FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of ~~September~~April ~~2003~~2004

Commission File Number: 1-14646

Sinopec Beijing Yanhua Petrochemical Company Limited

Company Limited

(Translation of registrant’s name into English)

No. 1 Beice, Yingfeng Erli, Yanshan, Fangshan District, Beijing

People’s Republic of China

(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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether by furnishing the information contained in this Form, the registrant 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 12g-2(b):82- Not Applicable.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SINOPEC BEIJING YANHUA PETROCHEMICAL COMPANY LIMITED
Dated:	September 18, 2003	By:	/s/ DU GUOSHENG
Dated: April 8, 2004		By:	/s/ DU GUOSHENG
		Name: Title:	Du Guosheng Chairman of the Board
		Name:	Du Guosheng
		Title:	Chairman of the Board

Exhibit Index

a. ~~Interim~~An ~~report~~announcement of ~~the~~results ~~Company~~ for the ~~six-month~~year ~~period~~ ended 30December ~~June~~31, 2003 ~~disclosed~~by on the ~~website~~Company, ofpublished ~~the~~on ~~Hong~~newspaper ~~Kong Stock Exchange~~ on ~~August~~April 286, ~~2003~~2004.

LOGO

SINOPEC BEIJING YANHUA PETROCHEMICAL COMPANY LIMITED

~~INTERIM~~(a ~~RESULTS~~joint stock limited company incorporated in the People’s Republic of China (the “PRC”)

~~FOR~~(Stock ~~THE~~Code: ~~SIX-MONTH PERIOD~~325) ~~ENDED 30 JUNE 2003~~

~~Dear~~Annual ~~Shareholders:~~Results Announcement for the year ended 31 December 2003

~~The~~Resignation ~~board~~ of ~~directors~~an ofIndependent ~~Sinopec Beijing Yanhua Petrochemical Company Limited (the “Company”) is pleased to announce the unaudited interim results for the six~~Non-~~month~~executive ~~period~~Director ~~ended 30 June 2003 (the “Reporting Period”).~~

~~During~~Proposed ~~the~~Amendments first half of 2003, the economy of the People’s Republic of China (the “PRC”) grew at great momentum with its gross domestic product (“GDP”) for the first quarter of 2003 increased by 9.9%, which has tremendously increased the market demand and the price of domestic petrochemical products in the PRC. In the second quarter of 2003, the outbreak of the war in Iraq resulted in intense fluctuations in the price of crude oil in the international market, whilst the outburst of the Severely Acute Respiratory Syndrome (“SARS”) in the PRC has again yielded adverse effect on the sale of the products. Facing these adverse elements, the management of the Company maintained a clear focus and responded in a timely and proper fashion to ~~have~~Articles ~~the effect~~ of ~~these~~Association adverse elements eliminated to the furthest extent possible, and thereby largely improved the business performance of the Company during the Reporting Period, as compared with that of the previous year.

~~During~~The ~~the~~Board ~~first~~of ~~half~~Directors of ~~2003,~~Sinopec ~~the~~Beijing ~~Company~~Yanhua ~~achieved~~Petrochemical ~~total~~Company ~~sales~~Limited of(the ~~RMB5,493.5~~“Company”) ~~million,~~is ~~representing~~pleased anto ~~increase~~announce ofthe ~~30.0%~~audited asresults ~~compared with that~~ of the ~~same~~Company ~~period~~for in the ~~previous~~ year. ~~The~~ended ~~profit~~31 ~~from~~December ~~ordinary~~2003, ~~activities~~extracted ~~before~~from ~~taxation and~~ the ~~profit~~audited ~~attributable~~financial tostatements ~~shareholders~~of ~~were~~the ~~RMB 297.7 million and RMB 192.2 million~~Company, ~~respectively,~~prepared ~~representing~~in anaccordance ~~increase~~with ofInternational ~~356.6%~~Financial ~~and~~Reporting ~~481.2% as~~Standards ~~compared~~(“IFRS”), totogether ~~those~~with of the ~~same~~comparative ~~period~~figures inof 2002.

INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2003

(Amounts in thousands, except per share data)


		2003		2002
	Note	RMB		RMB
Turnover	2	11,473,928		9,443,061
Cost of sales		(9,723,562	)	(8,368,029	)

Gross profit		1,750,366		1,075,032
Selling, general and administrative expenses		(721,418	)	(530,571	)
Other operating income		73,243		55,979
Other operating expenses		(59,148	)	(58,882	)

Profit from operations		1,043,043		541,558
Net financing costs		(165,936	)	(210,830	)

Profit from ordinary activities before taxation	3	877,107		330,728
Income tax expense	4	(243,222	)	(121,629	)

Profit attributable to shareholders		633,885		209,099

Dividends attributable to the year:	5
Final dividend proposed after the balance sheet date		168,700		—

Basic earnings per share	6	0.19		0.06

~~INTERIM~~NOTES ~~FINANCIAL REPORT (UNAUDITED) PREPARED IN ACCORDANCE~~

~~WITH~~1. ~~INTERNATIONAL~~PRINCIPAL ~~ACCOUNTING~~ACTIVITIES ~~STANDARD~~AND ~~(“IAS”)~~BASIS 34OF ~~“INTERIM~~PREPARATION

~~FINANCIAL~~The ~~REPORTING~~Company was incorporated as a joint stock company with limited liability in the PRC on 23 April 1997 as part of the reorganisation (“Reorganisation”) of Beijing Yanshan Petrochemical Corporation (~~see~~“Yanshan ~~note~~Company”) 1in preparation for the listing of the Company’s shares. The Company’s shares and American Depository Shares (“ADSs”) were listed on the Stock Exchange of Hong Kong Limited (“SEHK”) and the New York Stock Exchange respectively in June 1997.

~~Income~~Upon ~~statement~~the Reorganisation, the Company became a subsidiary of Yanshan Company. On 25 February 2000, China Petrochemical Corporation (~~unaudited~~“Sinopec Group”), underwent a reorganisation, and formed a subsidiary, China Petroleum and Chemical Corporation (“Sinopec”). In accordance with the reorganisation agreement, Yanshan Company, previously the Company’s parent company, transferred its 70% equity interest in the Company to Sinopec.

~~(Amounts~~The inprincipal ~~thousands~~activities of ~~Renminbi~~the ~~(“RMB”),~~Company are the manufacturing and sale of petrochemical ~~except~~products ~~per~~in ~~share~~the ~~data)~~PRC.

		Six-month periods ended 30 June
		2003		2002
	Note	RMB		RMB
Turnover		5,493,482		4,224,370
Cost of sales		(4,783,443	)	(3,821,165	)
Gross profit		710,039		403,205
Selling, general and administrative expenses		(315,583	)	(230,008	)
Other operating income		6,551		9,375
Other operating expenses		(12,960	)	(4,172	)
Profit from operations		388,047		178,400
Net financing costs		(90,298	)	(113,207	)
Profit from ordinary activities before taxation	3	297,749		65,193
Income tax expense	4	(105,512	)	(32,119	)
Profit attributable to shareholders		192,237		33,074
Basic earnings per share	6	0.057		0.010

The accounting policies have been consistently applied by the Company and are consistent with those adopted in the 2002 financial statements. The 2003 financial statements have been prepared in accordance with IFRS promulgated by the International Accounting Standards Board (“IASB”). IFRS includes International Accounting Standards (“IAS”) and the related interpretations approved and issued by the IASB.

~~The notes on pages 6 to 12 form part of this interim financial report~~2. TURNOVER

Turnover represents revenue from sales of goods to customers, net of value added tax.

3. PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION

Profit from ordinary activities before taxation is arrived at after charging/(crediting):


	2003		2002
	RMB’000		RMB’000
Interest expense	152,424		220,918
Less: Amount capitalised as construction in progress	(9,600	)	(25,805	)

Interest expense, net	142,824		195,113
Cost of inventories	9,723,562		8,368,029
Depreciation	890,779		806,124

~~Balance~~4. ~~sheet~~INCOME ~~(unaudited)~~TAX EXPENSE

~~(Amounts~~Income tax expense in ~~thousands~~the ofincome ~~RMB)~~statement represents:

			At 30 June2003		At 31 December2002
	2003			2002
	Note		RMB		RMB
	RMB’000			RMB’000
ASSETS
Provision for PRC income tax for the year	286,903			—
Non-current assets
Deferred taxation	(43,681	)		121,629
Property, plant and equipment			7,533,639		7,900,990
	243,222			121,629
Deferred tax assets			327,740		330,450
Total non-current assets			7,861,379		8,231,440
Current assets
Inventories			857,739		985,119
Trade receivables	7		314,579		285,594
Bills receivable	7		115,406		232,609
Prepayments and other current assets			227,043		262,410
Cash and cash equivalents			209,440		262,635
Total current assets			1,724,207		2,028,367
Current liabilities
Trade payables	8		64,299		150,185
Bills payable	8		100,000		130,000
Accruals and other payables			590,240		587,573
Income tax payable			40,311		—
Bank loans			1,426,409		1,776,402
Loans from parent companies and fellow subsidiaries			150,000		380,000
Total current liabilities			2,371,259		3,024,160
Net current liabilities			(647,052	)	(995,793	)
Total assets less current liabilities			7,214,327		7,235,647

The provision for PRC income tax is calculated at the rate of 33% (2002: 33%) on the estimated assessable income of the Company determined in accordance with relevant income tax rules and regulations of the PRC. The Company did not carry on business overseas or in Hong Kong and therefore did not incur overseas and Hong Kong income taxes.

