TIDMFTO
RNS Number : 2517Y
Fortune Oil PLC
28 November 2014
28 November 2014
FORTUNE OIL PLC
("Fortune Oil", "the Company" or together with its subsidiaries
"the Group")
Interim Report Announcement for the six months ended 30
September 2014 ("H1 FY2015")
(The six months ended 30 September 2013 is referred to as "H1
FY2014")
Fortune Oil's investments supply crude oil, transportation fuels
and natural gas in the People's Republic of China. Fortune Oil is
quoted on the Main Market of the London Stock Exchange and has its
headquarters in Hong Kong.
FINANCIAL HIGHLIGHTS
-- Revenues including share of jointly controlled entities and
associates increased by 28.7 per cent to GBP582.5 million (H1
FY2014: GBP452.7 million).
-- Group revenues from all operations excluding jointly
controlled entities and associates increased to GBP162.6 million
(H1 FY2014: GBP149.3 million).
-- Profit after tax attributable to Fortune Oil's shareholders
decreased 96.0 per cent to GBP8.9 million (H1 FY2014: GBP223.2
million). The decrease is due to the inclusion of other gains and
losses of GBP214.9 million in H1 FY2014 in respect of gain on
disposal of subsidiaries and the gain on revaluation of China Gas
Holdings Limited ("CGH") shares on the date of treating CGH as an
associate.
-- Share in Bluesky Aviation Refuelling ("Bluesky"); net profit
increased 12.5 per cent to GBP6.3 million (H1 FY2014: GBP5.6
million).
-- Net profit contribution from the investment in CGH was GBP6.7
million (H1 FY2014: GBP1.0 million after excluding the other gain
of GBP95.3 million).
-- Basic earnings per share was 0.36p (H1 FY2014: 11.73p). Basic
earnings per share, excluding other gains and losses of the Group
and including share of jointly controlled entities, was 0.36p (H1
FY2014: 0.44p).
-- Net assets further increased to GBP360.2 million as at 30
September 2014 (31 March 2014: GBP343.2 million).
OPERATIONAL HIGHLIGHTS
-- Bluesky aviation fuel sales increased 11.9 per cent to 1.9
million tonnes (H1 FY2014: 1.7 million tonnes).
-- Maoming Single Point Mooring ("SPM") sales volumes in H1
FY2015 were 5.2 million tonnes. Sales volumes are unavailable for
the comparable period in 2014 as a result of the expiry of the
previous joint venture agreement which meant that after February
2013 the Company had no effective financial interest in the
operations of the SPM until the new joint venture became effective
from 1 January 2014.
-- CGH increased sales by 49 per cent to GBP1.2 billion and
natural gas volumes by 16.8 per cent to 4.1 billion cubic metres.
The CGH network increased to 243 city concessions. CGH profits for
the period were GBP150.8 million an increase of 31.8 per cent.
-- Trading sales volumes increased 89.7 per cent to 261,800
tonnes (H1 FY2014: 138,000 tonnes).
OUTLOOK
-- The slow down in China's economic growth is impacting on
China's blended energy consumption in Q3 2014 which increased by
only 3.4 per cent year on year and was 2.8 per cent lower than Q2
2014 indicating a slow down in crude oil demand and associated
refined products including petrol and diesel.
-- Bluesky is required to keep sufficient storage to supply jet
fuel at each of its airports for approximately two weeks to ensure
that operations remain uninterrupted. Recent significant changes in
the crude oil prices may have a negative impact on the value of the
jet fuel storage and Bluesky continues to take steps to mitigate
against any potential stock related risk but not all risk can be
hedged against.
-- China's government raised natural gas prices around 20 per
cent on 1 September 2014 in line with the policy to bring China's
natural gas price in line with international market prices. This
on-going policy has the potential to adversely impact on the demand
for natural gas.
Mr Qian Benyuan, Chairman of Fortune Oil, commented:
"2014 and 2015 see China moving towards becoming a developed
economy, with greater stress on value for money investing,
environmental and health protection and lower overall growth rates.
We see this in the relationships we have with both state owned and
private corporations and in the opportunities our investee
companies are seeing. The infrastructure and services we provide
will continue to be in demand and the opportunities for further
investment, both follow on and into new projects, will continue but
we will be adapting to this new environment. We continue to monitor
the impact of the slow down in China's GDP growth and the recent
dramatic decrease in the oil price has increased our inventory
risk. At the same time the slowdown in the growth of China's
property market will reduce the rate of gas connections and
associated fees in city gas concessions. We will therefore be
working differently to deliver continued growth within these new
constraints."
ENQUIRIES:
Fortune Oil PLC Tel: 00 852 2583 3125
Tian Jun - Acting Chief Executive Tel: 00 852 2583 3120
Bill Mok - Chief Financial Officer
VSA Tel: 020 3005 5004
Andrew Raca - Head of Corporate
Finance
FORTUNE OIL PLC
("Fortune Oil", "the Company" or together with its subsidiaries
"the Group")
Interim Report Announcement for the six months ended 30
September 2014 ("H1 FY2015")
(The six months ended 30 September 2013 is referred to as "H1
FY2014")
SUMMARY OF UNAUDITED RESULTS
Financial GBP million H1 FY2015 H1 FY2014 Change %
----------------------------------------------- ---------- ---------- ---------
Revenue including share of jointly controlled
entities and associates 582.5 452.7 28.7
----------------------------------------------- ---------- ---------- ---------
Profit after tax 8.9 225.2 (96.0)
----------------------------------------------- ---------- ---------- ---------
Profit attributable to owners of the parent 8.9 223.2 (96.0)
----------------------------------------------- ---------- ---------- ---------
Profit attributable to owners of the parent
excluding other gain 8.9 8.3 7.7
----------------------------------------------- ---------- ---------- ---------
Net Assets 360.2* 343.2** 5.0
----------------------------------------------- ---------- ---------- ---------
Net Assets attributable to the owners
of the parent 357.8* 340.8** 5.0
----------------------------------------------- ---------- ---------- ---------
Shareholders
----------------------------------------------- ---------- ---------- ---------
Issued Shares, millions of shares 2,587* 2,587** -
----------------------------------------------- ---------- ---------- ---------
Earnings per Share (pence) 0.36p 11.73p (96.9)
----------------------------------------------- ---------- ---------- ---------
* 30 September 2014.
** 31 March 2014.
Group Performance
Our goal is to find attractive value enhancing investment
opportunities and to manage the investments made to extract value
for our shareholders. We work with our investee companies'
management to improve their competitive financial performance and
increase the value for our shareholders.
-- Group revenues including share of jointly controlled entities
and associates increased by 28.7 per cent to GBP582.5 million (H1
FY2014: GBP452.7 million). This was largely driven by the inclusion
of the share in CGH's revenue post the completion of the Fortune
Gas Investment Holdings Limited ("FGIH") transaction, growth in the
trading businesses and the establishment of the new Maoming SPM
joint venture, offsetting the decrease due to exclusion of Fortune
Oil's natural gas business after completion of the FGIH
transaction.
-- Group revenues from all operations excluding jointly
controlled entities and associates increased to GBP162.6 million
(H1 FY2014: GBP149.3 million).
-- Net profit attributable to owners of the parent decreased
96.0 per cent to GBP8.9 million (H1 FY2014: GBP223.2 million). The
decrease is due to the inclusion of other gains and losses of
GBP214.9 million in H1 FY2014 in respect of gain on disposal of
subsidiaries and the gain on revaluation of CGH shares on the date
of treating CGH as an associate.
-- Basic earnings per share was 0.36p (H1 FY2014: 11.73p) and
basic earnings per share, excluding other gains and losses
(including share of other gains in jointly controlled entities) was
0.36p (H1 FY2014: 0.44p). Basic earnings per share from continuing
operations decreased to 0.36p (H1 FY2014: 5.17p).
-- Net assets further increased to GBP360.2 million as at 30
September 2014 (31 March 2014: GBP343.2 million).
-- The Company increased its interest in CGH through the
acquisition of 13,252,000 shares from China Petroleum &
Chemicals Corporation ("Sinopec Corp.") as part of a share
placement. The shares were initially allotted to First Level
Holdings Limited ("FLH"), a substantial shareholder of the Company
and have been subsequently been transferred to the Company at cost
(i.e. no profit or loss). The acquisition represented 0.26 per cent
of the issued capital of CGH.
