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CONTENTS 01 02 03 04 05 06 07 08 ABOUT SINOCHEM 04 PRESIDENT'S MESSAGE 06 MANAGEMENT REPORT 08 BUSINESS OVERVIEW 12 CORPORATE CITIZENSHIP 42 KEY EVENTS 48 FINANCIAL STATEMENTS 50 DIRECTORY 60 3 .

01 ABOUT SINOCHEM 4 .

gradually transforming from a traditional state-owned trading company into an enterprise with updated corporate philosophy.09 7002. strive to achieve sustainable long-term development of the company.000 employees adhere to our corporate motto of “Creating Value and Pursuing Excellence”. and try their best to build a great company that commands respect and influence worldwide. Sinochem Group made a major move to inject most of its assets into a joint-stock entity “Sinochem Corporation”.93 9653. seeking for a bigger and stronger market presence. China’s earliest qualifier for the Fortune Global 500. 00297) (Sinofert). 00817) (Franshion Properties). Sinochem Group’s main business spreads across five areas: energy. chemicals. ranking 170th in 2009. Sinochem Group has entered the Fortune Global 500 for 19 times. and real estates. Sinochem Group has been dedicated to creating value for the country and the society. largest integrated operator of agricultural inputs (fertilizers. Sinofert Holdings Limited (HK. Sinochem’s more than 40.94 9006. finance. leading comprehensive service provider of chemical products. pesticides and seeds). and at the same time has strong presence in China’s high-end commercial properties and non-bank financial service sectors.71 5748. With creative and pioneering spirit. unremittingly exploring the way to business development.SH) (Sinochem International).54 943. Sinochem Group’s influence in various industries has been greatly enhanced. and is the controlling shareholder of several listed companies including Sinochem International Corp.2007-2009 Financial Highlights 2009 ANNUAL REPORT 2009 2008 2007 Revenue from Operations Net Profit Current Assets Total Assets Current Liabilities Equity 35591. scientific management.97 Unit: Million USD ABOUT SINOCHEM China’s fourth largest national petroleum company.39 6618. As a key state-owned enterprise. and Franshion Properties (China) Limited (HK. On June 1st 2009.36 7814.52 9077.81 45207. agriculture. China’s leading comprehensive service provider of chemical products.04 7120. (600500.1 9771. Incorporated for 60 years.44 31206.66 787. and seeds). 5 . Sinochem Group has over 200 subsidiaries and branches at home and abroad.1 19825. It is China’s forth largest national petroleum company.89 763.55 25131.45 15309. China’s largest integrated operator of agricultural inputs (fertilizers. and strong competitiveness. pesticides.

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2009 was a year full of challenges for Sinochem. enhance our sustainability. Facing with the global financial storm. The 60 years’ history teaches us that the way forward is not always a plain sailing. and pioneering spirit. In such a conjuncture for change. 2010 is also a critical year for Sinochem’s “Third Long March”. creating a more complicated external environment for businesses. President & CEO Sinochem Group 7 . and arduous strivings result in glorious achievements. Hereby. and strengthened the lean management. We will try our best to seize the opportunities. Sinochem called for “the Third Long March” to boost the morale. Only in this way. roll out developing strategies. unbending will. an enterprise must have forward-looking and creative insights to discover and seize development opportunities. 2010 marks the 60th anniversary for Sinochem. Hardships give birth to great causes. can it gain the upper hand in the new round of competition. by doing which Sinochem withstood the unprecedented test. it requires unwavering determination. ceaseless endeavor. and stick to the lean philosophy in order to meet the social and market demand to the largest extend by using the least resources. and make sure that the strategic goals of “ the Third Long March” period will be realized. We would like to join hands with friends from all circles across the global to conduct close cooperation and make tomorrow a better day. sped up the implementation of its strategies. strived to expand its business. achieve a steady and healthy development. and achieved progresses in all of its business. uncertainty has become one of the key features of the post-crisis era. make full use of our advantages to overcome difficulties. continuous creativity.2009 ANNUAL REPORT 02 PRESIDENT'S MESSAGE PRESIDENT'S MESSAGE After the global financial crisis wracked the world. I would like to express my sincere gratitude to all related government authorities and friends from all walks of life at home and abroad for their kind and great support for Sinochem. To lay a solid foundation for a business’ long-term sustainable development.

To become a force that can be relied on for national agricultural and energy security as well as the advancement of chemical technologies in China. “Five Key Areas”—agriculture. M&A. 8 . “Four Paths”—innovation. and collaboration. technology and the market. efficient use of resources and environmental protection. energy. Our Industry Service Strategy (referred to as the “One-TwoThree-Four-Five Strategy”): “One Ability”—the ability to develop in a sustainable way. “Three Links”—resources. To become a company with a strong sense of social responsibility that commands respect and influence worldwide. Our Missions: To become an industry role model in terms of innovative technology. “Two Fundamentals”—internal management and external expansion. integration. finance and real estates. chemicals.03 MANAGEMENT REPORT Our Vision: To become a company that commands respect and influence worldwide.

On the basis of careful contemplation. we have initiated the notion of “the Third Long March”. Since Sinochem has established and perfected its risk management system for years. we calmly analysed the situation to take precautionary measure which helps us to address the difficulties in a timely and efficient manner. The Profit before tax is USD 898. we have 2009 ANNUAL REPORT MANAGEMENT REPORT Focus on the sustainable development in the future. yet it was still a remarkable outcome for Sinochem since it was still in the nascent stage of transformation. Sinochem will become a national leading and world influential global conglomerate to realize its dream of being “a great company that commands respect and influence worldwide”. By starting “the Third Long March”. As a result.5 billion of corporate bonds. minimizing the effects brought by the financial crisis.86% of our performance target. Sinochem’s strategic transformation has entered into a new stage. its ability to resist aggregate risks is strengthened. “The Third Long March” is the embodiment of Sinochem’s motto of “Pursuing Excellence”. The main reason for Sinochem’s performance slide is two-fold: the sluggish demand and price of potash fertilizer and sharp decline of the crude oil prices which impacted Sinochem E&P’s profitability. Sinochem’s position and competitiveness in related industries will be greatly enhanced. Sinochem also took the opportunities to issue RMB 5. Sinochem’s core businesses were greatly impacted from the global economic recession. we took a very serious introspection of ourselves. “The Third Long March” means in the next 10 years. 102. Sinochem’s overall capital structure is sound and healthy. proactively explored our business.4 billion of mid-term Industrialization roadmap with Sinochem’s own characteristics RMB-denominated and USD-denominated commercial bill and RMB 2. It will build its management advantage by adopting the mindset of “Lean Management”.The year 2009 was very challenging for Sinochem.93 million. Fundamental Market-oriented operational capability Props resources and technology Safeguard lean management Trait Globalization 9 . a strong financial support for business development.59 billion. All our employees take a strong pose to the challenges. transformation and deployed “lean management notion”. scrutinized the bottlenecks containing Sinochem’s further development. accelerated the strategic realized the performance target set at the beginning of 2009 and made new breakthroughs in our core businesses. Facing the adverse external environment. Standing at the new historic height. Sinochem Group launched the strategic appeal for “the Third Long March”. Under the backdrop of the global financial crisis. it maintained stable operation and was immune from big losses of operation incident. Sinochem Group tightened its risk management work. Although our performance in 2009 declined compared with the record high in 2008. Overcome difficulties to realized its performance target In 2009. Sinochem tries to find its own development route in accordance with its business landscape. Sinochem’s offshore derivative operation has won credit by National Auditing Bureau.27% of our performance target. and found approaches of solving these bottlenecks. As the market condition deteriorated. The main mission for “the Third Long March” is to explore an industrialization roadmap with Sinochem’s own characteristics. We have realized the performance target set at the beginning of 2009. scrutinized the operational risks and clarified the responsible entity. reach an internal consensus for “the Third Long March” Facing with the opportunities and challenges brought by the international financial crisis. 99. We caught up the positive side of the crisis. Our operating income in 2009 was USD 35. Sinochem’s total profit will be quadrupled. Eventually. working wholeheartedly to address the difficulties.

started to receive Chinese government’s product oil as the country’s strategic inventory. has actively explored the business arena while underlined the importance of risk control. China Seeds confirmed its roadmap of becoming the world’s first tier seed company. 2009. Sinochem Corporation is co-founded by Sinochem Group. financing service. we have accelerated the development of our core businesses. we did internal business consolidation and coordination. carrying out various businesses to enhance our key competence in chemical business areas. pesticides and seeds. Our oil trading. development route and organization structure. In 2009. In energy sector. We continued our progress in our financial business. financial service and industry financial unification. following the country’s strategy and industrial policy. All these achievements helped FOTIC to establish its business position and enhance its business innovation capacity. Franshion Properties focused itself to the high-end property. fund operation. We have streamlined Franshion Properties’ strategic position. China Foreign Economy and Trade Trust Co. Sinochem made several tries to acquire its peers in pesticide industry by which we have accumulated acquisition experiences and amplified our business influence on the pesticide industry. Sinochem Plastics. It has also won the highest grading in terms of the business compliance. and unfolded several key programs as its solid foundation. facing with the severe fluctuation of oil prices. Sinochem. we have clarified the main body In real estate business. Sinochem Corporation was incorporated and became a real corporate entity since September. consolidation. Further streamline the management In 2009. By eliminating the overlapping of the businesses. Sinochem Jiangsu. distribution and storage areas all kept good shape while the operation volumes registered marked growth. In Chemical business. which holds 10 . On June. forming a unified real estate business platform. Franshion Properties has taken the market opportunity. a major step to increase its capital base and a great acknowledgement of “Sinochem Style” management and operation. International Far Eastern Leasing successfully introduced three renowned private equities like KKR to become its shareholders. accelerated its development and built up brand image. By purchasing Emerald. Ltd. the demand for fertilizer was sluggish. In seeds business. Franshion Properties’ Chemsunny Plaza and Jinmao Tower’s leasing revenue all registered a history high. pharmaceutical. circling with three key links as “resources.. market”. We have taken Sinochem Tianjin.Further develop core businesses to speed up strategic transformation In 2009. Sinochem implemented its “One-Two-Three-Four-Five” strategy. However. technology. As a result. a UK-listed oil company. Through innovation. Sinochem’s agricultural business comprises of fertilizer. we have strengthened the consolidation to make our chemical business bigger and stronger. Sinochem International as the receiving company to consolidate the group company’s dye and pigment. It is committed to build up five platforms for fund settlement. Sinochem tried to increase its industrial presence and complete its industrial chain. In 2009. we have further increased our oil reserve and streamlined our assets base to form two strategic development areas: Middle East and South America.15 through public bidding so as to expand its land bank. We have strengthened our ability to acquire new upstream oil and gas resources. Sinochem Finance. (FOTIC) has won the license granted by China Banking Regulatory Committee to unfold private equity business. an internal financial company serving for the group. as China’s national oil company. Franshion Properties has completed the acquisition of Jinmao Group. we have reduced financing cost and enhanced funds application efficiency. generic chemical and rubber business respectively. buyout and cooperation. strengthening R&D capability to promote industrial upgrading. As for real estate development. In terms of property leasing. Establish Sinochem Corporation. By leveraging the opportunities brought by world financial crisis. we have virtually finished the company’s restructuring work.1st. another major responsibility of Sinochem is to receive China’s strategic crude oil. accelerating its sales work and acquired Beijing Guangqu Road No. In pesticide business. Sinochem maintained its leading position in the market while further integrated its industrial chain and enhanced its brand recognition.

receiving 14 provincial level or above awards. agriculture. The establishment of Sinochem Corporation is momentous for Sinochem Group. we cut the cost by RMB 274 million. one national key lab for pesticide. By the end of 2009. two national quality test centers for pesticide and dyestuff. To be resolute on the road of “the Third Long March” It has been 60 years since the founding of Sinochem Group. Consolidation. 11 . filing 87 patent applications. In 2010 and the foreseeable future. we will continue to enhance Sinochem’s value. Hangzhou and Taicang. By the end of 2009. made great efforts of developing itself to become an influential multi-national company. and sticking to the “One-Two-Three-Four-Five” strategy and the philosophy of “Innovation. we have completed 270 group-level lean management projects. two national information centers for pesticide and dyestuff. Sinochem has taken the responsibility of creating value for the country and the society. We will be more resolute to overcome the challenges. Sinochem took the lead to organize national R&D institution and innovation alliance. which holds 2% of the equity. It is very instrumental for us to perfect the corporate governance. Sinochem Corporation has become the main body of the businesses and will continue to take energy. enjoying almost the same long time history as People’s Republic of China. targets and requirements of “the Third Long March” . Considering Sinochem’s strong R&D and manufacturing capacity in seeds and dyestuff business. Sinochem Group has passed the test to become China’s Innovation Pilots Enterprise. winning support from the state governments. one national safety evaluation center for pharmaceutical and pesticide. we continue to improve our management system by adopting the concept of “lean management” to cut cost and enhance efficiency. chemicals. two national pesticide R&D centers in Shenyang and Zhejiang. Throughout the year. we have markedly improved our technology management and innovation capability. We have injected most of Sinochem’s assets and businesses into Sinochem Corporation. and formulating 102 industrial standards for the country as well as the related industry. We have streamlined the management system for industrial investment projects by unfolding real time supervision and afterward revaluation for the purpose of improving the quality of these projects. two national standardization center for pesticide and dyestuff. expanded our team of technical experts. taking 60 key national and provincial-level R&D programs. Meanwhile. three postdoctoral working stations in Shenyang. Coordination”. As a result.2009 ANNUAL REPORT MANAGEMENT REPORT 98% of the equity and China Ocean Shipping Corporation (COSCO). and 2600 projects for subsidiaries. make regime innovation. Sinochem’s R&D expenditure is RMB 487 million. We have established two-layered technology management system and its working mechanism. one academician working station. try our best to maintain Sinochem’s development in a rapid. following the doctrine. In 2009. For the last 60 years. Sinochem owned three national-level engineering R&D centers for pesticides. and realize further development in the future. dye and pigment and ODS substitute. sound and sustainable manner. finance and real estates as its core businesses. consolidate the internal business.

12 . and by taking advantages of the resources at home and abroad and its worldwide operations. Sinochem is playing an important role in driving the development of related industries in China. Consequently. presence and leadership in the industries. Sinochem continues agriculture. chemical. finance and real estate. and enhance its to strengthen and expand its five key business sections – energy.Drawing upon its core philosophy of “Creating Value and Pursuing Excellence”.

