JILIN CITY, China and HONG KONG, Aug. 12 /Xinhua-PRNewswire/ --
Jilin Chemical Industrial Company Limited (the "Company") (HKSE:
0368, NYSE: JCC) announced its unaudited results for the six months
ended June 30, 2005, prepared under the International Financial
Reporting Standards (IFRS). Turnover for the six months ended June
30, 2005 was approximately RMB17,993 million (approximately
US$2,174 million) representing an increase of 31 per cent as
compared with the first six months of 2004. Net profit amounted to
approximately RMB135 million (approximately US$16 million). Profit
per share for the six months ended June 30, 2005 was RMB0.04
(approximately US$0.0048). The board of directors of the Company
has resolved not to declare any interim dividend for the six months
ended June 30, 2005. During the first half of 2005, the Company
implemented a strategy of vertical integration in refinery to
improve and adjust its product mix as a whole; closely monitored
the development of product market and took full advantage of any
price movement of products so as to adjust its product sales
strategy in a timely manner; continued to improve efficiency, save
energy and reduce wastage for the purpose of imposing stringent
control on costs and expenses; continued to improve internal
control to enhance capital management and increase efficiency in
the use of capital. For the first half of 2005, the sales revenue
and sales of the Company and its subsidiaries (together "the
Group") amounted to RMB17,992.634 million under IFRS, representing
the increase of 31% as compared with the corresponding period in
2004. The continuing increase in the price of crude oil drove the
price of refined oil to move upward, which unfortunately failed to
offset any impacts caused by price rise in crude oil. Actual
realized profits of the Company was RMB135.030 million, down by 77%
as compared with the corresponding period in 2004. The cost of
sales increased by 39% from RMB12,615.949 million in the first half
of 2004 to RMB17,508.817 million in the first half of 2005. This
increase was primarily attributable to an increase in the sales
volume of the Company's products, volume of crude oil processing
and the price of other raw materials. In the first half of 2005,
the weighted average price of the Group's crude oil cost was
RMB3,016/ton, which represented an increase of 47% from the same
period in 2004, and the volume of crude oil processing was 3.5
million tons, which represented an increase of 16% as compared with
the corresponding period in 2004. The Group's gross profit margin
decreased by 5% in the first half of 2005 as compared with the
corresponding period in 2004 due to an increase in cost of sales
caused by the continuing increase in crude oil price. Distribution
costs, administrative expenses and other operating expenses
decreased by 40% from RMB384.770 million in the first half of 2004
to RMB230.143 million in the first half of 2005. This decrease was
primarily attributable to the provisions made for diminution in
value of trade and other receivables, construction in progress and
intangible assets in the first half of 2004 which was made during
the reporting period; and net loss incurred from the retirement of
fixed assets amounted to RMB34.158 million in the first half of
2004 whereas net profit so incurred amounted to RMB4.638 million
during the reporting period. For the second half of 2005, the
Company will further strengthen the following: (i) the management
of safety production by arranging for installation and overhaul of
equipment so as to ensure its production facilities run at full
capacity; (ii) the control on capital budget in order to use
capital in a safe, responsible and efficient manner, thereby
speeding up the turnover of its capital; (iii) the control on cost
budget by continuing to implement a low-cost strategy to reduce the
production and operation costs; (iv) the marketing management in
order to respond to the changes in petrochemical and chemical
products. The Company expects the processing capacity for crude oil
to reach 3.5 million tons in the second half of 2005. In view of
the continuing increase in the price of crude oil to a high level
which may not be offset by the increase in the price of refined
oil, the actual realized profits for the period from January to
September 2005 is expected to decrease by over 50% as compared with
the corresponding period in 2004. Jilin Chemical is one of the
largest producers of basic chemicals and chemical raw materials,
and one of the largest diversified chemical enterprises in the PRC.
Its primary business comprises the production of petroleum
products, petrochemical and organic chemical products, synthetic
rubber products, chemical fertilizers and other chemical products.
* In this statement, amounts in Renminbi have been converted into
United States dollars at the rate of US$1.00=RMB8.2765, as
announced by the People's Bank of China as of June 30, 2005.
