RNS Number:1264A
Arko Holdings PLC
25 June 2004
FOR RELEASE AT 0700 ON 25 JUNE 2004
ANNOUNCEMENT TO THE LONDON STOCK EXCHANGE
Arko Holdings plc ("the Company" or "Arko")
Results of the Company
for the year ended 31 December 2003
The Board of Arko announces the results of the Company for the year ended 31
December 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.
Chairman's Statement for the year ended 31 December 2003
I have pleasure in presenting the annual financial statements for the year ended
31 December 2003. Although my appointment as a director and the Chairman of
Arko Holdings plc ("Arko" or the "Company") was only made on 23 April 2004, I
have been following the businesses of Arko since the conclusion of the reverse
takeover in May 2002 by Chin Dynasty Fund.
FINANCIAL RESULTS
The Company's consolidated operating profit before provisions and tax was
US$6,125,438 (2002: US$5,133,626). In the year ended 31 December 2003, we
adopted a more conservative approach by making a provision amounting to
US$5,954,871 for the fixed assets used in the power plant. This measure is
taken so as to adhere the relevant depreciation policy of the group and this
will have a positive effect when analysts assess the value of the Company's
assets.
Out of the profit before provisions and tax, Keen Chance Terminal (Guangzhou)
Limited contributed 17.1%, in comparison with 12.4% in the corresponding period
of last year. The power plant, Changzhou Power Development Company Limited,
recorded profitability comparable to last year, while both the businesses of
logistics and international trading experienced a slight downturn in this year.
DIVIDENDS
The directors do not recommend the payment of any dividend for the year ended 31
December 2003.
BUSINESS REVIEW
The four major operating subsidiaries of the Company maintained stable
profitability this year. The logistics business continued to play a significant
role in the Company, amounting to 52.96 % of the operating profit before
provisions and tax of the Group. This result reflects on the success of the new
management retained for the container terminal operation. All in all, the
prospects for logistics business in China are excellent. It is our objective to
expand our customer base to include large shipping companies for export trade as
the income and profit produced from these shipping companies are generally
higher compared to those generated by inland trade.
The power plant is the major cash income generator of the Company. However, its
development potential is limited as its relatively small generation capacity
constraints it from benefiting from certain incentives provided by the
government. We will keep the Group closely abreast of changes in the
electricity policy of China, in particular the power tariff policy.
Although the trading business has brought reliable income to the Company in the
past year, we anticipate that the activity level in trading will be reduced in
the forthcoming year. The change in management following the resignation of
Clement Leung, our former CEO (whose strength was in international trading), has
resulted in a review of the business strategy of the Company. That review is
ongoing. However, our aim currently is to place more focus on Arko's logistics
business, such as terminal construction, terminal operation and shipping. This
is to enable the Company to present a clear focus and image to its investors.
The Company will keep shareholders informed about development in its strategy.
CHANGE IN DIRECTORATE OF THE COMPANY
This year, the Company has experienced significant changes in its board of
directors. The departure of our former CEO, Clement Leung, has led the Company
to an important decision to restructure its board of directors to include
persons with different skills and expertise. The appointment of Mr Qin Bing
Qiang and Mr Shi Yan has filled the gap between Chinese and Western management.
As the former has extensive experience in terminal management, and the latter
has a wealth of knowledge in finance and accounting. The involvement of board
members in the operation of Arko's subsidiaries should become more effective and
efficient. On the other hand, the unfortunate conviction in March 2004 of our
former Chairman, Mr Chin Kam Chiu, and his subsequent resignation from the
board, has inevitably brought uncertainty to our investors and others with an
interest in the company. As the decision of the court relates entirely to Mr
Chin's personal affairs and has no relation to the Company or its business, and
since the Company's board operates the Company in accordance with the principles
of good corporate governance, this adverse effect on the Company is therefore
only transient. The directors intend to continue to strengthen the board by
introducing new talents to the board in the near future.
PROSPECTS
Recently, the China National Development and Reform Commission ("CNDRC") has
announced a unification policy of increasing the selling price of electricity.
There will be an increase on average of RMB 0.12cent/kwh in the central and
eastern China region. In Hubei province, this proposed scheme has already been
submitted to the provincial government for endorsement and will be announced,
subject to the ultimate approval of CNDRC. If the scheme is adopted, the
overall income of the power plant will be increased.
