HONG KONG, March 26 /PRNewswire-FirstCall/ -- Sinopec Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or the "Company") (HKEx: 338; SSE: 600688; NYSE: SHI) announced today its operating results for the year ended December 31, 2005 (the "Year") of the Company and its subsidiaries (collectively the "Group"), based on its financial statements prepared in accordance with International Financial Reporting Standards (IFRS).
Turnover of the Group for 2005 amounted to RMB45.9559 billion (approximately US$5.6945 billion), an increase of 16.63% as compared to 2004. Profit before tax was RMB2.2876 billion (approximately US$0.2835 billion), representing a decrease of 51.29% as compared to 2004. Profit attributable to equity shareholders of the Company was RMB1.8504 billion (approximately US$0.2293 billion), representing a decrease of 53.40% as compared to 2004. Earnings per share was RMB0.26 (approximately US$0.03) (2004: RMB0.55 (approximately US$0.07)). The board of directors of the Company has recommended a final dividend of RMB0.10 (approximately US$0.01) per share for 2005, equivalent to RMB10 (approximately US$1.24) per American Depositary Share.
Mr. Rong Guangdao, Chairman of Shanghai Petrochemical, said, "In 2005, the global and Chinese economies maintained a positive growth momentum. Benefiting from the fact that the global petrochemical industry was at a prosperous stage of the growth cycle, China's petrochemical industry was able to maintain a relatively fast pace of growth as a whole. During the Year, the Group enhanced safe production, the long-cycle operation of production facilities and its fundamental management. As a result, the Group's production and operation remained steady and smooth. The Group's technical and economic indicators such as crude oil processing volume, ethylene output and sales revenue all achieved record highs. However, economic efficiency saw a substantial fall in 2005. This was mainly due to the following: the Group's profit was reduced significantly as a result of climbing international crude oil prices; the distorted correlation existing between prices of petroleum products and prices of crude oil has caused heavy losses to the Group's oil refining business; and an aggregate loss from the investment in Shanghai Secco's 900,000 tons/year ethylene project was incurred in 2005 as a result of a one-off amortization of all start-up expenses for the current year."
In 2005, the Group focused on a long-cycle operation of production facilities and optimized raw material resources and system operation, thereby maintaining a steady increase in production output. Total production output exceeded 8,000,000 tons for the first time at 8,654,800 tons, an increase of 9.94% over the previous year. During 2005, the Company produced 3,199,400 tons of diesel oil, an increase of 12.71% over the previous year; 962,400 tons of ethylene, an increase of 0.67% over the previous year; 1,067,100 tons of synthetic resins, an increase of 0.71% over the previous year; 493,800 tons of synthetic fibre monomers, an increase of 18.16% over the previous year; and 595,800 tons of synthetic fibre polymers, an increase of 13.01% over the previous year.
During 2005, as a result of high international crude oil prices and relatively strong domestic demand for petrochemical products, product prices of the Group's four major product categories (namely synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products) increased to varying degrees. The weighted average prices of the four major categories increased by 8.50%, 8.12%, 18.37% and 22.55%, respectively, over the previous year.
For the year ended 31 December 2005, the Group processed 9,493,000 tons of crude oil (inclusive of oil processed on a sub-contracting basis), representing an increase of 383,600 tons over the previous year. Of this, offshore oil accounted for 339,400 tons and imported oil accounted for 9,153,600 tons. Of the Group's cost of sales, crude oil costs accounted for RMB29,576.4 million or 68.96% of the Group's annual cost of sales. The average cost of crude oil processed was RMB3,208.22/ton, an increase of 39.13% over the previous year.
In 2005, the Company worked hard on the construction of key projects and actively advanced the preliminary work on the new development projects. The 8,000,000 tons/year atmosphere and vacuum distillation plant commenced operation in February and has increased its preliminary processing capacity of crude oil to 14,000,000 tons/year. The second phase upgrade project for the expansion of PTA plant to 400,000 tons year PTA facilities was completed in November 2005 and was successfully commissioned on the first test run. The construction of the 3,300,000 tons/year diesel hydrogenation project and the 380,000 tons/year ethylene glycol project proceeded on schedule. At the same time, a pre-stage work office dedicated to the "Phase V" project was also set up for the new development projects. Among these new development projects, the third phase ethylene upgrade project has been submitted to the State Development and Reform Commission for approval and has gone through onsite research and assessment conducted by authoritative organizations.
Looking forward to 2006, Mr. Rong said, "The continuous growth in both the international and domestic economies will bring about attractive business opportunities to the petroleum and petrochemical industry. The domestic petrochemicals market is expected to remain prosperous due to the gradually increasing demand for petroleum, natural gas, petroleum products and major petrochemicals. Meanwhile, the petrochemical industry will still be exposed to a number of unfavorable and uncertain factors, such as the possibility of sustained high prices of international crude oil and State's control over prices of domestic petroleum products, adding uncertainties and risks to the operation of petrochemical companies. As such, in response to the changing macro-economic conditions and the industry's growth cycle, the Group will further increase operational efficiency, enhance management and accelerate development, with a view to achieving satisfactory operating results for 2006."
Shanghai Petrochemical is one of the largest petrochemical companies in the PRC and was one of the first Chinese companies to make a global securities offering. Located in Jinshan District in the southwest of Shanghai, it is a highly integrated petrochemical complex which processes crude oil into a broad range of synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products.
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" 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 being able to raise its prices accordingly which would adversely affect the Company's profitability; 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 one or more of its four major product 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 the convenience of the reader, amounts in Renminbi ("RMB") have been translated into United States dollars at the rate of US$1.000=RMB8.070 being the average of the buying and selling rates quoted by the People's Bank of China on December 31, 2005. No representation is made that the RMB amounts could have been, or could be, converted into United States dollars at the rate.
Sinopec Shanghai Petrochemical Company Limited
2005 Annual Results
(Prepared under International Financial Reporting Standards)
Summary of Consolidated Income Statement (audited)
For the years ended 31 December
2005 2004
RMB'000 RMB'000
Turnover 45,955,903 39,402,533
Sales taxes and surcharges (765,689) (738,474)
Net sales 45,190,214 38,664,059
Other income 632,820 --
Cost of sales (42,887,742) (33,223,604)
Gross profit 2,935,292 5,440,455
Selling and administrative expenses (444,449) (408,144)
Other operating income 238,611 277,005
Other operating expenses:
Employee reduction expenses (109,410) (112,526)
Others (92,084) (171,638)
Total other operating expenses
(201,494) (284,164)
Profit from operations 2,527,960 5,025,152
Share of losses of associates (60,968) (36,915)
Net financing costs (179,398) (292,008)
Profit before taxation 2,287,594 4,696,229
Taxation (366,300) (637,061)
Profit after taxation 1,921,294 4,059,168
Attributable to:
Equity shareholders of the Company 1,850,449 3,971,103
Minority interests 70,845 88,065
Profit after taxation 1,921,294 4,059,168
Basic earnings per share RMB0.26 RMB0.55
