RNS Number:0585Q
Arko Energy Holdings PLC
23 September 2003
FOR IMMEDIATE RELEASE 23 September 2003
ANNOUNCEMENT TO THE LONDON STOCK EXCHANGE
Arko Holdings plc ("the Company" or "Arko")
Interim Results of the Company
for the six months ended 30 June 2003
The Board of Arko announces the Interim Results of the Company for the six
months ended 30 June 2003, which are set out below. These have today been
published and will be despatched to Arko shareholders.
Copies of these financial statements will be available from the offices of
Nabarro Wells & Co. Limited, Saddlers House, Cheapside, London EC2V 6HS.
FINANCIAL HIGHLIGHTS
6 months ended 6 months ended
30th June 2003 30th June 2002
USD '000 USD '000
Turnover 42,575 17,289 +146%
EBITDA* 5,433 1,806 +200%
Operating Profit 3,130 1,245 +151%
Shareholders' funds and minority interest 78,848 66,405 +18%
*EBITDA represents earnings before interest, tax, depreciation and amortisation.
CHAIRMAN'S STATEMENT
The Board of Arko Holdings plc ("the Company") is pleased to report that the
Company and its subsidiaries ("the Group") recorded a significant growth in
operating profit for the six months ended 30 June 2003 in comparison with the
corresponding period of last year. This achievement reflected the inclusion of
the results of the businesses acquired in the May 2002 reverse takeover.
FINANCIAL REVIEW
In order to reflect the planned expansion of the Group's businesses in the
future, the Board has resolved to change the reporting currency from Pounds
Sterling to United States Dollars with effect from this period.
Despite the challenging economic environment, the first half of the year
witnessed a satisfactory advance in Group turnover and profit. Turnover was
146% higher at USD42.5m (2002: USD17.3m) whilst EBITDA were up 200% at USD5.4m
(2002: USD1.8m). The profit attributable to the shareholders grew by 81% to
USD3.0m (2002: USD1.6m).
INTERIM DIVIDEND
In order to maintain the desired level of investment in the Group's high valued
projects, the directors do not recommend the payment of any interim dividend.
REVIEW OF OPERATION
During the period under review, the Group's overall performance continued to
grow at a steady rate. The power plant in particular contributed considerable
profit and cash inflow to the Group during the period. The terminal also
performed satisfactorily and recorded a profit of RMB 6,206,000 (equivalent to
USD 747,680) in the first six months. Despite the fact that the average
handling fees have been reduced to compete with local operators, the throughput
reported a slight growth in comparison with last year. Taken as a whole, the
new management has successfully turned around the financial performance of the
terminal from the loss of last year. Whilst the performance of the trading and
logistics businesses were in line with the previous year, the management is of
the view that it is necessary to extend the customer network so as to overcome
the existing growth constraint.
PROSPECTS
The Group has continued to explore opportunities to grow and to develop its
current businesses. Following the change of management in the terminal
business, new and advanced machinery and equipment totalling approximately RMB20
million will be installed in the terminal, as well as for the refurbishment of
the terminal This is to increase the efficiency and the competitiveness of the
terminal business. As part of developing the quarry mine project and the
logistics business, the Group has also arranged for certain bulk carriers to be
delivered by early next year. The details of the bulk carriers were announced
by the Group in November 2002.
The third most significant development of the Group is a recently announced
investment relating to the construction of a chemical class silicon
manufacturing plant. The decision was prompted both by the ability of the Group
to secure long term low cost electricity supply as well as high quality and
economic silica and prospective market outlook of silicon industry. Affordable
high-purity silica and low electricity cost are two key criteria for a
successful silicon plant. Our silicon plant is situated at an excellent
location close to Changzhou Power Plant of Suizhou city of Hubei, which is able
to provide both these ingredients. Firstly, there are abundant world-class
silica (Si > 99.5%) reserves in the nearby cities of Hubei and Anhui. The high
purity charcoal for silicon furnaces also can be sourced from Shanxi. Secondly,
as electricity is the largest single production cost that accounts for
approximately 50% of total production cost, the availability of low-priced
electricity supplied by Changzhou Power Plant will reduce production cost and
make our products more competitive in the international market. It is envisaged
that, in the long term, the synergy effect created by the silicon and the power
plants will firstly finance the running and operations of these plants and
secondly enhance the overall cash flow position of the Group.
In order to address changes in global business and trading patterns, the Chinese
government has been implementing a series of reforms in the legal and monetary
system. Whilst foreign investors remain very cautious about investing in China,
the Group has taken an initiative to bring the western concepts of corporate
governance, transparent management practices and systems to its enterprises in
China. The Group-seeks to act as a pioneer to overcome the commercial
and cultural gaps between the West and Mainland China.