BUSINESS OVERVIEW 04 04 1 04 2 04 3 04 4 04 5 04 6 ENERGY BUSINESS 14 AGRICULTURAL BUSINESS 20 CHEMICALS BUSINESS 26 FINANCIAL BUSINESS 32 REAL ESTATE BUSINESS 36 OTHER BUSINESSES 40 13 .

with the annual revenue exceeding RMB 14 . playing an increasingly important role in China’s energy market. We draw upon the resources. facing with the unfavorable external environment featured by the severe recession of the world economy and the huge fluctuation of the international oil price. of oil storage and logistic facilities. and formed internal synergy to of the oil and gas output and the asset base. We have also cope with challenges. Sinochem Group has been committed to safeguarding the national energy security. optimized the industrial and profitability structure. We also actively participate in China’s development of the strategic oil reserve network and the research for the nation’s planning for the energy sector. and as a result strengthened the sustainability of our oil business. and exerts great influence in supply for the economic and social development of China. enhancing our business portfolio. while strengthening our competitive advantages in international oil trading. Sinochem Group has developed into a large energy company that is In 2009. we have sped up our strategic transformation. At present. we had in-depth study of the market trend. petroleum transport business. as well as the refining performance. our oil business saw a fairly good 160 billion. further extended our business to the upstream and downstream sectors. channels and operation advantages at home and abroad to provide oil and gas highly internationalized with a complete industrial chain. the industry.04 1 ENERGY BUSINESS As a state-owned oil company. Progress was also seen in the development project. promptly seized the business opportunities. In recent years. outstanding marketing ability. light oil distribution and filling station construction. which brought a remarkable increase made considerable achievements in oil trading. Last year.

which lays a solid foundation for our further development. which was the first time that a Chinese enterprise acquired a London-main-board-listed company. In 2009. In October 2009. our oil and gas reserve steadily increased. our business extended from production to exploration. conventional oil and heavy oil. 15 .27 2007 2008 2009 Rapid Increase of Oil and Gas Output In 2009. after conducting several researches. we saw progress in such technologies as comprehensive evaluation of traps. As a result. oil and gas output rapidly grew. and from on-shore to off-shore. UAE.2009 ANNUAL REPORT BUSINESS OVERVIEW 2007-2009 crude oil production Unit: million barrels (oil equivalent) ENERGY BUSINESS 13. and China Bohai Bay region. Syria.74 9. a Londonlisted energy company. we gradually develop into an international oil exploration and production company with strong and independent capacity to grow. Colombia. With our business expanding. our oil and gas equity output is 13. From 2003 to 2009. By the end of 2009. Our recoverable oil and gas reserve is 234 million barrels. up by 40% compared with last year. we had totally owned 25 oil and gas blocks in Yemen.77 7. asset quality and structure were remarkably improved. carbonate and volcanic rocks. and actively explore new projects.74 million barrels (oil equivalent). by which we had formed two strategic regions for E&P in Middle East and South America. and gas reservoir simulation. oil reservoirs include sandstone. These technologies play an important role in the exploration and production. modeling of fractured reservoir. as well as strategic area selection of oil and gas resources. our upstream business developed by leaps and bounds—we became an operator from a non-operator. Ecuador. Tunis. we successfully acquired Emerald Energy Plc. Indonesia. we continued to extend our business into the upstream sector. Peru. from oil field to gas field.

2007 2008 2009 16 . and technological advantages. we have significantly strengthened our ability to obtain oil resources overseas.72 20. we vigorously develope our core business and products. by leveraging our good reputation. with crude oil supply under long-term contracts exceeding 20 million metric tons per annum. we have formed stable and extensive global marketing channels. we chartered and operated 9 super tankers.82 3. We have maintained a long-term cooperation with major petroleum companies and related financial institutions regarding oil trading and risk management. While meeting the domestic demand for crude oil through overseas long-term contracts and spot purchase.61 3. we have strengthened cooperation with large international tanker owners and provided convenient and efficient ship chartering services for clients that import to China or engage in entrepot trade to the third country.06 21.65 2007 2008 2009 2007-2009 light oil sales volume million metric tons 4. By bringing our execellence into full play. we provide our clients with quality products and professional services. through various methods such as time chartering. In our oil transportation business.08 In addition. and become an important crude oil supplier for many countries and regions. Europe and North America. 24. laying a solid foundation for becoming a specialized oil transportation company. made up with equal parts of import and entrepot trade.Growing Marketing Capacity 2007-2009 crude oil import volume million metric tons Oil trading has always been our traditional strength. By so doing. As result. operation channels. Relying on the good relation and cooperation with many governments of the oil producing countries and their state oil companies. we enhanced our operation scale and profit margin. At the same time. In 2009. we have rapidly expanded the scale of our independent shipping operations. we also have entrepot trading selling crude oil to the refineries in Southeast Asia. In 2009. the total trading volume of crude oil and product oil exceeded 50 metric tons.

Sinochem increased its brand recognition and industrial influence in the filling stations market. The construction of the retail network in Fujian province. Cooperating with Total Group. 17 . In 2009. and made the entry to import of naphtha and duty-free marine diesel. we continued to put in efforts in building-up filling stations.2009 ANNUAL REPORT BUSINESS OVERVIEW ENERGY BUSINESS In oil products trading. In overseas market. Domestically. we strengthened the long-term cooperation with worldknown oil products producers. we built filling station networks in Bohai Bay Region and East China area. East China and South China. the operation cost for filling stations were declining. the amount of Sinochem’s filling stations in operation surpassed 100. a majoy complement for an oil products distribution network that cover North China. while the retail sales rapidly grew and the profit level remarkably rose. which is conducted by Sinochem independently. integrating domestic and overseas operations to conduct a comprehensive oil business under different market conditions. At the same time. and diesel entrepot trade. and the first station on expressways was set up. which brought benefits to both the society and the company itself. With the retail network further expanding. As to the retail network development for product oil. was progressing well. we vigorously explored the domestic end market to increase the sale for end users. we set up a new distribution company in Liaoning province. we fully tapped upon the markets and resources within China and outside China.

further improved our services. We strengthened the integrated operation. Layout of Sinochem’s oil storage and logistics network Bohai Bay area Sinochem Tianjin Petrochemical Terminal. The renovation and expansion projects of Sinochem Orient Petrochemical Terminal. as well as other coastal and riverside regions in China. Sinochem Group has a total storage capacity of approximately 13 million cubic meters. and achieved a total throughput of 30 million metric tons. Zhoushan Zhongwei Oilstore. which together form a storage and logistics network covering Yangtze River Delta. we are playing a more important role safeguarding China’s oil security.. counting both existing facilities and projects under construction (including Zhoushan National Oil Reserve Facilities). 1 Yangtze River Delta Sinochem Xingzhong.000 metric tons. they are served by a network of ports and jetties whose handling capacities range from 3000 to 300.Steady Progress in Storage and Logistic Facilities Construction Currently. The scale of our commercial storage network is among the largest in China and we remain the market leader among the third-party petrochemical storage and logistics operators. the storage jetty project in Tianjing harbor. In 2009. Ltd. Sinochem Xingyuan. Sinochem Orient Petrochemical Terminal. and the construction of a 300. Sinochem Nantong. the 230. In 2009. we also received the national reserve product oil. Sinochem Yangzhou. Zhoushan National Strategic Petroleum Reserve.000-metric-ton jetty in Sinochem Xiongzhong all came to a completion.000 cubic meters storage project of Sinochem Yangzhou. 2 Fujian Province 4 Pearl River Delta Sinochem-Gree Sinochem Quanzhou Petrochemical Terminal 3 18 . At the same time. our storage business focused on increasing our longterm client portfolio and bonded products. and the Bohai Bay area. we continued to facilitate the development of the petrochemical storage and logistics facilities. as well as the second stage of the second phase of Sinochem Xingyuan oil products project were progressing as planned. the second phase construction of Sinochem-Gree. the Pearl River Delta. As a result. which further enhanced Sinochem’s industrial position and influence in the petrochemical storage and logistics market. In turn. All these projects improved our storage facilities and further complete the strategic layout of our storage business. After we took over the task of constructing the national strategic reserve for crude oil. Beijing Petrochemicals Development and Supply Co.

. the first Sino-foreign joint venture dedicated to refining in China. Upon the completion of its construction. In the future. We will promote the coordinated development of all sections throughout the oil industrial chain. WEPEC has a crude oil processing capacity of 10 million metric tons per annum (t/a) and is installed with a 10 million t/a atmospheric and vacuum distillation unit. recovery unit. so as to achieve a synchronized growth of oil and gas production and the benefits it brings to the economy and society. which can make sector of China and the whole world. At present. This project will make contribution to building Fujian Province into a petrochemical base of China. a 2 million t/a diesel hydra-treating unit. At the same time.000 t/a sulphur In addition. petrochemical storage business. We will also make oil and gas assets. the Quanzhou project is progressing well. and increase the scale and competitiveness of every section of our oil business. and facilitating the strategic transformation of Sinochem Group as well as the economic development of West Taiwan Strait area. as well as the service quality of our great efforts to develop Sinochem into a worldfamous petroleum company with high-quality capability and sustainability. a 2 million t/a heavy oil hydrogenation and desulphurization unit. Ltd. and comprehensive operation contribution to the development of the energy 19 . Sinochem Group is the largest shareholder of Dalian West Pacific Petrochemical Co. we have been actively seeking cooperation related to refinery projects both at home and abroad.5 million t/a hydrogen cracking unit and a 100. a 3 million t/a heavy oil catalytic cracking unit. As a hydrogenation refining plant fully capable of processing high-sulphur crude oil.2009 ANNUAL REPORT BUSINESS OVERVIEW ENERGY BUSINESS Smooth Progress in Refining Projects The Quanzhou refining project with a capacity of 12 million metric tons per annum obtained the approval from the State Energy Bureau for kicking off the preparation work. it will become one of the petrochemical companies with the most cutting-edge technology in China. a 1. (WEPEC). we will further improve our marketing capability for crude oil. in an effort to promote the sustainable and coordinated development of our upstream and downstream businesses. light oil and fuel oil. Every one of these units is among the largest of its kind in China. we will speed up the development of our oil business through specialized operation and optimization of resource allocation.

20 . Sinofert (HK. is China’s leading fertilizer company with the most complete product line and greatest sales volume. Sinochem take its foothold in China while seeking resources all over the world to serve for China’s great agricultural endeavor. production. China Seeds is dedicated to only national seeds company with most comprehensive becoming China’s N0. Sinochem’s subsidiary China Seeds is the country’s operational presence. trading excellence. peers in China and it is a strong force supporting Chinese As China’s biggest fertilizer supplier and distributor. and making contribution to the agricultural development and grain supply of China and the world at large. sales and marketing. by taking advantage of our chain to provide highly-effective and environmental- and services. In recent years. We are committed to developing ourselves into China’s largest and the world’s leading provider of agricultural inputs Sinochem is also China’s leading pesticide company with global footprint connecting R&D. our fertilizer business flagship. 00297). Sinochem’s core competence in pesticide sector is the strongest among its pesticide industry’s upgrading.1 and the world’s first tier seeds company and back up Chinese seeds industry’s upgrading. pesticide and seed.04 2 AGRICULTURAL BUSINESS Sinochem Group’s agricultural business covers three main agricultural inputs: fertilizer. we further complement the industrial friendly pesticide products and services.

Domestically-made fertilizer sold by Sinochem
million tons

2009 ANNUAL REPORT

11.33 8.61

11.49

BUSINESS OVERVIEW AGRICULTURAL BUSINESS

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Explore supplying channel Sinochem is China’s only major fertilizer producer with the most complete product line including nitrogen, phosphate, potash and compound fertilizer. In 2009, by making new investment for upgrading and renovation, we controlled the total manufacturing capacity of 10.34 million/mt. By adopting lean management and advanced technology, we further curtailed the production cost to enhance the sustainable development capability. In 2009, we continue to forge strategic alliance with the world’s major fertilizer suppliers for the purpose of reaching economy of scale and increasing the capacity of providing more fertilizer to China customers. We have solidified our position as China’s biggest fertilizer importer. We also expanded our domesticmade fertilizer supplying system by enlarging the proportion of domestic fertilizer going through our distribution channel. In 2009, we sold 11.49 million metric tons of China-made fertilizer which accounted for 75% of the entire fertilizer product we have sold. Apart from that, we have unfolded the cooperation with Shell in terms of sulfur trading, which is a first strong step of In 2009, facing with the sluggish fertilizer demand especially the demand for potash fertilizer, we proactively address the challenge by adjusting our operation tactics. Following the guideline of “have circumspect operation, accelerate the turnover and manage the risk”, we took advantage of our complete industrial chain, further explored the market as well as clients, and made stress of agricultural service. We altogether sold 15.23 million metric tons of fertilizer in 2009 and kept our status as China’s largest fertilizer distributor and retailer. As one of the key state-owned enterprises, we take the responsibility to store fertilizer during the off-season. In 2009, we altogether stored up to 2.15 million tons of fertilizer, an active deed to level-off price fluctuation and ensure the market supply. Meanwhile, in order to promote communications among its counterparts, Sinofert successfully co-sponsored the 77th annual meeting of IFA in Shanghai. cultivating our sulfur business.

Fertilizer Business
Sinochem’s fertilizer business takes “distribution” as its most critical juncture, while making extensions to both the upstream and the downstream. At present, Sinochem is China’s largest integrated fertilizer company covering R&D, production, import & export, distribution and sales, and agrochemical services. Sinofert, Sinochem’s subsidiary dedicated to fertilizer business, was listed in Hong Kong Stock Exchange on July 28th, 2005.