5. DIVIDENDS

Dividends attributable to the year represent:


	2003	2002
	RMB’000	RMB’000
Final dividend proposed after the balance sheet date of RMB 0.05 (2002: Nil) per share	168,700	—

Pursuant to a resolution passed at the Directors’ meeting on 2 April 2004, a final dividend of RMB 0.05 (2002: Nil) per share totalling, RMB 168,700,000 (2002: Nil) was proposed for shareholders’ approval at the forthcoming Annual General Meeting. The final dividend proposed after the balance sheet date has not been recognised as a liability at the balance sheet date.

6. BASIC EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit attributable to shareholders of RMB 633,885,000 (2002: RMB 209,099,000) and the weighted average number of shares of 3,374,000,000 (2002: 3,374,000,000) during the year.

Diluted earnings per share is not presented as there were no dilutive potential ordinary shares in existence during the years ended 31 December 2003 and 2002.

~~Balance~~7. ~~sheet~~SEGMENT ~~(unaudited)~~INFORMATION ~~(Continued)~~

(Amounts in thousands of RMB)


	2003		2002
	RMB ‘000		RMB ‘000
External sales
Resins and Plastics	6,332,332		5,514,147
Synthetic Rubber	1,923,773		1,418,899
Basic Organic Chemical Products	2,700,036		2,140,185
Others	517,787		369,830

Total external sales	11,473,928		9,443,061

Cost of sales
Resins and Plastics	(5,575,377	)	(4,943,357	)
Synthetic Rubber	(1,474,901	)	(1,189,480	)
Basic Organic Chemical Products	(2,172,872	)	(1,877,542	)
Others	(500,412	)	(357,650	)

Total cost of sales	(9,723,562	)	(8,368,029	)

Segment gross profit
Resins and Plastics	756,955		570,790
Synthetic Rubber	448,872		229,419
Basic Organic Chemical Products	527,164		262,643
Others	17,375		12,180

Total segment gross profit	1,750,366		1,075,032
Selling, general and administrative expenses	(721,418	)	(530,571	)
Net financing costs	(165,936	)	(210,830	)
Other operating income	73,243		55,979
Other operating expenses	(59,148	)	(58,882	)

Profit from ordinary activities before taxation	877,107		330,728
Income tax expense	(243,222	)	(121,629	)

Profit attributable to shareholders	633,885		209,099

		At 30 June2003	At 31 December2002
	Note	RMB	RMB
Non-current liabilities
Bank loans		1,719,379	1,927,543
Deferred tax liabilities		280,764	286,157
Total non-current liabilities		2,000,143	2,213,700
Net assets		5,214,184	5,021,947
Shareholders’ equity
Share capital		3,374,000	3,374,000
Share premium		774,630	774,630
Reserves	9	7,966	12,908
Retained earnings	9	1,057,588	860,409
Total shareholders’ equity		5,214,184	5,021,947

In view of the fact that Company operates mainly in the PRC, no geographical segmental information is presented.

~~Approved~~8. ~~and~~COMPARATIVE ~~authorised for~~FIGURES ~~issue by the Board of Directors on 15 August 2003.~~

DuCertain ~~Guosheng~~comparative ~~Chairman~~figures ~~Guo~~have ~~Hong~~been reclassified ~~Chief~~to ~~Financial~~conform ~~Officer~~with the current year’s presentation.

The notes on pages 6 to 12 form part of this interim financial report.

~~Condensed~~9. ~~cash~~AUDITORS’ ~~flow~~REPORT ~~statement (unaudited)~~

~~(Amounts~~The auditors’ report in ~~thousands~~the ofCompany’s ~~RMB)~~financial statements is neither qualified nor modified.

	Six-month periods ended 30 June
	2003		2002
	RMB		RMB
Net cash generated from operating activities	827,407		397,981
Net cash used in investing activities	(92,445	)	(391,918	)
Net cash used in financing activities	(788,157	)	(51,013	)
Net decrease in cash and cash equivalents	(53,195	)	(44,950	)
Cash and cash equivalents at the beginning of the period	262,635		276,140
Cash and cash equivalents at the end of the period	209,440		231,190

MANAGEMENT’S DISCUSSION AND ANALYSIS

~~Statement~~Significant ofAccounting ~~changes~~Policies ~~in equity (unaudited)~~

~~(Amounts~~The Company’s significant accounting policies are set out in ~~thousands~~note 2 of the financial statements. IFRS requires that the Company adopts the accounting policies and ~~RMB)~~estimation techniques that are most appropriate in the circumstances for the purpose of giving a true and fair view of its results and financial condition. However, different policies, estimation techniques and assumptions in critical areas could lead to materially different results. In particular:

	Share capital	Share premium	Reserves		Retainedearnings	Total
	RMB	RMB	RMB		RMB	RMB
At 1 January 2003	3,374,000	774,630	12,908		860,409	5,021,947
Net profit	—	—	—		192,237	192,237
Revaluation surplus realised	—	—	(4,942	)	4,942	—
At 30 June 2003	3,374,000	774,630	7,966		1,057,588	5,214,184
At 1 January 2002	3,374,000	774,630	17,098		647,120	4,812,848
Net profit	—	—	—		33,074	33,074
At 30 June 2002	3,374,000	774,630	17,098		680,194	4,845,922

a. Impairments

If circumstances indicate that the net book value of an asset may not be recoverable, this asset may be considered “impaired”, and an impairment loss may be recognized in accordance with IAS 36 “Impairment of Assets”. The carrying amounts of long-lived assets are reviewed periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a decline has occurred, the carrying amount is reduced to recoverable amount. The amount of impairment loss is the difference between the carrying amount of the asset and its recoverable amount. The recoverable amount is the greater of the net selling price and the value in use. It is difficult to precisely estimate selling price because quoted market prices for the Company’s assets are not readily available. In determining the value in use, expected cash flows generated by the asset are discounted to their present value, which requires significant judgement in relation to sales volume, selling price and amount of operating costs.

b. Depreciation

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account their estimated residual value. The Company reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Company’s historical experience with similar assets and taking into account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.

c. Provision for Doubtful Debts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make the required payments. The Company bases its estimates on the ageing of its accounts receivable balance, customer credit-worthiness, and historical write-off experience. If the financial condition of the Company’s customers were to deteriorate, actual write-offs might be higher than expected.

~~Notes~~Operations onReview ~~the Unaudited Interim Financial Report~~

1In 2003, in spite of the influence of the war between the United States and Iraq and the Severe, Acute Respiratory Syndrome (“SARS”) outbreak in China, China’s economy continued to grow at a high speed and the demand for petrochemicals remained strong. ~~Principal~~As ~~activities~~a result of China’s accession to the World Trade Organization (“WTO”) in November 2001, foreign enterprises’ costs of exporting petrochemicals into China have been reduced. China’s accession to the WTO has also had a significant impact on Chinese enterprises in terms of management mechanisms as more foreign capital enters the Chinese market. Facing intensified market challenges, the Company, through calm observation and ~~basis~~conscientious thinking, and adherence to the development path of ~~preparation~~“low input, high output”, was able to cope with the situation, seize market opportunities, follow the established development strategies and accomplish the following tasks, and hence significantly increase the results of the Company during the reporting period:

