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