-- The Company is principally an investment holding company with
dividend income from each of its business units as the core cash
inflow to the Company. The actual dividend income received is
expected to be substantially lower than the "Profit for the
year/period". Furthermore, our future dividend payments will be
dependent on dividend income from each business unit. Their
dividend policy and the amount of dividends to be paid are subject
to the decision made by the board of each of these business
units.
Aviation Refuelling - Bluesky
Our performance
-- The Group's share of joint venture revenues increased to
GBP283.3 million (H1 FY2014: GBP277.9 million).
-- The Group's share of net profit increased 12.5 per cent to
GBP6.3 million (H1 FY2014: GBP5.6 million).
-- Sales volumes increased 11.9 per cent to 1.9 million tonnes
(H1 FY2014: 1.7 million tonnes), driven by the continued increase
in domestic and international air travel demand.
Outlook
-- The China aviation market is expected to continue to grow
driven both by increased business travel but also by increased
leisure travel by an increasingly wealthy and mobile
population.
-- Bluesky is required to keep sufficient storage to supply jet
fuel at each of its airports for approximately two weeks to ensure
that operations remain uninterrupted. Recent significant changes in
the crude oil prices can have a negative impact on the value of the
jet fuel storage and Bluesky continues to take steps to mitigate
against any potential stock related risk but not all stock risk can
be hedged against.
Maoming Single Point Mooring ("SPM")
Our performance
-- Fortune Oil's share of net profit was GBP0.5 million. For the
comparable period in 2014 there were no profits attributable to the
Maoming SPM due to the expiry of the previous joint venture
agreement which meant that after February 2013 the Company had no
effective financial interest in the operations of the SPM until the
new joint venture became effective from 1 January 2014.
-- Sales volumes were 5.2 million tonnes. Sales volumes are
unavailable for the comparable period in 2014 as a result of the
expiry of the previous joint venture agreement which meant that
after February 2013 the Company had no effective financial interest
in the operations of the SPM until the new joint venture became
effective from 1 January 2014.
-- The Maoming SPM facility continues to operate efficiently and
with an accident-free and spill-free record.
Outlook
-- The slow down in China's economic growth is impacting on
China's blended energy consumption in Q3 2014 which increased by
only 3.4 per cent year on year was 2.8 per cent lower than Q2 2014
indicating a slow down in crude oil demand and associated refined
products.
West Zhuhai Jetty and Storage Terminal
Our performance
-- The Group's share of revenues remained at GBP1.3 million (H1
FY2014: GBP1.3 million).
-- Fortune Oil's share of net profit decreased 4.9 per cent to
GBP0.38 million (H1 FY2014: GBP0.40 million).
-- Throughput and storage volumes decreased 6.6 per cent to 1.1
million tonnes (H1 FY2014: 1.2 million tonnes).
Outlook
-- Growth in autosales has slowed significantly and only rose by
1.7 per cent in September 2014 compared to the same month a year
earlier as Chinese consumers purchased only 1.7 million cars in the
month. Autosales are still expected to reach 23 million units in
2014, an increase of 4.6 per cent year on year, although lower than
the previous forecast of 8.3 per cent by the China Association of
Automobile Manufacturers. The slowdown in autosales will impact on
future demand growth for petrol and diesel.
Trading Business
Our performance
-- Revenues increased 36.5 per cent to GBP162.6 million (H1
FY2014: GBP119.1 million).
-- Profit from operations increased 16.1 per cent to GBP1.0
million (H1 FY2014: GBP0.8 million).
-- Sales volumes increased 89.7 per cent to 261,800 tonnes (H1
FY2014: 138,000 tonnes) principally 63,800 tonnes of mixed
aromatics and other petrochemical products, 36,000 tonnes of base
oil and 129,200 tonnes of fuel oil.
Outlook
-- Established a new company in Shenzhen to expand the Company's
domestic trading operations through the Shenzhen Qianhai Economic
Zone.
China Gas Holdings Limited ("CGH")
Fortune Oil and CGH
Fortune Oil's investment in CGH is managed and reported as a
separate segment under IFRS. CGH became an associate in August
2013, and since then, equity accounting has been adopted.
-- CGH contributed GBP6.7 million to the Group's operating
profit through its share of profit from jointly controlled entities
and associates (H1 FY2014: GBP1.0 million).
-- China Gas Group Limited ("CGG"), the joint venture company in
which the Group has a 50 per cent interest, owns 744,602,000 CGH
shares, representing 14.69 per cent of CGH total issued shares as
at 27 November 2014. As at 27 November 2014 the Group and CGG
together held 941,973,463 shares in CGH representing 18.8 per cent
of CGH total issued shares of 5,021,048,561, as per CGH's latest
public information.
CGH Performance - summary for the six month period ended 30
September 2014*
-- CGH revenues for the period including share of jointly
controlled entities and associates increased by 49 per cent to
HK$15.6 billion (GBP1.2 billion) (H1 FY2014: HK$10.5 billion
(GBP0.9 billion)).
-- Net profit from all operations attributable to owners of the
parent increased 31 per cent to HK$1.9 billion (GBP150.8 million)
(H1 FY2014: HK$1.5 billion (GBP123.7 million)).
-- During H1 FY2015 CGH sold a total of 4.1 billion cubic metres
of natural gas, an increase of 16.8 per cent over the same period
of the previous year (H1 FY2014: 3.5 billion cubic metres).
* The operational and financial information of CGH for the H1 FY2015
is based on operational and financial results published by CGH.
Outlook
-- China's government raised natural gas prices around 20 per
cent on 1 September 2014 in line with the policy to bring China's
natural gas price in line with international market prices. This
on-going policy has the potential to adversely impact on demand for
natural gas.
-- The continued slowdown in China's property market is expected
to lead to a reduction in the connection rate and associated
connection fees in the city gas concessions.
-- The Chinese government is proactively implementing new
policies to promote the use of natural gas to improve air quality.
China's General Office of the State Council has announced that
natural gas supply is expected to reach over 400 billion cubic
metres by 2020 which will increase the availability of natural gas
to CGH city gas concessions.
Resources
-- Iron ore prices have decreased by around 40 per cent in 2014
as a flood of new supply from the world's biggest and lowest-cost
producers has hit the market at the same time as fears about
slowing demand in China, the world's biggest consumer of seaborne
iron ore, have intensified.
-- The Group continues to assess whether there is an
economically viable investment case to develop the Armenian iron
ore deposits. The Group has continued to evaluate options to
improve the economic viability of these assets and is in
discussions with customers in the neighbouring countries and with
potential investment partners interested in developing the assets.
The Group will not make any material investment in the development
of this project unless there is a long term economically viable
investment case.
FINANCIAL REVIEW
Disposal Group Held for Sale and Discontinued Operations
The comparative figures of H1 FY2014, reflect the decision to
dispose of the Group's natural gas business FGIH to CGH (the "FGIH
Transaction") and the old Maoming SPM joint venture being in
dissolution procedure following the expiration of the joint venture
contract in February 2013. Hence, the results of the Group's
natural gas business in respect of the period before its disposal
to CGH and the old Maoming SPM business are presented as
discontinued operations in the income statement and cash flow
statement for the six months ended 30 September 2013.
In order to provide a more comprehensive review of all of the
Group's operations, on a basis comparable with that provided to
shareholders in previous period, the discussion of financial
results below relates to continuing operations and discontinued
operations combined. The income statement distinguishes the results
of discontinued operations from those of continuing operations.
Accounting Treatments
Investment in CGH
As a result of having significant influence through holding and
exercising the nomination rights of managing director and an
additional executive director in CGH granted at the FGIH
Transaction together with the CGH shares hold directly or
indirectly by Fortune Oil, CGH has been treated as an associate of
the Group and equity accounting has been adopted since
Completion.
The investment in CGH is divided into two layers: (i) direct
holding by wholly owned subsidiaries; and (ii) indirect holding by
CGG, a jointly controlled entity between the Company and Mr Liu
Minghui. The accounting treatments in these layers are discussed as
follows:
Treatments from the Group's wholly owned subsidiaries
Following Completion, the Group has applied equity accounting by
recognising CGH's net profit according to the Group's shareholding
percentage into the income statement (See the summary in "Profit
contribution from investment in CGH" under "Revenue and
Expenditure" below for details).