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Build up syndicated distribution network After we have finished the establishment of comprehensive distribution network which covers almost every agricultural county in China, we tried to redirect our focus to enhance the operation efficiency and quality. In 2009, we added 26 more distribution and retail outlets to bring the total number to 2,036. Our distribution network covers China’s major agricultural countries which altogether constitute more than 90% of China’s arable land. Our distribution centers follow the principle of “trying to develop new client in end market and end users”. As a result, we added more than 11,000 new clients into our list with total number surpassing 40,000. More than 85% of our clients are from villages and towns. Throughout the year, 11.31 million tons of fertilizer were sold through our own network, which accounts for 74% of all the fertilizers sold by us. Our network is playing an ever-increasing important role. In 2009, we tried to add other agricultural inputs like pesticide into our distribution centers’ portfolio. By providing our clients with “one-stop” service, we further strengthened our advantage with respect to our distribution service platform. Scientific Agro-chemical Service to Chinese Farmers We’ve always take “cultivating Chinese farmers” as our longterm strategy. In 2009, we have launched more than 4800 In 2006, Sinofert joined hands with China Academy of Agricultural Sciences to establish “Soil testing and Formulation Fertilizing Technology Center” and built up two labs earmarked for that purpose in Linyi, Shandong and Changshan, Jilin respectively. We have established a three-tier soil testing and formulation fertilizing system which includes the technology center, technical station and service station. In Feb. 2009, we, along with China Academy of Agricultural Sciences, invited experts to stay on the 800 free hotline to answer questions regarding to soil testing and formulation fertilizing through telephone conversation. education events like farming lecture, fair promotion, soil testing etc. More than 50 million farmers benefited from our activities. We have selected 1108 villages as the model villages for scientifical application of fertilizers and providing services for these villages. We participated into the project as “agricultural technology promotion model counties” sponsored by the Ministry of Agriculture and took the responsibility to build up 1000 model villages and 1000 agro-science demonstration bases in 280 counties. Sinofert organized big promotion events encouraging farmers to use more potash fertilizer. Sinofert also aided the farmers in Sichuan and Shanxi who suffered from “Sichuan Earthquake” by offering them high-quality fertilizer and technical services so that they can rehabilitate from the disaster sooner.

The Location of the manufacturing sites:
Gaoping, Shanxi Province Fuling, Chongqing Municipality Jinchang, Gansu Province Guiyang, Guizhou Province Golmud, Qinghai Province Kunming, Yunnan Province Songyuan, Jilin Province Pingyuan, Shandong Province Qingdao, Shandong Province Yantai, Shandong Province Linyi, Shandong Province Wuhan, Hubei Province Yong'an, Fujian Province

Area covered by the manufacturing sites and distribution network:
Heilongjiang / Jilin / Liaoning / Shandong / Hebei / Henan / Chongqing / Jiangsu / Anhui Hubei / Hunan / Jiangxi / Fujian / Yunnan / Guangdong / Guangxi / Hainan / Shaanxi / Gansu Qinghai / Shanghai / Guizhou / Ningxia / Xinjiang / Beijing / Tianjin / Zhejiang / Shanxi Inner Mongolia / Sichuan

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2009 ANNUAL REPORT
BUSINESS OVERVIEW

Pesticide Business
In 2009, Sinochem made new coordination and consolidation effort trying to streamline its pesticide business. By doing so, we have strengthened our R&D capability and the capacity of commercializing the R&D fruits, and increased our market share. We made further footprint in Southeast Asia market. In 2009, our pesticide business accounted for 13.6% and 3.92% of China’s total imports and export of pesticide respectively. In terms of R&D, Sinochem owns Shenyang Research Institute for Chemical Industry (Shenyang Institute) and Zhejiang Chemical Research Institute (Zhejiang Institute), known as China’s two national pesticide R&D centers, which bring the best R&D capability into China. Shenyang Institute is the trailblazer of Chinese pesticide’s research and development. It is the R&D powerhouse as part of China’s National Pesticide Engineering Center, National Pesticide Quality Supervision Center and National New Pesticide Safety Evaluation Center. It has the complete pesticide R&D system combines compounds design and syndication, bio activity screening, formulation processing, safety evaluation and commercialization. Zhejiang Institute was founded in 1950. It is part of China’s National Southern Pesticide R&D center and is Zhejiang Province’s biggest R&D institute mainly engaged in fluorine pesticide’s R&D and production. In 2009, we have increased the financial inputs supporting the innovation of our pesticide business. Shenyang Institute’s “National Key Lab for Pesticide R&D” was inaugurated. Meanwhile, it continued its construction of “GLP Lab for Safety Evaluation” and completed its non-human Primates Testing Lab and Pesticide Ecology Hazard Evaluation Program which has won international credit and certification. In 2009, Sinochem has completed 8 key Scientific Innovation Projects like “The Research and Commercialization of Mesotrione Syndication Technology”, applied for 39 items of patents, and developed manufacturing technology for 5 new pesticide projects. Those proprietary In terms of sales and marketing, we enjoy more than 4100 dealerships owned by us or as our agents, covering China’s main agricultural provinces. Through the partnership with major international companies, Sinochem International takes strong brand as the main tool of penetrating the market. Its portfolio includes 10 branded products which we own or play as an agent. Monsanto’s “Round-up” herbicide which we have the exclusive right to distribute takes 10% of market share in China’s glyphosate market. We also encourage the concerted efforts to sell all the agricultural inputs in a unified channel and have achieved positive progress. In foreign countries, Sinochem International acquired Monsanto’s acetanilide business in 6 Southeast Asian countries to have 500 dealerships and 54 brands. The sales volumes increased steadily. In India, we have taken the market share of 49% for rice herbicide while in Philippine this figure is 31%. Our distribution network covers 81% of the world’s rice planting region. In the field of manufacturing, we enjoyed 3 production bases in Shenyang, Nantong, and Lianyungan. These 3 bases together own the production land area of more than 200 hectares and production capacity exceeding 100,000 metric tons per year. The product line includes pesticide, herbicide, fungicide and plant growth regulator. In 2009, we have finished the construction of Phase II, Shenyang Kechuang Chemical Production Base. A group new environmental-friendly pesticides product with the traits of high efficiency, low-toxic and low residual were put into production, a strong complement of our production line. After becoming the largest shareholder of Jiangshan Agrochemical, Sinochem made extension of cooperation in terms of technology and production. Meanwhile, Sinochem International’s pesticide plant in Southeast Asia has started its trial production. pesticides products have helped Sinochem to enhance its innovation capability and expand Sinochem’s market share. As R&D works progresses, Sinochem’s position in pesticide business will be further elevated. Sinochem will play an ever-increasing role in Chinese pesticide industry’s development and upgrading.

23

AGRICULTURAL BUSINESS

In terms of manufacturing. universities. we have expanded our business scale and enhanced the operation quality and profitability. 11 rice varieties and 3 sun flower varieties had passed the test and got the license. In 2009. Yunnan Province with the land area of 10 hectares. Our research works is consisting of breeding. We have made resolution to build up China Seeds Life Science Technology Research Center. we implemented the strategy of “highlighting R&D. Sinochem is the only Chinese central state-owned enterprise which takes seeds as its core business. proactive sales and marketing” to further optimize the business structure. we try to complement our manufacturing layout with the focus on China’s key ecological areas. cotton. quality monitoring. It is the largest investment to date by a Chinese seeds enterprise trying to develop home-grown technology. rice. production upgrading. R&D capability and efficiency are therefore greatly enhanced.Seeds Business Sinochem owns China Seeds. We have presided over or participated in 2 key projects listed in “National 11th Five-year Plan Key Scientific Program” and another 2 key projects as part of ‘Agriculture Technology Commercialization Program”. wheat and most of the vegetable seeds. application and industrialization. We have also involved in “National Genetic-modified Plants Program” sponsored by the Ministry of Agriculture and other 11 key programs covering corn. the only national seed company in China. We have invested RMB 190 million to build up a processing plant in Shilin. We have made renovation for our plant in Zhangye. By consolidating internal resources and extending cooperation with outside counterparts. In 2009. industrial peers and seeds industry societies to launch “China Seeds Science and Technology Innovation Alliance” to push forward the synergy between research institutes and industrial players. We are building up another breeding and processing plant in Beijing which has the targeted market in Northern China with the annual processing capacity of 5000 tons. We continued our investment in R&D. 2 corn varieties. Gansu Province to improve the corn seeds’ quality. As a results. we have initially molded commercial breeding model and professional specification. We also join hands with 53 Chinese research institute. production and processing. By applying state-of-the-art processing equipment. China Seeds is now building 24 . which positioned itself as the world-class and China’s leading powerhouse for China seeds technology’s research. rape oil. this plant will occupy 20 million tons processing capacity for corn seeds once commissioned. China Seeds had 39 varieties or combinations of corn products and 60 varieties or combinations of rice products tested in province or national level. storage and transportation and after-sale service.

as China’s national seeds company. We tried to dispatch technicians to the villages disseminating seeds selection and planting knowledge.2009 ANNUAL REPORT BUSINESS OVERVIEW AGRICULTURAL BUSINESS up another processing plant for rice seeds in Fujian. South-East and East periphery to incorporate corn seeds. We have reached an agreement with Sichuan Agricultural Research Institute’s Rice and Sorghum Academy to purchase 70% stake of Sichuan Chuanzhong Seeds Company. we enforce an all-time quality supervision to enhance the risk management in every critical juncture of our business. We have made further research on the market to provide specified seeds product to various planting regions to enhance our business value. Depending on our own provincial distribution hubs. we further complete our distribution network to make it more close to the end users. we will further increase our investment. During the World’s Seeds Convention in May. we have labeled more 1000 families as “Technology Exemplary Family” in 197 counties of 21 provinces and have raised more than 500 promotion activities. North-east. we have formed four seeds breeding. vegetable seeds and oil seeds’ into our product portfolio. Currently. In terms of sales and marketing. rice seeds. we support China Seeds Trading Association to hold its fifth convention. China Seeds performed the role as the back-up company for China Seeds Trading Association. China’s seed industry will exert stronger influence on the world’s seed industry. we effectively broadcast agricultural knowledge. We strictly follow the country’s seeds industry standard to make sure our products has 100% pass rate. In 2009. guidance and lecture. We have already deployed 6 strategic regions with 22 provincial level distribution hubs to cover China’s main agricultural regions. production and processing powerhouses in China’s North-west. Looking into the future. we have made breakthrough in terms merge and acquisition. pesticide and seeds business. we extend cooperation with downstream retailers helping us to establish end users service network. and accelerate our development to leading agricultural service provider. We incessantly try to promote seeds planting technology serving for our farmers. The acquisition bolstered our competitiveness in rice seed business and served as an example for China’s leading seeds company involving in R&D Institute’s regime change. By this chance. In 2009. Meanwhile. we will continue to take China’s agricultural production and food security as our responsibility. By the end of 2009. China Seeds helped China Seeds Trading Association successfully win the rights to hold World’s Seeds Convention in Beijing in 2014. In March. Focusing on fertilizer. a strong foothold in the upstream area of Yangzi River. By on-site demonstration. build Sinochem into China’s biggest and world’s 25 . playing a positive role helping farmer to increase output and thus their economic return.

By the end of 2009. Eight ODS substitutes of our products. FLTCO.04 3 CHEMICALS BUSINESS Complete industrial chain of the fluorine chemicals business Our fluorine chemical business has form a complete industrial chain covering resource development (fluorspar and hydrofluoric acid). we have two companies responsible for the obtaining of fluorspar. production and marketing. In terms of resource development. including HFC-134a. and held dozens of national-level patents or world patents. we further consolidated our internal resources. enjoyed greater brand recognition in the world. In 2009. our ODS substitutes production capacity was near 80. Our product lines include ODS substitutes.. We have been committed to the development and production of zero-ODP low-GWP ozone-friendly green refrigerants and other fluorinated chemicals. we held a fluorspar reserve of 7 million metric tons. and Fujian Jianyang Kings Mining Industry Co. Ltd. and conducting lean management. such as Lantian. We are China’s leading fluorine chemicals provider with the most complete range of products. We have several fluorine chemicals production bases spreading over Taicang. which is the only research center of its kind in China—and Zhejiang Fluorine Chemicals Engineering Technology Research Center. and had two R&D centers in China—National ODS Substitutes Engineering Technology Research Center. In the area of R&D. drafted 29 industrial standards for fluorine chemicals industry.000 metric tons. By the end of 2009. through strengthening innovation and increasing R&D input. fluorinated fine chemicals etc. Hangzhou. while the capacity for fluoropolymers and fluorinated fine chemicals exceeded 10. we created an internal synergy in our fluorine chemical business. and Jincool. while the sale of HCFC-123 and HFC-236fa took the biggest slice in the international market. Ltd. Our brands. namely Xingguo CFIC Mining Co. 26 .000 metric tons. R&D.. completing the industrial value chain. which helped us to achieve a growth under the backdrop of the gloomy global fluorine chemicals’ market. fluoropolymers. boasted to have the largest sale volume in the domestic market. and Xi’an. We chaired or participated in formulating 6 national-level industry standards.

and the marketing strategy targeting at high-end clients. The year 2009 witnessed a revenue of RMB 43..2009 ANNUAL REPORT BUSINESS OVERVIEW Sinochem began its chemicals business with international trading. and has maintained its position as China’s largest chemicals import and export service as well as the safe. and harmonious development of the chemicals industry. Sinochem International steadily conducted internal resources consolidation. West Africa.000 metric tons. marketing and logistics. while our market and major clients spread over Asia. Its home-manufactured products acquired the certification from many international high-end tyre manufacturers such as Bridgestone and Goodyear. we have been making helped us to take the lead in the trading volume of related products. and influence further enhanced. processing. provider in recent years. the work of acquiring Indonesia-based natural rubber processing plant saw a substantial progress. Sinochem has been involved in rubber business for over 50 years. We have evolved from a pure import agent to become a natural rubber industrialized player and China’s largest natural rubber marketer and distributor. its industrial position further consolidated. Our natural rubber plantation covers Southeast Asia. up by 24% compared to 2008 and accounting for 4% of the global market share. innovation to the operation models. and further enhanced our market position. and Hainan and Yunnan areas in China. 27 . natural rubbers and chemicals logistics.8 billion of our chemicals business. As to the businesses that are our traditional edge such as the trading of pharmaceuticals and chemical commodities. EUROMA RUBBER achieved the best profitability in history. Its products include tyres and all kinds of standard rubbers. and its processing technology takes the lead in the industry. It is dedicated to facilitating the technological progress CHEMICALS BUSINESS In 2009. The business volume of rubber adhesive was 370. Europe and America. we actively extended our business into the upstream and downstream areas. In 2009. with In 2009. At the same time.000 metric tons. GMG completed private placement. After the successful acquisition of Malaysiabased EUROMA RUBBER and Singapore-listed GMG Global Ltd. we sped up the upstream extension strategy focusing on resources acquisition. which conducts integrated international operation covering rubber planting. Sinochem International further strengthened its comprehensive trading ability which focused on innovative marketing and the resources availability. with our business concentrating on several specific fields like fluorine chemicals. and boasted the biggest processing capacity among domestic enterprises. Sinochem International strengthened the strategic cooperation with the international tyre manufacturer. Sinochem International made it to rank among the world’s second tier players in the natural rubber industry. and enriching our business portfolio. Sinochem International controlled a natural rubber production capacity of 300. which Strengthened international industrial position and service capacity of the natural rubber business Since the implementation of the Rice-Rubber Barter Agreement signed between the governments of China and Sri Lanka. environmentally-friendly.