All in all, the Group will continue to make progress and will be well placed, by
using its surplus cash generated from the operations, to take advantages of any
opportunities for potential profits should they arise.
Whilst a degree of caution is appropriate, in view of prevailing global economic
uncertainties, the Group anticipates that its business revenues in the remainder
of 2003 will be maintained at a level similar to that recorded in the first half
of this year. The Board is confident of achieving a set of satisfactory full
year results in the forthcoming few months.
I have no doubt that our excellent team, coupled with our financial strength,
will stand the Group in good stead.
CHIN Kam Chiu
Chairman
23 September 2003
Consolidated Profit and Loss Account
Audited 9 6 months 6 months
months ended ended ended
31 December 30 June 30 June
2002 2003 2002
# '000 USD '000 USD '000
37,811 Turnover 42,575 17,289
(32,698 ) Cost of Sales (36,828 ) (14,966 )
5,113 Gross Profit 5,747 2,323
(1,168 ) Net operating expenses excluding (1,913 ) (924 )
goodwill
3,945 Operating profit before goodwill 3,834 1,399
amortisation
(609 ) Goodwill amortisation (704 ) (154 )
3,336 Operating profit 3,130 1,245
(70 ) Exceptional item - (93 )
461 Interest receivable 333 709
(133 ) Interest payable (3 ) (204 )
3,594 Profit on ordinary activities 3,460 1,657
before taxation
(548 ) Taxation on profit on ordinary 521 (33 )
activities
3,046 Profit on ordinary activities 3,981 1,624
after taxation
(452 ) Minority Interest (985 ) (33 )
2,594 Profit for the financial period 2,996 1,591
0.15 pence Earnings per share (US cents) 0.152 0.262
Statement of Total Recognised Gains and Losses
Audited 6 months 6 months
9 months ended ended ended
31 December 30 June 30 June
2002 2003 2002
# '000 USD '000 USD '000
2,594 Profit for the financial period 2,996 1,591
(1,866 ) Exchange adjustments (46 ) 6
728 Total gains recognized in the period 2,950 1,649
Consolidated Balance Sheet
Audited as at As at As at
31 December 30 June 30 June
2002 2003 2002
# '000 USD '000 USD '000
Fixed assets
18,311 Intangible assets 26,541 22,394
27,935 Tangible fixed assets 43,730 41,082
46,246 70,271 63,476
Current assets
230 Stock 1,678 316
9,853 Debtors 19,325 15,784
268 Cash at bank and in hand 994 1,443
10,351 21,997 17,543
Creditors: amounts falling due
(7,503 ) within one year (12,955 ) (13,083 )
2,848 Net current assets 9,042 4,460
49,094 Total assets less current liabilities 79,313 67,936
(994 ) Creditors: amounts falling due after (465 ) (1,531 )
more than 1 year
48,100 Net assets 78,848 66,405
Capital and reserves
8,910 Called up equity share capital 13,147 13,133
7,687 Share premium account 11,349 11,334
3,800 Share to be issued 5,603 -
17,667 Merger relief reserve 26,048 26,048
763 Profit and loss account 6,861 1,649
- Capital reserve (28 ) -
38,827 62,980 52,164
9,273 Minority interest 15,868 14,241
48,100 Shareholders' funds 78,848 66,405
Consolidated Cash Flow Statement
9 months ended 6 months ended
31 December 30 June
2002 2003
# '000 USD '000
4,177 Net cash inflow from operating activities 3,707
Returns on investments and servicing of finance
18 Interest received 333
(132 ) Interest paid (3 )
(114 ) 330
Capital expenditure and financial investment
(4,068 ) Payments to acquire fixed assets (624 )
(2,153 ) Deposits paid for fixed assets (1,807 )
1,090 Receipts from sale of assets -
1,390 Receipts from sale of current investment -
(3,741 ) (2,431 )
Acquisition and disposal
221 Net cash balances acquired with subsidiaries -
543 Net cash inflow/(outflow) before financing 1,606
Financing
10 Issued equity share capital 25
(304 ) Directly incurred issue expenses on issue -
- Loan repayment to fellow investor (1,066 )
249 Increase/(decrease) in cash 565
Reconciliation of operating profit to net cash
inflow/(outflow) from operating activities
3,336 Operating profit 3,461
609 Amortisation 704
1,320 Depreciation 1,599
112 (Decrease)/Increase in stock (1,310 )
3,024 (Decrease)/Increase in debtors (2,683 )
(3,691 ) Increase/(decrease) in creditors 2,029
(481 ) Negative goodwill written back -
(52 ) Exchange adjustments (93 )
4,177 3,707
The comparative figures of corresponding period of last year have not been
included in this statement on the basis that the comparatives do not reflect the
position of the Group for that particular period. The comparatives, if included
in this statement, might distort the current period figures
Notes to the Interim Financial Information
1. CHANGE OF REPORTING CURRENCY
During the period ended 30 June 2003, the directors resolved that the financial
statements of the Group should be stated in United States dollars instead of
Pounds Sterling as used in previous years' financial statement so as to reflect
the planned expansion of Group's businesses.