Forward-looking Statements: This press release contains statements
of a forward-looking nature. These statements are made under the
"safe harbor" provisions of the U.S. Private Securities Litigation
Reform Act of 1995. You can identify these forward- looking
statements by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates", "shall" and
similar statements. The accuracy of these statements may be
impacted by a number of business risks and uncertainties that could
cause actual results to differ materially from those projected or
anticipated, including risks related to: the risk that the PRC
economy may not grow at the same rate in future periods as it has
in the last several years, or at all, including as a result of the
PRC government's macro-economic control measures to curb
over-heating; uncertainty as to global economic growth in future
periods; the risk that prices of the Company's raw materials,
particularly crude oil, will continue to increase; not be able to
raise its prices accordingly which would adversely affect the
Company's profitability; the risk that new marketing and sales
strategies and improvements to various management systems may not
be effective; the risk that the Company may not be able to improve
its safety or archive its often objectives for 2005; the risk that
fluctuations in demand for the Company's products may cause the
Company to either over-invest or under-invest in production
capacity in its major production categories; the risk that
investments in new technologies and development cycles may not
produce the benefits anticipated by management; the risk that the
trading price of the Company's shares may decrease for a variety of
reasons, some of which may be beyond the control of management;
competition in the Company's existing and potential markets; and
other risks outlined in the Company's filings with the U.S.
Securities and Exchange Commission. The Company does not undertake
any obligation to update this forward-looking information, except
as required under applicable law. For further information, please
contact: Jilin Chemical Industrial Company Limited Mr. Li Chunqing
Tel: (86) 432-390 3651 Fax: (86) 432-302 8126 E-mail: Fortune China
Public Relations Ltd. Ms. Nellie Chan Tel: (852) 2838 1162 Fax:
(852) 2834 5109 E-mail: Unaudited Consolidated Interim Condensed
Profit and Loss Account (Prepared under IFRS) For the Six Months
Ended 30th June, 2005 (Amounts in thousands except for per share
data) Six months ended 30th June, 2005 2004 Notes RMB RMB Turnover
2 17,992,634 13,729,975 Cost of sales (17,508,817) (12,615,949)
Gross profit 483,817 1,114,026 Distribution costs (8,617) (16,076)
Administrative expenses (229,788) (306,330) Other operating
income/(expenses), net 8,262 (62,364) Operating profit 3 253,674
729,256 Interest expense (94,851) (152,934) Interest income 823 585
Exchange loss (29) (3,829) Exchange gain 12,226 6,926 Share of
profit of a jointly controlled entity 8,443 12,559 Share of profit
of an associated company 2,953 1,005 Profit before taxation 183,239
593,568 Taxation 4 (48,209) - Profit for the period 135,030 593,568
Attributable to: Equity holders of the Company 128,536 606,354
Minority interest 6,494 (12,786) 135,030 593,568 Basic and diluted
earnings per share for profit attributable to the equity holders of
the Company during the period 5 RMB0.04 RMB0.17 Dividend 6 - -
Unaudited Consolidated Interim Condensed Balance Sheet (Prepared
under IFRS) As of 30th June, 2005 (Amounts in thousands) 30th June,
31st December, 2005 2004 Notes RMB RMB NON-CURRENT ASSETS Property,
plant and equipment 8,937,297 9,368,990 Interests in a jointly
controlled entity 74,278 89,835 Investment in an associated company
12,258 9,305 Intangible assets 466,523 515,047 Deferred income tax
assets 234,993 283,202 9,725,349 10,266,379 CURRENT ASSETS
Inventories 1,449,954 2,606,053 Accounts receivable 7 317,832
265,245 Prepaid expenses and other current assets 390,461 441,891
Cash and cash equivalents 40,300 14,629 2,198,547 3,327,818 CURRENT
LIABILITIES Accounts payable and accrued liabilities 8 4,633,438
4,429,686 Current income tax liabilities 97,523 113,079 Short-term
borrowings 1,268,212 3,086,075 5,999,173 7,628,840 NET CURRENT
LIABILITIES (3,800,626) (4,301,022) TOTAL ASSETS LESS CURRENT
LIABILITIES 5,924,723 5,965,357 EQUITY Equity attributable to
equity holders of the Company Share capital 3,561,078 3,561,078
Reserves 2,099,372 2,099,858 Accumulated losses (476,848) (605,870)
5,183,602 5,055,066 Minority interest 20,770 14,276 Total equity
5,204,372 5,069,342 NON-CURRENT LIABILITIES Long-term borrowings
720,351 896,015 5,924,723 5,965,357 Unaudited Consolidated Interim
Condensed Statement of Changes in Equity (Prepared under IFRS) For
the Six Months Ended 30th June, 2005 (Amounts in thousands)
Attributable to equity holders Minority Total of the Company
interest equity Share Accumulated capital losses Reserves RMB RMB
RMB RMB RMB Balance at 1st January, 2004 as previously represented