with a “T-shaped” logistics network that begins in the northern city of Dalian and moves south to Zhuhai. by doing which we have made contributions to raising the safety level and push forward the long-term sound development of China’s hazardous chemicals logistics industry. In 2009. with its ships operation meeting the International Safety Management (ISM) Codes.Continuous growth of chemicals logistics and petrochemical distribution business We are the China’s leading third-party supplier of petrochemical storage and logistics services. and became the first liquid-chemical ship owner that obtained that license. We were also invited by related authorities to make industrial standards for the water transport industry for liquid chemicals in China. By the end of 2009. We also own the largest hazardous chemical fleet and ISO tank lorries in China with strictest safety standard. Safety. capable of providing comprehensive chemical logistic solutions for Chinese and foreign clients. Our industrial position was further consolidated in the domestic chemicals logistic market. its business on the Middle East route saw remarkable progress. Its tankers have been certified by Chemical Distribution Institute (CDI) and passed the annual safety inspections conducted by major international oil company such as SHELL and BP. meeting the strict requirements of the high-end clients. and Environmental-protection) standard that meets the international requirement. by seizing the historic chance of the direct shipping across Taiwan Strait. with long-term contracts signed with many clients. In terms of the shipping business. Sinochem International got the direct shipping permit for its 25 liquid chemical tankers. Apart from that. Our chemicals logistics business is guided by a HSE (Health. It is certified by ISO-9001-2000 Quality Management Systems by DNV. Sinochem International is the domestic leader for providing liquid chemicals shipping solution on both long-haul and short-haul international routes as well as domestic routes. meanwhile stretching from Shanghai in the east to Chongqing in the west. and shipping volume and market share significantly raised. Sinochem 28 .

while our market share further increased. In 2009. and has qualified chemicals warehouses in major coastal port cities such as Tianjin. is the national class-A freight-forwarder. Regarding the storage and freight-forwarding business. the annual shipping volume of Sinochem International still realized a 45% year-on-year increase. In 2009. It successfully won the bids for providing global service for BASF.2009 ANNUAL REPORT BUSINESS OVERVIEW CHEMICALS BUSINESS International controlled 38 vessels. At the same time. and Exxon Mobil. our domestic sale had a year-on-year growth of 40%. We have been making innovation to our operation model. and chemical fiber raw materials. we significantly increased our operation efficiency by creating synergy between ISO tank business and freightforwarding and storage business. and Guangzhou. We are one of China’s largest distributors of petrochemical feedstock. tried our best to meet the demand of both upstream and downstream clients. we continued to signed long-term contracts and maintain cooperation with international petrochemicals suppliers. It has branches and offices in China’s major ports. Against the the sluggish global shipping market. we consolidated our generic petrochemical commodities business. Shanghai. Dow Chemicals. After the consolidation. Dalian. it owns 2557 ISO tanks. and certified for customs declaration. providing all kinds of chemical storage and logistics service including handling of containers with hazardous chemical goods for both Chinese and foreign clients.000 metric tons. 29 . our petrochemical feedstock business saw steady growth. In addition. By the end of 2009. with our business coverage spreading over various petrochemical commodities including general-purpose plastics. Ltd. and increased our core competitiveness through developing endusers and building a complete service network. and successfully developed ourselves from a petrochemical feedstock trader to a distributor with client-oriented marketing strategy. we aimed to become the main supply channels of the petrochemical feedstock market. While our chemical logistics business achieved rapid increase. with a shipping capacity over 300. engineering plastics. Sinochem International also takes the lead among its Chinese peers in providing ISO tank logistics services. By so doing. Sinochem International not only continued to consolidate its leading position in the domestic ISO tank market. In 2009. In 2009.. and identified Sinochem Plastics Company as the only platform for this business. we had a clearer business strategy and more diversified business content. so as to provide more value-added services to our clients. but also worked on developing the global service network by having strategic cooperation with American Newport Tank Container. Sinochem International Storage and Transportation Co. and a service network covering China’s major chemicals production regions and logistics links. We have been making our efforts to increase the synergy between petrochemical feedstock distribution and chemical logistics. We focused on providing distribution service. we established strategic partnership with the domestically large and medium-sized clients to harvest a mutually-beneficial outcome. Bayer.

Its sales network covers Zhejiang. a relatively complete industrial chain is in the making. We have developed various independent brands of our own such as “SINING”. and obtained over 200 registrations in over 20 countries and regions. In terms of pharmaceutical distribution and logistics.. we formed a unified platform as our pharmaceutical business. we also set up long-term cooperation with universities and research institutions. 30 .. is the only qualifier to run the third-party pharmaceuticals logistics business in Zhejiang province. we combined our own independent R&D capacities with various external resources available to us. While we continued to conduct the market-oriented development strategy. and Pfizer. Nanjing University. We have set up a number of production bases for high-end pharmaceutical intermediates. through customized R&D and processing service. Zhejiang Int’l Medicine Co. and bio-pharmaceuticals. and take the lead in the import of APIs and formulations in China. and more than 80% of Zhejiang’s hospitals at county level or above. and Zhejiang University. which have provided a platform for the commercialization. we further enhanced our long-term strategic cooperation with the international well-known pharmaceutical companies including Johnson & Johnson. we also further strengthened our R&D and production capacity.Gradually enhanced pharmaceutical business Through an internal consolidation in 2009. which further enhanced our quality control and technology service capacities. Roche. It is playing an increasingly important role in the domestic pharmaceuticals sales and logistics business. and is also the unit that shoulders the responsibility of building medical reserve for Zhejiang province. a subsidiary of Sinochem Lantian. Apart from owning several R&D institutes. In terms of pharmaceuticals R&D. registration and IPR protection of our achievements in R&D. such as China Pharmaceutical University. Shanghai Jiaotong Universtiy. In addition. Anhui and Fujian provinces. therefore. Ltd. APIs.

petrochemical feedstock. we made strategic investment in the sub-sectors of pigments business. In 2009. more than 50% of China’s dyestuff is developed and promoted by Shenyang Institute. We will further sharpen our edges in related fields. In the future. natural rubbers. we maintained the position as the largest exporter of dyestuff and pigments in China. Shenyang Research Institute of Chemical Industry (Shenyang Institute) is the national technology development center for dyestuff. Many products such as the CF-351 fluorescent brightener developed and produced by Shenyang Institute enjoy a leading position in the global dyestuff market. further consolidated the industrial basis. company that is market-oriented and supported by 31 . sales and technology service. so as to have a stable suppliers and customers bases. we completed the internal consolidation of our dyes and pigments business. our focus will be placed on the development of our chemical sub-sectors including fluorine chemicals. and “DYCOS”. and set up an operation platform that integrated R&D. the national engineering research center and standardized unit for dyestuff. We sped up the development of new products containing high-tech and high value added. At present. pharmaceuticals. In 2009. with our R&D and production advantages further enhanced. dyes and pigments. and accelerate our transformation into a chemical resources and technology.2009 ANNUAL REPORT BUSINESS OVERVIEW CHEMICALS BUSINESS A more specialized dyes and pigments business Sinochem has long enjoyed a competitive advantage in the trade of dyes and pigments and owns several reputable brands such as “YOUHAO”. “YONGJIU”. We provide our clients with quality products and technological services by sticking to our business model that emphasizes “Separated Sourcing. and gradually made our way to our strategic goal of becoming a more international and specialized player. Concentrated Supplying”. production. At the same time. chemical logistics.

Ltd. Through these differentiated operation. According to the situations of different industries. building operation platforms at home and abroad. 32 . balanced and steady progress. industrial equipment and education appliance.9 billion. steadily rolled out its development strategy and reaped rapid growth in the following six key areas: medical appliances. we maintain our lead in the domestic financial leasing industry. Far Eastern Leasing realized its strategic goals. two of them saw new contracts each worth over RMB 2. taking up more market share. which further enhanced the financial prowess and improved the corporate governance of Far Eastern Leasing. up by 66% from the previous year. and CICC. exploring the ship leasing area by having innovation in steady development. In terms of business operation. printing machinery.5 billion. International Far Eastern Leasing Co.04 4 FINANCIAL BUSINESS Financial leasing In 2009. construction equipment. GIC SI. namely KKR. steadily developing the medical appliances and printing machinery leasing business by further exploring sub-sectors. Far Eastern Leasing brought in three strategic investors. Throughout the year. and obtained USD 160 million of investment from them. Far Eastern Leasing continued to provide differentiated and value-added financial leasing services by encouraging a rational. accelerating market deployment. Far Eastern Leasing signed new leasing contracts worth a total of RMB 11. and education appliance. enriching product categories. construction equipment. and expanding overseas business. one of Sinochem’s subsidiaries. and achieving substantial breakthrough. Among the six key areas we mainly involved. and seeking sound and steady growth. shipping. while the rest four increased their leased assets by over RMB 1 billion. and made differentiated operation strategies: actively advancing its leasing business in the three areas of industrial equipment. In September 2009.. (Far Eastern Leasing). it had prompt adjustment to its business layout.

2009 ANNUAL REPORT BUSINESS OVERVIEW FINANCIAL BUSINESS Our financial business is a non-banking financial system made up of a full range of service and product categories including financial leasing. with further enhanced market competitiveness and industrial influence. (FOTIC). China Foreign Economy & Trade Trust Co. and securities investment trust. Trust business In 2009. it issued four securities investment trust products with a total value of RMB 149 million. operation and management. It received the “Brand-value Award” in the third “Trustable Trust Contest” organized by Shanghai Securities News. Through continuous business development and risk control. Sinochem’s trust management firm. In addition. FOTIC continued to focus on its trust business. which helped it to receive the highest grade given by China Banking Regulatory Commission (CBRC) to the trust enterprises. and divided its main business into four major sectors. At the same time. In 2009. real estates trust.. In 2009. it had large-scale operation and product innovation to overcome the adverse impact the financial crisis inflicted on the asset management market. with its trust business revenue reaching RMB 167 million. Its general operation was progressing well. It obtained the qualification granted by CBRC to conduct equity investment and relevant business within its own assets.7 billion. 33 . Ltd. namely financial cooperation. life insurance. FOTIC’s average monthly trust assets volume amounted to RMB 39. and making more contribution to Sinochem’s general development. securities investment fund. our financial business is becoming increasingly profitable. trust management. strengthened its corporate governance. internal financial company and financial futures. as well as human resource building. equity investment trust.

SinochemManulife has been committed to providing quality and professional services and diversified products for the Chinese clients. By the end of December 2009. while Lion Flexible Allocation Fund was granted “Golden Abacus Award of the Fifth China Capital Market Annual Meeting”. At present. Jiangsu. Zhejiang. Lion Money Market Fund. the first Sino-foreign life insurance joint venture in China. Lion Fund managed the total asset value of over RMB 51 billion. Lion Flexible Allocation Fund.000 clients. Life insurance Manulife-Sinochem Life Insurance Co. Guangdong. With over a decade’s operation experience in China’s insurance market.Securities investment and fund management Sinochem has investments in two large fund management companies—Lion Fund and Baoying Fund. Sinochem-Manulife has set up branches and offices in more than 30 cities in Shanghai. with over 11. (Manulife-Sinochem). and Lion China Securities 100 ETF Fund. Lion Growth Equity Fund.000 insurance agents providing professional financial insurance services for over 500. We are the major fundraiser of Lion Fund. Sichuan.. Ltd. was co-founded by Sinochem Group and the Canadabased Manulife Financial Corporation back in November 1996. Lion Profit Increase Bond Fund A/ B. which manages nine openend funds. Lion Fund received “2009 the Most Innovative Marketing Award of the Seventh China Financial and Economics Billboard”. Lion Optimized Bond Fund. Shandong. Lion Growth Equity Fund.58 billion. 34 . Beijing. namely Lion Balanced Fund. and has distributed a cumulative dividend of over RMB 12. Fujian and Chongqing. Lion Value & Growth Equity Fund. Lion Equity Fund.

which indeed effectively met the capital demands of Sinochem’s subsidiaries. As to the credit extension business. Sinochem Finance has been dedicated to providing convenient and customized services for Sinochem’s subsidiaries by understanding their financing needs. In terms of fund settlement business. securities investment. Sinochem Finance tried its best to obtain different kinds of operation qualification. Standard Operating. and providing professional liability management advices. Ltd (Sinochem Finance) is one of the financial companies under the direct supervision of CBRS. it established a relatively complete business system. 35 . By so doing.. Sinochem Finance successfully provided third-party payment as well as spot sale and purchase of foreign currencies services in 2009. It expanded its business portfolio by adding such businesses as concurrent-business insurance agent services. In terms of business innovation. In the past one year. Sinochem Finance upheld the guidelines of “Relying on and Serving Sinochem Group. It also included RMB settlement and domestic foreign exchanges into its centralized management system. Sinochem Finance Co. and reduce the financial costs of Sinochem’s subsidiaries. and expanded the coverage of the centralization of RMB business as well as international settlement business. and set up a comprehensive financial service platform that provides diversified. and diversified the capital utilization channels and service methods. and equity investment management. It was running its business focusing on the industrial chain and value chain of Sinochem Group.2009 ANNUAL REPORT BUSINESS OVERVIEW FINANCIAL BUSINESS Financial Company Incepted on June 18th 2008. and Expanding through Innovation”. professional and specific services. so as to increase the efficiency and safety of the capital utilization. bond underwriting. in order to increase its financial service level.

and 3200 luxury hotel rooms. with our assets scale and operation efficiency taking the lead in the domestic market. Our business involves the development and operation of highend commercial property and residential buildings in prime locations of China’s first tier cities. and ultimately increase the brand value and enhance its market competitiveness. the total gross floor area (GFA) of the high-end or held by us was about 2. We are one of the largest high-end commercial property companies in China. 36 . the real estate flagship of Sinochem 2009. of commercial real estate and residential buildings developed which we were holding 360. Franshion good combination of short-term and long-term investment. so as to have a the holding of premium commercial real estate.1 million square meters.000 square meters of premium office buildings. While focusing on Properties is gradually increasing the proportion of highend residential building in its portfolio. After a series of consolidation. 5th property leasing and hotel investment. Franshion Properties is engaged in high-end commercial property development. an integrated real estate business platform of Sinochem has been built. At the end of 2009. Group. and thus Jin Mao Group becomes a wholly-owned subsidiary of Franshion Properties. Franshion Properties. acquired all shares of Jin Mao Group on Jan.04 5 REAL ESTATE BUSINESS Sinochem Group is one of the 16 central SOEs approved by SASAC to run real estate and hotel business.

