Jilin Chemical Industrial Company Limited Announces 2004 Annual Results

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Elements DB China	NYSE:JCC	NYSE	Ordinary Share

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

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