RNS Number:3775D
Arko Holdings PLC
27 September 2004
FOR IMMEDIATE RELEASE 27 September 2004
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 2004
The Board of Arko announces the Interim Results of the Company for the six
months ended 30 June 2004, 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.
CHAIRMAN'S STATEMENT
I am pleased to announce Arko Holdings plc's ("the Group/Arko") interim results
for the six months ended 30 June 2004 and to report the progress of the Group to
date.
FINANCIAL SUMMARY
For the six months to 30 June 2004, the turnover was US$37.6m (2003:US$42.6m),
some 11.6% lower than the corresponding period last year. Of this fall 6.7% was
as a result of the effect of the disposal of a trading subsidiary, and the
remainder largely arose from the downturn in shipping logistics business of a
Hong Kong-based subsidiary.
The reported period witnessed decline in performance in both Arko Logistics
Limited ("ALL") and Changzhou Power Development Company Limited ("CZPD"), the
combined effect of which led to an 18.7% reduction in EBITDA.
The Group's operating expenses were US$3.7m (2003:US$1.9m), which included the
operating costs of US$1.6m of the overall Group's businesses and a total of
US$2.1m depreciation charge on assets. The decrease in turnover, combined with a
significant increase per unit in the Depreciation and Amortisation charge on
assets in People's Republic of China ("PRC") from existing operations, has led
to a 35.1% decrease in Operating Profit before provisions, exceptional items and
goodwill amortisation, which recorded US$2.5m (2003: US$3.8m). As a result,
profit before tax fell by 54.9% to US$1.6m compared to the pro forma figures for
the six months ended 30 June 2003. Earnings per share, of US0.042 cents,
declined drastically by 72.0% compared to pro forma figure for the first half of
2003.
In the light of the operation performance described above, the Board does not
propose any interim dividend.
OPERATIONAL REVIEW
In fact, throughout the period margins of the power plant and shipping business
were under pressure due to the fluctuation in coal and fuel price. The unstable
quality of coal supply not only increased the direct cost but also affected the
generation capacity of the power plant. The disposal of an oil tanker was
another factor causing the decline in performance of ALL. However, such disposal
was necessary as most income of ALL was derived from cargo shipment and there
was a rapid increase in the capacity of the vessels other than the tanker, the
management saw the need to dispose of the tanker and to upgrade other means of
transport.
As mentioned in the last annual report, the Group's aim is to focus on logistics
business, such as terminal construction, terminal operation and shipping. Thus,
the management disposed the existing trading arm of the Group in order to
concentrate efforts on the profit generating logistics business based in China
with its present centre at the Keen Chance Terminal in Guangzhou. It is in this
context that the aforesaid trading subsidiary was disposed of in the reported
period.
Despite the above, there was an overall improvement of the performance in Keen
Chance Terminal. This reflected the direct effectiveness of the new and
advanced machinery and equipment ordered last year. As some of the new
machinery and equipment has not been delivered, we believe that there will be
room for growth in the terminal in the second half-year result.
OUTLOOK
To review the performance of the Group ever since the reverse takeover in May
2002, the board has been concentrating on the problems of the past and are now
building on the strength of the continuing business. In fact, our continuing
business delivered reasonable results, regardless of the deterioration shown
from the discontinued units. The Board realised that business planning becomes
more sophisticated and demanding. We believe that the business of the Group
will be in a stronger operational health by way of optimising its assets
gradually.
The board expects a gradual improvement in the overall performance of the Group
in the second half in the light of the improving technical efficiency and
business of the Keen Chance Terminal. There was an overall improvement in the
operational performance of the terminal as a result of the benefits of
investment in new machinery and equipment made last year. Upon full delivery of
the ordered new machinery and equipment, the performance of this profit centre
should be better. Additional sources of business should be captured by this
terminal as recently, Keen Chance Terminal has been approved by the relevant
official body as a designated port of handling import and export of waste
papers. Only two ports have been approved for such handling in the region and
Keen Chance Terminal is one of them. However, due to keen competition, the board
is conservative about the profit outcome and does not expect that it could match
last year's bench mark.