The International Shipping Service Center is on the list of the Shanghai Major Projects. Yunnan—two tourist hotspots in China. located on the west bank of Huangpu River and adjacent to the Shanghai Bund.06 billion. Beijing Chemsunny World Trade Center. enjoys a golden shoreline nearly 880 meters long. In addition. Shanghai Port International Cruise Terminal. and is able to berth three luxury cruise liners at the same time. and will become the shipping hub for Shanghai in the future. Shanghai Zhangyang Riverside Court.2009 ANNUAL REPORT BUSINESS OVERVIEW Projects Development Franshion Properties has developed a series of landmark commercial real estate projects. The Shanghai International Cruise Terminal. Franshion Properties has accumulated abundant experience in developing high-end residential buildings through such projects as Zhuhai Every Garden. and Shanghai International Shipping Service Center. The wharf of the International Cruise Terminal Center covers an area of 20 thousand square meters. including Shanghai Jin Mao Tower. Beijing at a price of RMB 4. and close to Beijing Central Business District. the two compounds form a riverside area that has an extension two times of the Bund. Apart REAL ESTATE BUSINESS from that. and is a commercial complex project that integrates wharf building with commercial and office space development. 37 .33 million square meters. which earns the label of “Incomparable Golden Land Plot” in Beijing. Shanghai International Shipping Service Center is located at North Bund of Shanghai Hongkou District. Franshion Properties plans to develop it into a landmark high-end residential complex. 15 land plot at Guangqu Road. The total GFA of the ongoing premium commercial property projects by Franshion Properties is around 1. With the International Cruise Terminal Center on its west. the project is expected to be completed in 2013. It has a capacity to handle 1 million person times annually. Franshion Properties won the bid of the No. This project is located within the east 4th ring road of Chaoyang District. and Shanghai Haiyi Villa. In June 2009. and becomes a key project when Shanghai is implementing the strategy of building an international shipping center. Franshion Properties has two high-end property development projects underway in Shanghai’s Chongming Island and Lijiang.

therefore become the industrial champions in the local luxury hotel market. and Forbes Global CEO Conference. As the new landmark of West Chang’an Avenue and with the unique designing style and superb facilities. While receiving numerous titles and awards. 38 . In 2009.Property Leasing The total GFA of the high-end property held and operated by Franshion Properties is over 360 thousand square meters. It showcases the best combination of the traditional architectural style of China and the most advanced technology of the world. Sinochem Tower is a pure office building that combines office automation with people-oriented services.5 meters’ tall with 88 floors and has a GFA of 292. so as to keep its leading position among its peers in the same area. and provided accommodation service for a series of grand events. Jin Mao Sanya Hilton Resort and Spa. including Grand Hyatt Shanghai. Annual Meeting of Asian Development Bank. Grand Hyatt Shanghai took prompt action to adjust its marketing strategies. Hotel Operation Cooperating with the world-renowned hotel management corporations. such as Fortune Global Forum. Chemsunny World Trade Center distinguishes itself in the market of high-end office buildings. the Beijing Chemsunny World Trade Center and Shanghai Jin Mao Tower are regarded as the landmarks of the core business districts in China. Among them. Positioned at the financial center of Shanghai Lujiazui district. all of which enjoy prime locations in the first tier cities or 5A-class holiday destination. Franshion Properties invested to build several fivestar luxurious hotels. Located at the bustling section of West Chang’an Avenue. and JW Marriott Shenzhen. Jin Mao Westin Beijing Chaoyang. Occupying floors 53-87 of the Jin Mao Tower in Shanghai. APEC Summit. The tower is 420. Jin Mao Ritz Carlton Sanya.475 square meters. Jin Mao Tower is one of the groundbreaking buildings in China. these two buildings are pacemakers among their peers in terms of occupancy rate. Jin Mao’s Grand Hyatt Shanghai has received over 100 awards at home and abroad. facing the severe external environment.

As China’s first resort hotel meeting the international standard of “luxury” . and outperformed its local competitors by large margin. namely Jin Mao Sanya Hilton Resort and Spa and Jin Mao Ritz Carlton Sanya. Exhibition and Tourism” by Shenzhen Conference and Exhibition Association. Jin Mao Ritz Carlton Sanya had an even more eye-catching operation result. Jin Mao Westin Beijing Chaoyang was entitled “2009 Starwood Best Hotel in China”. JW Marriott Shenzhen is the five-star business luxury hotel in Shenzhen. Opening at the beginning of 2009. Franshion Properties operates a total of 951 luxury hotel rooms. we will continue to develop highdevelopment. which has largely boosted the tourism in Sanya. focus on both property holding and industrial consolidation. located at Beijing Wangfujing Street and Beijing Eastern Garden International Conference Center. In 2009. Jin Mao Ritz-Carlton Sanya is taking the lead in Yalong Bay hotel market. institutional innovation and business expansion. adjust and optimize our business structure. It was named “Best Hotel for Conference. fully leverage the opportunities of end properties. 39 .2009 ANNUAL REPORT BUSINESS OVERVIEW REAL ESTATE BUSINESS In Sanya. In Beijing. In the future. Jin Mao Westin Beijing Chaoyang hotel accommodated numerous heads of states and commercial leaders since it opened in June 2008. a city on the southern island of Hainan. the central government published the Scheme for Building Hainan into an International Tourist Island. Apart from that. By taking sales incentive measures and exerting cost control through lean management. and ultimately become the leading property developer and operator in China’s high-end real estate industry. spreading out over two five-star hotels in Yanglong Bay. located in Beijing Shunyi District. Jin Mao Sanya Hilton maintain a leading position in the local competition. which helped to build a luxury brand image for the hotel. Wangfujing Grand Hotel. further increased their brand influence and market position in 2009.

social undertakings.04 6 OTHER BUSINESSES Tendering Business While providing professional services and support for the development of our own operations.. Apart from that. a “Class-A Government Procurement Tendering Agency”. “Top 10 Most Influential Tendering Agency”. and Dongbei Special Steel Group Co. Sinochem Tendering’s major clients spread across the areas of railway transportation. It has received many titles from related industrial authoritative organizations. and a agency qualified for “Japanese Government Loan Funded Project”. such as “The Most Competitive Tendering Agency”. “Top 10 Best Tendering Company”. Sinochem Tendering continues to make improvements to its construction project management and project supervision consulting services. It has been involved in a large number of national key investment projects. as well as the qualification to undertake tendering service for Japanese Government Loan Funded Project. Ltd. Officially recognized as a “Class-A International Tendering Agency”.. including the projects of China State Shipbuilding Corporation. aerospace. China Aerospace Science and Technology Corporation. In recent years. Sinochem Tendering has become one of the most influential and competitive tendering agencies in China. China South Locomotive and Rolling Stock Corporation Limited. and metallurgy. 40 . Sinochem’s tendering business has achieved rapid growth by looking to the wider market. shipbuilding. Sinochem International Tendering Co. a “Class-A Tendering Agency for Central Government’s Investment Projects”. Its professional and quality services gain high recognition from related government authorities. aviation. Ltd. By so doing. and other clients. In addition to running the tendering business. China Shipbuilding Industry Corporation. and BOT (Build-Operate-Transfer) tender consulting and agency services. it was entitled as “Creditable and Excellent Tendering Agency” by China Tendering and Bidding Association. Aluminum Corporation of China. SOEs. and “Top 10 Valuable Brands of Tendering Agencies”. China CNR Corporation Limited. Sinochem Tendering also provides EPC (Engineering-Purchase-Construction) procurement consulting services. a “Class-A Construction Tendering Agency”. China Aerospace Science & Industry Corporation. petrochemical. These tendering projects combined to involve a total investment of around RMB 100 billion. (Sinochem Tendering) is specialized in domestic and international tendering services.

Ltd. Sinochem Hebei’s chrome ore and ferrochrome business. India. and expend its product range to cover not just coke but also other products. of the domestic export market. Jiangsu.. In 2009. After a series of investment. both take leading positions among its China’s peers. it has become the controlling shareholder of Shanxi Sinochem Huanda Coking Co. and South Africa to gain stable and quality resources. boric acid and boron business. it has improved the operation of the iron ore business and its sustainability by constantly optimizing its customer structure. Sinochem International sets up good business relation with the coking plants in Shanxi. which enables Sinochem International to meet the long-term and diversified demand of customers. and Hebei areas.5 metric tons and its sales taking up more than 10% Sinochem International has been committed to becoming an outstanding resources supplier for the steel companies at home and abroad. alloy metals. and increasing the proportion of sales to core customers. At the same time.. Sinochem actively expand its supply channels in various places including Australia. Russia. Many years’ experience in metallurgy business enables Sinochem to take the lead in China’s coke exporting. Basil. 41 . by leveraging its advantages in resources and logistics organization.2009 ANNUAL REPORT BUSINESS OVERVIEW OTHER BUSINESSES Metallurgy Business Our metallurgy business began with exporting China’s highquality coke to large international steel companies in 1990. Zhenjiang Coking Co. Regarding the coke business. Ltd. and chemical business. It has totally exported 15 million metric tons of coke to overseas companies in iron. with its annual export volume reaching 1.. and has a total annual coke production capacity of 2 million metric tons. extend its core operation from exporting to sales and production. In addition.. Sinochem International expanded its product range from coke and iron ore to cover such new products as coking coal and power coal. as well as Sinochem Liaoning’s borax. and Shanxi Yaxin Coking Co.. Sinochem International has been China’s largest coke exporter since 2001. Ltd. Henan.. In 2009. such as iron ore and coal. the iron ore trading volume of Sinochem had a 120% increase compared to 2008. By strengthening the cooperation with China’s premium producers. In terms of iron ore business.

05 CORPORATE CITIZENSHIP Sinochem’s Goals as a Corporate Citizen To satisfy its shareholders (the State) by providing good returns and generating capital value. cooperation. valuing ethics and working for the greater good. To command respect from the society by adhering to laws. To achieve harmonious coexistence with the nature by protecting environment and conserving energy. To win the trust of clients by conducting mutually-beneficial To become a company that people love to work for by caring its employees and growing with them. 42 .

It tries its best to achieve harmony with the society and Serving the National Economy We always uphold the goal of “satisfying the State”. channels and operation experience accumulated at the domestic and overseas markets. we played an active role in guaranteeing the oil and gas supply to meet the demand of China’s economic and social development. As a national oil company. and identify the three important missions including protecting the national energy and agricultural safety. Sinochem Group is dedicated to serving the progress. which helps to facilitate the technological upgrading of China’s pesticide industry. drafted industrial standards for 29 fluorine chemical products. developing and promoting more efficient and environmentfriendly agricultural inputs. so as to provide a firm support for the technological progress of these areas. we actively participated in China’s development of the strategic oil reserve network and the research for the nation’s planning of the energy sector. At the same time. every year we take over the task to reserve fertilizers during the slack seasons for the country. We increase our input in R&D. In terms of the fluorine chemicals. pesticides and seeds. upholder of the social ethics. The China Seeds Life Science Technology Center that we proposed to build is an innovation base representing the highest level in the technology research and commercialization of the seeds industry. and own dozens of national and world patents. in order to better serve China’s agricultural development. actively conduct cooperation with specialized research institutes. and promoting related industrial upgrading. seeds and fluorine chemicals. and further enhanced our ability in guaranteeing the supply of fertilizers. Sinochem is CORPORATE CITIZENSHIP greater good of the national political stability. While pursuing the sustainable development of itself. 40% of the main pesticides produced in China are developed and promoted by Shenyang Research Institute for Chemical Industry. we continue to extend our business to upstream and downstream areas. 43 . which further enhanced our position in the national oil security strategy. for a long time we have been committed to making contributions to protecting the national energy security. In the past 60 years. we completed another task of developing the national product oil reserve in 2009. and is related to the long-term stability of the society. We have also achieved material progress in obtaining international pesticide certifications. and social always bearing in mind the social responsibility that an excellent enterprise should undertake. we presided over and participated in the formulation of six national standards. by leveraging the resources. At present. In recent years. After we took over the task of building the national strategic crude oil reserve. economic development. and build a great respectable company. We continue to enhance our technological innovation capability in pesticides. and committed to becoming the pillar of the national development and environment. As a key state-owned enterprise. which plays an constructive role in guaranteeing the market supply and stabilizing the price. and make a great effort in We also took the initiative to establish the strategic alliance of technological innovation for seeds and dyestuff industry.2009 ANNUAL REPORT As the key state-owned enterprise. Agricultural security serves as the foundation for China’s steady economic growth. and participated in the establishment of the alliance alike for pesticides industry.

logistics. and set up a complete agrochemical service system. 44 . scientific fertilization.. and counseling. Apart from providing high-quality products for our customers. In 2009. internal competition. so as to provide the premium products for the customers. to become a trust-worthy enterprise is our goal. sales. and strengthen our sales and industrial services in key business areas. aiming at bringing more value for our clients. pesticides application. seeds selection and breeding etc. in order to avoid the fragmentation of customer base. processing.Serving the Customers and Clients In terms of customer services. We attach great importance to product quality by conducting quality management. and strictly abiding by related national standards. we also deliver value-added services in purchasing. we further consolidated our business. so as to provide premium products for our customers. which were brought by overlapping operations in the past. and quality inspection. which has helped the farmers to increase the work and cost efficiency. Bearing this in mind. HSE. we continue to improve our market-oriented operation. built a specialized operation platform for each business sector. and low operation efficiency. established an integrated operation model. enhancing the risk control in production. and provide better service for our customers. we went to the farms to teach farmers with agricultural knowledge such as crop nutrition. and promote the sustainable development of China’s agricultural industry. protect the agro-ecological system. In the past few years.

