SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For March 30, 2005
CNOOC Limited
(Translation of registrant's name into English)
-----------------------------------------------
65th Floor
Bank of China Tower
One Garden Road
Central, Hong Kong
(Address of principal executive offices)
-----------------------------------------------
(Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F)
Form 20-F X Form 40-F
------- -------
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No X
------- -------
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): N/A.)
Company Announcement
[LOGO OMITTED]
(Incorporated in Hong Kong with limited liability)
(Stock Code: 883)
2004 ANNUAL RESULTS ANNOUNCEMENT
Director Report
In 2004, world economy remains auspicious. China, as one of the robust
regions, still grew at a rapid rate of 9.5%. The continuous rapid development
in the economy resulted in strong demand for energy. Under the combined effect
of various factors including increase in demand, hedging activities, market
panic and geopolitical instability, international oil prices stayed at a high
level during the year.
Adhering to our objective of creating better value for our shareholders, we
continued to emphasize production and reserves growth. We have also
proactively developed and expanded our natural gas business, and continued to
maintain a sound financial position so as to maximize shareholders' value.
Due to high oil prices and increase in production, the Company's results for
2004 were the best in the Company's history. For the year ended 31 December
2004, total revenue of RMB 55,222 million and net profit of RMB 16,186 million
were recorded, representing a growth of 34.9% and 40.3%, respectively over the
previous year.
During the year, the Company continued its prudent financial policies.
Standard and Poor's has upgraded the Company's long-term corporate credit
rating from "BBB" to "BBB+" with positive outlook, demonstrating the rating
agency's confidence in our financial position.
During the year under review, the Company implemented a stock-split plan to
subdivide our shares into five shares each and broadened our investor base. In
addition, the Company repurchased and cancelled some of its issued share
capital from May to July in 2004. The share repurchases not only evidenced the
confidence of the Directors and management in the Company's prospect, but also
effectively enhanced the shareholders' value. Taking advantage of the
favorable market conditions on our strong stock performance as well as the US
dollar interest rate at its historical lowest level, CNOOC Finance (2004)
Limited, a wholly-owned subsidiary of the Company issued US$1 billion zero
coupon convertible bonds, which further improved the Company's capital
structure.
In 2004, the Company continued to focus on oil and natural gas exploration and
development, achieving steady growth in oil and gas production and reserves.
The oil and natural gas production were 117 million barrels and 133 bcf
respectively, which amounts to 140 million barrels of equivalent in total, a
year-on-year increase of 7.5%. During the year, six projects commenced
production, including Weizhou 12-1N, Qikou 18-2, Bonan fields, Bozhong
25-1/25-1S, Caofeidian 11-1/11-2, and Huizhou 19-3/2. They were executed under
strict progress, cost, quality and HSE controls. In addition, many projects
were underway. As planned, nine new projects are expected to commence
production in 2005, a year with the largest number of projects on stream.
1
Growth in our reserves remained satisfactory in 2004. 242 million BOE of
reserves were added, realizing a reserve replacement ratio of 173%. During the
same period, our appraisal work accomplished promising results, in terms of
both commercial appraisal success rate and reserve additions. We will continue
to expand our efforts offshore China on new exploration initiatives.
We will further pursue our natural gas strategy, and maintain our leading
position in supplying coastal China. The Company completed the acquisition of
an equity interest in the North West Shelf Gas Project in Australia. We
exercised our pre-emptive right to increase interests in the Indonesian
Tangguh Project to 16.96%. In 2004, the Chunxiao gas field in East China Sea,
the phase 2 of Dongfang 1-1 in Western South China Sea, and Huizhou 21-1 in
Eastern South China Sea are under construction. In the coming years, we expect
our natural gas production to grow steadily.
In the past year, the economy of China continues to grow in an accelerated
manner. Meanwhile, the prices of raw materials such as iron, steel, coal and
electricity went up sharply. The surge in costs of upstream oil and gas sector
became a problem commonly faced by the players in sector. Nevertheless, the
Company maintained effective cost control. We continued to rank in the top
quartile among our peers by in term of production costs.
We also gained satisfactory results in health, safety and environmental
protection. During 2004, the Company did not have any incident of small scale
or above oil spillage nor any incident resulting in economic loss in excess of
RMB 1 million. The Company's OSHA statistics was above average among our
international peers. Focus on our employee's health, emphasis on safety and
environmental protection have always been part of the missions of the Company.
We will maintain and constantly improve our performance in these areas.
As a corporate citizen, we insist on our community responsibility. We actively
participated in community charity activities. The Company as a whole expressed
our sympathies to the tsunami victims in Southeast Asia, and made donations.
Despite the wide coverage and geographical distance in our asset distribution,
we were able to sustain development and steady growth by capitalizing on the
outstanding professional expertise and diligent work attitude of over 2,500
domestic and foreign staff. I'm impressed by their efforts as well as
performance of last year. On behalf of the Board, I would like to express our
sincere thanks for the hard work, loyal service and contribution made by our
employees.
On the basis of the good performance in 2004, the company was able to pursue
our development goals and ensure our healthy and sound development, while
delivering promising return to our shareholders. During the year under review,
the basic and diluted earnings per share of the Company were RMB 0.39. In
accordance with our dividend policies, our Board of Directors has proposed a
final dividend of HK$0.03 per share and a special final dividend of HK$ 0.05
per share. Together with the interim dividend of HK$0.03 per share and the
special interim dividend of HK$0.05 per share, we distributed a total of
HK$0.16 per share to our shareholders during 2004.
2
In the coming year, we remain positive towards China's economic growth and
global oil industry. China has become one of the world major energy
consumption countries, importing 120 million tons of crude oil in 2004. This
creates a favorable business environment for the Company. We will increase our
oil and gas reserves and production, maintain prudent financial policies, and
devote great effort in natural gas business. Whilst consolidating on our solid
fundamentals, we will adhere to our objective of maximizing shareholders'
value, and leverage on opportunities to grow into a new era.