As at 30 September 2014, Fortune Oil directly held 197,371,463
CGH shares via Fortune Oil PRC Holdings Limited, Fortune Oil
Holdings Limited and First Marvel Limited, all of which are wholly
owned subsidiaries of the Company. Since CGH is an associate of the
Group, and thus accounted for under the equity method, the market
value of the investment in CGH is no longer directly reflected in
the Group's balance sheet, however, any future decrease in CGH's
share price, which is significant and prolonged, is objective
evidence of impairment, which would be charged to the income
statement directly in the relevant future period.
Treatments in CGG
Following Completion, CGG has applied equity accounting by
recognising CGH's net profit according to CGG's shareholding
percentage in the income statement. During H1 FY2014, CGG's income
statement also recognised a gain in fair value of CGG's investment
in CGH, previously recognised in equity up to the date when CGH
became an associate, which is disclosed separately as "Other Gains"
under the "Share of results of Jointly Controlled Entities", and
accrued administrative expenses and finance costs to compute its
net profit. Since Fortune Oil has a 50 per cent shareholding in
CGG, the Group treats CGG as its jointly controlled entity and
recognises 50 per cent of CGG's net profit by adopting equity
accounting for the Group. In terms of cash flow, cash received from
dividends declared by CGH has covered the finance costs and other
administrative expenses incurred by CGG (See the summary in "Profit
contribution from investment in CGH" for details).
As at 30 September 2014, CGG holds 737,374,000 CGH shares,
representing 14.7 per cent of CGH's total issued share capital. As
discussed above, since CGH is an associate to CGG and CGG is a
jointly controlled entity of the Group, and thus accounted for
under the equity method, the market value of the investment in CGH
is no longer directly reflected in the Group's balance sheet,
however, any future decrease in CGH's share price, which is
significant and prolonged, is objective evidence of impairment
which would be charged to the income statement of CGG directly in
the relevant future period.
Treatment of Maoming SPM
Due to the expiry of the previous joint venture agreement, the
Company had no effective financial interest in the operations of
the SPM until the new joint venture became effective from 1 January
2014.
The new joint venture is an associate of the Group, and equity
accounting has been adopted from when the joint venture became
effective. It has been reclassified to "Others" of Segmental
Reporting (note 3 to the accounts as page 21 for detail).
Revenue and Expenditure
Revenue from all operations including the Group's share of
jointly controlled entities and associates increased by 28.7 per
cent to GBP582.5 million for the six months ended 30 September 2014
from GBP452.7 million for the H1 FY2014. This was largely driven by
the inclusion of the share in CGH's revenue since Completion and
the growth in the Group's trading business, netted off by the
exclusion of revenue from the natural gas business after the
Completion. Group revenue from all operations excluding jointly
controlled entities and associates has also increased slightly to
GBP162.6 million for the six months ended 30 September 2014 from
GBP149.3 million for the H1 FY2014.
Profit from operations before Other Gains (see below for
discussion), decreased 11.2 per cent to GBP13.1 million for the six
months ended 30 September 2014, compared with GBP14.8 million for
the H1 FY2014. Following Completion, most of the consolidated
earnings are generated by the Group's jointly controlled entities
and associates.
The net profit attributable to owners of the parent was GBP8.9
million for the six months ended 30 September 2014, a decrease of
96.0 per cent compared with GBP223.2 million for the H1 FY2014.
Earnings per share from all operations decreased to 0.36 pence for
the six months ended 30 September 2014, compared with 11.73 pence
for the H1 FY2014. The sharp decrease is mainly due to the combined
effect of the exclusion of "Other Gains" to be further discussed
below (totalling of GBP214.9 million for the H1 FY2014), netted off
against the inclusion of the share of results of CGH.
Profits contribution from investment in CGH
CGH became an associate in August 2013, and since then, equity
accounting has been adopted. Based on the accounting treatments
discussed above, the profit contribution from the investments in
CGH for the H1 FY2015 can be summarised in the following table:
Group's wholly
owned subsidiaries 100% of CGG
------------------------------------------- --------- -------------------- ------------
Number of CGH shares held* 197,371,463 737,374,000
------------------------------------------------------ -------------------- ------------
At single companies' level
------------------------------------------- --------- -------------------- ------------
Percentage held in CGH* % 3.9% 14.7%
Dividend received in cash from CGH GBP'000 1,501 5,604
------------------------------------------- --------- -------------------- ------------
Share of results
------------------------------------------- --------- -------------------- ------------
Share of results of CGH as an associate** GBP'000 3,307 12,822
Other income, net in CGG GBP'000 Unallocated 85
Finance costs in CGG GBP'000 Unallocated (2,920)
Loss on dilution of associate, included
the share of results of jointly
controlled entity and associates**** GBP'000 (522) (2,076)
------------------------------------------- --------- -------------------- ------------
Total GBP'000 2,785 7,911
------------------------------------------- --------- -------------------- ------------
At consolidated level
------------------------------------------- --------- -------------------- ------------
Effective percentage held in CGH* % 3.9% 7.3%
Profit from operations GBP'000 2,785 3,956
------------------------------------------- --------- -------------------- ------------
Total (see note 3 to accounts) GBP'000 - 6,741
------------------------------------------- --------- -------------------- ------------
Valuation of CGH shares for the
Group*
------------------------------------------- --------- -------------------- ------------
Book value GBP'000 - 402,704
Market value*** GBP'000 - 598,281
------------------------------------------- --------- -------------------- ------------
* based on the CGH shares held as at 30 September 2014.
** share of results of CGH as an associate were based on different
shareholding percentages in CGH during the 6 months ended 30 September
2014.
*** based on closing price of CGH as at 30 September 2014.
**** represents the loss incurred on dilution of the Group's effective
interest at the time of issue of new shares in CGH. This resulted
in a reduction in the Group's share of the net assets of CGH and
recognition of an associated loss.
Disposal of natural gas business
For the comparative figures of H1 FY2014, the results of natural
gas business have been consolidated and classified as discontinuing
operation until the completion of the FGIH Transaction in August
2013 (the "Completion"), which was also the date that FGIH and its
sub-group ceased to be subsidiaries of the Group. Please refer to
"Natural Gas" of Segmental Reporting (note 3 to the accounts at
page 21) for detail.
Other Gains (including share of other gains in jointly
controlled entities)
There were no other gains (including share of other gains in
jointly controlled entities) in H1 FY2015. The GBP214.9 million of
other gains recognised in H1 FY2014 consisted of: (i) the gain on
disposal of the Group's natural gas business of GBP119.7 million;
and (ii) the gain on revaluation of CGH shares on the date of
treating CGH as an associate of GBP95.3 million).
Other Comprehensive Income/Loss
Other comprehensive income was GBP7.9 million for H1 FY2015
which was due to exchange differences arising on translation of
foreign operations of the Group.
The other comprehensive loss of GBP83.1 million for H1 FY2014
was mainly due to the exchange losses arising on translation of
foreign operations of the Group of GBP13.2 million; the share of
net gain in fair value of available-for-sale investments in jointly
controlled entity of GBP25.4 million; and the cumulative gains in
fair value of CGG's investment in CGH being reclassified from
equity to the income statement on the date when CGH became an
associate of GBP95.3 million.
Cash Position
Notwithstanding the steady historical dividend pay-out ratio of
its jointly controlled entities and associates, the Group's cash
inflow from operating activities heavily relies on the future
dividends received from these entities, which will be affected by
their own profitability.
As a result of the possible uneven timing of distribution of
dividends received, Fortune Oil will require careful treasury
management in order to avoid future cash shortfalls.
Financial Position
The net assets of the Group as at 30 September 2014 were
GBP360.2 million, compared with GBP343.2 million as at 31 March
2014. The increase was mainly due to the total comprehensive income
of GBP16.8 million generated in the H1 FY2015. The net borrowing
position as at 30 September 2014 was GBP36.8 million compared with
GBP50.6 million as at 31 March 2014. With a cash balance of
GBP152.1 million as at 30 September 2014, and the expected positive
cash flow generated from operations, the Group envisages no
difficulties in meeting both current loan repayment obligations and
investment commitments. The net gearing ratio (after deduction of
cash) for the Group further decreased to 10.2 per cent as at 30
September 2014 against 14.8 per cent as of 31 March 2014.
Finance Costs and Tax
Finance costs for the Group from all operations were GBP4.3
million in the reporting period, compared with GBP2.2 million for
the last reporting period. It was mainly due to the increase of the
Group borrowing from the full draw down of the syndicated loan by
US$180 million (GBP113 million) in April 2014.