that fully recognizes the value of every member staff for their contribution. we have established a relatively complete training system.2009 ANNUAL REPORT CORPORATE CITIZENSHIP Treasuring Talents Employees are the value creators of an enterprise. Sinochem people adhere to the company’s core philosophy of “Honest. with an average age at 33. bear in mind the corporate citizenship. and EMBA courses for cadre employees. ethnics. among which nearly 1600 were newly graduated students. In order to encourage our staff to have lifetime learning and increase their individual value. disassembles the company’s strategic goal and working plan into small tasks. and make contribution to helping Sinochem realize the goals of “the Third Long March”. technology R&D. We conduct employee performance management. and also the primary factor for our success. we now have professional teams specialized in trade and marketing. accident insurance and property insurance. we abide by the local laws and regulations. specialty development. After several years’ training. and meet the ability requirement of our company. and distribute them to each employee through an All-round Rating System. We regard our employees the most important resource of our company. and Open to Learn. built around performance management and guided by our corporate culture. and Pursuing Excellence”. Diligent. Cooperative. Innovative. leadership development. Wherever we run our business. so as to enable the employees to grow with the company. which contains career development. regardless their nationalities. genders. and improve the company’s performance through improving employees’ performance. we also set up a recruitment platform within our company to enable the internal human resource flow and facilitate the employees’ development. targeting at talents who appreciate our corporate culture. Giving integrity a priority”. finance and real estates. Post Description System. and religious believes. Our human resource philosophy is “Valuing both ability and integrity. management development. In 2009. we set up a human resource management system that is based on the labor market. With the rapid development of Sinochem. 45 . and uphold a non-discriminatory human resource policy that treats every employee equally and justly. and functional department management. in order to combine the individual’s goal with the organization’s goal. and Employee Performance Contracts. colors. While attracting people from the society. medical care. we totally employed over 6000 people across the world. Our door is wide open to the society to attract and select talents through transparent recruitment and fair competition. which By December 31st 2009. We also provide our staff with a comprehensive welfare and security package that includes pension. Sinochem employed a total of 42282 people across the world. project management. We operate a market-oriented compensation and benefits system Our recruitment policy is in line with the corporate development strategy. engineering technology. and around 4400 were experienced talents from other famous companies at home and abroad.

and realized the binding targets for the central SOE managers in their second tenure.1% respectively.60 million tons of water and 275 thousand tons of standard coals. We also strengthen our emergency management. and largely reduce the damage to the ozone. Sinochem attaches great importance to occupational health. We also met the energy conservation and emission reduction requirements given by SASAC. Sinochem’s ability to address emergencies has been enhanced. We have made notable achievement in energy conservation and emission reduction. In 2009.933 tons given by SASAC. Sinochem subsidiaries all together compiled and amended 68 contingency plans. Remain trustworthy and law-abiding. In 2009.000 megawatt hours of power. 46 . we further advanced our clean production projects. safe production and environmental protection (hereinafter referred to as HSE). We take it as our responsibility to protecting employees from occupational hazards by organizing regular health checks. We take the supervision on contractors’ safe operation as a part of our HSE management system. Once we discover the key risks are exposed without appropriate management. Through signing the letter of accountability level by level. and identified the HSE guidance and philosophy. keep improving. we will resort to the “Pulling Plug” policy by putting the project to a halt until the risks are under control. In 2009. We hold the department heads accountable for HSE issues in order to materialize the “HSE Accountability System”. We also enhance the inspection to eliminate production hazards and improve the HSE management of the work place. At present. we allocate responsibility to each staff member. and Greener World As a key state-owned enterprise directly supervised by SASAC. We had three environmentalfriendly technologies identified as the key technology of the National “863 Pesticide” Waste Water Reduction Program. and keep a record of zero accident caused by occupational hazards. We also strengthen our ability to identify risks. Sinchem’s overall energy consumption was 0. and recycle and use 115 thousand tons of waste. In 2009. far less than the energy consumption quota of 0. we officially kicked off the HSE management system. every year they can yield RMB 330 million. On January 1st 2009.381 tons per ten thousand RMB. Therefore. and environment pollution accident. After those projects are put into production. personnel’s health damage. We always view HSE as a crucial part of our social responsibility. reduce 295 thousand tons of CO2. Sinochem now has the largest production and most variety of ODS substitutes in China. we kept our record of zero production accident. which takes safety culture as the guidance. Our HSE Goals Establish a long-term HSE management mechanism with distinctive Sinochem characteristics.Creating a Safer. and system management throughout the production process. save 140. risk control as the core. and integrate it into the company’s sustainable development strategy. Sinochem has 29 subsidiaries implementing the HSE management system. Our SO2 and COD emission decreased by 23. conduct operation analysis and enhance assessment on new projects.4% and 47. and renovation and expansion projects. save energy and shoulder responsibilities. occupational disease. and inspecting and assessing the working place regularly. Healthier. Conduct lean management. and strictly control their operation process. Protect environment. participation open for all. give priority to preventions of accidents.000 megawatt hours of electricity. generate 200. establishing occupational health archive for each staff member. and environmental pollution. We strengthen all staff members’ HSE and risk-control awareness by education and training. In 2009. We regard the management on contractors as the company’s responsibility. The ODS substitutes produced by Sinochem in 2009 reduced up to 45 thousand tons of ozone depletion. held 1818 times of accident rescue drills. so as to prevent accidents. organized 1098 times of emergency response training. Our HSE philosophy takes risk control as its core. and form an HSE Accountability System that covers all employees of Sinochem. we further enhanced our management on energy conservation and emission reduction. Our aim is to guarantee all employees to pass the health checks. Our HSE Policy Keep safe and healthy. 1. The products such as HFC-134a developed by Sinochem can be used as the CFCs substitute.

On the one hand. In 2009. under the leadership of the State Council. our contributions amounted to RMB 6. we actively make donation to build primary schools. While advancing our own business. and facilitated the economic and social development of these areas. When we operate our overseas business. we help the local people to improve their life. We also call on our employees to make contribution to facilitating social justice. we are pursuing mutually-beneficial outcome and common development with the local community. we injected RMB 3 million to promote the building of new socialist villages. In the past seven years. we have put in nearly RMB 24 million to improve the local infrastructure. and make contribution to the local development. medical care. For the year 2009. These assistance and support efficiently improved the production condition and livelihood of the local people. we provide scholarship to outstanding students suffering from poverty to help them realize their dream. provided assistance to and conducted over 50 infrastructure construction and personnel training projects. we are also committed to social welfare projects. and promoting the economic development and changes of mindset. In 2009. pasturage.5 million. aim at achieving harmonious co-existence between resource development and environment protection as well as social progress. on the other. we continued to advance our Volunteer Program We are dedicated to alleviating poverty in China. basic education. 47 . we provided assistance to Helinggeer and Qingshuihe counties of Inner Mongolia. and commit ourselves to establishing longterm stable cooperation with the countries we operate in. agriculture. and make contribution to the social harmony through our own sustainable development. and forestry. we also tried new methods to support education and increase the efficiency of our assistance. We also care about the education development and provided diversified assistance to schools and students. and strengthened the sense of responsibility and dedication of our staff members. we have made a total contribution of RMB 44 million. Since 2002.2009 ANNUAL REPORT CORPORATE CITIZENSHIP Giving Back to the Society While pursuing more economic achievement. We focus on both short-term and long-term benefits. We continue our assistance to Tibet by combining infrastructure construction with education investment. In 2009. and promoting the sustainability and harmony of the society through their day-today practice. and regard increasing farmers and shepherds’ income as the most important means in our assistance. Since our assistance to Gangba County in 2002.

Consolidation. according to which the two sides will strengthen cooperation on chemical logistics. according to which Bank of China Beijing Branch will provide Franshion Properties with a full range of financial service products. were elected as the Director and the Supervisor of Sinochem Corporation respectively. March In accordance with the CPC Central Committee’s arrangement and as one of the second batch of companies to conduct learning programs on Scientific Concept of Development. On May 20 th . by so doing to facilitate Sinochem’s business to develop in a steady. of which Luo Dongjiang was appointed as the chairman. strengthening the determination to succeed. Luo Dongjiang and Feng Jinhua were appointed as the Supervisors of the first Supervisor Panel. petrochemical commodities and rubber business with Sinochem Shanghai. Taiwan. st th 48 . On April 14 th. Ltd. Han Gensheng was appoitned the general manager. On May 31 st . Sinochem convened a mobilization meeting. which unveiled the six-month-long learning program. Sinochem further consolidated pesticides. Sinochem Plastics Company. the key project of Sinochem’s petroleum warehousing and logistics business—the reservoir construction project of Sinochem Yangzhou Petroleum Terminal Co. On May 6th. chemical feedstock supply and distribution. was completed. Franshion Properties and Bank of China Bejing Branch signed a Comprehensive Strategic Cooperation Agreement. Sinochem decided to roll out the “Third Great Leap-forward” Scheme from 2010 based on careful scrutiny of internal and external environment. healthy and sustainable way. On May 31 st. Frashion Properties concluded the deal on acquiring China Jin Mao Group Co. and “Headquarter Economy” development in Shenzhen.. On February 28 . On January 15 . Wang Yinping. Sinochem Corporation held the first meeting of the first board of directors. rolling out Lean Management in an all-round manner. accelerating the strategic transformation. On January 5 th. taking initiative to seize opportunities. during which it stressed on further implementing the Scientific Concept of Development. At the second meeting of the sixth session of the Employee Representatives’ Meeting. Sinochem and Shenzhen municipal government signed a Strategic Cooperation Framework Agreement. Sinochem Jiangsu. Li Bin and Chen Guogang appointed the deputy managers. Pan Zhengyi and Feng Zhibin were elected as the Directors of the first Board. pharmaceuticals. Liu Xiaojie and Jiang Aiping. and Sinochem International as the receiving company respectively. On 31 st. Beginning with the consolidation of dyes and pigments business. Sinochem Group received the “2008 Chinese Charity Awards” granted by the Ministry of Civil Affairs.’s “Rainbow Goddess” Tanker arrived at Ji’an Wharf. tackling challenges with composure. Sinochem Corporation held the inaugural meeting and ceremony. which marked the countdown to the trial production. Sinochem International Corp. Sinochem Corporation held the first meeting of the first supervisory board. Sinochem Group held its 2009 annual meeting. Liu Deshu.06 January KEY EVENTS April Sinochem received the entitlement of “2009 Grade-A Taxpayer in Beijing” co-granted by State Administration of Taxation of Beijing Municipality and Beijing Local Taxation Bureau. the kick-off ceremony was held for the construction of Shanghai International Shipping Service Center invested by Frashion Properties in Shanghai’s North Bund. following through the “One-Two-Three-Four-Five” strategy and “Innovation. On 21 . On April 14 th . In the meeting. the GLP laboratory for analysis of pesticides (full spectrum). Fujian from Mailiao. On April 28 th. and Chen Guogang appointed the CFO. including a credit line of RMB 20 billion. Zhang Zhiyin. Han Gensheng. as the representatives of the employees. Sinochem Dyes and Pigments Business Reorganization and Transfer Agreement was signed at Sinochem Tianjian.R. as well as the first general meeting of shareholders at Beijing Chemsunny World Trade Center. Li Hui. Sinochem passed the examination on the third batch of Intellectual Property Pilot Units conducted by the State Intellectual Property Office and related departments of SASAC with an excellent result. th May On May 6 th . On February 22 nd. and became the first mainland parcel tanker that completed the direct sailing across Taiwan Strait since the founding of P. which makes Jin Mao a wholly-owned subsidiary of Franshion Properties. Sinochem successfully issued RMB 1 billion medium term notes..C. While conducting the learning program on the Scientific Concept of Development. Cooperation” development guideline. so as to establish a long-term stable strategic cooperation. On March 13 . Beijing Jinmao Westin Hotel held by Franshion Properties received Hillary Clinton. Ltd. dyestuff and related fine chemicals of Shenyang Research Institute of Chemical Industry was put into use. Sinochem held related activities within the whole group. th th th February Sinofert guaranteed the fertilizer supply in the spring plowing season by taking many measures such as enhancing procurement work and providing agrochemical services. chemical project investment. Liu Deshu was elected as the chairman of Sinochem Corporation. Between 19 and 20 . State Secretary of USA.