In the interim report, the Company reported an intention to invest in the
construction of a chemical class silicon manufacturing plant. Despite the fact
that the bulk of the preliminary work has been completed, the project cannot
currently move ahead. This is due to the recent unification policy for
electricity restraining the power plant from offering lower electricity rates to
the silicon plant. Nor is the local government able to provide any additional
incentive to reduce the electricity cost. As electricity is the largest single
production cost, accounting for approximately 50% of the total production cost,
the project becomes less viable due to this new price control policy.
In respect of the Company's joint venture in a coalmine in Ningxia, as reported
in the last year financial statements, the disputes with the PRC party in
relation to the Company's change of shareholding has remained unresolved. It has
therefore been decided that the coalmine project would be shelved until an
amicable compromise with the other party is reached. At present, the Company
holds a 60% equity interest in this venture vehicle.
Regardless of the above, the future of the quarry mine project remains
unaffected and undiminished as the Company owns the investment right of this
valuable asset, from which the Company will in time benefit significantly,
either by an industry sale or by mine development. In the coming year, the
Company will place a strong focus on this quarry mine development and keep
shareholders informed of progress.
In conclusion, the Board looks to the future of our Company with optimism and
confidence.
APPRECIATION
I would like to express my sincere gratitude on behalf of all shareholders to
the Board of Directors and employees of the Group for their support, dedication
and hard work throughout the past year and in the future.
Qin Shun Chao
Acting Chairman
24 June 2004
Consolidated Profit and Loss Account
Year ended 31 December 2003
Year 9 months
ended ended
31.12.2003 31.12.2002
Note US$ US$
Turnover 2 82,978,181 58,192,919
Cost of sales (69,188,539) (50,324,485)
Gross profit 13,789,642 7,868,434
Other income 3 340,279 -
Net operating expenses (8,004,483) (2,734,808)
Operating profit before provisions and
exceptional items
6,125,438 5,133,626
Impairment of fixed assets 4 (5,954,871) -
Operating profit 2, 5 170,567 5,133,626
Exceptional items 7
Acquisitions
Disposal of fixed assets - 95,068
Disposal of investments - (202,160)
Interest receivable 8 538,125 708,946
Interest payable 9 (718,294) (204,076)
(Loss)/profit on ordinary activities
before taxation (9,602) 5,531,404
Taxation on profit on ordinary activities 10 (594,896) (842,911)
(Loss)/profit on ordinary activities after (604,498) 4,688,493
taxation
Minority interests 2,158,185 (696,014)
Profit for the financial year / period 1,553,687 3,992,479
Earnings per share (cent)
Basic 11 0.0787 0.2365
Diluted 11 0.0786 0.2358
There were no material differences between the reported profit and historical
cost profit on ordinary activities before taxation in any of the above financial
year / period.
The Group has neither acquired nor discontinued any operations within the
meaning of Financial Reporting Standard 3 during 2003 therefore turnover and
operating results derive entirely from continuing operations. In the year ended
31 December 2002, the turnover and operating results are set out below:
Year ended 31.12.2003 9 months ended 31.12.2002
Continuing Continuing
operations Total operations Acquisition
US$ US$ US$ US$
Turnover 82,978,181 58,192,919 45,753,967 12,438,952
Operating profit before provisions
and exceptional items
6,125,438 5,133,626 1,145,680 3,987,945
Statement of Total Recognised Gains and Losses
Year ended 31 December 2003
Year 9 months
ended ended
31.12.2003 31.12.2002
US$ US$
Profit for the financial year / 1,553,687 3,992,479
period
Exchange adjustments (198,346) (262,397)
Total gains recognised in the year / 1,355,341 3,730,082
period
Balance Sheets
At 31 December 2003
Group Company
At At At At
31.12.2003 31.12.2002 31.12.2003 31.12.2002
Note US$ US$ US$ US$
FIXED ASSETS
Intangible asset 12 25,597,845 26,992,543 - -
Tangible assets 13 44,171,427 44,781,965 - -
Investments in subsidiaries 14 - - 56,014,662 56,014,662
Investments in associates 15 1,092,836 -
70,862,108 71,774,508 56,014,662 56,014,662
CURRENT ASSETS
Stocks 16 273,936 369,145 - -
Debtors 17
-due within one year 5,243,978 7,399,956 983 13,899
-due after more than
one year 6,220,540 8,394,573 - -
Cash at bank and in hand 239,860 429,151 1,329 4,363
11,978,314 16,592,825 2,312 18,262
CREDITORS
Amounts falling due