The Group's total tax charge in the Reporting Period from all
operations was GBP0.8 million (for six months ended 30 September
2013: GBP3.2 million) representing an effective tax rate of 8.7 per
cent, compared with 23.7 per cent (after excluding non-taxable
capital gains and losses of GBP214.9 million) for the six months
ended 30 September 2013. The decrease in the effective tax rate was
mainly the result of the exclusion of the income tax charge of the
Group's natural gas business after the completion of the FGIH
Transaction and because profits of jointly controlled entities and
associates are included in the income statement net of tax.
Foreign Exchange
The revenues and expenses of the Group are mainly denominated in
China's renminbi (RMB). The remaining expenses are denominated
either in pounds sterling (GBP), Hong Kong dollars (HK$), which is
pegged to the US dollar, or in US dollars (US$). On average for H1
FY2015, the RMB depreciated against the US$ by 1.1 per cent and the
pounds sterling appreciated by 8.1 per cent against the US$, hence
there was an overall 9.3 per cent appreciation of the pounds
sterling against the RMB. This currency movement has had the effect
of decreasing our profits as measured in pounds sterling.
The assets and liabilities of the Group are also primarily
denominated in RMB. The remaining balance, which represents a small
proportion of the assets and liabilities, is denominated in US$,
pounds sterling and HK$. As at 30 September 2014, the closing
pounds sterling rate depreciated against the RMB and US$ by 2.9 per
cent and 2.5 per cent, respectively.
The Group does not have a policy to hedge currency risk and
therefore any changes in the RMB/GBP exchange rate are likely to
affect the Groups' results which are presented in pounds
sterling.
Capital Structure
Most of the Group's investments and expenses take place in the
PRC and are held through Fortune Oil PRC Holdings Limited, a wholly
owned subsidiary of the Company incorporated in Hong Kong. To
facilitate inter-company restructuring, most of the investments in
China are held through subsidiary Hong Kong registered companies.
The Group's UK operations consist only of local representation as a
direct expense to the Company.
Refinancing
In October 2013, Fortune Oil PRC Holdings Limited, a
wholly-owned subsidiary of Fortune Oil, signed a US$300 million
(GBP184 million) loan agreement. The facility is denominated in US$
with a term of three years and an interest rate payable at a margin
of 2.75 per cent over LIBOR was fully drawn in April 2014. The
facility is guaranteed by Fortune Oil PLC and secured by share
charges over its various Hong Kong subsidiaries.
The purpose of this refinancing was to maximise the borrowing
capacity and to lock-in low-cost financing at then prevailing
levels. This new facility, which has been partly used to repay the
previous syndicated loan of US$180 million (GBP113 million) signed
in April 2011, will provide the Company with working capital, and
finance new investment.
Dividend
It is not the Company's policy to pay interim dividends. A
special dividend of 2.36 pence per ordinary share was paid to
shareholders on 25 October 2013, in respect of the FY2014.
PRINCIPAL RISK AND UNCERTAINTIES
Our business is supplying China with energy and resources,
principally oil and natural gas. We face many risks and whilst we
can manage some, we have to accept others as part of doing
business. There are a number of potential risks and uncertainties
which could have a material impact of the Group's performance over
the remaining six months of the financial year and could cause
actual result to different materially from expected and historical
results. These risks have not changed since the date of Annual
Report 2014, where the principal risks and uncertainties, their
effects and our management strategy are detailed on pages 23 and 24
of that report.
The principal risks and uncertainties facing Fortune Oil's
operations include: the group does not have control of all of its
investments, concentration risks, exposure to underlying result of
CGH, profit guarantee risk, pricing risks, regulatory and
relationships risks, health, safety and the environment, attraction
and retention of key employees, development risks and uninsured
risks.
GOING CONCERN STATEMENT
The Group's business activities and associated opportunities and
risks are set out above in the "Business Review" and "Principal
Risks and Uncertainties". The financial position of the Group, its
cash flows and liquidity position is described in the Financial
Review. In the management of liquidity risk, the Group monitors and
maintains a level of cash and cash equivalents deemed adequate by
the management to finance the Group's operation and mitigate the
effects of fluctuations in cash flows. The Group expects to meet
its capital expenditure requirements from medium term loan
facilities and the cash dividend received from its jointly
controlled entities and associates.
The current economic conditions may create uncertainty over:
-- The level of demand for the Group's products and services
-- International exchange rates that affect commodity prices and
hence the Group's revenues in China as denominated in US dollars or
pound sterling
-- The availability of bank or equity finance in the foreseeable
future
-- Counterparty credit risk
As at 30 September 2014, the Group had a cash balance of
GBP152.1 million and a net borrowing position of GBP36.8 million.
With the expected positive cash flow generated from operations, the
Group's current forecasts and projections and adjusting for
possible changes in trading conditions, show that the Group will be
able to repay the interest and principal payments in a timely
manner in accordance with loan agreements and to operate within the
required covenants.
As part of the FGIH Transaction, the Group will compensate CGH
on a dollar for dollar basis where the net profits for the natural
gas business for the twelve months ended 31 December 2014 are less
than HK$400 million (approximately GBP32 million). As Management
believe the FGIH business within CGH should be on target to meet
the profit guarantee and the possibility of the compensation is
unlikely, no liability for compensation has been recognised when
considering this going concern exercise.
The Directors believe that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, Fortune Oil continues to adopt the going concern basis
in preparing the half year report and accounts.
RESPONSIBILITY STATEMENT PURSUANT TO DTR 4.2
The names and functions of the Directors of Fortune Oil are
listed in the Company's Annual Report for 2014. We confirm that, to
the best of each person's knowledge:
1. The condensed set of financial statements, which have been
prepared in accordance with the applicable set of accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Group, or the undertakings
included in the consolidation as a whole as required by DTR
4.2.4R;
2. The interim management report includes a fair review of
important events that have occurred during the first six months of
the financial year, and their impact on these six months financial
report and a description of the principal risks and uncertainties
for the remaining six months of the financial year in accordance
with DTR 4.2.7R; and
3. The interim management report includes a fair review of
disclosures of related party transactions that have taken place in
the first six months of the financial year and that have materially
affected the financial position or the performance of the Group
during that period and any changes in the related party
transactions described in the last annual report that could have a
material effect on the financial position or performance of the
Group in the first six months of the current financial year in
accordance with DTR 4.2.8 R.
These interim results have not been audited nor reviewed.
