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Arko Holdings PLC (YGH)

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Monday 27 September, 2004

Arko Holdings PLC

Interim Results

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     
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