within one year 18 (8,516,669) (12,027,927) (1,328,860) (705,430)
NET CURRENT
ASSETS 3,461,645 4,564,898 (1,326,548) (687,168)
TOTAL ASSETS LESS
CURRENT LIABILITIES 74,323,753 76,339,406 54,688,114 55,327,494
CREDITORS
Amounts falling due
after more than one year 18 (1,224,049) (1,593,967) - -
MINORITY INTERESTS (12,723,462) (14,854,056) - -
60,376,242 59,891,383 54,688,114 55,327,494
CAPITAL AND RESERVES
Called up share capital 22 13,167,451 13,134,525 13,167,451 13,134,525
Shares to be issued 23 5,601,466 5,601,466 5,601,466 5,601,466
Share premium 23 11,416,567 11,331,474 11,416,567 11,331,474
Merger relief reserve 23 26,042,970 26,042,970 26,042,970 26,042,970
Other reserve 23 1,394,464 -
Profit and loss account 23 2,753,324 3,780,948 (1,540,340) (782,941)
SHAREHOLDERS' FUNDS 60,376,242 59,891,383 54,688,114 55,327,494
Consolidated Cash Flow Statement
Year ended 31 December 2003
Year ended 9 months ended
31.12.2003 31.12.2002
Note US$ US$
NET CASH INFLOW FROM
OPERATING ACTIVITIES 20 11,585,327 6,651,151
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Dividend paid to miniority interest holders (988,501)
Interest received 538,125 27,760
Interest paid (718,294) (204,076)
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE (1,168,670) (176,316)
TAXATION
Overseas tax paid (168,379) -
NET CASH OUTFLOW FROM TAX PAYMENTS (168,379) -
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire fixed assets (9,833,099) (6,521,333)
Deposits paid for fixed assets - (3,450,856)
Receipts from sale of assets 370,347 1,747,199
Receipts from sale of current investments - 2,228,815
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE
AND FINANCIAL INVESTMENT (9,462,752) (5,996,175)
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings - (2,480)
Purchase of an associate (1,092,836) -
Net cash acquired with subsidiaries - 356,212
Sale of subsidiaries - -
NET CASH (OUTFLOW) / INFLOW FROM
ACQUISITIONS AND DISPOSAL (1,092,836) 353,732
CASH (OUTFLOW) / INFLOW BEFORE FINANCING (307,310) 832,392
FINANCING
Issue of equity share capital 131,704 14,741
Share issue expenses paid (13,685) (446,506)
Capital element of finance lease payment - (1,078)
118,019 (432,843)
(DECREASE) / INCREASE IN CASH (189,291) 399,550
Consolidated Cash Flow Statement
Year ended 31 December 2003
Year 9 months
ended ended
31.12.2003 31.12.2002
Note US$ US$
RECONCILIATION OF NET CASH FLOW 21
TO MOVEMENT IN NET DEBT
(Decrease) / increase in cash in the year / period (189,291) 399,550
Cash outflow from decrease in lease financing 5,226 1,077
Cash outflow from repayment of bank loan 9,789
Cash outflow from repayment of other loan 357,599
Cash outflow from repayment of advances from investors 30,340
Bank loan acquired with subsidiaries - (2,098,860)
Other loan acquired with subsidiaries - (393,278)
Advances from fellow investors
acquired with subsidiaries - (1,355,537)
New finance leases (23,494) (6,726)
Translation differences - 349,079
Movement in net debt in the year / period 190,169 (3,104,695)
Net (debt) / funds at beginning of year / period (3,075,094) 29,601
Net debt at end of year / period (2,884,925) (3,075,094)
Reconciliation of Movement in Shareholders' Funds
Year ended 31 December 2003
Year 9 months
ended ended
31.12.2003 31.12.2002
US$ US$
Profit for the financial year 1,553,687 3,992,479
Issue of new shares 131,704 50,427,935
Shares issue expenses (13,685) (446,506)
Shares to be issued as deferred consideration - 5,601,466
Other movements in shareholders' funds
Exchange adjustments (198,346) (262,397)
Dividends to minority shareholders (988,501) -
Net addition to funds 484,859 59,312,977
Opening shareholders' funds 59,891,383 578,406
Closing shareholders' funds 60,376,242 59,891,383
Notes to the Financial Statements
Year ended 31 December 2003
1. ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost
convention, and in accordance with applicable UK accounting standards.
(a) Basis of consolidation
On the acquisition of a subsidiary, its assets and liabilities are recorded at
their fair value, reflecting their condition at the date of acquisition. All
changes to those assets and liabilities, and the resulting gains and losses,
that arise after the Group has gained control of the subsidiary are taken to the
profit and loss account.
The consolidated profit and loss account and consolidated balance sheet include
the financial statements of the Company and its subsidiary undertakings up to 31
December. The results of subsidiaries acquired are included in the consolidated
profit and loss account from the date on which control passes. Intra-group sales
and profits are eliminated on consolidation.