By order of the Board
TIAN Jun
Acting Chief Executive
FORTUNE OIL PLC
Interim Report Announcement for the six months ended 30
September 2014 ("H1 FY2015")
Consolidated Income Statement for the period ended 30 September
2014
6 months ended
6 months Discontinued
ended operations Total
Continuing
30.09.14 operations 30.09.13 30.09.13
30.09.13
Amount in GBP'000 Notes (Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------------------------------- ------ ------------- -------------- ------------- -------------
Revenue including share
of jointly controlled entities
and associates 3 582,518 417,956 34,770 452,726
Share of revenue of jointly
controlled entities and
associates 3 (419,904) (298,825) (4,634) (303,459)
--------------------------------- ------ ------------- -------------- ------------- -------------
Group revenue 3 162,614 119,131 30,136 149,267
Cost of sales (160,989) (117,507) (18,158) (135,665)
--------------------------------- ------ ------------- -------------- ------------- -------------
Gross profit 1,625 1,624 11,978 13,602
--------------------------------- ------ ------------- -------------- ------------- -------------
Distribution expenses - - (2,011) (2,011)
Administrative expenses (2,484) (5,103) (1,382) (6,485)
Share of results of jointly
controlled entities excluding
other gain 10 10,685 8,986 716 9,702
Share of other gain in jointly
controlled entities - 95,251 - 95,251
Share of results of associates 11 3,294 - (39) (39)
--------------------------------- ------ ------------- -------------- ------------- -------------
Profit from operations 13,120 100,758 9,262 110,020
--------------------------------- ------ ------------- -------------- ------------- -------------
Other gains 4 - - 119,655 119,655
Finance costs (4,257) (1,919) (286) (2,205)
Investment revenue 867 772 136 908
--------------------------------- ------ ------------- -------------- ------------- -------------
Profit before tax 9,730 99,611 128,767 228,378
Income tax charge 5 (845) (1,301) (1,895) (3,196)
--------------------------------- ------ ------------- -------------- ------------- -------------
Profit for the period 8,885 98,310 126,872 225,182
--------------------------------- ------ ------------- -------------- ------------- -------------
Attributable to
Owners of the parent 8,918 98,350 124,833 223,183
Non-controlling interests (33) (40) 2,039 1,999
--------------------------------- ------ ------------- -------------- ------------- -------------
8,885 98,310 126,872 225,182
--------------------------------- ------ ------------- -------------- ------------- -------------
Earnings per share
Basic 7 0.36p 5.17p 6.56p 11.73p
Diluted 7 0.35p 5.12p 6.50p 11.62p
--------------------------------- ------ ------------- -------------- ------------- -------------
FORTUNE OIL PLC
Interim Report Announcement for the six months ended 30
September 2014 ("H1 FY2015")
Consolidated Statement of Comprehensive Income for the period
ended 30 September 2014
6 months
6 months
ended ended
30.09.14 30.09.13
Amount in GBP'000 (Unaudited) (Unaudited)
------------------------------------------------------- ------------- -------------
Profit for the period 8,885 225,182
Exchange differences arising on translation of
foreign operations 7,893 (13,211)
Share of net gain in fair value of available for
sale financial assets in jointly controlled entities - 25,376
Reclassification of available for sale financial
assets in jointly controlled entities to interest
in associates - (95,251)
------------------------------------------------------- ------------- -------------
Other comprehensive income/(loss) for the period 7,893 (83,086)
------------------------------------------------------- ------------- -------------
Total comprehensive income for the period 16,778 142,096
------------------------------------------------------- ------------- -------------
Attributable to
Owners of the parent 16,796 144,662
Non-controlling interests (18) (2,566)
------------------------------------------------------- ------------- -------------
16,778 142,096
------------------------------------------------------- ------------- -------------
FORTUNE OIL PLC
Interim Report Announcement for the six months ended 30
September 2014 ("H1 FY2015")
Consolidated Statement of Financial Position at 30 September
2014
30.09.14 31.03.14
Amount in GBP'000 Notes (Unaudited) (Audited)
--------------------------------------------- ------ ------------- -----------
Assets
Non-current assets
Property, plant and equipment 8 1,855 1,861
Intangible assets 9 370 360
Investments in jointly controlled entities 10 226,443 240,704
Investments in associates 11 152,384 131,576
Available for sale investments 1,986 1,937
--------------------------------------------- ------ ------------- -----------
383,038 376,438
--------------------------------------------- ------ ------------- -----------
Current assets
Trade and other receivables 12 51,759 79,624
Cash and cash equivalents 152,057 58,338
--------------------------------------------- ------ ------------- -----------
203,816 137,962
--------------------------------------------- ------ ------------- -----------
Total Assets 586,854 514,400
--------------------------------------------- ------ ------------- -----------
Liabilities
Current liabilities
Borrowings 13 16,227 40,819
Trade and other payables 14 27,668 52,048
Current tax liabilities 285 278
--------------------------------------------- ------ ------------- -----------
44,180 93,145
--------------------------------------------- ------ ------------- -----------
Non-current liabilities
Borrowings 13 172,673 68,156
Deferred tax liabilities 1,462 1,791
Other non-current liabilities 8,334 8,062
--------------------------------------------- ------ ------------- -----------
182,469 78,009
--------------------------------------------- ------ ------------- -----------
Total Liabilities 226,649 171,154
--------------------------------------------- ------ ------------- -----------
Net Assets 360,205 343,246
--------------------------------------------- ------ ------------- -----------
Equity
Capital and reserves
Ordinary shares 15 25,871 25,871
Treasury shares (781) (578)
Share premium 50,969 50,969
Other reserves 33,488 33,488
Foreign currency translation reserve 957 (6,921)
Retained earnings 247,249 237,947
--------------------------------------------- ------ ------------- -----------
Equity attributable to owners of the parent 357,753 340,776
Non-controlling interests 2,452 2,470
--------------------------------------------- ------ ------------- -----------
Total Equity 360,205 343,246
--------------------------------------------- ------ ------------- -----------
FORTUNE OIL PLC
Interim Report Announcement for the six months ended 30
September 2014 ("H1 FY2015")
Consolidated Cash Flow Statement for the period ended 30
September 2014
6 months
6 months
ended ended
30.09.14 30.09.13
Amount in GBP'000 Notes (Unaudited) (Unaudited)
---------------------------------------------------- ------ ------------- -------------
Net cash from operating activities 17 1,659 2,841
Interest received 867 136
Dividend received from jointly controlled entities 10 12,141 13,484
Dividend received from associates 11 1,501 -
Payment for property, plant and equipment (172) (3,519)
Payment for exploration and evaluation assets - (205)
Receipt from disposal of subsidiary undertakings - 82,642
Consideration paid on acquisition of additional
interests in a subsidiary - (1,390)
Receipt from disposal of property, plant and
equipment - 68
Acquisition of investments in associates 11 (15,181) -
Loan to jointly controlled entities - (3,232)
Repayment from jointly controlled entities 10 17,952 -
---------------------------------------------------- ------ ------------- -------------
Net cash from investing activities 17,108 87,984
---------------------------------------------------- ------ ------------- -------------
Interest paid (3,577) (1,885)
Dividend payment to owners of the parent - 485
Repayment of loans to non-controlling shareholders - (1,254)
Net proceeds from issue of new borrowings 116,323 7,417
Repayment of borrowings (38,385) (52,095)
---------------------------------------------------- ------ ------------- -------------
Net cash from/(used in) financing activities 74,361 (47,332)
---------------------------------------------------- ------ ------------- -------------
Increase in cash and cash equivalents 93,128 43,493
Cash and cash equivalents at beginning of the
period 58,338 61,019
Cash flow effect of foreign exchange rate changes 591 3,820
---------------------------------------------------- ------ ------------- -------------
Net cash and cash equivalents at end of the
period 152,057 108,332
---------------------------------------------------- ------ ------------- -------------
FORTUNE OIL PLC
Interim Report Announcement for the six months ended 30
September 2014 ("H1 FY2015")
Consolidated Statement of Changes in Equity for the period ended
30 September 2014
Issued capital
------------------ -------- --------- ------------ --------- ------------- ---------------- ---------
Foreign Attributable
currency to owners
Ordinary Treasury Share Other translation Retained of the Non-controlling
Amount in GBP'000 shares shares premium reserve reserve earnings parent interests Total
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 1
April 2013 19,875 (678) 10,129 69,889 31,893 95,607 226,715 56,452 283,167
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Profit for the
period - - - - - 223,183 223,183 1,999 225,182
Exchange
differences
arising
on translation
of foreign
operations - - - - (8,646) - (8,646) (4,565) (13,211)
Share of net gain
in fair
value of
available for
sale
financial assets
in jointly
controlled
entities - - - 25,376 - - 25,376 - 25,376
Reclassification
of available
for sale
financial assets
in jointly
controlled
entities
to interest in
associates - - - (95,251) - - (95,251) - (95,251)
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Total
comprehensive
income
for the period - - - (69,875) (8,646) 223,183 144,662 (2,566) 142,096
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Payment of
dividends to
non-controlling
interests - - - - - - - (1,815) (1,815)
Dividend paid to
owners of
the parent - - - - - (3,056) (3,056) - (3,056)
Transfer - - - 2,166 - (2,166) - - -
Share of capital
contribution
on acquisition
of available
for sale
financial assets - - - 33,610 - - 33,610 - 33,610
Adjustment
arising from
changes
in
non-controlling
interest - - - (292) - - (292) (1,102) (1,394)
Net capital
contribution
from
non-controlling
interest - - - - - - - 2,685 2,685
Dissolution of a
subsidiary - - - - (2,268) - (2,268) (10,773) (13,041)
Disposal of
subsidiaries - - - (1,874) (10,347) - (12,221) (43,429) (55,650)
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 30
September 2013
(Unaudited) 19,875 (678) 10,129 33,624 10,632 313,568 387,150 (548) 386,602
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 1
April 2014 25,871 (578) 50,969 33,488 (6,921) 237,947 340,776 2,470 343,246
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Profit for the
period - - - - - 8,918 8,918 (33) 8,885
Exchange
differences
arising
on translation
of foreign
operations - - - - 7,878 - 7,878 15 7,893
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Total
comprehensive
income
for the period - - - - 7,878 8,918 16,796 (18) 16,778
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Movement in
treasury shares - (203) - - - 184 (19) - (19)
Share-based
payments - - - - - 200 200 - 200
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 30
September 2014
(Unaudited) 25,871 (781) 50,969 33,488 957 247,249 357,753 2,452 360,205
------------------ --------- --------- -------- --------- ------------ --------- ------------- ---------------- ---------
FORTUNE OIL PLC
Notes to the Condensed Set of Financial Statements
Six months ended 30 September 2014
1. Basis of preparation
The condensed financial statements have been prepared in
accordance with International Accounting Standard 34 Interim
Financial Reporting, as adopted by the European Union.