FU CHENGYU
Chairman and Chief
Executive Officer
Hong Kong, 29 March 2005
3
CONSOLIDATED INCOME STATEMENT (AUDITED)
Year ended 31 December 2004
(All amounts expressed in thousands of Renminbi, except per share data)
Notes 2004 2003
REVENUE
Oil and gas sales 5 36,886,019 28,116,831
Marketing revenues 6 18,191,353 12,398,661
Other income 144,691 434,781
55,222,063 40,950,273
EXPENSES
Operating expenses (5,070,344) (4,512,809)
Production taxes (1,725,674) (1,238,598)
Exploration expenses (1,316,160) (848,072)
Depreciation, depletion and amortisation (5,455,062) (4,642,753)
Dismantlement ( 201,637) (167,326)
Crude oil and product purchases 6 (17,963,461 (12,295,238)
Selling and administrative expenses 8 (1,057,706) (1,212,523)
Others (45,844) (350,232)
(32,835,888) (25,267,551)
PROFIT FROM OPERATING ACTIVITIES 22,386,175 15,682,722
Interest income 206,872 183,576
Interest expense 9 (441,825) (354,940)
Exchange gains/(losses), net 29,269 (6,746)
Short term investment income 72,438 123,483
Share of profits of associates 344,469 220,263
Non-operating income/(expenses), net 519,206 314,968
PROFIT BEFORE TAX 7 23,116,604 16,163,326
Tax 10 (6,930,826) (4,627,836)
NET PROFIT 16,185,778 11,535,490
DIVIDENDS
Special interim dividend declared in
place of 2003 final dividend* 2,617,526 -
Interim 1,306,451 1,220,132
Special interim 2,177,418 1,568,741
Proposed final* 1,310,022 -
Proposed special final* 2,183,371 -
9,594,788 2,788,873
4
Notes 2004 2003
EARNINGS PER SHARE
Basic 11 RMB0.39 RMB0.28
Diluted 11 RMB0.39 RMB0.28
DIVIDEND PER SHARE
Special interim dividend declared in
place of 2003
final dividend* RMB0.06 N/A
Interim RMB0.03 RMB0.03
Special interim RMB0.05 RMB0.04
Proposed final* RMB0.03 -
Proposed special final* RMB0.05 -
* The proposed final dividend and special final dividend for 2003 were
cancelled and replaced by the special interim dividend declared in 2004.
CONSOLIDATED BALANCE SHEET (AUDITED)
31 December 2004
(All amounts expressed in thousands of Renminbi)
Group
Notes 2004 2003
NON-CURRENT ASSETS
Property, plant and equipment, net 57,456,697 43,123,801
Investments in associates 1,327,109 1,117,640
58,783,806 44,241,441
CURRENT ASSETS
Accounts receivable, net 4,276,489 4,248,570
Inventories and supplies 1,147,294 1,092,926
Due from related companies 1,173,374 756,283
Other current assets 556,931 757,355
Short term investments 5,444,113 5,684,333
Time deposits with maturities over three
months 8,603,000 2,323,000
Cash and cash equivalents 14,091,524 14,400,394
35,292,725 29,262,861
TOTAL ASSETS 94,076,531 73,504,302
5
Group
Notes 2004 2003
CURRENT LIABILITIES
Accounts payable 3,102,024 3,969,922
Other payables and accrued liabilities 4,191,024 1,955,783
Current portion of long term bank loans 24,364 20,618
Due to the parent company 370,060 164,653
Due to related companies 211,425 474,223
Tax payable 2,503,466 2,721,331
10,402,363 9,306,530
NON-CURRENT LIABILITIES
Long term bank loans 865,211 889,575
Long term guaranteed notes 12 16,313,550 8,141,669
Provision for dismantlement 3,089,448 2,646,800
Deferred tax liabilities 6,688,498 5,783,196
26,956,707 17,461,240
CAPITAL AND RESERVES
Issued capital 876,586 876,978
Reserves 55,840,875 45,859,554
56,717,461 46,736,532
TOTAL EQUITY AND LIABILITIES 94,076,531 73,504,302
6
NOTES TO FINANCIAL STATEMENTS
31 December 2004
(All amounts expressed in Renminbi unless otherwise stated)
1. CORPORATE INFORMATION
CNOOC Limited (the "Company") was incorporated in the Hong Kong Special
Administrative Region ("Hong Kong"), the People's Republic of China (the
"PRC") on 20 August 1999 to hold the interests in certain entities whereby
creating a group comprising the Company and its subsidiaries. During the year,
the Company and its subsidiaries (hereinafter collectively referred to as the
"Group") were principally engaged in the exploration, development, production
and sale of crude oil, natural gas and other petroleum products.
The registered office address is 65/F, Bank of China Tower, 1 Garden Road,
Hong Kong.
In the opinion of the directors, the ultimate holding company is China
National Offshore Oil Corporation ("CNOOC"), a company established in the PRC.
2. PRINCIPAL ACCOUNTING POLICIES
The audited financial statements of the Group are prepared in conformity with
generally accepted accounting principles in Hong Kong ("Hong Kong GAAP").
The principal accounting policies and basis of presentation used in the
presentation of the annual audited financial statements for the year ended 31
December 2004 are the same as those used in the annual audited financial
statements for the year ended 31 December 2003, except for the followings:
On 16 March 2004, the Company's shareholders approved a five-for-one stock
split of the Company's shares (the "Stock Split"). The Stock Split was
effected by dividing each of the Company's issued and unissued shares of
HK$0.10 each into five shares of HK$0.02 each, and to increase the board lot
size for trading on The Stock Exchange of Hong Kong Limited (the "HKSE") from
500 shares of HK$0.10 each to 1,000 subdivided shares of HK$0.02 each. The
ratio of the Company's American Depository Receipts ("ADR") listed on the New
York Stock Exchange, also changed such that each ADR now represents 100
subdivided common shares of HK$0.02 each, as opposed to 20 common shares of
HK$0.10 each prior to the Stock Split. All references in the consolidated
financial statements referring to share, share option and per share amounts of
the share of the Company have been adjusted retroactively for the Stock Split.
In addition, the Hong Kong Institute of Certified Public Accountants has
issued a number of new Hong Kong Financial Reporting Standards and Hong Kong
Accounting Standards, herein collectively referred to as the new HKFRSs, which
are generally effective for accounting period beginning on or after 1 January
2005. The Group has not early adopted these new HKFRSs in the financial
statements for the year ended 31 December 2004.The Group has already commenced
an assessment of the impact of these new HKFRSs, but is not yet in a position
to state when these new HKFRSs would have a significant impact on its results
of operations and financial position.
3. ACQUISITIONS
(i) In 2003, the Company acquired from British Petroleum ("BP") an equivalent
of 12.5% interest in the proposed joint venture known as the Tangguh LNG
Project of Indonesia ("Tangguh LNG Project") for approximately US$275
million (equivalent to approximately RMB 2,276,578,000) through the
acquisition of certain interest in production sharing contracts ("PSCs")
which was effective from 1 January 2003. The Tangguh LNG Project
comprises three PSC areas: the Berau PSC, the Muturi PSC and the Wiriagar
PSC. The Tangguh LNG Project partners have signed a conditional 25-year
Liquefied Natural Gas ("LNG") Supply Contract (the "LNG Supply Contract")
to provide up to 2.6 million tonnes per annum of LNG to the Fujian LNG
project in the PRC, beginning in 2008. The Company
7
completed the Tangguh acquisition on 8 February 2003. CNOOC has an equity
interest in the Fujian LNG project.
In addition, a repurchase agreement (the "Repurchase Agreement") was
entered into whereby put options and call options are granted to the
Company and the sellers, respectively, to sell or to repurchase the
interests in the above mentioned PSCs. The options are exercisable if:
(1) the LNG Supply Contract is terminated due to the non-satisfaction of
the conditions precedent to the LNG Supply Contract on or before 31
December 2004; or
(2) the LNG Supply Contract is otherwise legally ineffective on or before
31 December 2004.
The exercise price of the options is determined based on the original
consideration paid plus adjustments stipulated in the Repurchase
Agreement.