~~Sinopec~~1) ~~Beijing~~Vigorously ~~Yanhua~~carry ~~Petrochemical~~out ~~Company~~technical ~~Limited~~improvements (“and advancements to guarantee the sustainable development of the enterprise. In June 2003, the Company”) ~~was~~initiated ~~incorporated~~one-month asshutdown aand ~~joint~~overhaul ~~stock~~of ~~company~~operations ~~with~~at ~~limited~~the ~~liability~~tail-end of the SARS outbreak in Beijing and further eliminated certain technological bottlenecks in the ~~People’s~~ ~~Republic~~ethylene units via a technological upgrade of ~~China~~the (ethylene units of the ~~“PRC”)~~Company, onthus 23enabling ~~April~~the ~~1997~~Company asto ~~part~~fully ofutilize the ~~reorganisation~~advantages ~~(“Reorganisation”)~~gained from the increased production capacity of ~~Beijing~~the ~~Yanshan~~ethylene ~~Petrochemical~~units, ~~Group~~and ensuring that the Company (would operate according to the business concept of “~~Yanshan~~not ~~Company~~for the largest, but for the best”). Such a business concept in ~~preparation~~turn ~~for~~guarantees the ~~listing~~sustainable development of the Company’s ~~shares.~~by ~~The~~increasing ~~Company’s~~product ~~shares~~quality as well as reducing consumption of materials and ~~American~~energy. ~~Depository~~Even ~~Shares~~with ~~(“ADSs”)~~the ~~were~~one-month ~~listed~~shutdown, onthe ethylene output of the ~~Hong~~Company ~~Kong~~in ~~Stock~~2003 ~~Exchange~~reached ~~and~~722,000 tons, which exceeded the ~~New~~planned ~~York~~amount, ~~Stock~~ensuring ~~Exchange~~the ~~respectively~~sustainable ingrowth ~~June~~of ~~1997.~~the Company.

~~Upon~~2) ~~the~~Enhance ~~completion of~~ the ~~Reorganisation,~~Company’s ~~the~~core ~~Company~~competence ~~became~~through afurther ~~subsidiary~~stripping of ~~Yanshan~~ ~~Company.~~its Onnon-core 25businesses. ~~February~~In ~~2000~~2003, ~~China~~the ~~Petrochemical~~Company ~~Corporation~~gave ~~(“Sinopec~~more ~~Group”),~~prominence ~~underwent~~to athe ~~reorganisation,~~core businesses and ~~established~~increased athe ~~subsidiary,~~efficient ~~China~~use ~~Petroleum~~of ~~and~~the ~~Chemical~~Company’s ~~Corporation~~core ~~(“Sinopec”).~~assets Inby ~~accordance~~further ~~with~~stripping ~~the reorganisation~~away ~~agreement, Yanshan Company, previously~~ the Company’s ~~parent~~non-core ~~company~~businesses, ~~transferred~~and ~~its~~thereby ~~70%~~enhanced ~~equity~~the ~~interest~~core incompetence of the Company ~~to Sinopec~~.

~~The~~3) ~~principal~~Increase ~~activities~~production of products with high added value by adopting a market orientated approach. In 2003, through close cooperation among all of its departments, the Company ~~are~~continued ~~the~~to ~~manufacturing~~adjust its product mix to improve and ~~sale~~strengthen ofits ~~petrochemical~~profitability. ~~products~~Based on the thorough market research conducted, the Company engaged in efforts to develop special-purpose materials with high market demand, high added value and the ~~PRC~~domestic supply of which relies mainly on imports. As a result of such efforts, the Company further increased the sales proportion of special-purpose materials used for producing synthetic resin.

~~The~~4) ~~interim~~Adhere ~~financial~~to ~~report~~the ispolicy ~~unaudited~~of integrating supply, ~~but~~production, ~~has~~sales ~~been~~and ~~reviewed~~research, byand ~~KPMG~~further ~~in accordance~~improvement ~~with~~of ~~Statement~~sales and marketing activities. In 2003, the Company continued to strengthen its sales and marketing activities based on its prior experiences, and further harmonized the operations of ~~Auditing~~the ~~Standards~~supply, ~~700~~production, ~~“Engagements~~sales and research departments. Through close cooperation between those various departments, the Company adjusted its production plans in a timely manner in order to ~~review~~meet ~~interim~~market ~~financial~~changes ~~reports”~~and the different needs of different customers, ~~issued~~and was rated as an enterprise “to the satisfaction of the users throughout China” by the ~~Hong~~All ~~Kong~~China ~~Society~~Users Committee of ~~Accountants~~China Quality Association. ~~KPMG’s~~The ~~independent~~Company ~~review~~also ~~report~~reinforced its efforts in conducting market analysis and improving its ability to meet market changes, to avoid market risks and to enhance economic efficiency by continuing to adopt the ~~Board~~sales strategy of ~~Directors~~“follow isthe ~~included~~market, onmaintain ~~page~~a 13stable production-sales ratio, and obtain the highest sales price”, and thus guaranteed the increase in the economic benefits for the Company.

The interim financial report has been prepared in accordance with the requirements of the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), including compliance with IAS 34 “Interim Financial Reporting” adopted by the International Accounting Standards Board (“IASB”).

The financial information relating to the financial year ended 31 December 2002 included in the interim financial report does not constitute the Company’s annual accounts for that financial year but is derived from those accounts. Annual accounts for the year ended 31 December 2002 are available from the Company’s registered office. The Company’s independent auditors have expressed an unqualified opinion on those accounts in their report dated 11 April 2003.

The accounting policies have been consistently applied by the Company and are consistent with those adopted in the 2002 annual accounts. The 2002 annual accounts have been prepared in accordance with International Financial Reporting Standards (“IFRS”) promulgated by the IASB. IFRS includes International Accounting Standards and related interpretations issued and adopted by the IASB.

2.The ~~Segment~~following ~~information~~table sets forth the percentages of total turnover of the principal operating expenses associated with the Company’s business:

	Six-month periods ended 30 June
	2003		2002
	RMB ’000		RMB ’000
	%		%
External sales
Turnover	100.0		100.0
Resins and Plastics	2,902,849		2,509,283
Less expenditure
Synthetic Rubber	878,229		587,923
Raw materials	(59.2	)	(62.4	)
Basic Organic Chemical Products	1,406,757		884,260
Utility (fuels and power) expenses	(10.7	)	(12.9	)
Others	305,647		242,904
Depreciation	(7.8	)	(8.5	)
Total external sales	5,493,482		4,224,370
Wages and bonus	(2.5	)	(2.5	)
Cost of sales
Other overheads	(5.1	)	(2.9	)
Resins and Plastics	2,650,511		2,218,128
Selling, general and administrative expenses	(5.7	)	(5.0	)
Synthetic Rubber	685,224		508,101
Other operating income/ (expenses), net	0.1		(0.1	)
Basic Organic Chemical Products	1,134,862		845,641
Operating margin	9.1		5.7
Others	312,846		249,295
Total cost of sales	4,783,443		3,821,165
Segment results
Resins and Plastics	252,338		291,155
Synthetic Rubber	193,005		79,822
Basic Organic Chemical Products	271,895		38,619
Others	(7,199	)	(6,391	)
Total segment results	710,039		403,205
Selling, general and administrative expenses	315,583		230,008
Net financing costs	90,298		113,207
Other operating expenses/ (income), net	6,409		(5,203	)
Profit from ordinary activities before taxation	297,749		65,193

InTurnover ~~view~~increased to RMB 11,473.9 million in 2003 from RMB 9,443.1 million in 2002, representing an increase of RMB 2,030.8 million, or 21.5%. The increase in the ~~fact~~turnover ~~that~~was mainly due to the large increase in the prices of the principal products of the Company ~~operates~~in ~~mainly~~2003. Due to strong market demand and an increase in the ~~PRC~~prices of raw materials, nopetrochemical ~~geographical~~products ~~segmental~~in ~~information~~China maintained a high price level in 2003, which resulted in an increase of 25.9% in the weighted average sales price of the eight principal products of isthe ~~presented~~Company as compared to that of 2002 (representing 79.1% and 78.6% of the total sales revenue of 2002 and 2003, respectively). The sales volume of the eight principal products of the Company decreased by approximately 4.1% in 2003 as compared with that of 2002 due to the one-month shutdown and overhaul; nevertheless, the Company’s sales revenue increased significantly.

Cost of sales increased by 16.2% to RMB 9,723.6 million in 2003 up from RMB 8,368.0 million in 2002. This increase was mainly due to the increase in the prices for raw materials and the increased overhead costs resulting from normal shutdown and overhaul. The Company’s gross profit increased by 62.8% from RMB 1,075.0 million in 2002 to RMB 1,750.4 million in 2003, as gross margin rose from 11.4% in 2002 to 15.3% in 2003.

Selling, general and administrative expenses increased by RMB 190.8 million (36.0%) to RMB 721.4 million in 2003 from RMB 530.6 million in 2002. This increase in selling, general and administrative expenses was primarily due to the increase in research and development expenses and other similar expenses.