. which totally invested USD 160 million into IFELC. On November 11 th . School of Management at Fudan University and Vale Colombia Sustainable Investment Center jointly released “2009 Chinese Multinationals Ranking” in terms of foreign assets they were holding. On June 11th. Ltd.R. Sinochem ranked the 7 th in “500 Most Valuable Brands in China” with the brand’s value of RMB 69. On December 17 th . which aimed at a first class seeds processing center in China.2009 ANNUAL REPORT June On June 1 st. On December 10 th. which marked the 19 th time for Sinochem to enter the list. September On September 4 th .. 1000 bases. (IFELC) brought in three strategic investors. and 10000 pilot farmer households for promoting agro-technology. rd On November 1st. The acquisition of Nufarm came to a halt. ranking the 10th and 8th respectively. 49 . SASAC dispatched the fourth supervisory panel for key SOEs to Sinochem. On August 25th. a subsidiary of Sinochem. Sinochem ranked the 170 th. Director of SASAC. China National Seeds Group Corporation successfully acquired 70% interest of Sichuan Seeds Co. It was the 6th consecutive year that Sinochem entered the top ten of the list. On June 30 th . Ltd.C. Sinochem Resources UK Limited. SASAC published the result of 2008 Key SOEs Performance Assessment. Sinochem once again shoulder the responsibility of building the national product oil reserve. December August China National Seeds Group Corporation launched “China Seeds Life Science Technology Center” program. On October 18 th . Sinochem Corporation completed the business registration and was incorporated in Beijing. On December 28 th. Sinochem launched Centralized Management of RMB Settlement Program. On October 20 th. It was one of the 45 oil companies around the globe to be the qualifier. On September 27 th. th On December 18th. China Bond Insurance Co.46 billion).06 billion. On July 23 . which will foster 1000 pilot villages. loaded the first batch of production oil as China’s national reserve. and Sinochem was named “Grade-A Enterprise” for the 5th consecutive year. Sinochem became the qualifier of “Top 500 Chinese Enterprises” and “Top 500 Chinese Service Enterprises” for the eighth consecutive year.. and completed related business registration.. a UK-listed energy company.Ltd. Sinochem International received the “2009 China’s Best Board of Directors Award” granted by Shanghai Stock Exchange.33. Liu Deshu. On September 27 th.. and submitted the application to related government authority. which Sinochem holds a stake in and is the first professional bond credit insurance institution in China. Ltd. On July 7 th. and CICC. in the newly published Fortune Global 500 for 2009. the trademark of “Sinochem” was named one of the “60 Most Competitive Trademarks of Service Enterprises” on the 3 rd China Trademark Festival.1 billion pounds. on behalf of the State Council. th On December 1 st. Sinochem identified 280 counties to set up the pilot project.. Sinochem entered the list of the third batch of “National Innovation Pilot Enterprise”. Ltd. On September 21 st. namely KKR. On September 24 th . inspected Sinochem. On September 23 rd . and thus hold 100% interest of the company. President of Sinochem. with an offer of 532. 15 land plot of Guangqu Road at a price of RMB 4. On August 12 th.84 billion (USD 2. Working together with the Ministry of Agriculture.. On November 17 th . GIC SI. Ltd. On June 16 th . On August 18 . Franshion Properties won the bid for No. Sinochem’s wholly own subsidiary. was elected as the vice chairman of the first council for Fudan Premium Scholarship of Management. Sinochem got the qualification to participate in the second bidding round for Iraqi oil and gas field drilling contract. Sinofert participated in the “National Pilot Counties Building Program for Agro-technology Promotion” organized by the Ministry of Agriculture. Sinochem Xingzhong Oil Staging Co. Sinochem became a member of the United Nations Global Compact.. up by 87 places compared to 2008. On September 5 . became one of the fuel oil delivery warehouses designated by Shanghai Futures Exchange. Sinochem was informed by Nufarm that the Board of Nufarm was unable to accept the readjusted offering price at AUD 12 per share and thus decided to terminate the negotiation with Sinochem. International Far Eastern Leasing Co. KEY EVENTS November July On July 6 th . was set up in Beijing. the oil depot of Sinochem Yangzhou Import and Export Co. Sinochem ranked 6th on the list. On December 4 th . October On October 12 th . Li Rongrong. After taking over the task of constructing and managing the Zhoushan National Strategic Petroleum Reserve. Sinochem Corporation signed a non-binding framework agreement with Nufarm Limited in relation to Sinochem’s proposal to acquire all of the issued ordinary shares in Nufarm with an offer of AUD 2. Sinochem was named one of the “Top 10 Chinese Enterprises Registered by Madrid International Registration for Trademarks” by State Administration for Industry and Commerce of P. announced a proposal to acquire Emerald Energy PLC. Shenyang Research Institute of Chemical Industry celebrated its 60th anniversary.. Sinochem completed the delivery of the acquisition of Emerald. Zhengjiang Petrochemical Construction Material Group was renamed as Sinochem Lantian Co. China National Seeds Group Corporation signed an agreement with the Yunnan Provincial Government to invest nearly RMB 190 million to build up Yunnan Seeds Processing Center.

07 FINANCIAL STATEMENTS AUDITORS’ REPORT 51 CONSOLIDATED BALANCE SHEET 52 CONSOLIDATED INCOME STATEMENT 54 CONSOLIDATED CASH FLOW STATEMENT 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 58 50 .

Certified Public Accountants Reanda Certified Public Accountants Co. We believe that the audit evidence we have obtained is sufficient and appropeiate to provide a basis for our audit opinion. and of its financial performance and its cash flows for the year then ended in accordance with the Accounting Standards for Business Enterprises. whether due to fraud or error. 1. the financial statements present fairly. in all material aspects. In making those risk assessments. The procedures selected depend on the auditor’s judgment. whether due to fraud or error. cash flow statement for the year then ended. including the assessment of the risks of material misstatement of the financial statements. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. Reanda Shenzi (2010) No. (3) making accouning estimates that are reasonable in the circumstances. Management’s Responsibility for the Financial Statements The Company’s Management is responsible for the preparation of these financial statements in accordance with the Accounting Standards for Business Enterprises. the financial position of Sinochem Group as of 31 December 2009.Ltd. 3. 26 April 2010 51 . This responsibility includes: (1) designing. and related notes on the financial statement.2009 ANNUAL REPORT AUDITORS’ REPORT FINANCIAL STATEMENTS SINOCHEM GROUP.. implementing and maintaining internal control relevant to the preparation of financial statements that are free from material misstatement. Those standards require that we comply with ethical requirements and plan and preform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. Opinion In our opinion. We conducted our audit in accordance with the Standards on Auditing for China Certified Public Accountants. and the income statement. An audit also includes evaluating the overall presentation of the financial statements. the auditor considers internal control relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances. (2) selecting and applying appropriate accounting policies. but not for the purpose of expressing and poinion on the effectiveness of the entity’s internal control. An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. 2. 1016 We have audited the accompanying financial statements of Sinochem Group (“The Company”) which comprise the balance sheet as of 31 December 2009.

452.37 89.69 2.93 48.97 1.202.006.95 3.554.55 529.792.418.45 361.889.845.16 392.284.27 147.561.079.730.991.96 46.938.909.565.610.14 233.79 82.568.361.88 17.00 27.00 12.054.79 268.323.32 700.879.662.009.991.144.35 20.140.37 50.97 5.45 2.30 1.455.526.14 130.29 299.347.499.632.82 21.679.98 0.501.12.163.670.307.01 RMB'0000 Current assets Cash at bank and on hand Deposit reservation for balance Transaction monetary assets Notes receivable Accounts receivable Advances to suppliers Interest receivable Other receivables Inventories Current portionof non-current assets Other current assets Total current assets Non-current assets Loans and advances Available-for-sale financial assets Held-to-maturity investments Long-term account receivable Long-term equity investments Investment real eastate Fixed assets-cost Less: accumulated depreciation Fixed assets-net value Less: fixed assets depreciation reserves Fixed assets-net value after fixed assets depreciation reserves Construction in process Construction materials Fixed assets pending disposal Productive living assets Oil and gas assets Intangible assets Goodwill Long-term prepaid expenses Deferred tax assets Other non-current assets Total non-current assets Total assets USD'000 RMB'0000 USD'000 2.06 2.667.00 765.00 446.80 2.870.991.57 6.44 1.51 2.508.73 1.33 215.735.73 9.087.87 12.328.085.82 2.00 8.078.111.363.198.914.42 561.907.460.38 185.73 2.060.822.78 0.65 2.415.37 131.357.73 976.848.447.43 600.077.441.84 9.72 53.50 589.77 1.50 1.365.032.416.06 30.51 3.30 0.11 1.765.860.95 183.93 21.633.449.514.45 10.012.24 862.30 3.12 879.85 159.53 388.99 449.078.19 305.43 52 .402.220.229.87 83.295.496.942.85 119.51 914.919.653.944.139.47 1.713.524.00 478.99 8.106.454.01.805.41 2.43 30.338.351.818.61 30.894.25 3.69 125.757.38 2.554.57 35.475.243.720.04 14.213.888.90 120.79 6.00 18.374.477.894.517.359.48 71.158.75 4.009.95 8.116.86 2.01 14.912.042.847.909.53 383.660.667.616.579.607.429.78 122.160.121.75 126.89 1.828.140.93 1.945.274.399.504.408.31 2009.956.01 1.639.644.711.42 72.04 0.417.173.756.829.694.02 1.819.340.974.00 187.994.92 74.008.97 2.346.55 1.65 779.99 1.648.131.744.99 89.CONSOLIDATED BALANCE SHEET 2009.528.572.83 175.56 1.34 0.872.68 36.742.766.06 532.02 3.910.78 3.60 25.00 274.40 650.611.431.956.30 205.622.77 236.346.61 15.58 8.591.60 1.383.958.553.52 161.44 0.21 13.67 952.663.08 1.34 9.18 2.43 2.119.123.94 45.348.566.107.675.02 31.90 3.19 49.98 6.88 569.395.37 306.87 24.527.075.90 44.722.235.932.674.651.186.970.87 3.72 11.725.22 969.658.717.

952.543.12.75 3.87 8.756.271.205.419.69 9.742.672.249.405.572.503.617.80 35.110.024.905.748.31 2009.227.625.310.369.752.20 251.211.056.69 14.00 2.330.33 2.923.648.355.502.359.620.289.13 140.377.72 -129.652.463.08 110.43 4.11 8.611.317.83 1.84 2.49 1.789.944.341.064.139.614.00 95.303.54 8.58 46.026.66 390.60 3.336.50 13.49 2.136.229.30 68.542.54 134.268.294.00 6.233.851.599.524.958.608.055.26 250.213.68 10.946.18 1.33 3.490.210.188.731.872.58 2.086.846.64 0.391.771.298.248.726.58 226.83 2.611.59 1.85 331.946.88 9.447.062.795.01.266.470.00 0.172.61 9.31 5.322.93 3.023.198.211.76 -98.519.337.06 17.69 365.34 3.226.771.367.497.077.09 2.80 889.079.74 415.00 4.55 6.48 2.906.307.31 9.37 9.359.81 121.338.08 3.026.35 1.000.208.011.05 828.384.32 3.32 249.12 2.167.32 1.76 1.615.76 120.00 4.00 1.23 4.17 283.282.874.368.57 6.50 1.43 1.24 196.65 1.90 0.62 797.175.477.71 368.569.84 52.65 14.00 4.00 2.506.36 4.600.29 13.58 -144.12 6.050.15 5.115.43 2.49 112.57 7.25 421.283.593.35 176.253.95 37.13 25.487.257.57 21.358.367.77 12.205.301.38 1.43 53 .880.805.742.582.02 1.999.589.052.86 172.40 1.15 2.625.51 76.25 75.487.925.397.667.697.64 219.487.719.856.160.083.94 2.196.109.355.021.898.00 1.807.179.467.98 572.58 5.915.063.173.95 -88.91 122.885.25 25.99 6.40 13.099.315.41 149.721.86 1.20 5.35 1.759.685.692.844.34 2.415.59 9.11 7.69 2.468.62 4.00 2.CONSOLIDATED BALANCE SHEET (CONTINUED) 2009 ANNUAL REPORT FINANCIAL STATEMENTS 2009.62 0.131.73 6.083.225.10 1.106.221.855.729.72 3.241.01 0.01 170.031.86 1.19 2.000.962.771.718.380.88 83.601.267.824.996.484.142.757.01 RMB'0000 Current lialilites Short-term borrowings Accept money deposits and call loans from banks Borrowings from banks and other financial institutions Transaction financial liabilities Notes payable Accounts payable Advances from customers Employee compensation payable Taxes and dues payable Interest payable Other payables Current portion of non-current liabilities Other current liabilities Total current liabilities Non-current liabilities Long-term borrowings Debentures payable Long-term payables Grants payable Provisions Deferred tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Shareholders’ equity Paid-in capital Capital surplus Less: treasury stock Special reserve funds Surplus reserves Retained earnings Converted difference in foreign currency statements Equity attributable to equity holders of the Company Minority interests Total shareholders' equity Total liabilities and shareholders' equity USD'000 RMB'0000 USD'000 2.77 13.102.65 616.78 252.723.279.874.02 0.865.13 15.16 84.

88 -19.86 124.424.742.897.178.93 23.00 30.322.55 795.285.264.933.31 297.220.88 7.09 156.199.885.69 435.500.349.52 150.08 165.641.96 33.12 -124.01 35.74 8.818.584.173.59 87.79 204.808.91 45.76 2.299.54 5.851.41 -85.69 494.141.164.39 85.59 510.148.591.28 26.88 23.909.836.997.286.234.387.13 0.550.863. Total operating income Including: operating income Including: prime operating income Other operating income Interest revenue Fee and commission income USD'000 35.124.511.51 35.674.20 266.01 12.52 16.35 11.591.157.070.54 24.572.24 26.976.926.00 17.66 182.34 52.CONSOLIDATED INCOME STATEMENT 2009 2008 RMB'0000 1.78 30.069.397.26 24.356.28 25.79 28.745.374.497.77 17.368.89 81.274.43 30.74 76.899.37 106.516.783.014.53 299.01 42.66 26.63 421.366.207.87 42.791.982.717.660.529.126.254.54 38.52 121.90 392.67 21.421.26 27.895.273.00 Add: profit and loss from fair value changes Investment income Including: share of profit of associates and jointly controlled entities Exchange gains 113.891.84 574.480.49 -87.077.081.492.05 13.039.84 0.05 11.609.48 56.720.302.97 102.73 USD'000 45.55 0.00 35.907.175.38 19.803.449.08 10.929.27 135.181.811.41 55.769.70 8.349.910.031.90 283.46 124.88 337.76 16.170.548.91 17.53 288.00 30.25 18.98 19.98 18.133.951.416.36 92.740.45 -13.51 0.55 1.857.695.652.57 352.10 177.375.154.34 33.624.357.260.472.894.80 137.55 -59.52 29.229.21 17.88 128.91 181.48 77.26 RMB'0000 30.629.567. Total cost of sales Including: cost of sales Including: prime operating cost Other operating cost Interest expense Fee and commission expense Tax and levies on operations Selling expenses General and administrative expenses Including: business entertainment expense Research and development expense Finance expenses Including: interest expense Interest revenue Exchange net loss Asset impairment losses Other 24.901.46 201.669.12 349.071.294.087.58 24.63 415.501.75 24.543.879.030.17 45.52 29.970.00 44.863.13 241.445.30 54 .258.937.38 113.217.