2. FINANCIAL INFORMATION AND COMPARATIVES
The interim results for the 6 months ended 30 June 2003 has been prepared under
the same accounting policies as those used in the preparation of the audited
accounts for the period ended 31 December 2002. The audited figures for the
period ended 31 December 2002 have been extracted from the statutory accounts
which have been filed with the Registrar of Companies and on which the auditors
gave an unqualified report under Section 235 of the Companies Act 1985.
3. TURNOVER
31 December 2002 30 June 2003 30 June 2002
#'000 USD'000 USD'000
Turnover comprised:
3,915 Terminals and shipping logistics 4,607 2,712
4,167 Power plant 6,749 1,111
29,729 Trading and others 31,219 13,466
------ ------ ------
37,811 42,575 17,289
====== ====== ======
4. EARNINGS PER SHARE
The calculation of earnings per share is based on the profit of USD 2,996,000
divided by the weighted average number of shares in issue and to be issued
during the period.
30 June 2003 30 June 2002
No. of shares ('000) No. of shares ('000)
Weighted average number of shares 1,973,140 606,935
========= =======
5. DIVIDENDS
The directors do not recommend the payment of dividend.
6. INTANGIBLE ASSETS
Goodwill
USD'000
Year ended 31st December 2002
At 1st January 2001, as previously reported 27,245
Amortisation charge (704)
------
At 30th June 2003 26,541
======
7. PRINCIPAL SUBSIDIARY COMPANIES
Name Equity attributable to the Principal activities Place of incorporation
Group
Arko Management Limited 100% Provision of management Republic of Seychelles
services
Arko Enterprise Limited 100% Investment in industries Republic of Seychelles
Arko Harbour Limited 100% Investment in harbour Republic of Seychelles
Long Prosperity Industrial 100% Investment in electricity Republic of Seychelles
Limited
Arko Terminal Limited 100% Investment in terminal Republic of Seychelles
Arko Energy Limited 100% Energy resources exploitation British Virgin Islands
Sanko Mineral Limited 100% Investment holding British Virgin Islands
Arko Satellite Limited 100% Satellite tracking system British Virgin Islands
for vessels
Arko International Trading 100% International trading and Hong Kong
Limited investment
Arko Logistics Limited 100% Provision of logistics Hong Kong
services
Changzhou Power Development 59.2% Power Plant PRC
Company Limited
Keen Chance Terminal (GZ) 40% Container terminal operation PRC
Company Limited
Fujian Sanko Mining Limited 70% Granite stone quarry mine PRC
Arko Silicon (Hubei) Limited 100% Industrial Silicon PRC
Manufacturing
8. SUPPLEMENTARY BALANCE SHEET- COMPLIANCE WITH INTERNATIONAL ACCOUNTING
STANDARDS
The information in this Note is included to help international investors to
understand the financial performance of the Group.
As at As at
30 June 30 June 2002
2003
USD '000 USD '000
Fixed assets
Intangible assets 255,457 251,310
Tangible fixed assets 43,730 41,082
299,187 292,392
Current assets
Stock 1,678 316
Debtors 19,325 15,784
Cash at bank and in hand 994 1,443
21,997 17,543
Creditors: amounts falling due
within one year (12,955 ) (13,083 )
Net current assets 9,042 4,460
Total assets less current liabilities 308,229 296,852
Creditors: amounts falling due after (465 ) (1,531 )
more than 1 year
Net assets 307,764 295,321
Capital and reserves
Called up equity share capital 13,147 13,133
Share premium account 11,349 11,334
Share to be issued 5,603 -
Merger relief reserve 26,048 26,048
Profit and loss account 6,861 1,649
Capital reserve (28 ) -
62,980 52,164
Deferred income 160,241 162,241
Minority interest 84,543 82,916
Shareholders' funds 307,764 295,321
The Supplementary balance sheet included in this Note has been prepared in
accordance with International Accounting Standards ("IAS") issued by the
International Accounting Standards Committee which differ from the interim
financial statements prepared in accordance with UK accounting standards. The
principal adjustments to the balance sheet made to conform to IAS include the
following:
i. Adjustment of intangible assets, which includes the fair
value of mining exploitation right based on a professional valuation using
discounted cash flow basis;
ii. To record the initial fair value of mining exploitation
right as deferred income; and
iii. Adjustment of minority interest to reflect the share of
interest in the mining exploitation right.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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