3The Company’s profit from 2003 operations was RMB 1,043.0 ~~Profit~~million, representing an increase of 92.6% when compared with the RMB 541.6 million from ~~ordinary~~2002 ~~activities~~operations. ~~before~~The ~~taxation~~Company’s operating margin increased to 9.1% in 2003, as compared with 5.7% in 2002. The increase in operating margin reflects improvement of the market operating situation as well as a realization of the benefits from the economies of scale of the Company.

~~Profit~~Net financing costs in 2003 decreased by RMB 44.9 million from ~~ordinary~~RMB 210.8 million in 2002 to RMB 165.9 million 2003. This decrease was primarily due to the repayment of certain bank loans in 2003 along with the increase of cash generated from operating activities ~~before~~and ~~taxation~~the iscorresponding ~~arrived~~significant atdecrease ~~after~~in ~~charging/(crediting):~~expenditure of loan interest.

	Six-month periods ended 30 June
	2003		2002
	RMB’000		RMB’000
Interest expense	86,603		115,106
Less: Amount capitalised	(7,131	)	(13,546	)
Interest expense, net	79,472		101,560
Cost of inventories	4,783,443		3,821,165
Depreciation	450,374		405,279
Loss/ (gain) on disposal of property, plant and equipment	6,540		(3	)

In 2003, the Company recorded a profit before taxation of RMB 877.1 million, representing an increase of 165.2% when compared with the profit before taxation of RMB 330.7 million in 2002. The Company’s net profit for 2002 was RMB 209.1 million, and the net profit for 2003 was RMB 633.9 million, representing an increase of 203.2% when compared to that of 2002. The net profit margin for 2003 increased to 5.5%, compared to 2.2% for 2002.

4.Liquidity ~~Income~~and ~~tax~~Capital ~~expense~~Resources

~~Income~~The ~~tax~~Company ~~expense~~has inprincipally ~~the~~relied ~~income~~on ~~statement~~cash ~~represents:~~generated from operating activities, bank loans and share capital to finance its capital expenditures and working capital.

	Six-month periods ended 30 June
	2003		2002
	RMB’000		RMB’000
Provision for PRC income tax	108,195		—
Deferred taxation	(2,683	)	32,119
	105,512		32,119

The Company’s net cash flow derived from operating activities is generally much higher than its net profit, mainly due to substantial depreciation. In 2003, the Company’s net cash flow from operating activities was RMB 1,616.6 million, with an increase of RMB 579.5 million as compared with the RMB 1,037.1 million net cash flow in 2002. The net cash flow in 2003 was primarily adjusted by (i) profit before taxation of RMB 877.1 million; (ii) depreciation expenses of RMB 890.8 million; and (iii) interest expenditure of RMB 142.8 million. As of 31 December 2003, the accounts receivable and bills receivable of the Company amounted to RMB 423.1 million, equivalent to a sales volume of approximately 14 days in 2003.

~~The~~In ~~provision~~2003, ~~for PRC income tax is calculated at~~ the ~~rate~~net ofcash ~~33%~~used ~~(2001: 33%) on the estimated assessable income of the period determined~~ in ~~accordance~~investing ~~with~~activities ~~relevant~~amounted ~~income~~to ~~tax~~RMB ~~rules~~348.6 ~~and regulations of the PRC~~million. The ~~Company~~funds were ~~did~~mainly ~~not~~used ~~carry~~for onthe ~~business~~technical ~~overseas~~improvement ~~and~~of inphenol-acetone ~~Hong Kong~~ and ~~therefore~~ethylene ~~did~~glycol ~~not incur any overseas and Hong Kong income taxes~~units.

The Company’s short-term and long-term loans are primarily obtained from PRC financial institutions. In 2003, the Company repaid a total of RMB 3,065.1 million of its short-term loans and RMB 719.8 million of its long-term loans, while it borrowed RMB 2,560.0 million in short-term loans and RMB 205.7 million in long-term loans. As of 31 December 2003, the Company’s total loans taken from banks was RMB 2,684.8 million (including RMB 1,070.0 million in short-term loans and RMB 18.4 million in long-term loans due within one year), a 27.5% decrease from the RMB 3,703.9 million in bank loans (including RMB 1,575.0 million in short-term loans and RMB 201.4 million in long-term loans due within one year) as of 31 December 2002. This was primarily due to the substantial decrease in bank loans resulting from repayment, an increase in the cash generated from operating activities, and a decrease in cash expenditure for investment as the Company did not carry out any project involving large capital expenditure in 2003.

The Company expects to incur capital expenditures of RMB 300.0 million in 2004 and of RMB 400.0 million in each of 2005 and 2006. These capital expenditures will mainly be used for the technical improvement projects of the Company. The Company believes that its net cash flow from operating activities and new bank loans will be sufficient to cover the Company’s expected capital expenditures for the above periods.

5.Gearing ~~Dividends~~Ratio

The ~~Directors~~Company’s dogearing ~~not~~ratio ~~recommend~~was 47.5% in 2003, compared with 73.8% in 2002. Such decrease was mainly due to the ~~payment~~decrease in both long-term and short-term debts caused by repayment of certain bank loans and an ~~interim~~increase ~~dividend~~in ~~for~~cash ~~the~~generated ~~Reporting~~from ~~Period~~operating ~~(2002:~~activities ~~Nil)~~in 2003.

6.The ~~Basic~~gearing ~~earnings~~ratio ~~per~~is ~~share~~calculated by dividing the total amount of both long-term and short-term bank loans by the shareholders’ equity.

~~The~~Contingent ~~calculation~~Liabilities of basic earnings per share is based on the profit attributable to shareholders for the period of RMB 192,237,000 (2002: RMB 33,074,000) and 3,374,000,000 (2002: 3,374,000,000) shares in issue during the Reporting Period.

~~Diluted~~As ~~earnings~~of ~~per~~31 ~~share~~December is2003, ~~not~~the ~~presented~~Company ashad ~~there were~~ no ~~dilutive~~significant ~~potential~~contingent ~~ordinary shares in existence during both periods~~liabilities.

7.Purchase, ~~Trade~~Sale ~~receivables~~ and ~~bills~~Investment ~~receivable~~

	At 30 June 2003		At 31 December 2002
	RMB’000		RMB’000
Trade receivables
— Third parties	380,138		346,615
— Parent companies and fellow subsidiaries	103,592		97,941
Less: Allowance for doubtful accounts	(169,151	)	(158,962	)
Subtotal	314,579		285,594
Bills receivable
— Third parties	107,227		198,034
— Parent companies and fellow subsidiaries	8,179		34,575
Subtotal	115,406		232,609
Total	429,985		518,203

For the year ended 31 December 2003, there was no material purchase, sale or investment in connection with the Company’s subsidiaries and associates.

Pledges of Assets

As of 31 December 2003, there was no significant pledge of assets by the Company.

Exposure to Fluctuations in Exchange Rates and Any Related Hedges

The Company is exposed to exchange rate risks primarily due to its foreign currency denominated long-term debt and, to a limited extent, its cash and cash equivalents being denominated in foreign currencies. The Company had not been engaged in any foreign currency hedging activities for the year ended 31 December 2003.

Prospects

Looking forward to 2004, since the international economic situation has had further improvements recently, the Board of Directors believes that internationalization will be an increasingly common phenomenon in the domestic market of China as a result of China’s accession to the WTO. The establishment and commencement of production of a number of joint venture petrochemical enterprises will not only intensify market competition, but will also exert significant influence on the production and operations of the petrochemical industry in China. Nevertheless, the Board of Directors is confident that the momentum of the continuous growth of China’s economy will further stimulate the increase in demand for petrochemical products. The Company will closely monitor the market’s development, seize market opportunities, make use of the advantages gained in the completion of the technology upgrading program, and further improve the operating results of the Company through continuous implementation of its development strategies. These strategies include:

71) Attain long-term and full-load operation of the Company’s production facilities through reinforcing production management. ~~Trade~~The ~~receivables~~Company has come upon the knowledge that long-term and ~~bills~~full-load ~~receivable~~operation ~~(Continued)~~of the Company’s production facilities is conducive to the improvement of the operating results of the Company. In 2004, the Company will institute strict technological management, reinforce process control to continuously improve the operational level, rely on technological advancement and technical innovation measures to eliminate the bottlenecks and hidden problems existing in the production facilities in order to further improve the output volume of the main products of the Company, and thereby guarantee further improvement of the Company’s operating results.