00 25.932.063.58 130.49 735.64 0.298.04 4.006.73 71.61 9.019.255.252.160.28 861.675.831.171.927.73 8.502. Net profit Net profit attributed to equity holders of the Company Minority shareholders' profit and loss 521.024.534.427.09 2.86 0.334.47 -696.143.896.593.844.781.794.20 30.00 0.00 71. Total profit Less: income tax 613.252.03 RMB'0000 793.99 USD'000 1.48 55 .42 1.83 247.407.882.371.CONSOLIDATED INCOME STATEMENT (CONTINUED) 2009 ANNUAL REPORT FINANCIAL STATEMENTS 2009 2008 RMB'0000 3.37 83.510.96 4.12 169.39 483.33 1.241.757.087.657.62 -150.161.00 0.88 88.625.109. Operating profit Add: non-operating income Including: net income on disposal of fixed assets Non-cash deal income Government subsidies Debt restructuring income Less: non-operating expenses Including: net loss on disposal of fixed assets Non-cash deal loss Debt restructuring loss USD'000 795.00 26.57 21.45 7.00 0.28 0.20 0.334.108.018.35 -397.00 0.00 0.298.39 450.97 5.451.444.47 -102.67 1.307.95 0.92 1.462.018.32 122.00 0.260.74 425.49 12.618.383.48 6.35 391.31 0.59 20.00 17.00 0.46 330.39 135.35 169.864.593.506. Earning per share Basic earning per share Diluted earning per share 0.653.00 104.181.00 0.183.00 0.113.67 763.32 543.02 92.29 35.11 659.64 104.08 1.00 24.871.332.66 19.004.62 869.00 0.00 17.38 621.509.077.82 71.03 18.95 13.58 1.991.62 898.10 418.00 0.241.85 13.809.928.47 594.07 267. Other comprehensive income 285.546.74 -271.47 -1.612. Total comprehensive income Total comprehensive income attributed to equity holders of the Company Total comprehensive income attributed to minority shareholders 807.129.845.11 104.540.16 31.488.90 247.00 7.

49 33.Cash flows from investing activities Cash received from disposal of investments Cash received from returns on investments Net cash received from disposal of fixed assets.55 44.00 0.832.379.602.99 3.63 -23.Cash flows from operating activities Cash received from sales of goods or rendering of services Net increase in deposits and due from banks Net increase in inter-bank borrowing Net increase in disposal of transaction monetary assets Receipt from interest.269.060.217.480.87 49.35 38.532.611.154.178.595.856.097.62 549.354.86 1.00 24.367.84 32.57 -4.91 597.85 48.015.69 30.565. intangible assets and other long-term assets Cash paid to acquire investments Net cash paid to purchase subsidiary company Other cash paid relating to investing activities Sub-total of cash outflows Net cash flows from investing activities 366.287.888.354.071.47 667.753.083.04 33.269.439.220.906.239.89 861.48 1.817.810.88 844.67 317.285.703.55 520.94 976.25 1.11 1.62 436.356.050.54 945.48 804.068.906.789.00 0.18 277.87 5.18 34.39 -831.188.73 -33.171.225.245.172.781.460.813.08 248.27 42.61 9.23 77.854.848.90 36.907.835.96 589.322.115.393.23 50.61 28.940.58 2.197.01 307.70 164.094.743.455.246.24 152.97 577.75 10.385.460.480.27 -1.781.416.24 42.06 1.93 355.756.30 103.89 407.751.84 465.45 25.65 451.147.356.01 50.09 87.723.38 2.25 14.09 658.900. oil and gas properties.29 161.092.535.53 960.106.143.342.18 2.223.67 313. oil and gas properties.387.61 43.735.536.399.32 113.348.44 63.797.287.000.670.21 5.39 1.60 21.613.385.27 31. intangible assets and other long-term assets Net cash received from selling subsidiary company Other cash received relating to investing activities Sub-total of cash inflows Cash paid to acquire fixed assets.613.020.59 0.94 -293.65 213.23 655.46 42.42 34.311.343.286.038.83 210.066.813. fee and commission Refund of taxes and levies Cash received relating to other operating activities Sub-total of cash inflows Cash paid for goods and services Net increase in loans and advances Net increase in due from central bank and others Payments for interest.18 704.25 47.10 -200.397.24 127.233.956.46 7.31 44.412.68 99.150.927.123.73 363.395.04 25.36 2.019.877.212.389.30 786.263.412.959.37 2.41 1.39 0.51 240.837.CONSOLIDATED CASH FLOW STATEMENT 2009 2008 RMB'0000 1.36 497.267.00 35.704. fee and commissions Cash paid to and on behalf of employees Payments of taxes and levies Cash paid relating to other operating activities Sub-total of cash outflows Net cash flows from operating activities USD'000 RMB'0000 USD'000 29.68 728.927.487.937.37 56 .895.71 405.31 639.95 3.136.45 3.032.075.023.261.318.894.51 9.96 -2.036.30 29.56 13.835.73 15.886.70 -1.701.446.270.101.150.163.20 308.939.76 536.960.25 235.00 -3.406.00 68.565.73 30.01 449.332.

698.184.73 0.Net increase / (decrease) in cash and cash equivalents Add: cash and cash equivalents at beginning of the year -303.005.601.95 1.430.84 11.907.699.34 12.39 8.24 426.830.23 587.133.674.402.15 10.653.448.14 17.99 12.447.494.67 3.760.677.447.24 33.15 11.277.235.722.46 626.86 17.800.42 6.15 2.845.223.91 5.034.485.436.860.468.93 13.171.740.975.151.22 3.00 49.00 16.45 57 .893.67 -444.961.391.028.85 5.19 17.94 9.406.Effect of foreign exchange rate changes on cash and cash equivalents -3.640.456.882.30 -5.307.18 24.10 787.255.572.739.09 4.235.80 11.759.869.460.175.69 291.25 246.Cash flows from financing activities Cash received from capital contributions Cash received from borrowings Cash received from bond issuance Cash received relating to other financing activities Sub-total of cash inflows Cash repayments of borrowings Cash payments for interest expenses and distribution of dividends or profits Cash payments relating to other financing activities Sub-total of cash outflows Net cash flows from financing activities USD'000 RMB'0000 USD'000 248.700.118.00 33.708.03 2.270.185.Cash and cash equivalents at end of the year 1.665.195.78 261.24 0.141.580.85 16.12 -58.52 2.94 8.442.88 2.59 11.838.293.73 427.265.765.18 14.931.127.95 2.921.94 178.436.347.089.177.47 -39.89 4.29 1.829.08 360.857.011.384.882.154.38 859.764.677.34 22.38 1.19 363.CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) 2009 ANNUAL REPORT FINANCIAL STATEMENTS 2009 2008 RMB'0000 3.914.273.

“China Accounting Standards” or “CAS”). Basis of accounting Accounts have been prepared on an accrual basis. On January 1. Interpretation of Accounting Standards for Business Enterprises and other regulations issued thereafter (hereafter referred to as the “Accounting Standard for Business Enterprises”. and that of overseas companies is its foreign currency. Significant Accounting Policies Accounting system The Company adopts the Accounting Standards for Business Enterprises and other relevant regulations issued by the Ministry of Finance of the People’s Republic of China (“PRC”). 2009 truly and completely present the financial position of the Company as of December 31. Financial statements of overseas subsidiaries prepared on basis of the relevant local accounting standards have been adjusted accordingly. 2009 and its financial performance and its cash flows for the year then ended in compliance with the Accounting Standards for Business Enterprises. Reporting currency The reporting currency of domestic companies is the Renminbi (“Rmb”). Currency translation Foreign currency (currency other than the reporting currency) transactions are translated into the reporting currency at the exchange rates prevailing on the transaction dates. All significant inter-company transactions and balances have been eliminated on consolidation. Monetary assets and liabilities and accounts of overseas subsidiaries denominated in foreign currencies at the balance sheet date are translated into the reporting currency using the exchange rates at that date. 58 . 4 domestic non-wholly owned subsidiary companies. Assets are recorded at historical cost. Application Guidance of Accounting Standard for Business Enterprises. 2008 the Company adopted the Basic Standard and 38 specific standards of Accounting Standards for Business Enterprises issued by the Ministry of Finance (the “MOF”) on February 15. Statement of Compliance with the Accounting Standards for Business Enterprises The Company’s financial statements for the year ended December 31. Accounting year The accounting year of the Company is from 1 January to 31 December of each calendar year.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Basis of Preparation The consolidated financial statements of Sinochem Group (the “Company”) include the financial statements of the Company and its subsidiaries which including 25 domestic and 3 overseas wholly-owned subsidiary companies. 2006.

Otherwise. 2 Accounts receivable Provisions were made to accounts of the Company and its subsidiaries for losses on bad and doubtful debts. Revenue recognition Revenue from the sale of goods is recognized when: 1 the significant risks and rewards in relation to ownership of the goods have been transferred to the buyer. 59 .99 million.2009 ANNUAL REPORT FINANCIAL STATEMENTS Cash equivalents Cash equivalents represent short-term. work-inprogress and finished goods. are stated at cost when purchased. which may have a material effect on the consolidated financial statements. and the relevant amounts of revenue and costs can be measured reliably. Contingencies The Company has not involved in any lawsuits. which mainly comprise of raw materials. and which are subject to an insignificant risk of changes in value. 4 3 Notes to Material Items Taxes Taxes were calculated at the rates applicable under the respective jurisdictions. Long-term investments the equity method is applied for long-term equity investments when an investor can control. Related party transactions Related party transactions were carried out on terms approximating normal market conditions. the investments are stated at cost. As of 31 December 2009. Inventories Inventories. the Company retains neither continuing management nor effective control over the goods sold. jointly control or has significant influence over the invested enterprise. it is probable that the economic benefits associated with the transaction will flow to the Company. Accounts receivable are stated at value net of provisions for bad and doubtful debts. highly liquid investments which are readily convertible into known amounts of cash. Depreciation is calculated using the straight-line method over the respective estimated useful lives and estimated residual values of fixed assets. Fixed assets and depreciation Fixed assets are recorded at historical cost when acquired. the Company has issued guarantees of indebtedness aggregating US$135. and valued at the lower of cost and net realizable value at the balance sheet date.

N0. LTD. CHINA Tel: 0086-10-59569575. SINOCHEM INDUSTRIES CO. CENTRAL TOWER.com SINOCHEM XINGZHONG OIL STAGING (ZHOUSHAN) CO. 28 FUXINGMENNEI STREET. A2 FUXINGMENWAI STREET. SHANGHAI 200120. CHINA Tel: 0086-513-85996915. NO.. LTD.29 HUIXING STREET. LTD. 9TH FLOOR. TIANCHUANGKEJI TOWER.. 28 FUXINGMENNEI STREET. BEIJING 100031. NO.. ZHEJIANG. CENTRAL TOWER.1. CHINA Tel: 0086-10-59568800 Fax: 0086-10-59569564 E-mail: e&p@sinochem. CHINA Tel: 0086-10-88078751 Fax: 0086-10-88078701 TOTAL-SINOCHEM FUELS CO. LTD.com Http://zhdf. 8TH FLOOR. NANTONG 226017. XINMEI UNION SQUARE. WAIGAOQIAO. ZHEJIANG. NO. BEIJING 100045. BEIJING 100031. TONGSHENG SOUTH ROAD. LIAONING. GAOLAN PORT ECONOMIC ZONE. CHEMSUNNY WORLD TRADE CENTER. 59569585 Fax: 0086-10-59569401 SINOCHEM NANTONG TERMINAL CO. HAIDIAN DISTRICT. 12/F. LTD. BEIJING 100031.wepec. CHINA Tel: 0086-10-59568888 Fax: 0086-10-59568890 SINOCHEM WEPEC REPRESENTATIVE OFFICE BUILDING 2. CHINA Tel: 0086-10-82255525 Fax: 0086-10-82255518 ZHOUSHAN NATIONAL OIL RESERVE BASE CO. ROOM 1008. ZHOUSHAN 316021. AOSHAN ISLAND. LTD. CHINA Tel: 0086-580-2061860 Fax: 0086-580-2027654 SINOCHEM SINOPEC SHANGHAI ORIENT PETROCHEMICAL TERMINAL CO.sinochemoil. SINOCHEM TOWER. LTD. HUIAN 362100.. GUANGDONG. 28 FUXINGMENNEI STREET. BEIJING 100080.18 NORTH TAIPINGZHUANG ROAD. CHEMSUNNY WORLD TRADE CENTER. JIANGSU.1 XINGZHONG ROAD. CHINA Tel: 0086-595-28220527 Fax: 0086-595-27301678 —BEIJING REPRESENTATIVE OFFICE ROOM 1702. CHENGJIAN PLAZA. 85996910 Fax: 0086-513-85996900 SINOPEC-SINOCHEM OIL PRODUCTS SALES CO.. CHINA Tel:0086-21-58649568 Fax: 0086-21-58644051 E-mail: sotco@orientank. CENTRAL TOWER.. CHINA Tel: 0086-10-62698718 Fax: 0086-10-62698991 SINOCHEM QUANZHOU PETROCHEMICAL CO. PUDONG NEW AREA.. LTD. LUOCHENG TOWN. CHINA Tel: 0086-756-7228000 Fax: 0086-756-7228111 60 . LTD.DIRECTORY OF DOMESTIC INSTITUTIONS SINOCHEM CORPORATION 11TH FLOOR. LTD. LTD. CHEMSUNNY WORLD TRADE CENTER. LTD.com SINOCHEM OIL CO. HAIQING DAO ECONOMIC & TECHNICAL DEVELOPMENT ZONE. 28 FUXINGMENNEI STREET. DALIAN 116600. SHANGHAI 200137. HAIQINGDAO. LTD. CHINA Tel: 0086-411-87514200 Fax: 0086-411-87514197 SINOCHEM PETROLEUM EXPLORATION AND PRODUCTION CO.8 CAIHEFANG ROAD. BEIJING 100088. DALIAN 116600.918 LINGHAI ROAD. 59569585 Fax: 0086-10-59569401 NO. CHINA Tel: 0086-10-59569575.com SINOCHEM-GREE OIL TERMINAL CO... ROOM 1201-1203. FUJIAN. ZHUHAI 519050. C+D PART OF 14/F.999 SOUTH PUDONG ROAD. LIAONING. CHEMSUNNY WORLD TRADE CENTER. ECONOMIC&TECHNICAL DEVELOPMENT ZONE. ZHOUSHAN 316000. NO. BEIJING 100031.. LINCHENG DISTRICT. SINOCHEM-GREE HARBOUR SERVICE CO. 9TH FLOOR.. CHINA Tel: 0086-411-87506666 Fax: 0086-411-87510033 Http://www. NO... CENTRAL TOWER. CHINA Tel: 0086-21-68885788 Fax: 0086-21-68885755 DALIAN WEST PACIFIC PETROCHEMICAL CO.. CHINA Tel: 0086-580-2310162 Fax: 0086-580-2310100 TOTAL-SINOCHEM OIL CO. WEPEC. LTD.

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