The options lapsed on 31 December 2004. As such, although the
consideration was paid in full in 2003 but the acquisition date for
accounting purpose is 31 December 2004.
During the year, the Company acquired from British Gas International
Limited a 20.767% interest in the Muturi Production Sharing Contract
("Muturi PSC") for a consideration of US$105.1 million (equivalent to
approximately RMB869,881,000), subject to a final price adjustment. The
purchase increased the Company's interest in the Muturi PSC to 64.767% and
its interest in the Tangguh LNG Project increased from 12.5% to 16.96%.
The Company completed the acquisition on 13 May 2004. As at 31 December
2004, Tangguh LNG project was still in the development stage.
(ii) On 15 May 2003, the Company entered into an equity sale and purchase
agreement and a Gas Production and Processing Agreement (the
"Agreements") with the existing North West Shelf ("North West Shelf
Project") partners to acquire an interest in the upstream production and
reserves of the NWS Project. Under the Agreement, the Company will
acquire an interest of approximately 5.3% in the NWS Project and a 25%
interest in the China LNG Joint Venture, a new joint venture to be
established within the NWS Project. According to the Agreement, the
Company has the right to acquire more interest in the NWS Project should
the final quantity of LNG committed under the LNG supply agreement to the
facilities in Guangdong Province be increased. The total consideration of
the acquisition is US$348 million, subject to certain conditions,
including the LNG supply agreement to Guangdong becoming unconditional,
have been fulfilled. In addition, the Company will be required to make an
upfront tariff payment relating to certain LNG processing facilities
amounting to US$180 million. CNOOC has an equity interest in the
Guangdong LNG Project.
On 23 December 2003, the Company signed a Deed of Amendment to the
Agreement and a Deed of Amendment to the Gas Production and Processing
Agreements (the "Deeds") and agreed to pay US$483,577,000 representing a
deposit of the consideration and tariff payment, to the NWS project
participants by 2 January 2004. The Company made the payment on 2 January
2004.
On 18 December 2004, the Company paid the balance of the consideration
payable and concurrently entered into a side letter for the fulfillment of
a condition precedent to the purchase. As such, the consideration paid of
approximately US$567 million (equivalent to approximately
RMB4,693,809,000) including the payment of the tariff of US$180 million
plus direct incremental costs relating to the acquisitions were included
as a prepayment in property, plant and equipment as at 31 December 2004.
As at 31 December 2004, NWS Project was still in the development stage.
(iii)Apart from the acquisitions above, during the year, the Company also
acquired from VANCO Energy Company an 11.25% interest in a petroleum
agreement in Ras Tafelney, Morocco for approximately US$7.75 million. The
PSC was still in the exploration stage as of 31 December 2004.
8
(iv) In addition, the Company also entered into production sharing contracts
with Golden Aaron Pte. Ltd. and China Global Construction Limited in
Myanmar during the year. The PSCs were still in a pre-exploration stage
as of 31 December 2004. The Company is the operator.
4. PRODUCTION SHARING CONTRACTS
PRC
For production sharing contracts in the PRC, the foreign parties to the
contracts ("foreign partners") are normally required to bear all
exploration costs during the exploration period and such exploration costs
can be recovered according to the production sharing formula after
commercial discoveries are made and production begins.
After the initial exploration stage, the development and operating costs
are funded by the Group and the foreign partners according to their
respective participating interest.
In general, the Group has the option to take an up to 51% participating
interest in a production sharing contract and may exercise such option
after the foreign partners have independently undertaken all the
exploration risks and costs and made viable commercial discoveries.
After the Group exercises its option to take a participating interest in a
production sharing contract, the Group accounts for the oil and gas
properties using the "proportional method" under which the Group
recognises its share of development costs, revenues and expenses from such
operations based on its participating interest in the production sharing
contract. The Group does not account for either the exploration costs
incurred by its foreign partners or the foreign partners' share of
development costs and revenues and expenses from such operations.
Part of the Group's annual gross production of oil and gas in the PRC is
distributed to the PRC government as settlement of royalties which are
payable pursuant to a sliding scale. The Group and the foreign partners
also pay a production tax to the tax bureau at a pre-determined rate. In
addition, there is a pre-agreed portion of oil and gas designated to
recover all exploration costs, development costs, operating costs incurred
and related interest according to the participating interests between the
Group and the foreign partners. Any remaining oil after the foregoing
priority allocations is first distributed to the PRC government as
government share oil on a pre-determined ratio pursuant to a sliding
scale, and then distributed to the Group and the foreign partners based on
their respective participating interests. As the government share is not
included in the Group's interest in the annual production, the net sales
of the Group do not include the sales revenue of the government share oil.
The foreign partners have the right either to take possession of their
allocable remainder oil for sale in the international market, or to
negotiate with the Group to sell their allocable remainder oil to the
Group for resale in the PRC market.
Overseas
The Group and the other partners to the production sharing contracts in
Indonesia are required to bear all exploration, development and operating
costs according to their respective participating interests. Exploration,
development and operating costs, which qualify for recovery can be
recovered according to the production sharing formula after commercial
discoveries are made and production begins.
The Group's net interest in the production sharing contracts in Indonesia
consists of its participating interest in the properties covered under the
relevant production sharing contracts, less oil and gas distributed to the
Indonesian government and the domestic market obligation.
9
5. OIL AND GAS SALES
2004 2003
RMB'000 RMB'000
Gross sales 39,955,702 30,556,967
Royalties (610,055) (478,454)
PRC government share oil (2,459,628) (1,961,682)
36,886,019 28,116,831
6. MARKETING PROFIT
2004 2003
RMB'000 RMB'000
Marketing revenues 18,191,353 12,398,661
Crude oil and product purchases (17,963,461) (12,295,238)
227,892 103,423
7. PROFIT BEFORE TAX
The Group's profit before tax is arrived at
after (crediting)/charging:
2004 2003
RMB'000 RMB'000
Crediting:
Interest income on bank deposits (206,872) (183,576)
Interest income on investments (1,654) (28,752)
Dividend income on investments (93,040) (46,140)
Realised (gains)/losses on investments (2,972) (27,088)
Unrealised losses/(gains) on investments 25,228 (21,503)
Short term investment income (72,438) (123,483)
Charging:
Auditors' remuneration 6,750 5,790
Staff costs
- Wages, salaries and allowances* 265,007 393,165
- Labour costs paid to contractors 666,599 542,292
Depreciation, depletion and amortisation 5,410,413 4,643,364
Less: Oil-in tank adjustments 44,649 (611)
5,455,062 4,642,753
10
2004 2003
RMB'000 RMB'000
Operating lease rentals
- Office 107,803 72,708
- Equipment 494,264 190,581
Loss on disposal of property, plant and equipment 173 21
Repairs and maintenance 1,193,700 608,603
Research and development costs 268,477 165,793
* including in wages, salaries and allowances, an amount of Rmb30,304,000
(2003: Rmb95,147,000) for pension scheme contributions and termination
benefits.