3,561,078 (3,151,353) 2,100,831 - 2,510,556 Representation as a
result of the adoption of revised IAS 1 and IAS 27 (Note 1) - - -
30,800 30,800 Balance at 1st January, 2004 3,561,078 (3,151,353)
2,100,831 30,800 2,541,356 Profit for the period - 606,354 -
(12,786) 593,568 Transfer to accumulated losses on realisation of
revaluation reserve - 486 (486) - - Balance at 30th June, 2004
3,561,078 (2,544,513) 2,100,345 18,014 3,134,924 Balance at 1st
January, 2005 as previously represented 3,561,078 (605,870)
2,099,858 - 5,055,066 Representation as a result of the adoption of
revised IAS 1 and IAS 27 (Note 1) - - - 14,276 14,276 Balance at
1st January, 2005 3,561,078 (605,870) 2,099,858 14,276 5,069,342
Profit for the period - 128,536 - 6,494 135,030 Transfer to
accumulated losses on realisation of revaluation reserve - 486
(486) - - Balance at 30th June, 2005 3,561,078 (476,848) 2,099,372
20,770 5,204,372 Notes: 1. The unaudited consolidated interim
condensed financial statements are prepared in accordance with
International Accounting Standards 34 "Interim Financial
Reporting". The accounting policies and methods of computation used
in the preparation of the consolidated interim condensed financial
statements are consistent with those used in the preparation of the
annual financial statements for the year ended 31st December, 2004
except for the ones modified by the Company as a result of the
adoption of the new revised International Financial Reporting
Standards ("IFRS"). The results of operations for the six months
ended 30th June, 2005 are not necessarily indicative of the results
to be expected for the full year ending 31st December, 2005. 2.
SEGMENT INFORMATION Six months ended 30th June, 2005 Petro-
chemical Chemical and fertilisers Other organic and Synthetic
products Petroleum chemical inorganic rubber and products products
products products services Total RMB RMB RMB RMB RMB RMB Revenues
7,263,050 7,943,724 337,620 1,017,254 1,430,986 17,992,634 Segment
results (1,351,841) 1,571,834 (23,606) 145,611 (88,324) 253,674
Finance costs, net (81,831) Share of profit of a jointly controlled
entity - 8,443 - - - 8,443 Share of profit of an associated company
- - - - 2,953 2,953 Profit before taxation 183,239 Six months ended
30th June, 2004 Petro- chemical Chemical and fertilisers Other
organic and Synthetic products Petroleum chemical inorganic rubber
and products products products products services Total RMB RMB RMB
RMB RMB RMB Revenues 6,212,553 5,493,959 616,306 800,349 606,808
13,729,975 Segment results (93,733) 818,966 (91,967) 172,965
(76,975) 729,256 Finance costs, net (149,252) Share of profit of a
jointly controlled entity - 12,559 - - - 12,559 Share of profit of
an associated company - - - - 1,005 1,005 Profit before taxation
593,568 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. 3. OPERATING PROFIT
The following items have been charged/(credited) to operating
profit during the period: Six months ended 30th June, 2005 2004 RMB
RMB Crediting Government grants and subsidies (2,683) - Charging
Amortisation of intangible assets 48,524 61,562 Depreciation of
property, plant and equipment 491,792 501,375 Net (profit)/loss on
disposal of property, plant and equipment (included in "other
operating (income)/expenses") (4,638) 34,158 Provision for
impairment of property, plant and equipment (included in "cost of
sales") - 19,814 Provision for impairment of intangible assets
(included in "cost of sales") - 6,698 (Reversal)/provision for
impairment of receivables (included in "administrative expenses")
(882) 11,354 (Reversal)/provision for impairment of prepaid
expenses and other current assets (included in "other operating
(income)/expenses") (18) 11,179 Inventory writedowns (included in
"cost of sales") - 79,169 Research and development expenditure 279
192 Employee compensation costs 378,110 497,520 Operating lease
rentals on land and buildings 3,200 4,320 Operating lease rentals
on plant and machinery 15,650 13,867 Repair and maintenance 163,357
304,285 4. TAXATION Six months ended 30th June, 2005 2004 RMB RMB
PRC income tax - - Deferred tax 48,209 - 48,209 - Income tax
expense is recognised based on the best estimate of the weighted
average annual income tax rate expected for the full financial
year. During the six months ended 30th June, 2005 and 2004 there
was no current tax expense because of the utilisation of tax loss
carryforwards. Tax expense during the six months ended 30th June,
2005 results from changes in the deferred tax assets and
liabilities at the expected annual rate of 33%. The tax on the
Group's profit before taxation differs from the theoretical amount
that would arise using the basic tax rate in the PRC applicable to
the Group as follows: Six months ended 30th June, 2005 2004 RMB RMB
Profit before taxation 183,239 593,568 Tax calculated at a rate of
33% 60,469 195,877 Utilisation of previously unrecognised deferred
tax assets - (202,269) Other (12,260) 6,392 Tax expense 48,209 - 5.