~~The~~2) ~~ageing~~Vigorously ~~analysis~~carry out technical improvements to build a technical platform for the development of ~~trade~~the ~~receivables~~Company. In 2004, the Company will further increase the technical elements in the Company’s products through continuous technical improvement, and ~~bills~~improve ~~receivable~~the isprofitability asof ~~follow:~~the Company’s products by dedicating its efforts to the development of new products; thus enabling the Company to stand at a more advantageous position in the face of intense market competition, by means of scientific and technical advancement.

	At 30 June 2003		At 31 December 2002
	RMB’000		RMB’000
Within one year	306,760		348,863
Between one and two years	43,717		92,257
Between two and three years	32,260		61,117
Over three years	216,399		174,928
Less: Allowance for doubtful accounts	(169,151	)	(158,962	)
	429,985		518,203

Build up a modern operation concept, and further improve on sales and marketing activities. In 2004, the Company will continue to reinforce customer relationship management, and gradually implement a management system based on customer performance evaluations and further enhance the after-sales services. The Company will also continue to implement sales by order strategies, to maintain efforts at perfecting technical services, to stabilize the customer list to improve the market shares of the Company’s products, to reduce logistics costs by further optimizing logistics management, and to clear logistics channels to provide better logistics services to the clients.

~~Sales~~4) ~~are~~Continuously ~~generally~~improve ~~on a~~the ~~cash~~management ~~term~~skills of the Company by reinforcing basic management. ~~Subject~~In 2004, the Company will take the opportunity to ~~negotiation~~improve its internal control system by adopting the requirements on normalizing management of listed companies promulgated by regulatory bodies in various jurisdictions, ~~credit~~in isa ~~generally~~manner ~~only~~suitable ~~available~~to ~~for~~the ~~major~~Company, ~~customers~~and ~~with~~guarantee ~~well-established~~that ~~trading~~all ~~records~~work is done in a standardized, normalized and proceduralized manner. The Company will also enhance the corporate management level and the corporate image on a full scale by facilitating information technology construction.

8.Contractual ~~Trade~~Obligations ~~payables and bills payable~~

	At 30 June 2003	At 31 December 2002
	RMB’000	RMB’000
Trade payables
— Third parties	52,287	77,852
— Parent companies and fellow subsidiaries	12,012	72,333
Subtotal	64,299	150,185
Bills payable
— Parent companies and fellow subsidiaries	100,000	130,000
Total	164,299	280,185

The following table sets forth the Company’s obligations to make future payments under contracts as of 31 December 2003:

The ageing analysis of accounts payables and bills payable is as follow:


	As of 31 December 2003 payment due by period
	Total	2004	2005	2006
	(RMB in thousands)
Contractual obligations
Short-term debts	1,170,000	1,170,000	—	—
Long-term debts	1,614,760	18,401	709,193	887,166

Total contractual obligations	2,784,760	1,188,401	709,193	887,166

	At 30 June 2003	At 31 December 2002
	RMB’000	RMB’000
Due within three months or on demand	58,923	137,477
Due after three months and within six months	100,000	130,000
Due after six months	5,376	12,708
	164,299	280,185

9.REPORT ~~Reserve~~OF ~~movement~~THE BOARD OF DIRECTORS

NoDividends ~~transfers~~and ~~have~~Proposed ~~been~~Profit ~~made~~Appropriations ~~to the statutory surplus reserve, the statutory public welfare fund nor the discretionary surplus reserve from the income statement for the period (2002: Nil).~~

~~10.~~The ~~Related~~Company ~~party~~did ~~transactions~~not declare any interim dividends for the six months ended 30 June 2003.

AOn ~~significant~~2 ~~portion~~April of2004, the ~~transactions~~Board ~~undertaken~~of byDirectors resolved to recommend the ~~Company~~distribution isof ~~with,~~a ~~and~~final dividend onto ~~terms~~all ~~determined~~shareholders byat ~~Sinopec~~RMB ~~Group~~0.05 ~~and~~per ~~Sinopec~~share ~~and~~for ~~its affiliates~~the year ended 31 December 2003, during the Annual General Meeting.

The ~~following~~shareholders ison the register of members as of 18 May 2004 will be entitled to a ~~summary~~final dividend. The Company will temporarily close the register of ~~significant~~members from 19 May ~~related~~2004 ~~party~~to ~~transactions~~18 ~~with~~June ~~Sinopec~~2004 ~~Group~~(both ~~and~~days ~~Sinopec~~inclusive), ~~and~~during ~~its~~which ~~affiliates:~~time no share transfer will be effected.

	Six-month periods ended 30 June
	2003	2002
	RMB’000	RMB’000
Sale of goods	736,011	1,076,767
Purchase of inventories	2,894,670	1,812,854
Utilities provided to the Company	504,893	492,045
Transportation and storage services provided to the Company	—	12,520
Social services (environmental protection, employee housing, health care, education, public security and other ancillary services) provided to the Company	31,940	31,920
Construction and repair services provided to the Company	113	7,110
Interest expenses paid	1,612	2,684
Interest income received	148	78
Technological development fees received	9,650	22,300
Insurance premium paid	23,975	12,067

In order to qualify for the distribution of the final dividend, all transfer forms accompanied by relevant share certificates must be lodged with the share transfer registry of the Company (Hong Kong Securities Clearing Company Limited (“HKSCC”), at 19/F, Hopewell Centre, 183 Queen’s Road, Hong Kong) no later than 4:00 p.m. of the last transaction day immediately preceding the date of suspending the register of members for share transfer, i.e., 18 May 2004.

Upon the approval of shareholders at the Annual General Meeting to be held on 18 June 2004, the proposed final dividend for the year ended 31 December 2003 will be a total of RMB 168.7 million, which will be distributed to qualified shareholders on or before 2 July 2004.

Connected Transactions

As stated in the prospectus of the Company (the “Prospectus”) issued in June 1997 in connection with its global public offering, SEHK has granted conditional waivers to the Company from strict compliance with the Rules Governing the Listing of Securities on the SEHK (“Listing Rules”) in respect of certain connected transactions mentioned in the Prospectus.

The independent non-executive directors confirm that during the year ended 31 December 2003, (i) relevant connected transactions were entered into by the Company in the ordinary and usual course of its business, either on normal commercial terms or on terms that are otherwise fair and reasonable so far as the shareholders of the Company are concerned; and either in accordance with the terms of the agreement governing each such transaction or on terms no less favorable than terms available to/from independent third parties, and (ii) the amount of each category of the connected transaction has not exceeded its relevant cap as stated in the Prospectus.

The auditors of the Company have reviewed the transactions described above and have confirmed with the Board of Directors that:

(a)	the transactions described above have been approved by the Board of Directors; and

(b)

the transactions described above have been entered into in accordance with the terms of the agreements governing such transactions, or where there is no such agreement, nothing came to their attention that caused them to believe the transactions described above were not conducted on normal commercial terms (which expression was applied by reference to transactions of a similar nature made by similar entities within the PRC).

~~11.~~Purchase, ~~Capital~~Sale ~~commitments~~or Redemption of the Company’s Listed Securities

~~Capital~~For ~~commitments primarily relate to~~ the ~~purchase~~year orended ~~construction~~31 ofDecember ~~production~~2003, ~~facilities.~~there ~~Capital~~was ~~commitments~~no ~~outstanding~~purchase, atsale, 30redemption ~~June~~or ~~2003 not~~cancellation ~~provided~~of ~~for~~any inof the ~~accounts~~Company’s ~~were~~listed assecurities. ~~follow:~~

	At 30 June 2003	At 31 December 2002
	RMB’000	RMB’000
Authorised and contracted for	108,939	67,385
Authorised but not contracted for	17,322	—
	126,261	67,385

Major Litigation or Arbitration

~~12.~~For ~~Comparative~~the ~~figures~~year ended 31 December 2003, the Company was not involved in any material litigation or arbitration.

~~Certain~~Disclosure ~~comparative~~of ~~figures~~Major Events ~~have been reclassified to conform with the current Reporting Period’s presentation.~~

1)	At the 2002 Annual General Meeting of the Company held on 27 June 2003, the Company decided to continue appointing KPMG and KPMG Huazhen as its international and domestic auditor, respectively.

At the 2002 Annual General Meeting of the Company held on 27 June 2003, the following 12 persons were elected to comprise the third session of the Board of Directors : Du Guosheng, Wang Yuying, Wang Yongjian, Yang Qingyu, Wang Ruihua, Xu Hongxing, Cui Guoqi, Xiang Hanyin, Zhang Haoruo, Zhang Yanning, Liu Haiyan and Yang Xuefeng, among whom, Mr. Zhang Haoruo, Mr. Zhang Yanning, Mr. Liu Haiyan and Mr. Yang Xuefeng were elected as non-executive independent directors of the Company; the following 9 persons were elected to comprise the third session of the Board of Supervisors of the Company: Shang Bo, Ren Jinxiang, Wang Guifen, Wang Shulan, Liu Changwei, Rong Guozhong, Zhang Jianjun, Geng Dianming and Zhao Shaohua, among whom, Mr. Geng Dianming and Mr. Zhao Shaohua were elected as independent supervisors of the Company.