8. SELLING AND ADMINISTRATIVE EXPENSES
2004 2003
RMB'000 RMB'000
Salary and staff benefits 265,007 393,165
Utility and office expenses 115,817 90,801
Travel and entertainment 75,675 74,218
Rentals and maintenance 128,579 107,310
Management fees 218,087 219,771
Selling expenses 36,015 30,686
Provision accrual/(reversal) for
inventory obsolescence (2,710) 8,745
Other 221,236 287,827
1,057,706 1,212,523
9. INTEREST EXPENSE
2004 2003
RMB'000 RMB'000
Interest on bank loans which are:
- Wholly repayable within five years 80,829 81,539
- Not wholly repayable within five years - -
Interest on long term guaranteed notes 485,812 391,005
Other borrowing costs 163 34,933
Total interest 566,804 507,477
Less: Amount capitalised in property,
plant and equipment (244,686) (245,783)
322,118 261,694
Other finance costs:
Increase in discounted amount of provisions arising 119,707 93,246
from the passage of time
441,825 354,940
The interest rates used for interest capitalization represented the cost of
capital from raising the related borrowings and varied from 4.1% to 9.2% per
annum for the year ended 31 December 2004.
11
10. TAX
2004 2003
RMB'000 RMB'000
Overseas income taxes
- Current 755,568 654,988
- Deferred (170,118) (179,134)
PRC enterprise income tax
- Current 6,411,417 3,623,157
- Deferred (66,041) 528,825
Total tax charge for the year 6,930,826 4,627,836
11. EARNINGS PER SHARE
2004 2003
Earnings:
Net profit attributable to shareholders, used in
the basic and diluted earnings per share calculations RMB16,185,778,000 RMB11,535,490,000
Number of shares (after stock split):
Weighted average number of ordinary shares for
the purpose of basic earnings per share before
effects of shares repurchased 41,070,828,275 41,070,828,275
Effect of shares repurchased (10,587,616) -
Weighted average number of ordinary shares for
the purpose of basic earnings per share 41,060,240,659 41,070,828,275
Effect of dilutive potential ordinary shares
under the share option scheme 66,720,503 39,510,820
Effect of dilutive potential ordinary shares for
convertible bonds 52,552,274 -
Weighted average number of ordinary shares for
the purpose of diluted earnings per share 41,179,513,436 41,110,339,095
Earnings per share - Basic RMB0.39 RMB0.28
- Diluted RMB0.39 RMB0.28
12. LONG TERM GUARANTEED NOTES
On 1 March 2002, CNOOC Finance (2002) Limited, a company incorporated in the
British Virgin Islands on 24 January 2002 and a wholly-owned subsidiary of the
Company, issued US$500 million of a principal amount of 6.375% guaranteed
notes due in 2012. The obligations of CNOOC Finance (2002) Limited in respect
of the notes are unconditionally and irrevocably guaranteed by the Company.
12
On 21 May 2003, CNOOC Finance (2003) Limited, a company incorporated in the
British Virgin Islands on 2 April 2003 and a wholly-owned subsidiary of the
Company, issued US$200 million of a principal amount of 4.125% guaranteed
notes due in 2013 and US$300 million of a principal amount of 5.500%
guaranteed notes due in 2033. The obligations of CNOOC Finance (2003) Limited
in respect of the notes are unconditionally and irrevocably guaranteed by the
Company.
On 15 December 2004, CNOOC Finance (2004) Limited, a company incorporated in
the British Virgin Islands on 9 December 2004 and a wholly-owned subsidiary of
the Company, issued US$1 billion zero coupon guaranteed convertible bonds due
2009, unconditionally and irrevocably guaranteed by, and convertible into
shares of the Company. The bonds are converted at HK$6.075 per share, subject
to adjustment for, among other things, subdivision or consolidation of shares,
bond issues, right issues, capital distribution and other dilutive events.
Unless previous redeemed, converted or purchased and cancelled, the bonds will
be redeemed on the maturity date at 105.114% of the principal amount.
13. SHARE CAPITAL
Issued
Number Share share
of shares capital capital
HK$'000 Equivalent
of RMB'000
Shares (after Stock Split)
Authorised:
Ordinary shares of HK$0.02 each
As at 31 December 2003 and 2004 75,000,000,000 1,500,000
Issued and fully paid:
Ordinary shares of HK$0.02 each
As at 1 January 2003 and 1 January 2004 41,070,828,275 821,417 876,978
Repurchased and cancelled (18,453,000) (369) (392)
As at 31 December 2004 41,052,375,275 821,048 876,586
MANAGEMENT DISCUSSION & ANALYSIS
Outlook
In 2004, international oil prices stayed high, whilst the Company's production
and reserves increased steadily, with attractive revenue and promising results
achieved. We expect that the Company will perform even better in 2005.
Despite the various unfavorable factors, the development of global economy
remained vigorous in 2004. In 2005, there are still some worries over the
development of the global economy. Although the growth of the global economy
may slow down, its outlook is promising.
The Company's principal businesses are concentrated in the Asia Pacific
region. In 2005, the speed of economic development in this region may slow
down, but will remain sound. China, where most of the Company's assets are
concentrated will still be one of the major drive forces in the development of
the global economy. In 2005, China will be integrated with the global
mainstream political and economic development in a more active manner in terms
of both attitude and action. There will still be more room for the development
of the economy of China. We believe that under the guidance of the State macro
control policies, the economic growth in China will be more balanced.
13
In respect of the development trends of the oil price in 2005, analysts are
holding different opinions, while the management is prudently optimistic to
the trends. In 2005, since demands for international crude oil will continue
to grow, there may exist new changes in the political and economic situation
in the Mid East regions, in addition to the impact of speculations and
unexpected incidents, international oil prices may remain high.
The management will continue to cope with various external unfavorable factors
so as to mitigate any negative impact to the Company's development.
2005 is a key year for our production. Nine new projects will commence
operation during the year. It will also be a year with the largest number of
projects planning to commence operation in a single year in the Company's
history.
In 2005, we will focus on the new sectors and the prospects of reserves in
deep water areas. Emphasis will continue to be placed in the enhancement of
production volume and reserves so as to maintain the competitiveness of the
cost structure of the Company. Innovation in management will be promoted.
Internal control system and mechanism will be established and upgraded to
comply with regulatory requirements in the market. We will endeavour to attain
efficiency and maximize return for our shareholders.
The management is confident in the prospects of continuous growth of the
Company.
CONSOLIDATED NET PROFIT
Our consolidated net income after tax was RMB16,185.8 million (US$1,955.6
million) in 2004, an increase of RMB4,650.3 million (US$561.8 million), or
40.3% from RMB 11,535.5 million in 2003.