The comparative figures included in financial statements and the
notes to the accounts for the six months ended 30 September 2013
(H1 FY2014) has not previously been published, however it has been
prepared on the same basis described in this note and under the
same accounting policies outlined in note 2.
The financial information for the six months ended 30 September
2014 was neither audited nor reviewed by the auditors. The
information for the year ended 31 March 2014 does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditor's report on
these accounts was not qualified, did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying the report and did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
The Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of no less than twelve months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed financial statements. Detail of the factors
that which have been taken into account in assessing the Group's
going concern status are set out on pages 11 and 12.
2. Significant accounting policies
The condensed financial statements have been prepared under the
historical cost convention, except for the revaluation of certain
properties and financial instruments.
The same accounting policies, presentation and methods of
computation have been followed in these condensed financial
statements as were applied in the preparation of the Group's
financial statements for the year ended 31 March 2014, with the
following exceptions. In the current year, the Group has applied,
for the first time, the following new and revised Standards and
Interpretations, which are effective for the Group's financial year
beginning 1 April 2014, but have not had any significant impact on
the financial statements for the six months to 30 September
2014.
IFRS 10 Consolidation financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interests in other entities
IAS 27 (revised) Separate financial statements
IAS 28 (revised) Investments in associates and joint ventures
3. Segmental Reporting
The Group has adopted IFRS 8 Operating Segments to identify
eight operating segments on the basis of internal reports about
components of the Group which are reviewed regularly by the chief
operating decision maker in order to allocate resources to the
segment and to assess its performance.
The Group has classified the operating divisions and the
reportable segments under IFRS 8 as "Investment in China Gas
Holdings Ltd", "Natural Gas", "Single point mooring facility",
"Aviation Refuelling", "Trading", "Products Terminal", "Resources"
and "Others".
Information regarding these segments is presented below.
(a) Operating segments
Oil
---------- ---------- -------------------- --------- ---------
Investment Resources
in CGH**** Aviation Refuelling Trading Products Terminal
Amount in Sep Sep Sep Sep Sep Sep Sep Sep Sep
GBP'000 14 Sep13 14 13 14 13 14 13 14 13
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Revenue
including
share of
jointly
controlled
entities
and associates 133,671 17,442 283,276 277,921 162,614 119,131 1,262 1,339 - -
Share of revenue
of jointly
controlled
entities and
associates (133,671) (17,442) (283,276) (277,921) - - (1,262) (1,339) - -
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Group revenue - - - - 162,614 119,131 - - - -
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Profit from
operations
before
office
overheads 6,741 96,201 6,331 5,630 953 821 386 406 (184) (70)
Office
overheads*
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Profit from
operations
Other gains - - - - - - - - - -
Finance costs
Investment
revenue
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Profit before
taxation
Taxation
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Profit for the
period
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Attributable
to
Owners of the
parent
Non-controlling
interests
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Amount in
GBP'000 30.09.14 31.03.14 30.09.14 31.03.14 30.09.14 31.03.14 30.09.14 31.03.14 30.09.14 31.03.14
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Net assets:
by class of
business
Assets
Segment assets 330,454 320,016 36,309 35,228 129,923 131,876 7,017 6,456 6,655 6,621
Unallocated
assets
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Consolidated
total assets
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Liabilities
Segment
liabilities - - (8) (8) (24,590) (48,916) - - (8,429) (8,231)
Unallocated
liabilities***
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
Consolidated
total
liabilities
----------------- ---------- --------- ---------- ---------- --------- --------- --------- --------- --------- ---------
(a) Operating segments (cont.)
Continuing Single point Discontinuing
Others** operations mooring facility Natural Gas operations Group
Amount in Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep
GBP'000 14 13 14 13 14 13 14 13 14 13 14 13
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Revenue
including
share of
jointly
controlled
entities
and associates 1,695 2,123 582,518 417,956 - - - 34,770 - 34,770 582,518 452,726
Share of
revenue of
jointly
controlled
entities
and associates (1,695) (2,123) (419,904) (298,825) - - - (4,634) - (4,634) (419,904) (303,459)
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Group revenue - - 162,614 119,131 - - - 30,136 - 30,136 162,614 149,267
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Profit from
operations
before office
overheads 505 80 14,732 103,068 - - - 9,262 - 9,262 14,732 112,330
Office
overheads* (1,612) (2,310) - - - - - - (1,612) (2,310)
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Profit from
operations 13,120 100,758 - - - 9,262 - 9,262 13,120 110,020
Other gains - - - - - - - 119,655 - 119,655 - 119,655
Finance costs (4,257) (1,919) - (286) (4,257) (2,205)
Investment
revenue 867 772 - 136 867 908
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Profit before
taxation 9,730 99,611 - 128,767 9,730 228,378
Taxation (845) (1,301) - (1,895) (845) (3,196)
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Profit for
the period 8,885 98,310 - 126,872 8,885 225,182
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Attributable
to
Owners of
the parent 8,918 98,350 - 124,833 8,918 223,183
Non-controlling
interests (33) (40) - 2,039 (33) 1,999
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Amount in
GBP'000 30.09.14 31.03.14 30.09.14 31.03.14 30.09.14 31.03.14 30.09.14 31.03.14 30.09.14 31.03.14 30.09.14 31.03.14
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Net assets:
by class
of business
Assets
Segment
assets 13,666 12,845 524,024 513,042 802 782 - - 802 782 524,826 513,824
Unallocated
assets 62,028 576 - - - - - - 62,028 576
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Consolidated
total assets 586,052 513,618 802 782 - - 802 782 586,854 514,400
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Liabilities
Segment
liabilities (2,353) (2,287) (35,380) (59,442) - - - - - - (35,380) (59,442)
Unallocated
liabilities
*** (191,269) (111,712) - - - - - - (191,269) (111,712)
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
Consolidated
total
liabilities (226,649) (171,154) - - - - - - (226,649) (171,154)
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
359,403 342,464 802 782 - - 802 782 360,205 343,246
----------------- --------- --------- ---------- ---------- --------- --------- ---------- --------- ---------- --------- ---------- ----------
* Includes overheads in UK/HK/PRC offices.
Others include retail and distribution in 2014. In 2015, SPM has
** been reclassified to "Others".
*** Includes bank loan, deferred tax and dividend withholding tax.
**** Investment in CGH includes the Group's directly held associate
interest together with that held through CGG. It also includes
the Group's 50% share of other gains and losses of CGG, including
CGG's finance cost.
(b) Analysis of group revenue
6 months 6 months
Amount in GBP'000 ended 30.09.14 ended 30.09.13
-------------------------------------- ---------------- ----------------
Sales of goods 162,409 141,830
Income from gas connection contracts - 6,702
Rental income - 5
Others 205 730
-------------------------------------- ---------------- ----------------
162,614 149,267
Investment revenue 867 908
-------------------------------------- ---------------- ----------------
163,481 150,175
-------------------------------------- ---------------- ----------------
4. Other gains
30.09.14 30.09.13
Amount in GBP'000 (Unaudited) (Unaudited)
---------------------------------- -------------- -------------
Gain on disposal of subsidiaries - 119,655
---------------------------------- -------------- -------------
- 119,655
------------------------------------------------- -------------
5. Income tax charge
Interim period income tax is accrued based on the average
effective income tax rate of 8.7 per cent (six months ended 30
September 2013: 23.7 per cent after excluding non-taxable capital
gains and losses of GBP214.9 million).
The Group tax charge does not include corporate income tax for
jointly controlled entities and associates, whose results are
disclosed in the statement of comprehensive income net of tax.
Please refer to the financial review for discussion on the tax
charges during the period.