At the first meeting for the third session of the Board of Directors held on 27 June 2003, Mr. Du Guosheng was elected as the Chairman of the Board of Directors, and Mr. Yang Qingyu was elected as the Vice Chairman of the Board of Directors of the Company. It was resolved that Mr. Xu Hongxing be appointed as the General Manager of the Company, Mr. Zhao Qichao be appointed as the Deputy General Manager of the Company, Mr. Guo Hong be appointed as the Chief Financial Officer of the Company, and Mr. Zhou Quansheng be appointed as the Board Secretary of the Company. It was resolved that an audit committee be comprised of Zhang Haoruo, Zhang Yanning, Liu Haiyan and Yang Xuefeng; Mr. Yang Xuefeng was elected as the Chairman of the audit committee.

4)	At the first meeting for the third session of the Board of Supervisors of the Company held on 27 June 2003, Mr. Shang Bo was elected as the Chairman of the Board of Supervisors.

Audit Committee

The Board of Directors has established an audit committee in 2002. For the year ended 31 December 2003, the audit committee was composed of Mr. Zhang Haoruo, Mr. Zhang Yanning, Mr. Liu Haiyan and Mr. Yang Xuefeng, the independent directors of the Company. Mr. Yang Xuefeng was elected as the Chairman of the audit committee. The audit committee is responsible for the review and supervision of the Company’s financial reporting process and internal control as set out in the Code of Best Practice. For the year ended 31 December 2003, the audit committee held two meetings. The audit committee, together with the management of the Company, has reviewed the accounting policies adopted by the Company, and has discussed about the contents of the auditing, internal supervising and the financial statements.

~~kpmg~~Employees’ Benefit, Retirement Scheme and Employee Housing Subsidy

~~INDEPENDENT~~As ~~REVIEW~~of ~~REPORT~~31 December 2003, the Company had 10,207 employees as compared with 10,366 employees in 2002, representing a decrease of 159 employees. In addition, the Company offered its employees the opportunities for education and training based upon its development and actual performance of the employees.

ToUnder the ~~Board~~relevant laws and regulations of ~~Directors~~the PRC, the policy for the allocation of ~~Sinopec~~housing as ~~Beijing~~welfare ~~Yanhua~~benefits ~~Petrochemical~~has ceased to apply. The Company ~~Limited~~is considering detailed measures for payment of housing subsidies through increasing wages or making lump sum payments to qualified employees. Once determined, these measures will be reflected in the financial statements of the Company of the relevant year. As disclosed in the Company’s Prospectus dated 17 June 1997, Yanshan Company is willing to pay such a lump sum payment. For this purpose, the Company is not expecting any cash outflows.

~~Introduction~~Basic Medical Insurance for Employees

WeAccording ~~have~~to the Beijing Municipal Government Order (2001) No. 68, and in line with the arrangements of Beijing Municipal Labor Security Authority, the Company has implemented the Regulations of Beijing Municipality on Basic Medical Insurance (the “Regulations”) on 1 September 2002. Prior to the implementation of such Regulations, the Company has been ~~instructed~~complying with relevant State regulations by drawing 14% of the ~~company~~employees’ total current wages as welfare fees to ~~review~~be used for the ~~interim~~medical ~~financial~~expenditure ~~report~~of the Company, whilst relevant welfare fees were set out onin the ~~pages~~labor 2costs of the Company for the specific current term. After the implementation of the Regulations, the medical insurance fees to 12be paid represented 9% of the total wages, and such amount has been included in the 14% employee welfare fees to be drawn by the Company. As a result, there will be no impact on the income statement and the balance sheet of the Company upon implementation of the Regulations.

~~Respective~~Impact ~~responsibilities~~ of ~~directors~~the ~~and~~Recent ~~auditors~~Economic Development

~~The~~Unstable ~~Rules~~factors ~~Governing~~inevitably exist in the ~~Listing~~international ofeconomy, ~~Securities~~which might bring adverse impact on ~~The~~the ~~Stock~~production ~~Exchange~~and operation of ~~Hong~~the ~~Kong~~Company ~~Limited~~in ~~require~~the near future. Nevertheless, the ~~preparation~~Company believes that the steady growth of anChina’s ~~interim~~economy ~~financial~~will ~~report~~undoubtedly lead to bea further increase in ~~compliance~~the ~~with~~ demand for the ~~relevant~~products ~~provisions~~of ~~thereof~~the ~~and~~Company, ~~International~~whilst ~~Accounting~~the ~~Standard~~commissioning 34of ~~“Interim~~the ~~financial~~ethylene ~~reporting”~~facilities ~~adopted~~with by710,000 tons capacity will elaborate the ~~International~~scale ~~Accounting~~merit ~~Standards~~of ~~Board~~the Company. The ~~interim~~Company ~~financial~~believes ~~report~~that, isthrough the ~~responsibility~~implementation of, ~~and~~various ~~has~~effective ~~been~~operating ~~approved by~~and development strategies, it will be able to provide satisfactory returns to the ~~directors~~shareholders.

ItTrust isDeposits our responsibility to form an independent conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

~~Review~~As ~~work~~of ~~performed~~31 December 2003, the Company did not have any trust deposits with any financial institutions in the PRC. The Company has not encountered any difficulty with respects to withdrawing its deposits.

WeCompliance ~~conducted our review in accordance~~ with ~~Statement of Auditing Standards 700 “Engagements to review interim financial reports” issued by~~ the ~~Hong~~Code ~~Kong Society~~ of ~~Accountants.~~Best APractice review consists principally of making enquiries of management and applying analytical procedures to the interim financial report and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the interim financial report.

~~Review~~The ~~conclusion~~Board of Directors believes that, for the year ended 31 December 2003, the Company complied with the Code of Best Practice as set out in Appendix 14 of the Listing Rules.

On the basis of our review which does not constitute an audit, we are not aware of any material modifications that should be made to the interim financial report for the six-month period ended 30 June 2003.

KPMG

Certified Public Accountants

China, Hong Kong, 15 August 2003

~~MANAGEMENT~~PUBLICATION ~~DISCUSSION~~OF ~~AND~~DETAILED ~~ANALYSIS~~RESULTS ANNOUNCEMENT ON SEHK’S WEBSITE

~~Operation~~A ~~Review~~detailed Annual Results Announcement containing all the information in respect of the Company required by paragraphs 45(1) to 45(3) of Appendix 16 of the Listing Rules will be published on SEHK’s website in due course.

InRESIGNATION ~~the~~OF ~~first~~AN ~~half~~INDEPENDENT ofNON-EXECUTIVE ~~2003,~~DIRECTOR the sales of the Company was RMB 5,493.5 million, representing an increase of 30.0% as compared with that of the same period in the previous year. During the Reporting Period, the economy of the PRC continued to grow at great momentum despite of the occurrence of SARS in the second quarter, which had limited impact on the growth of the PRC economy. The demand for and price of petrochemical products in the domestic market remained at a comparably high level. The average price of each of the eight principal products of the Company increased by 27.8% as compared with those of the same period in the previous year.

~~During~~The ~~the~~Board ~~first~~of ~~half~~Directors of ~~2003,~~ the Company ~~continued~~wishes to ~~develop~~announce ~~and manufacture~~that ~~specialised~~Mr. ~~products~~Zhang toHaoruo, ~~improve~~an ~~its~~independent ~~product~~non-executive ~~mix~~director ~~in order to maintain the competitiveness~~ of the Company~~’s products. For the same period~~, ~~the~~passed ~~percentage~~away ~~sales~~on of27 ~~specialised~~March ~~products, which in general command higher margins than generic products, to total sales of resins and plastics was 65~~2004.~~4%.~~

The ~~following~~ ~~table~~Board ~~sets~~of ~~out~~Directors of the ~~comparative~~Company ~~figures~~would ~~for~~like to take this opportunity to extend their deepest sympathy and condolences to the ~~sales~~family of the ~~Company’s~~late ~~principal~~Mr. ~~products~~Zhang and express their gratitude for ~~the~~his ~~six~~devotion ~~months~~and ~~ended~~dedication 30to ~~June~~the ~~2003~~Company ~~and~~during ~~2002,~~his ~~respectively:~~tenure of office.