REVENUE
Income from our oil and gas sales for 2004 was RMB36,886.0 million (US$4,456.6
million), an increase of RMB8,769.2 million (US$1,059.5 million), or 31.2%
from RMB 28,116.8 million in 2003. The increase was attributable to the high
oil price, whilst growth in production also attributed to higher profits in
the Company. The average realized price for our crude oil was US$35.41 per
barrel in 2004, an increase of US$7.3, or 26.0% from US$28.11 per barrel in
2003. Sale of crude oil amounted to 116.3 million barrels, an increase of 5%
over 2003. The average realised price for our natural gas was US$2.75 per
thousand cubic feet in 2004, a decrease of 4%, due to the increased weighting
of production of low-price gas fields. At the same time, sales volume of our
natural gas increased by 26% from 2003, which effectively compensated the drop
in the gas price. Sales income of our natural gas increased by RMB480.0
million.
In 2004, our net marketing profit, which were derived from marketing revenue
less purchase cost of crude oil and oil products, were RMB227.9 million
(US$27.5 million), an increase of RMB124.5 million (US$15.0 million), or
120.3%, from RMB103.4 million. Since we are one of the three companies that
have the right to sell crude oil in China, we can purchase the oil from our
foreign partners for sale in China at the request of our partners. However,
our ability to sell oil in China depends on our foreign partners, and,
therefore, we cannot control the amount of crude oil that we are able to sell
for a specific period. Marketing revenue from the Company's wholly-owned
subsidiary, China Offshore Oil (Singapore) International Pte Ltd., was
RMB10,448.8 million (US$1,262.4 million), less purchase cost of crude oil and
oil production, the net marketing profit was RMB71.3 million (US$8.6 million),
or 36.1% increased from same period last year.
14
Our other income, reported on a net basis, was derived from our other income
less corresponding costs. In 2004, our other net income was RMB98.8 million
(US$11.9 million), an increase of RMB14.3 million (US$1.7 million) from
RMB84.5 million in 2003.
EXPENSES
Operating expenses
Our operating expenses in 2004 were RMB5,070.3 million (US$612.6 million), an
increase of RMB557.5 million (US$67.4 million), or 12.4% from RMB 4,512.8
million in 2003. The increase was mainly attributable to the commencement of
production of 6 new oil and gas fields in China in the year, resulting in
higher cost during the initial stage of production. Operating expenses in 2004
were RMB36.7 (US$4.43) per BOE, an increase of 4.2% from RMB 35.2 (US$4.25)
per BOE in 2003. Operating expenses offshore China in 2004 were RMB29.9
(US$3.61) per BOE, an increase of 10.7% from 2003. The increase was mainly
attributable to the higher service fees, especially in supply vessels,
equipment lease, maintenance materials and fuel, resulting from higher
international crude oil price. Operating expenses offshore Indonesia in 2004
were RMB88.7 (US$10.72) per BOE, an increase of 15.6% from 2003. The increase
was attributable to the international crude oil price which maintain a high
level, and the increase in operating expenses per barrel for our Indonesian
oil fields due to lower production volume based on their profit sharing mode.
Based on working interest production, operating expenses in offshore Indonesia
in 2004 was RMB42.0 (US$5.08) per BOE, which was in line with the previous
year.
Production taxes
Our production taxes for 2004 were RMB1,725.7 million (US$208.5 million), an
increase of RMB487.1 million (US$58.9 million), or 39.3% from RMB 1,238.6
million in 2003. The increase was mainly due to the increase in oil and gas
sales.
Exploration costs
Our exploration costs for 2004 were RMB1,316.2 million (US$159.0 million), an
increase of RMB468.1 million (US$56.6 million), or 55.2% from RMB 848.1
million in 2003. The increase was mainly due to the significant increase in
the exploration works in the year. In 2004, some successful exploration wells
have been written-off since they won't be developed in the next one or two
years after reviewing by company. The write-off amount was RMB155.8 million
(US$18.8 million) during the year.
Depreciation, depletion and amortization
Our depreciation, depletion and amortization were RMB5,455.1 (US$659.1
million) for 2004, an increase of RMB812.3 million (US$98.1 million), or 17.5%
from RMB 4,642.8 million in 2003. Our average depreciation, depletion and
amortization per barrel were RMB39.5 (US$4.77 ) per BOE, an increase of 9.2%
from RMB 36.2 (US$4.37) per BOE in 2003. The increase was mainly due to higher
amortization expenses of the new commencement oil fields, resulting in rising
material prices. On the other hand, the reduction in the net production of the
Indonesian oil fields was subject to the influence of oil prices, resulting in
further increase in amortization expenses per barrel as well as average
amortization expenses.
15
Dismantlement
Our dismantling costs for 2004 were RMB201.6 million (US$24.4 million), an
increase of RMB34.3 million (US$4.1 million) from RMB 167.3 million in 2003.
The increase was primarily due to the increased dismantling costs resulting
from the commencement of production at new oil and gas fields. Our average
dismantling costs were RMB1.5 (US$0.18) per BOE, a slight increase from RMB1.3
(US$0.16) per BOE in 2003.
Selling and administrative expenses
Our selling and administrative expenses for 2004 were RMB1,057.7 million
(US$127.8 million), a decrease of RMB154.8 million (US$18.7 million), or 12.8%
from RMB 1,212.5 million in 2003. Of which, the selling and administrative
expenses of companies in China were RMB5.5 (US$0.66) per BOE, a decrease of
17.5% from the previous year. This was mainly attributable to some of the
labor costs being directly charged into related projects, and the replacement
of foreign employees by local staffs.
Net interest income/expenses
Our net interest expenses for 2004 was RMB235.0 million (US$28.4 million), an
increase of 37.1% from the net interest expenses of RMB 171.4 million in 2003,
which was mainly due to the interest expenses on our US$ 500 million bonds
issued in 2003. An increase of RMB94.8 million (US$11.5 million) in interest
expenses was caused by our long term guaranteed notes.
Exchange gains/losses, net
Our net exchange gain incurred in 2004 was RMB29.3 million (US$3.5 million),
an increase of RMB36.0 million (US$4.3 million) from a net exchange loss of
RMB 6.7 million in 2003. Compared with 2003, the position of exchange
turnaround from loss to gain, where the exchange loss was set off by our
foreign exchange swap business.
Short term investment income
Our short term investment income for 2004 was RMB72.4 million (US$8.7
million), a decrease of RMB51.1 million (US$6.2 million), or 41.4% from RMB
123.5 million in 2003. Subject to the influence from the market, we disposed
some investment in corporate bonds and reinvest in market funds. Thus, the
average return on short term investments for the year fell due to the
structural change.
Share of profit of associates
In 2004, there were gain from our investments in Shanghai Petroleum and
Natural Gas Company Limited and CNOOC Finance Corporation Limited. Of which,
share of profit from Shanghai Petroleum and Natural Gas Company Limited was
RMB297.8 million (US$36.0 million), an increase of 35.2% from 2003, which was
mainly due to the increase in oil prices in 2004. Share of profit from CNOOC
Finance Corporation Limited was RMB46.7 million (US$5.6 million) during the
period.
