JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003 79
Documents Available for Inspection and Address for
Inspection of Documents
- --------------------------------------------------
1. The original 2003 interim report of the Company duly signed by the
Chairman of the Board;
2. The original financial statements for the six months ended 30th June, 2003
prepared in accordance with PRC GAAP and IFRS respectively duly signed by
the legal representative, the financial controller and the chief of the
Financial Department of the Company;
3. Original copy of the auditors' report duly executed under the seal of
PricewaterhouseCoopers Zhong Tian CPAs Company Limited by a PRC registered
accountant;
4. The original announcements and all other documents disclosed by the
Company in the newspapers designated by CSRC during the reporting period;
5. The articles of association of the Company;
6. The interim report published in Hong Kong.
Address for inspection of the above documents:
Jilin Chemical Industrial Company Limited
The Secretary's Office to the Board of Directors
No. 9 Longtan Street, Longtan District, Jilin City, Jilin Province,
the PRC
Tel : (86432) 3903651
Fax : (86432) 3028126
Note: This interim report is prepared in both Chinese and English. In the event
of any inconsistency between the two versions, the Chinese version shall
prevail.
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80 JILIN CHEMICAL INDUSTRIAL COMPANY LIMITED Interim Report 2003