6. Dividends
6 months ended Year ended
Amount in GBP'000 30.09.14 30.09.13 31.03.14
----------------------------------------------- ---------- --------- -----------
Amounts recognised as distributions to
equity holders in the period:
Final dividend for the year ended 31 December
2012 of 0.16p per share - 3,056 3,056
Special dividend of 2.36p (2012: nil)
per share - - 45,101
----------------------------------------------- ---------- --------- -----------
- 3,056 48,157
---------------------------------------------------------- --------- -----------
Proposed final dividend for the year ended
31 March 2014 -
----------------------------------------------------------- --------- -----------
The Directors do not recommend the payment of an interim
dividend in respect of the six months ended 30 September 2014.
7. Earnings per share
Earnings per share has been calculated by dividing earnings
attributable to the shareholders by the weighted average number of
shares in issue during the respective periods, as indicated
below:
30.09.14
No.
'000 pence
Total
(Unaudited) (Unaudited)
-------------- --- --- ----------- -----------
Basic 2,509,044 0.36
Share option 16,472
adjustment -
-------------- --- --- ----------- -----------
Diluted 2,525,516 0.35
-------------------------- ----------- -----------
30.09.13
No. No. No.
'000 pence '000 pence '000 pence
Continuing operations Discontinued operations Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------- ------------ ------------ ------------ ------------ ------------ ------------
Basic 1,906,476 5.17 1,906,476 6.56 1,906,476 11.73
Share option
adjustment 13,380 - 13,380 - 13,380 -
-------------- ------------ ------------ ------------ ------------ ------------ ------------
Diluted 1,919,856 5.12 1,919,856 6.50 1,919,856 11.62
-------------- ------------ ------------ ------------ ------------ ------------ ------------
31.03.14
No. No. No.
'000 pence '000 pence '000 pence
Continuing operations Discontinued Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------- ------------ ------------ ------------ ------------ ------------ ------------
Basic 2,141,508 3.11 2,141,508 5.97 2,141,508 9.08
Share option
adjustment 15,937 - 15,937 - 15,937 -
-------------- ------------ ------------ ------------ ------------ ------------ ------------
Diluted 2,157,445 3.08 2,157,445 5.93 2,157,445 9.01
-------------- ------------ ------------ ------------ ------------ ------------ ------------
8. Property, plant and equipment
During the period, the Group spent approximately GBP0.2 million
on assets consisting of motor vehicles and fixture and
fittings.
The depreciation charge for the period was GBP0.2 million (six
months ended 30 September 2013: GBP0.3 million).
9. Intangible assets
During the period, the Group spent nil (September 2013: GBP1
million) on exploration and evaluation assets in Armenia.
10. Investments in jointly controlled entities
There were no acquisition during the period and the movement is
mainly due to share of the profit, dividend received, repayment of
loan to the jointly controlled entities and exchange gains. Details
are as follows:
Interest
in Net loans Total
jointly to jointly jointly
Jointly controlled entities controlled controlled controlled
Amount in GBP'000 entities entities entities
----------------------------- ------------ ------------ ------------
Share of net assets/cost
At 1 April 2014 165,870 74,834 240,704
Exchange rate difference 3,854 1,293 5,147
Repayment of loans - (17,952) (17,952)
Dividend (12,141) - (12,141)
Share of profit 10,685 - 10,685
----------------------------- ------------ ------------ ------------
At 30 September 2014 168,268 58,175 226,443
----------------------------- ------------ ------------ ------------
11. Investments in associates
Associates Interest
Amount in GBP'000 in associates
-------------------------- ---------------
Share of net assets/cost
At 1 April 2014 131,576
Exchange rate difference 3,834
Acquisition 15,181
Dividend (1,501)
Share of profit 3,294
-------------------------- ---------------
152,384
-------------------------- ---------------
In August 2014, the Group acquired a further 13.3 million shares
in CGH. The acquisition represented 0.26 per cent of the issued
capital of CGH. The fair value of the investment in CGH at 30
September 2014 is GBP201.7 million, based on the market share price
at that date of GBP1.02 (HK$12.88).
12. Trade and other receivables
The significant decrease in trade and other receivables was
mainly due to reduction in deposits made in respect to trading
transactions amounting to GBP6.0 million at 30 September 2014 (31
March 2014: GBP30.2 million).
Included in trade and other receivables is an amount of GBP0.8
million that represents the net amount expected to be recovered on
dissolution of the joint venture in Maoming King Ming Petroleum
Company Limited that was dissolved on 5 February 2013. From this
date control has been lost and therefore consolidation is no longer
appropriate.
13. Borrowings
On 7 August 2013, the Company issued the Loan notes of GBP7.5
million (US$12 million) to Fortune Dynasty Holdings Limited in
order to fund the Group's near-term capital expenditure,
particularly the capital expenditure relating to FGIH, and to
provide additional general working capital. The Loan Notes were
settled by way of the issue of the 99,373,000 ordinary shares of
the Company, with the balance of approximately US$80,000 of
principal and all accrued interest paid in cash in October
2013.
During April 2014, a further GBP110 million (US$180 million)
which was the remaining balance of the existing loan facility of
GBP184 million (US$300 million) entered in October 2013, was drawn
down by the Group. The loan is with a term of three years and a
margin of 2.75 per cent above LIBOR. The loan has been used to
repay the existing syndicated loan, provide the Group with working
capital, and finance new investment. The facility is guaranteed by
the Company and secured by share charges over its various Hong Kong
subsidiaries.
In addition, trading loans of GBP6 million and GBP38 million had
been drawn and repaid respectively during the period.
14. Trade and other payables
The significant decrease in trade and other payables was mainly
due to reduction in deposits made in respect to trading
transactions amounting to GBP2.4 million received from trading
customers at 30 September 2014 (31 March 2014: GBP37.6
million).
15. Issued capital
Issued capital as at 30 September 2014 amounted to GBP25.9
million. There were no movements in the issued capital of the
Company during the period.
16. Financial Instruments' fair value disclosures
Financial instruments that are measured subsequent to initial
recognition at fair value are grouped into levels 1 to 3 based on
the degree to which the fair value is observable:
- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within level 1 that are
observable for the asset or liabilities, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from
valuation techniques that included inputs for the asset or
liabilities that are not based on observable market date
(unobservable inputs).
During the period ended 30 September 2014, there were no
transfers between levels (31 March 2014: nil).
30.09.14 31.03.14
(Unaudited) (Audited)
Level Level Level Level Level Level
Amount in GBP'000 1 2 3 Total 1 2 3 Total
------------------------- ------- -------- ------ ------ ------ ------ ------ ------
Financial assets
Available for sale
investments - quoted - - - - - - - -
Available for sale
investments - unquoted - - 1,986 1,986 - - 1,937 1,937
------------------------- ------- -------- ------ ------ ------ ------ ------ ------
- - 1,986 1,986 - - 1,937 1,937
------- ---------------------------------- ------ ------ ------ ------ ------ ------
Available for sale investments
Amount in GBP'000
------------------------------ ------
Balance at 1 April 2014 1,937
Exchange difference 49
------------------------------ ------
Balance at 30 September 2014 1,986
------------------------------ ------
Profit guarantee
As part of the FGIH Transaction, the Group will compensate CGH
on a dollar for dollar basis where the net profits for the natural
gas business for FY2013 are less than HK$200 million (approximately
GBP16 million) or are less than HK$400 million (approximately GBP32
million) in 2014. This compensation agreement is not subject to any
cap.