Non-operating income/expenses, net
Our net non-operating income for 2004 was RMB519.2 million (US$62.7 million),
and our net non-operating income for 2003 was RMB 315 million. The
non-operating income in both two years were
16
due to the tax refund from re-investment in China.
Income tax
Our income tax for the year 2004 was RMB6,930.8 million (US$837.4 million), an
increase of RMB2,303.0 million (US$278.2 million), or 49.8% from RMB 4,627.8
million in 2003. The primary reason for the increase was the increase in
profit before tax. In 2003, we received RMB 252.0 million tax rebate from
using domestic equipments. The effective tax rate for 2004 was 30.3%, slightly
higher than the effective rate of 28.6% in 2003.
Cash generated from operating activities
Net cash generated from operating activities in 2004 amounted to RMB22,327.9
million (US$2,697.6 million), an increase of RMB4,509.1 million (US$544.8
million), or 25.3% from RMB 17,818.7 million in 2003.
The increase in cash was mainly due to an increase in profit before tax of
RMB6,953.3 million (US$840.1 million), an increase in depreciation, depletion
and amortization expenses of RMB812.3 million (US$98.1 million), an increase
in dismantling costs of RMB34.3 million (US$4.1 million), and an increase in
write-off exploration wells and disposal of fixed assets of RMB116.1 million
(US$14.0 million) in the year.
Increase of cash flow was partially offset by an increase of income tax of
RMB3,887.5 million (US$469.7 million), an increase in our share of profits of
associates of RMB124.2 million (US$15.0 million), an increase in net interest
expenses of RMB63.6 million (US$7.7 million), an increase of net exchange gain
of RMB36.0 million (US$4.4 million), the provision for inventory obsolescence
of RMB11.5 million (US$1.4 million), and a decrease in short term investment
income and others of RMB55.0 million (US$6.7 million).
In addition, operating cash flow was increased due to the decrease of working
capital, mainly due to the decrease in current liabilities from operating
activities of RMB332.1 million (US$40.1 million), and a simultaneous decrease
in current assets from operating activities excluding cash and bank balances
of RMB1,031.7 million (US$124.6 million).
Capital expenditures and investments
Net cash outflow from investing activities in 2004 was RMB24,607.2 million
(US$2,973.0 million), an increase of RMB15,094.6 million (US$1,823.7 million)
from RMB9,512.6 million in 2003.
In line with our use of successful efforts method of accounting, total capital
expenditures and investments primarily include successful exploration and
development expenditures and purchases of oil and gas properties. Total
capital expenditures were RMB18,622.0 million (US$2,250.0 million) in 2004, an
increase of RMB6,249.5 million (US$755.1 million), or 50.5%, from RMB12,372.5
million in 2003. Capital expenditures in 2004 mainly comprised RMB783.5
million (US$94.7 million) for capitalized exploration activities, RMB12,059.4
million (US$1,457.0 million) for development investments, and RMB5,779.1
million (US$698.2 million) for acquisition of oil and gas properties of
Tangguh, NWS and other projects. Our development expenditures in 2004 related
principally to the development of Bozhong 25-1, Bonan, Luda and Caofeidian oil
and gas fields.
In addition, cash out flow was attributable to increase in time deposits with
maturities over three months of RMB 6,280 million (US$758.7 million), and RMB
294.8 million (US$ 35.6 million) cash
17
inflow was generated from net disposal of short-term investment.
Financing activities
The net cash flow arising from financing activities in 2004 was inflow of
RMB1,970.5 million (US$238.1 million). The issue of US$1 billion convertible
bonds in December 2004 generated cash inflow of RMB8,154.1 million (US$985.2
million). Such cash inflow was partially set off by repayment of bank loans of
RMB21.1 million (US$2.5 million), appropriation of dividend of RMB6,101.4
million (US$737.2 million), and a cash outflow of RMB61.2 million (US$7.4
million) resulted from the repurchase of shares by the Company in 2004.
Repayment arrangements of our total debts as at 31 December 2004 were as
follows:
Debt maturities principal only
Original currency
Total Total
RMB US$
Due by 31 December US$ JPY RMB equivalent equivalent
(in millions, except percentages)
2005 - 271.5 - 24.3 2.9
2006-2008 100.0 542.9 - 865.2 104.5
2009-2010 983.1 - - 8,156.4 985.5
2011 and beyond 981.1 - - 8,157.2 985.6
Total 2,064.2 814.4 - 17,203.1 2,078.5
Percentage of total
debt 99.3% 0.7% - 100.0% 100.0%
The gearing ratio of the Company was 23.3%. Gearing ratio is (Total
Debt)/(Total Debt + Equity).
Market risks
Our market risk exposures primarily consist of fluctuations in oil and gas
prices, exchange rates and interest rates.
Oil and gas price risk
As our oil and gas prices are mainly determined by reference to the oil and
gas prices in international markets, changes in international oil and gas
prices have a large impact on us. International oil and gas prices are
volatile, and this volatility has a significant effect on our net sales and
net profits.
Currency risk
Substantially all of our oil and gas sales are denominated in Renminbi and US
dollars. In the past decade, the PRC government's policy of maintaining a
stable exchange rate and China's ample foreign reserves have contributed to
the stability of the Renminbi. Recently, there has been wide speculation in
the international market that the Chinese government will deregulate the
Renminbi exchange rate. However, the Chinese government has not determined if
or when the exchange rate will be deregulated. Currently, the Renminbi
exchange rate remains stable.
In the event of the deregulation in Renminbi exchange rate in the future, we
may be adversely
18
affected. At present, we are seriously conducting investigation on this issue,
and will actively seek a strategy for its resolution.
As of the end of 2004, the balance of our yen-denominated loans was only 0.81
billion yen. Since we have hedged our yen loans against foreign currency
swaps, we do not expect any exchange risk relating to Japanese yen in the
future.
Interest rate risk
As of the end of 2004, the interest rates for all the balance of our debts
were fixed. The term of the weighted average balance was approximately 9
years, with very low weighted average interest rates. The weighted average
interest rates of our debts, including the newly issued convertible bonds in
2004, was only 3.6%. Therefore, if interest rates of US dollars increase in
future, our debt combination can effectively avoid the risk of such increase.
Significant investments and material acquisitions
(i) During the year, we acquired 20.767% interests from BG Group at Muturi
contract district, at a consideration of US$105.1 million (equivalent to
RMB869,881,000). The final price is subject to adjustment. The
acquisition increased our interest in the Muturi contract district to
64.767%, and our interest in Tangguh natural gas project in Indonesia
from 12.5% to 16.96%. We have completed the acquisition on 12 May 2004.
(ii) On 18 December 2004, we completed the acquisition of the Northwest Shelf
Gas Project in Australia. Disclosure of such acquisition has been made on
15 May 2003. Pursuant to the contract, we acquired 25% interest of the
China LNG Joint Venture, a newly established joint venture within the
Northwest Shelf Gas Project in Australia. The Company also obtained
certain production licenses, lease certificates in respect of the
Northwest Shelf Gas Project and approximately 5.3% interest in the
exploration licenses of Northwest Shelf Gas Project. At the same time,
the Company will enjoy the right to participate in the explorations other
than the proven reserves in future. The NWS Gas Project partners have
signed a 25-year LNG agreement to provide LNG to the first LNG terminal
in Guangdong, China, beginning in 2006.