At the same time, the management will seek to tackle the problem of the quality
of coal supply and to continue to seek opportunities to obtain an official
approval for increasing electricity tariff to increase the overall income
generating potential of the power plant.
Internally, following the restructuring, both management and corporate, which
occurred in the first half, a radical review of business operations has been
completed that will ensure the business is more focused on its shipping
logistics strengths. Senior management and staff recruitment will concentrate on
achieving the objective of promoting the logistic business. In addition, the
management is now exploring alternative means to fund the project of the quarry
mine, including but not limited to the vessels construction.
STAFF
The Board would like to give special thanks to all our staff, for the
commitment, professionalism and loyalty that they have shown during the last
six-months.
We look forward to the future with confidence.
Qin Shun Chao
Chairman
27th September 2004
FINANCIAL HIGHLIGHTS
For the six month period ended 30 June 2004
6 months 6 months
ended ended
30 June 2004 30 June 2003
US$ '000 US$ '000
Turnover 37,648 42,575 -11.6%
EBITDA* 4,417 5,433 -18.7%
Operating Profit 1,790 3,130 -42.8%
Shareholders' funds and minority interest 74,526 78,848 -5.5%
*EBITDA represents Earnings before interest, tax, depreciation and amortisation.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six month period ended 30 June 2004
6 months 6 months
ended ended
30 June 2004 30 June 2003
US$ '000 US$ '000
Turnover 37,648 42,575
Cost of Sales (31,436 ) (36,828 )
Gross Profit 6,212 5,747
Net operating expenses (3,725 ) (1,913 )
Operating profit before provisions and 2,487 3,834
exceptional items
Goodwill amortisation (697 ) (704 )
Operating profit 1,790 3,130
Loss on disposal of fixed assets (132 ) -
Interest receivable - 333
Interest payable (98 ) (3 )
Profit on ordinary activities 1,560 3,460
before taxation
Taxation on profit on ordinary (133 ) 521
activities
Profit on ordinary activities 1,427 3,981
after taxation
Minority Interest (588 ) (985 )
Profit for the financial period 839 2,996
Earnings per share (US cents)
Basic 0.042 0.152
Diluted 0.042 0.151
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six month period ended 30 June 2004
6 months 6 months
ended ended
30 June 30 June
2004 2003
US$ '000 US$ '000
Profit for the financial period 839 2,996
Exchange adjustments - (46 )
Total gains recognized in the period 839 2,950
CONSOLIDATED BALANCE SHEET
For the six month period ended 30 June 2004
As at As at
30 June 2004 30 June 2003
US$ '000 US$ '000
FIXED ASSETS
Intangible assets 24,901 26,541
Tangible fixed assets 41,847 43,730
Investment in associates 1,093 -
67,841 70,271
CURRENT ASSETS
Stock 1,062 1,678
Debtors 13,900 19,325
Cash at bank and in hand 360 994
15,322 21,997
CREDITORS
amounts falling due within one year (7,421 ) (12,955 )
NET CURRENT ASSETS 7,901 9,042
TOTAL ASSETS LESS CURRENT LABILITIES 75,742 79,313
CREDITORS
amounts falling due after (1,216 ) (465 )
more than 1 year
NET ASSETS 74,526 78,848
CAPITAL AND RESERVES
Called up equity share capital 18,769 13,147
Share premium account 11,417 11,349
Share to be issued - 5,603
Merger relief reserve 26,043 26,048
Profit and loss account 3,592 6,861
Other reserve 1,394 (28 )
61,215 62,980
MINORITY INTEREST 13,311 15,868
SHAREHOLDER'S FUNDS 74,526 78,848
CONSOLIDATED CASH FLOW STATEMENT
For the six month period ended 30 June 2004
6 months 6 months
ended ended
30 June 2004 30 June 2003
US$ '000 US$ '000
NET CASH INFLOW FROM OPERATING ACTIVITIES 124 3,707
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received - 333