	For the six-month periods ended 30 June
	2003 Sales	Percentage ofCompany’sSales	2002 Sales	Percentage ofCompany’sSales
	(RMB ‘000)	(%)	(RMB ‘000)	(%)
Principal Products
Resins and Plastics	2,902,849	52.8	2,509,283	59.4
Synthetic Rubber	878,229	16.0	587,923	13.9
Basic Organic Chemical Products	1,406,757	25.6	884,260	20.9
Others	305,647	5.6	242,904	5.8
Total	5,493,482	100.0	4,224,370	100.0

It is not expected that there will be any disruption to the operations of the Company due to Mr. Zhang’s resignation. The Company currently has no intention of making any arrangement to fill the resulting vacancy. As the Company will still continue to have three independent non-excutive directors, it is in full compliance with Rule 3.19(2) of the Listing Rules.

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

It is proposed that the Articles of Association of the Company be amended to reflect the amended provisions of Appendix 3 to the Listing Rules. Such amendments involve conformation with the following:

(1)

where any shareholder is, under the Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted;

(2)	the minimum 7-day period for lodgment by any shareholder of the Company of the notice to nominate a director shall commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than 7 days before the date of such meeting; and

(3)	directors shall abstain from voting at the board meeting on any matter in which any of his associates has a material interest and are not to be counted towards the quorum of the relevant board meeting.

The above proposed amendments are subject to the approval of the shareholders of the Company in the Annual General Meeting by way of special resolution.

By Order of the Board of Directors

Du Guosheng

Chairman

2 April 2004, Beijing, the PRC

As at the date of the announcement, the Board of Directors of the Company is comprised of Mr. Du Guosheng, Mr. Yang Qingyu and Mr. Xu Hongxing as executive directors, Ms. Wang Yuying, Mr. Wang Yongjian, Mr. Wang Ruihua, Mr. Cui Guoqi and Mr.Xiang Hanyin as non-executive directors, and Mr. Zhang Yanning, Mr. Liu Haiyan and Mr. Yang Xuefeng as independent non-executive directors.

~~The~~NOTICE ~~following~~OF ~~table~~ANNUAL ~~shows~~GENERAL ~~the~~MEETING ~~percentage of main business-related operating expenses in relation to the total sales of the Company:~~

	Six-month periods ended 30 June
	2003	2002
	(%)	(%)
Sales	100.0	100.0
Less expenses:
Raw materials	62.1	62.5
Fuel and power	11.0	13.2
Depreciation	8.2	9.6
Salary and bonus	1.8	2.1
Other production expenses	4.8	4.1
Selling, general and administrative expenses (exclusive of depreciation, salary and bonus)	5.0	4.3
Operating profit ratio	7.1	4.2

NOTICE IS HEREBY GIVEN that the 2003 Annual General Meeting of the Company will be held on Friday, 18 June 2004, at No.1 Beice, Yingfeng Erli, Yanshan, Fangshan District, Beijing, the PRC at 9:00 a.m. sharp to consider, approve and authorize the following matters:

InAs ~~the~~general first half 2003, the cost of goods sold of the Company increased from RMB3,821.2 million to RMB4,783.4 million, representing an increase of 25.2% as compared with that of the same period in 2002. This was mainly attributable toresolutions: (i) the increase in the price of cracking feedstock, which resulted in the corresponding increase in the expenses for the raw materials; (ii) increased depreciation caused by the completion and utilisation of the ethylene production unit expansion project; (iii) increase in other production expenses as a result of the necessary shutdown and overhaul of certain units. Costs of cracking feedstock represents the largest portion of operational costs and accounted for 52.5% and 47.2% of the sales costs for 2003 and the first six months of 2002 respectively. In the first half of 2003, the costs for cracking feedstock amounted to RMB2,509.2 million, representing an increase of RMB707.1 million from RMB1,802.1 million in the first half of 2002, or an increase of 39.2%. The average price of cracking feedstock in the first half of 2003 increased by 28.8% as compared to that of the same period last year.

~~For the Reporting Period, the Company’s selling, general and administrative expenses increased from RMB230~~1.0 ~~million~~ to ~~RMB315.6~~consider ~~million~~and asapprove ~~compared with~~ the ~~same period~~2003 inreport ~~2002,~~of ~~representing~~the anBoard ~~increase~~ of ~~37.2%,~~Directors ~~which mainly resulted from the increase~~ of the Company~~’s bad debt provisions by approximately RMB31 million.~~ ;

~~For the Reporting Period, financial expenses decreased from RMB113.~~2 ~~million to RMB90~~.3 ~~million as compared~~ to ~~that~~consider ~~of the same period in 2002, representing a decrease of 20.2%, mainly attributable to the decrease in interest expense as a result of decrease in the long-term~~ and ~~short-term~~approve ~~bank loans. Profit from ordinary activities before taxation amounted to RMB297.7 million, representing an increase of 356.6% from RMB65.2 million for~~ the ~~same period in 2002. The Company’s net profit for the first six months of~~ 2003 ~~was~~report ~~RMB192.2 million, representing a net margin~~ of ~~3.5%, as compared to~~ the ~~net~~Board ~~profit~~ of ~~RMB33.1 million,~~Supervisors ~~with a net margin~~ of ~~0.8%, in~~ the ~~same period of 2002.~~ Company;

3.	to consider and approve the audited financial statements of the Company for the year ended 31 December 2003;

4.	to consider and approve the proposed profit appropriation plan of the Company for 2003;

5.	to determine the remuneration of the directors and supervisors of the Company for 2004;

6.	to consider and approve the appointment of KPMG and KPMG Huazhen as the Company’s international and domestic auditors, respectively, for the fiscal year 2004, and to authorize the Board of Directors of the Company to determine their remuneration; and

7.	to transact any further business, if necessary.

As special resolutions:

To consider and approve the amendments to the Articles of Association of the Company in accordance with Appendix 3 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (“Listing Rules”) and resulting from the resignation of Mr. Zhang Haoruo. Details of the amendments to the Articles of Association are set out as follows:

(1)	That the following be added to Article 72 as its paragraph 2:

“Where any shareholder is, under the Listing Rules (as such term is defined in The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited), required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.”

~~Sources~~(2) That paragraph 2 of ~~Working~~Article ~~Capital~~95 be deleted and ~~Other~~replaced ~~Capitals~~by the following:

“The ~~funding~~minimum length of the ~~Company~~period, isduring ~~sourced~~which ~~from~~notice to the ~~cashflow~~Company ~~from~~of ~~its~~the ~~operation~~intention ~~and~~to ~~bank~~propose ~~loans,~~a person for election as a director and during which ~~were~~notice ~~used~~to ~~mainly~~the Company by such person of his willingness to ~~cover~~be ~~its~~elected ~~capital~~may be given, will be at least 7 days. The aforesaid period for lodgment of the notices will commence no earlier than the day after the despatch of the notice of the meeting ~~expenditure~~appointed for such election and ~~working~~end ~~capital~~no later than 7 days prior to the date of such meeting.”

During the first half of 2003, the net cashflow from the Company’s operations amounted to RMB827.4 million, representing an increase of RMB429.4 million as compared with that of the same period in 2002 which mainly includes (i3) ~~RMB297.7~~That ~~million as profit before taxation; (ii) RMB450.4 million as total depreciation costs; and (iii) RMB127.4 million from~~ the ~~reduction~~following ofbe ~~inventory.~~added ~~The increase in the cashflow from the operations helps~~ to ~~reduce~~Article ~~the~~104 ~~bank~~as ~~loans~~its ~~and~~paragraph ~~reduce the interest expenditure of the Company.~~ 4:

~~The~~“Subject ~~Company’s~~to ~~short-term~~the ~~and~~exceptions ~~long-term~~set ~~loans~~out ~~are~~in ~~mainly~~Note ~~from~~4(1) ~~financial~~to ~~institutions in~~Appendix 3 of the ~~PRC.~~Listing AsRules, ofa 30director ~~June~~shall ~~2003,~~not ~~the~~vote ~~Company’s~~on ~~total~~any ~~outstanding~~board ~~loans~~resolution ~~decreased~~approving byany contract ~~RMB788.1~~or ~~million~~arrangement ~~from~~or ~~RMB~~any ~~4,083.9~~other ~~million~~proposal asin ofwhich 31he ~~December~~or ~~2002~~any of his associates (~~RMB2,156.4~~as ~~million~~such term is defined in The Rules Governing the Listing of ~~which~~Securities ison ~~attributable~~The toStock ~~short-term~~Exchange ~~loans~~of Hong Kong Limited) tohas ~~RMB3,295.8~~a ~~million~~material interest nor shall he be counted ~~(RMB1,576.4~~in ~~million~~the ofquorum ~~which~~present isat ~~attributable~~the tosame ~~short-term~~board ~~loans)~~meeting.”