(iii)During the year, the Company, through is wholly-owned subsidiary CNOOC
Morocco Limited, entered into a farmout agreement with Vanco Energy
Corporation, and acquired 11.25% interests in an petroleum agreement for
Ras Tafelney at offshore Morocco.
(iv) In addition, the Company also entered into three production sharing
contracts with Golden Aaron Pte. Ltd. and China Global Construction
Limited in Myanmar during the year, with the company being the operator.
19
SUPPLEMENTAL INFORMATION FOR NORTH AMERICAN SHAREHOLDERS
The effects on net profit and equity of the above significant differences
between Hong Kong GAAP and US GAAP are summarized below:
Net Profit
2004 2003
RMB'000 RMB'000
As reported under Hong Kong GAAP 16,185,778 11,535,490
Impact of U.S GAAP adjustments:
- Reversal of additional depreciation,
depletion and amortisation charges arising
from the revaluation surplus on land and
buildings 9,156 9,156
- Equity accounting for the results of CNOOC
Finance - 30,913
- Unrealised holding gains from
available-for-sale investments in
marketable securities 25,228 (21,503)
- Realised holding gains/(losses) from
available-for-sale marketable securities 2,972 27,088
- Recognition of stock compensation cost (46,642) (37,747)
Income before cumulative effect of change in
accounting policy 16,176,492 11,543,397
Cumulative effect of change in accounting policy
for dismantlement liabilities - 436,112
Net profit under US GAAP 16,176,492 11,979,509
Net profit per share under US GAAP
- Basic (after Stock Split)
Before cumulative effect of change in
accounting policy for dismantlement
liabilities RMB0.39 RMB0.28
Cumulative effect of change in accounting
policy for dismantlement liabilities - RMB0.01
RMB0.39 RMB0.29
- Diluted (after Stock Split)
Before cumulative effect of change in
accounting policy for dismantlement
liabilities RMB0.39 RMB0.28
Cumulative effect of change in accounting
policy for dismantlement liabilities - RMB0.01
RMB0.39 RMB 0.29
20
Net equity
2004 2003
RMB'000 RMB'000
As reported under Hong Kong GAAP 56,717,461 46,736,532
Impact of US GAAP adjustments:
- Reversal of revaluation surplus on land and
buildings (274,671) (274,671)
- Reversal of additional accumulated
depreciation, depletion and amortisation
arising from the revaluation surplus on
land and buildings 44,207 35,051
- Equity accounting for the results of CNOOC
Finance - 41,576
- Dividend distribution made by CNOOC Finance
to CNOOC - (41,576)
Net equity under US GAAP 56,486,997 46,496,912
Apart from the derivative components with a total credit balance of
approximately RMB450 million that are required to be bifurcated from the
convertible debt, there are no significant GAAP differences that affect
classification within the balance sheet or income statement but do not affect
net income or shareholders' equity.
(i) Revaluation of land and buildings
The Group revalued certain land and buildings on 31 August 1999 and 31
December 2000 and the related revaluation surplus was recorded on the
respective dates. Under Hong Kong GAAP, revaluation of property, plant and
equipment is permitted and depreciation, depletion and amortisation are based
on the revalued amount. Additional depreciation arising from the revaluation
for the year ended 31 December 2004 was approximately RMB9,156,000 (2003:
RMB9,156,000). Under US GAAP, property, plant and equipment are required to be
stated at cost. Accordingly, no additional depreciation, depletion and
amortisation from the revaluation are recognised under US GAAP.
(ii) Short term investments
According to Hong Kong GAAP, available-for-sale investments in marketable
securities are measured at fair value and related unrealised holding gains and
losses are included in the current period's earnings. According to US GAAP,
such investments are also measured at fair value and classified in accordance
with Statement of Financial Accounting Standards ("SFAS") No.115. Under US
GAAP, related unrealised gains and losses on available-for-sale securities are
excluded from the current period's earnings and included in other
comprehensive income.
(iii) Impairment of long-lived assets
Under Hong Kong GAAP, impairment charges are recognised when a long-lived
asset's carrying amount exceeds the higher of an asset's net selling price and
value in use, which incorporates discounting the asset's estimated future cash
flows.
Under US GAAP, long-lived assets are assessed for possible impairment in
accordance with SFAS No.144, "Accounting for the impairment or disposal of
long-lived assets". SFAS No. 144 requires the Group to (a) recognise an
impairment loss only if the carrying amount of a long-lived asset is not
recoverable from its undiscounted cash flows and (b) measure an impairment
loss as the difference between the carrying amount and fair value of the
asset. SFAS No. 144 requires that a long-lived asset to be abandoned,
exchanged for a similar productive asset, or distributed to owners in a
spin-off be
21
considered as held and used until it is disposed of.
SFAS No. 144 also requires the Group to assess the need for an impairment of
capitalised costs of proved oil and gas properties and the costs of wells and
related equipment and facilities on a property-by-property basis. If an
impairment is indicated based on undiscounted expected future cash flows, then
an impairment is recognised to the extent that net capitalised costs exceed
the estimated fair value of the property. Fair value of the property is
estimated by the Group using the present value of future cash flows. The
impairment was determined based on the difference between the carrying value
of the assets and the present value of future cash flows. It is reasonably
possible that a change in reserve or price estimates could occur in the near
term and adversely impact management's estimate of future cash flows and
consequently the carrying value of properties.
In addition, under Hong Kong GAAP, a subsequent increase in the recoverable
amount of an asset is reversed to the income statement to the extent that an
impairment loss on the same asset was previously recognised as an expense when
the circumstances and events that led to the write-down or write-off cease to
exist. The reversal is reduced by the amount that would have been recognised
as depreciation had the write-down or write-off not occurred. Under US GAAP,
an impairment loss establishes a new cost basis for the impaired asset and the
new cost basis should not be adjusted subsequently other than for further
impairment losses.
For the year ended 31 December 2004, there were no impairment losses
recognised under Hong Kong GAAP and US GAAP.
(iv) Stock compensation schemes
As at December 31, 2004, the Company had three stock option schemes. The
Company accounted for those plans under the fair value recognition provision
of FASB Statement No. 123, "Accounting for Stock-Based Compensation", as
amended by FASB statement No. 148, for stock-based employee compensation.
Compensation costs recognised for the stock option schemes amounted to
RMB46,642,000 (2003: RMB37,747,000) for the year ended 31 December 2004.
The weighted average fair value of the options at the grant dates for award
under the schemes was HK$0.84 per share which was estimated using the
Black-Scholes model with the following assumptions: dividend yield of 2%; and
expected life of five years; expected volatility of 44%; and risk-free
interest rates of 5.25%. The weighted average exercise price of the stock
options was HK$2.06 per share.