As Management believe the FGIH business within CGH is on target
to meet the profit guarantee and the possibility of the
compensation is unlikely, and the fair value of the obligation has
been estimated on the basis of the weighted average of the possible
outcomes to be immaterial, no liability has been recognised as at
30 September 2014.
17. Note to cashflow statement
6 months 6 months
ended 30.09.14 ended 30.09.13
Amount in GBP'000 Notes (Unaudited) (Unaudited)
--------------------------------------------- ------ ---------------- ----------------
Net cash from operating activities
Profit for the period 8,885 225,182
Adjustments for:
Share of post-tax results of jointly
controlled entities 10 (10,685) (104,953)
Share of post-tax results of associates 11 (3,294) 39
Taxation 845 3,196
Amortisation - 29
Depreciation 219 313
Loss on disposal of property, plant and
equipment - (19)
Gain on disposal of subsidiary undertakings - (119,655)
Share-based payments 200 -
Investment revenue (867) (908)
Finance costs 4,257 2,205
Decrease in inventories - 328
Decrease/(increase) in trade and other
receivables 29,964 (61,557)
(Decrease)/increase in trade and other
payables (27,036) 61,170
--------------------------------------------- ------ ---------------- ----------------
Net cash from operations 2,488 5,370
Taxation paid (829) (2,529)
--------------------------------------------- ------ ---------------- ----------------
Net cash from operating activities 1,659 2,841
--------------------------------------------- ------ ---------------- ----------------
Cash and cash equivalents
Cash and bank balances 152,057 108,332
--------------------------------------------- ------ ---------------- ----------------
18. Related party transactions and significant contracts
The Group's related parties, the nature of the relationship and
the extent of transactions with them are summarised below:
Sub 30.09.14 30.09.13 31.03.14
Amount in GBP'000 notes (Unaudited) (Unaudited) (Audited)
-------------------------------------- ------- ------------- ------------- -----------
Loans to equity non-controlling
interests in a subsidiary 1 - 3,708 3,606
Shareholder loans to jointly
controlled entities 2 58,175 55,729 74,834
Sales of goods to jointly controlled
entities 3 - 1,601 2,845
Purchase of goods from jointly
controlled entities 3 - 905 1,650
Current account with Vitol Energy
(Bermuda) 3 - (483) -
-------------------------------------- ------- ------------- ------------- -----------
Sub notes
1. Loans of GBP3,606,000 comprised mainly loans to the
non-controlling shareholders in March 2014 (September 2014:
GBPnil). A GBP3,606,000 loan balance at March 2014 (September 2014:
GBPnil) to the non-controlling shareholders of Bounty Resources
Armenia Limited was guaranteed, interest bearing at a margin of 4%
over LIBOR p.a. and was repaid in June 2014.
2. The shareholder loans are part of shareholders' investment in
the jointly controlled entities. These are common methods of making
an investment in jointly controlled entities in the PRC.
GBP58,030,000 (March 2014: GBP74,692,000), of which GBP2.5
million are unsecured, interest bearing of HIBOR plus 4.72% p.a.
and repayable on October 2015, was loaned to CGG which is
established in Hong Kong and GBP145,000 (March 2014: GBP148,000)
was due from Zhuhai Special Economic Zone South China Petroleum
Company Limited.
3. Purchase from jointly controlled entity - Jining Qufu New Fu
Hong Gas Limited amounted to GBPnil (September 2013: GBP905,000).
Sales from Group's subsidiary, Xinyang Fortune Gas Company Limited
and Beijing Fuhua Natural Gas Limited to Group's jointly controlled
entity, Xinyang Fortune Vehicle Gas Company Limited and Beijing
Fuhua Natural Gas Logistics Limited, amounted to GBPnil (September
2013: GBP1,524,000 and GBP77,000) respectively.
4. Fortune Max Holdings Limited ("FMH") is a private company
controlled and beneficially owned by Mr Daniel Chiu. During 2012,
FMH has entered into arrangements with lenders to finance the
purchase of CGH shares, and then entered into a verbal
understanding to sell any such CGH shares to CGG, at all cost
associated with the purchase and financing of any CGH shares
acquired as and when these are transferred to CGG, and any losses
arising on the CGH shares acquired by FMH. In April 2013, CGG has
acquired all the 207,968,000 CGH shares previously purchased by FMH
by its own financing capacity. Under the terms of the agreement
with CGG, FMH generated neither profit nor incurred any loss from
its transaction in CGH shares, however, CGG recognised a gain in
equity of over GBP67 million based on the market value at the date
of transfer, with the Group's share being GBP33.5 million.
5. On 7 August 2013, the Group entered into a conditional sale
and purchase agreement to purchase the entire issued share capital
of First Marvel Investment Limited ("First Marvel") which had been
incorporated for the purpose of acquiring Wilmar International
Limited's US$60 million interest in the total US$400 million
consideration receivable as a result of the FGIH Transaction (the
"Wilmer consideration"). First Marvel was wholly-owned subsidiary
of Fortune Dynasty Holdings Limited ("FDH"), a joint venture
company then owned 55 per cent by First Level Holdings Limited
("FLH"), which is in turn controlled by Mr Daniel Chiu, an
executive director of the Company.
The conditional sale and purchase agreement included
consideration of GBP39.1 million (US$60 million), and an unsecured
fixed rate loan note instrument with FDH. Under the Loan
Instrument, FDH was agreed to subscribe in cash at par for GBP7.9
million (US$12 million) nominal amount of fixed rate unsecured loan
notes issued by the Group (the "Loan Notes"). Interest was payable
on the Loan Notes at a rate of 7% per annum until they were settled
through the subscription for shares.
On 25 September 2013, the Company announced that the acquisition
of First Marvel and the amendment of the loan received from FDH
amounting to US$12 million were approved by shareholders in the
General Meeting, such that it would be repayable in shares in
Fortune Oil (the "Loan Settlement") with the balance of
approximately US$80,000 of principal and all accrued interest paid
in cash. On 3 October 2013, Fortune Oil issued 599,639,580 new
ordinary shares of the Company for the acquisition of First Marvel
and the Loan Settlement.
6. Certain assets included in property, plant and equipment of
GBP1.6 million were transferred at cost by way of trust & deed
from two companies controlled and beneficially owned by Mr Daniel
Chiu on January 2014.
7. Included in trade and other receivables is an amount of
GBP0.8 million that represents the net amount expected to be
recovered on dissolution of the joint venture in Maoming King Ming
Petroleum Company Limited that was dissolved on 5 February 2013.
From this date control has been lost and therefore consolidation is
no longer appropriate.
8. The investment in CGH is divided into two layers: (i) direct
holdings by wholly owned subsidiaries of the Company; and (ii)
indirect holding by CGG, a jointly controlled entity between the
Group and Mr Liu Ming Hui. In October 2013, the Group loaned
GBP21.5 million to CGG to further purchase 30,000,000 ordinary
shares of CGH from Mr Liu Ming Hui. The loan balance as 30
September 2014 was GBP2.5 million.
9. By virtue of their directly and indirectly held shareholding
of 51.2%, FLH is considered to be the ultimate controlling party of
the Group.
10. In August 2014, the Group has increased its interest in CGH
through an acquisition of 13,252,000 shares (the "Acquired
Shares"). The shares were acquired from the China Petroleum &
Chemical Corporation (Sinopec Corp.) as part of a share placement.
The shares were acquired at a price of HK$14.80, a 5.1% discount to
the closing price on the date the acquisition was made on 13 August
2014.
Due to logistical constraints on the date the acquisition was
made, the Acquired Shares were allotted to FLH, a substantial
shareholder of the Company and private company controlled and
beneficially owned by Mr Daniel Chiu, an executive director of the
Company.
During August 2014, FLH transferred all the allotted shares at
cost (i.e. no profit or loss) to the Company. The Company has
indemnified FLH against all costs associated with the acquisition,
financing and transfer of any Acquired Shares.
19. Litigation
In April 2012, an action was commenced in the High Court of Hong
Kong by Caspian Resources Development Pte Limited ("CRDPL") against
Fortune Oil, Giant Global Development Limited ("GGDL"), a wholly
owned subsidiary of Fortune Oil, and George Howard Richmond ("Mr
Richmond") in relation to the validity of the sale and purchase of
a 16.7 per cent shareholding in Caspian Bounty Steel Limited
("CBSL") by Mr Richmond to GGDL in January 2011. CBSL is the
company through which Fortune Oil holds part of its interests in an
iron ore mining project located in Armenia. A writ of summons was
served on GGDL in April 2012 and on Fortune Oil in March 2013. GGDL
and Fortune Oil will strenuously defend the action. GGDL
successfully applied in September 2012 to the High Court of Hong
Kong for security for costs to be given by CRDPL. Fortune Oil will
similarly seek security for costs.
Fortune is currently unable to quantify the potential damages
that could arise from this claim. However, the Directors believe
that the Group and GGDL have reasonable prospects in successfully
defending the action and that therefore no provision has been made
in the financial statements as this claim is not expected to result
in any material loss to the Group. At 31 March 2014, the carrying
value of the assets in the Armenia iron ore project has been fully
impaired.
20. Approval of the interim financial statements
The interim of financial statements for six months ended 30
September 2014 were approved by the board of directors on 28
November 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QKODBDBDBPDB
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