Interest paid (98 ) (3 )
(98 ) 330
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire fixed assets (155 ) (624 )
Deposits paid for fixed assets (1,807 )
Receipts from sale of assets 256 -
101 (2,431 )
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 127 1,606
FINANCING
Issued equity share capital 25
Directly incurred issue expenses on issue - -
Loan repayment to fellow investor (7) (1,066 )
INCREASE/(DECREASE) IN CASH 120 565
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW/
(OUTFLOW) FROM OPERATING ACTIVITIES
Operating profit 1,560 3,461
Amortisation 697 704
Depreciation 2,062 1,599
Increase in stock (789) (1,310 )
Increase in debtors (2,435) (2,683 )
Decrease/(Increase) in creditors (1,103 ) 2,029
Loss on disposal of fixed assets 132
---
Exchange adjustments - (93 )
124 3,707
1. FINANCIAL INFORMATION AND COMPARATIVES
The interim results statement for the 6 months ended 30 June 2004 has been
prepared under the same accounting policies as those used in the preparation of
the audited accounts for the year ended 31 December 2003.
2. TURNOVER
30 June 2004 30 June 2003
US$'000 US$'000
Turnover comprised:
Terminals and shipping logistics 4,007 4,607
Power plant 5,287 6,749
Trading and others 28,354 31,219
37,648 42,575
3. EARNINGS PER SHARE
The calculation of earnings per share is based on the profit of US$839,000
(2003:US$2,950,000) divided by the weighted average number of shares in issue
and to be issued during the period. The calculation of diluted earning per share
is based on the profit and weighted average number of shares after adjusting for
the effects of all dilutive potential shares totalling 1,979,076,092 shares
(2003:1,978,925,296 shares).
30 June 2004 30 June 2003
No. of shares No. of shares
('000) ('000)
Weighted 1,976,109 1,973,140
average
number
of
shares
4. COMPARATIVE FIGURES
Previous year figures have been reclassified to conform with current year
presentation.
5. DIVIDENDS
The directors do not recommend the payment of any dividend.
6. INTANGIBLE ASSETS
Goodwill
US$'000
Cost
At 30th June 2003 and 30th June 2004 27,890
Accumulated amortisation:
At 30th June 2003 1,349
Amortisation charged 1,640
At 30th June 2004 2,989
Carrying amount:
At 30th June 2004 24,901
At 30th June 2003 26,541
7. PRINCIPAL SUBSIDIARY COMPANIES
Name Equity Principal activities Place of
attributable incorporation
to the Group
Arko Management Limited 100% Provision of management services Republic of
Seychelles
Arko Investments Limited 100% Investment holding Republic of
Seychelles
Arko Harbour Limited 100% Investment holding Republic of
Seychelles
Long Prosperity Industrial 100% Investment holding Republic of
Limited Seychelles
Arko Terminal Limited 100% Investment holding Republic of
Seychelles
Arko Consultants Limited 100% Investment holding British Virgin
Islands
Arko Energy Limited 100% Investment holding British Virgin
Islands
Sanko Mineral Limited 100% Investment holding British Virgin
Islands
Arko Satellite Limited 100% Satellite tracking system for British Virgin
vessels Islands
Arko Logistics Limited 100% Provision of logistics services Hong Kong
Changzhou Power Development 59.20% Power Plant PRC
Company Limited
Keen Chance Terminal (GZ) Company 40% Container terminal operation PRC
Limited
Fujian Sanko Mining Limited 70% Granite stone quarry mine PRC
Arko Silicon (Hubei) Limited 100% Industrial Silicon Manufacturing PRC
Linko Mineral (Ningxia) Limited 60% Not yet commenced business PRC
Arko Enterprises Limited, Arko International Trading Limited, Arko Silicon
Limited and Jin Jian International Limited were disposed of during the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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