(v) Accounting for CNOOC Finance
Under HK GAAP, the Company adopted the purchase method to account for the
acquisition of 31.8% equity interest in CNOOC Finance in December 2003. Under
the purchase method, the acquired results are included in the consolidated
results of operations of the Company from the date of the acquisition.
As the Company and CNOOC Finance are under common control of CNOOC, under US
GAAP, the acquisition is considered to be a transfer of businesses under
common control and the acquired assets and liabilities are accounted at
historical cost in a manner similar to the pooling of interests method.
Accordingly, the consolidated financial statements for all periods presented
have been retroactively restated as if the current structure and operations
had been in existence since inception. The cash consideration paid by the
Company is treated as an equity transaction in the year of the acquisition for
US GAAP purpose.
22
(vi) Accounting for convertible debt
Under HK GAAP, prior to December 31, 2004, there were no requirements to
segregate the equity and derivative components of convertible debt. As such,
convertible debt was stated at amortised cost.
Under US GAAP, the derivative components will need to be bifurcated from the
debt components if it contains a compound derivative or fails to fulfill
certain criteria for not bifurcating. The derivative components are marked to
market at each balance sheet date and the differences will be charged/credited
to income. The debt components are stated at amortised cost.
Employees
We had 2,524 employees as at 31 December 2004.
We have adopted 3 Share Option Schemes for our senior management officers of
the Company since 4 February 2001.
In 2004, in line with our development, we have set up and implemented a
corresponding human resources strategy, to provide strong support of human
resources so as to cope with the internationalisation development and demands
of international competition.
We further implemented a highly effective performance evaluating system,
emphasizing on the integration of the individual's development targets and the
Company's operating objectives. We are now setting up a performance evaluating
systems for our branches, at the same time. Actively promoting the
implementation of a performance evaluating system for individuals.
Based on the reform in the previous year, we further implemented the reforms
in accordance with new situation and requirements of our developments, and
upgraded the salary system and incentive mechanism.
In 2004, the Company continuously promote the effective training programme.
Through the promotion of the individual development schemes and systems, we
managed to organize and implement various specialised and comprehensive
management training courses. During the year, a total of 641 training courses
were conducted within the Company, which was attended by more than 8,816
participants, and per capita training hours was 42,506.
Charges on Assets
The Group had no charge on assets as at 31 December 2004.
Contingent Liabilities
The Group had no contingent liabilities as at 31 December 2004.
DIVIDENDS
The Board of Directors recommends the payment of a final dividend of HK$0.03
per share and a special final dividend of HK$0.05 per share for the year ended
31 December 2004 to shareholders whose names appear on the Register of Members
of the Company on 25 May 2005. Together with the interim dividend of HK$0.03
per share and the special interim dividend of HK$0.05 per share, give a
23
total of HK$0.16 per share for the year. The proposed dividends are expected
to be paid on 7 June 2005 following the approval at the annual general meeting
of the Company on 25 May 2005.
AUDIT COMMITTEE
The audit committee has reviewed together with the management the accounting
principles and practices adopted by the Group and discussed the internal
control and financial reporting matters. The audit committee of the Board of
Directors of the Company has reviewed the annual results of the Company for
the year ended 31 December 2004.
PURCHASE, DISPOSAL AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the twelve months ended 31 December 2004, the Company purchased listed
securities of the Company on the Stock Exchange of Hong Kong Limited (the
"Hong Kong Stock Exchange") as follows:
Aggregate
price paid by
Aggregate the Company
number of for the
shares purchase
Date of purchase purchased (HK$)
18 May 2004 5,427,000 15,529,360.50
24 May 2004 3,450,000 10,682,580.00
17 June 2004 7,140,000 23,328,522.00
21 June 2004 876,000 2,744,420.40
2 July 2004 500,000 1,637,500.00
8 July 2004 1,060,000 3,485,492.50
All the shares purchased by the Company have been cancelled.
Save as described above, there was no other purchase, sale or redemption by
the Company, or any of its subsidiaries of the Company's listed securities
during the twelve months ended 31 December, 2004.
ADJUSTMENTS TO CONVERSION PRICE OF CONVERTIBLE BONDS
The Company issued convertible bonds (the "Convertible Bonds") in the
principal amount of US$1,000,000,000 in December 2004. In accordance with the
terms and conditions of the Convertible Bonds, the payment of the proposed
final dividend may result in an adjustment to the conversion price of the
Convertible Bonds. The exact amount of the adjustment, if any, can only be
determined after the record date for the proposed final dividend. A separate
announcement will be made as and when appropriate.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members will be closed from 18 May 2005 to 25 May 2005 (both
dates inclusive). In order to qualify for the dividends, all transfers,
accompanied by the relevant share certificates, must be lodged with the
Company's share registrar, Hong Kong Registrars Limited, at Rooms 1712-1716,
17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, not
later than 4:00 p.m. on 17 May 2005.
24
FORWARD-LOOKING STATEMENTS
Certain statements contained in this announcement may be viewed as
"forward-looking statements" within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended, and Section 21E of the U.S. Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors, which may cause the
actual performance, financial condition or results or operations of the
Company to be materially different from any future performance, financial
condition or results of operations implied by such forward-looking statements.
Further information regarding these risks, uncertainties and other factors is
included in the Company's most recent Annual Report in Form 20-F filed with
the U.S. Securities and Exchange Commission (the "SEC") and the Company's
other filings with the SEC.
COMPLIANCE WITH CODE OF BEST PRACTICE
The Company has complied with the Code of Best Practice as set out by the Hong
Kong Stock Exchange in Appendix 14 to the Listing Rules throughout the year
ended 31 December 2004, except that the Non-executive Directors were not
appointed for a specific term, but are subject to retirement by rotation and
re-election at the Company's annual general meeting in accordance with the
Company's articles of association.
PUBLICATION OF ANNUAL RESULTS ON THE INTERNET WEBSITE OF THE STOCK EXCHANGE
OF HONG KONG LIMITED
All information required by paragraphs 45(1) to 45(3) of Appendix 16 to the
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited then in force prior to 31 March 2004 which remain applicable to
results announcement in respect of accounting periods commencing before 1 July
2004 under the transitional arrangements, will be published on the website of
the Stock Exchange in due course.
Please also refer to the published version of this announcement in South China
Morning Post, Wen Wei Po and Hong Kong Economic Times dated March 30 2005.
As at the date of this announcement, the Board comprises:
Executive Directors
Fu Chengyu (Chairman)
Luo Han
Jiang Longsheng
Zhou Shouwei
Independent non-executive Directors:
Chiu Sung Hong
Dr. Kenneth S. Courtis
Dr. Erwin Schurtenberger
Evert Henkes
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report on Form 6-K to be signed
on its behalf by the undersigned, thereunto duly authorized.
CNOOC Limited
By: /s/ Cao Yunshi
-----------------------------
Name: Cao Yunshi
Title: Company Secretary
Dated: March 30, 2005