~~Outlook for~~By ~~the~~Order ~~Second~~of ~~Half~~the Board of ~~2003~~Directors

Over the first six months of 2003, the PRC’s GDP increased by 8.2%. The economy of the PRC is expected to improve further in the second half of 2003, which will be beneficial in maintaining an increase in the demand for petrochemical products in the PRC.

The Company will fully utilise its unique position in the market in its continuing efforts to improve the efficiency of production through technical development and innovations. The Company also aims to increase the added value of the products through reasonable readjustment of the product mix on the basis of adequate market analysis and enhance the economic efficiency of the Company by strengthening marketing strategies. The Company’s objective is to produce a satisfactory return to the shareholders of the Company.

Interim Dividends

The Company’s board of directors has decided not to declare any interim dividends.

Gearing Ratio

In the first half of 2003, the Company’s gearing ratio was 60.3% (in 2002: 73.8%). The decrease in the gearing ratio was mainly due to a decrease in both long-term and short-term debts of the Company during the Reporting Period. The gearing ratio is calculated by dividing the total of long-term and short-term bank loans by the total of the shareholders’ equity.

Contingent Liabilities

As of 30 June, 2003, the Company had no significant contingent liabilities.

Purchase, Sale and Investment

During the Reporting Period, there was no material purchase, sale or investment in connection with the Company’s subsidiaries and associates.

Pledges of Assets

During the Reporting Period, there was no material pledge of assets.

Exposure to Fluctuations in Exchange Rates and Any Related Hedges

The Company is exposed to foreign exchange currency risk mainly as a result of its foreign currency denominated long-term debt and, to a limited extent, cash and cash equivalents denominated in foreign currencies. The Company had no foreign currency hedging activity during the Reporting Period.

CAPITAL STRUCTURE

The Company’s capital structure as of 30 June 2003 was as follows:

	Number of shares	Percentage oftotal issuedshare capital
Class of shares
Domestic shares held by Sinopec	2,362,000,000	70.0	%
Foreign shares (in the form of H shares)	1,012,000,000	30.0	%
Total	3,374,000,000	100.0	%

SUBSTANTIAL SHAREHOLDERS

As of 30 June 2003, shareholders holding over 10% of the share capital of the Company are as follows:

	Number of shares	Percentage oftotal issuedshare capital
Class of shares
Sinopec	2,362,000,000	70.0	%
HKSCC Nominees Limited	978,320,999	29.0	%

PURCHASE, SALE AND REDEMPTION OF THE LISTED SHARES OF THE COMPANY

The Company did not purchase, sell or redeem any of the listed shares of the Company during the Reporting Period.

DIRECTORS’ AND SUPERVISORS’ INTERESTS

As of 30 June 2003, none of the Company’s directors, supervisors or chief executives, including their spouses and/or children under 18 years of age, received beneficial interest in the issued shares or any other rights to subscribe for shares in the Company.

UNIFORM INCOME TAX RATE AND LOCAL TAXATION BENEFITS

The Company is subject to the PRC’s income tax rate of 33%. The Company is not aware of any governmental policy changes that will potentially affect the Company’s tax rate.

TRUST DEPOSIT

As of 30 June 2003, the Company did not have any trust deposits with any financial institutions in the PRC. The Company has not encountered any withdrawal difficulties with respect to its deposits.

EMPLOYEE HOUSING SCHEME

In accordance to the relevant laws and regulations of the PRC, the policy for the allocation of housing as welfare benefits has ceased to apply. The Company is considering measures for payment of housing subsidies including increasing wages or making a lump sum payment to qualified employees. Once determined, these measures will be reflected in the accounts of the next relevant year. As disclosed in the Company’s prospectus dated on 17 June 1997, the predecessor of the Company is willing to pay such a lump sum payment. For this purpose, the Company is not expecting any cash outflows.

DISCLOSURE OF MAJOR EVENTS

(1) At the Shareholders’ Meeting of the Company for Year 2002 held on 27 June 2003, 12 people including Du Guosheng, Wang Yuying, Wang Yongjian, Yang Qingyu, Wang Ruihua, Xu Hongxing, Cui Guoqi, Xiang Hanyin, Yang Xuefeng, Zhang Yanning, Liu Haiyan and Zhang Haoruo comprised the third session of board of directors of the Company, amongst whom, Mr. Yang Xuefeng, Mr. Zhang Yanning, Mr. Liu Haiyan and Mr. Zhang Haoruo acted as independent non-executive directors of the Company; nine people including Shang Bo, Ren Jinxiang, Wang Guifen, Wang Shulan, Liu Changwei, Rong Guozhong, Zhang Jianjun, Geng Dianming and Zhao Shaohua comprise of the third session of the board of supervisors of the Company, among whom, Mr. Geng Dianming and Mr. Zhao Shaohua acted as the independent supervisors of the Company.

(2) On the first meeting of the third session of the board of directors held on 27 June 2003, Mr. Du Guosheng was elected as the Chairman of the board of the Company, and Mr. Yang Qingyu was elected as the vice chairman of the board. It was resolved that, Mr. Xu Hongxing is engaged as the general manager of the Company, and Mr. Zhao Qichao the deputy general manager of the Company; Mr. Guo Hong was retained as the chief financial officer of the Company, and Mr. Zhou Quansheng the secretary of the board of the company; and it was resolved that an audit committee was established comprising of Yang Xuefeng, Zhang Yanning, Liu Haiyan and Zhang Haoruo, and Mr. Yang Xuefeng was elected as the chair person of the audit committee.

(3) On the first meeting of the third session of the board of supervisors held on 27 June 2003, Mr. Shang Bo was elected as the chairman of the board of supervisors.

CODE OF BEST PRACTICE

None of the Company’s directors is aware of any information that would reasonably indicate that the Company is not or was not, during the Reporting Period, in compliance with the Code of Best Practice as set out in Appendix 14 of the Listing Rules.

On behalf of the board of directors

Du Guosheng

Chairman

2 April 2004, Beijing, the PRC

15The ~~August~~Registered ~~2003~~Office:

~~DOCUMENTS~~No. ~~AVAILABLE~~1 ~~FOR~~Beice, ~~INSPECTION~~Yingfeng Erli,

~~The full text of the Interim Financial Report signed by the Chairman is available for inspection at the company secretary office, No. 1 Beice, Yingfeng Erli,~~ Yanshan, Fangshan District, ~~Beijing, the PRC.~~

~~Sinopec~~ Beijing, ~~Yanhua~~the ~~Petrochemical Company Limited~~ PRC

~~No.~~Postal 1Code:102500 ~~Beice, Yingfeng Erli, Yanshan, Fangshan District, Beijing, People’s Republic of China~~

Notes:

(A)

Holders of the Company’s overseas listed foreign invested shares (in the form of H Shares) whose names appear on the Register of Members of the Company at close of business on Tuesday, 18 May, 2004 are entitled to attend the Annual General Meeting upon presentation of their passports or other identity papers documenting their authorization.

(B)

According to the Company’s Articles of Association, the register of members of the Company will be closed 30 days before the date of the Annual General Meeting; therefore, such register will be closed from Wednesday, 19 May 2004 to Friday, 18 June 2004 (both days inclusive), during which time no H share transfer will be affected.

(C)	Each shareholder who has the right to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies, whether they are members or not, to attend and vote on his behalf at the Annual General Meeting.

(D)	A proxy of a shareholder who has appointed more than one proxy may only vote on a poll.

(E)

The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney. If that instrument is signed by an attorney of the appointor, the power of attorney must be notarially certified. To be valid, the notarially certified power of attorney and the form of proxy must be delivered to the registered office of the Company not less than 24 hours before the time appointed for the holding of the Annual General Meeting.

(F)	Shareholders intending to attend the Annual General Meeting should return the reply slip for attending the Annual General Meeting to the Secretary’s Office of the Company before Friday, 28 May 2004 personally or by mail, cable or facsimile.

(G)	Shareholders attending the Annual General Meeting are responsible for their own transportation and accommodation expenses.

(H)	The details of the Secretary’s Office of the Company are as follows:

No. 1 Beice, Yingfeng Erli,

Yanshan, Fangshan District,

Beijing, the PRC

Postal Code: 102500

Tel: (~~0086~~8610) 106934-5924 ~~69345924~~

Fax: (~~0086~~8610) 106934-5448 ~~69345448~~

20Please also refer to the published version of this announcement in the (South China Morning Post)

Filing Compare · SINOPEC BEIJING YANHUA PETROCHEMICAL CO LTD