BASIC AND DILUTED EARNINGS PER SHARE Basic and diluted earnings per
share for the six months ended 30th June, 2005 have been computed
by dividing the profit attributable to equity holders of the
Company of RMB128,536 (2004: RMB606,354) by the number of
3,561,078,000 shares issued and outstanding for the period. 6.
DIVIDEND The directors do not recommend the payment of an interim
dividend for the six months ended 30th June, 2005 (2004: nil). 7.
ACCOUNTS RECEIVABLE 30th June, 31st December, 2005 2004 RMB RMB Due
from third parties 218,325 236,943 Due from related parties -
PetroChina 287,222 211,530 - JCGC (a fellow subsidiary) Group
Companies 172,007 169,077 - An associated company 17,147 23,138 -
Other state-controlled enterprises 263,691 265,999 958,392 906,687
Less: Provision for impairment loss - Due from third parties
(205,114) (211,932) - Due from related parties (435,446) (429,510)
317,832 265,245 Amounts due from related parties are interest free
and unsecured. Related parties are offered credit terms of no more
than 30 days. Provision for impairment of amounts due from related
parties charged to profit and loss account was RMB5,936 for the six
months ended 30th June, 2005 (Six months ended 30th June, 2004:
RMB2,507). The ageing analysis of accounts receivable at 30th June,
2005 is as follows: 30th June, 31st December, 2005 2004 RMB RMB
Within 1 year 289,193 222,075 Between 1 to 2 years - 2,042 Between
2 to 3 years 2,042 299 Over 3 years 667,157 682,271 958,392 906,687
In 2002, the Group implemented a cash sales policy for the majority
of its customers. Certain selected customers are offered credit
terms of no more than 30 days. There is no change in this policy
during 2004 and the six months ended 30th June, 2005. 8. ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES 30th June, 31st December, 2005 2004
RMB RMB Trade payables 1,205,534 1,548,764 Advances from customers
203,243 545,545 Salaries and welfare payable 194,570 197,094 Other
payables and accrued liabilities 200,731 121,461 Amounts due to
related parties - PetroChina 2,620,436 1,667,303 - CNPC Group
Companies 3,718 - - JCGC (a fellow subsidiary) Group Companies
58,277 85,623 - An associated company - 9,109 - Other
state-controlled enterprises 146,929 254,787 4,633,438 4,429,686
Amounts due to related parties are interest free, unsecured and
with no fixed term of repayment. The ageing analysis of trade
payables at 30th June, 2005 is as follows: 30th June, 31st
December, 2005 2004 RMB RMB Within 1 year 1,112,293 1,450,029
Between 1 to 2 years 25,483 33,123 Between 2 to 3 years 12,345
23,267 Over 3 years 55,413 42,345 1,205,534 1,548,764 DATASOURCE:
Jilin Chemical Industrial Company Limited CONTACT: Mr. Li Chunqing,
Jilin Chemical Industrial Company Limited, +86-432-390-3651, Fax:
+86-432-302-8126, ; or Ms. Nellie Chan, Fortune China Public
Relations Ltd., +852-2838-1162, Fax: +852-2834-5109, , for Jilin
Chemical Industrial Company Limited Web site:
http://www.jcic.com.cn/englishmain0508.htm
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