As permitted by Section 230 of the Companies Act 1985, a separate profit and
loss account is not presented in respect of the Company.
(b) Turnover
Turnover comprises the invoiced value of sales relating to the period in respect
of trading, operation of a power plant and a terminal and provision of shipping
logistic services.
(c) Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the
consideration paid over the fair value of the identifiable net assets acquired
and will be amortised through the profit and loss account over its estimated
useful economic life of 20 years on a straight line basis.
Provision is made for any impairment in the carrying value of the goodwill to
the extent that an asset's recoverable value in use is reduced below its
carrying value.
(d) Tangible assets
Expenditure on additions and improvements is capitalized as incurred. Fixed
assets are included at historical cost less accumulated depreciation and any
impairment losses.
Tangible fixed assets, other than construction in progress, are depreciated over
their estimated useful lives on a straight line basis. The following annual
rates of depreciation have been used.
Land and buildings 20-30 years
Plant and machinery 10-20 years
Equipment, furniture and fixtures 5-10 years
Motor vehicles 5-10 years
Oil storage tanks 15 years
Vessels 10 years
Construction in progress represents a building under construction, which is
stated at cost less any impairment. Cost comprises the direct cost of
construction. Construction in progress is reclassified to the appropriate
category of tangible fixed assets when completed and ready for use.
(e) Stock
Stock is valued at the lower of cost and estimated net realizable value.
(f) Foreign currencies
Monetary assets and liabilities expressed in foreign currencies are translated
at the rate of exchange ruling at the balance sheet date. Differences on
exchange arising from the translation of the opening balance sheets of foreign
subsidiaries at the period end are taken directly to exchange reserve. Revenues,
costs and non-monetary assets are translated at the exchange rates ruling at the
transaction date.
Profit and losses arising from currency transactions and on settlement of
amounts receivable and payable in foreign currencies are dealt with through the
profit and loss account.
(g) Deferred taxation
As required by FRS 19 "Deferred tax", full provision is made for deferred tax
assets and liabilities arising from all timing differences between the
recognition of gains and losses in the financial statements and recognition in
the tax computation, except for those timing differences in respect of which the
standard specifies that deferred tax should not be recognized.
Deferred tax assets and liabilities are calculated at the tax rates expected to
be effective at the time the timing differences are expected to reverse.
(h) Liquid resources
In accordance with FRS 1 "Cash Flow Statements", for cash flow purposes, cash
includes net cash in hand and bank deposits payable on demand within one working
day, and liquid resources include all of the Group's other bank deposits.
(i) Pension costs
The Group operates defined contribution pension schemes including the Hong Kong
Mandatory Provident Fund Scheme and the PRC Central Pension Scheme.
Contributions are charged to the profit and loss account in the period as
incurred.
(j) Lease
Assets acquired under finance leases are treated as tangible fixed assets and
depreciation is provided accordingly. The present value of future rentals is
shown as a liability and the interest element of rental obligations is charged
to the profit and loss account over the period of the lease in proportion to the
capital balance outstanding.
Rentals paid under operating leases are charged to the profit and loss account
as incurred.
2. SEGMENTAL INFORMATION
Turnover Operating profit/ Net operating
(loss)
Year 9 months Year 9 months assets /
(liabilities)
ended ended ended ended At At
31.12.2003 31.3.2002 31.12.2003 31.3.2002 31.12.2003 31.3.2002
US$ US$ US$ US$ US$ US$
Continuing
operations:
Terminal and 9,620,772 6,024,988 3,243,924 2,734,625 42,504,275 21,553,551
shipping logistics
Power plant 11,423,085 6,413,965 (3,208,044) 1,270,392 4,875,170 31,369,960
Trading and others 61,934,324 45,753,966 245,252 1,223,620 3,712,912 4,498,910
Mining - - (110,565) (95,011) 9,283,885 2,468,962
Group 82,978,181 58,192,919 170,567 5,133,626 60,376,242 59,891,383
Analysis by
destination:
Hong Kong 67,876,476 4,277,510 3,328,202 3,964,012 15,731,583 22,697,287
PRC excluding 15,101,705 53,915,409 (2,400,235) 2,009,253 46,659,880 37,881,282
Hong Kong
United Kingdom ("UK") - - (757,400) (839,639) (2,015,221) (687,186)
Others - - - - - -
Group 82,978,181 58,192,919 170,567 5,133,626 60,376,242 59,891,383
The analysis of turnover by destination is not materially different to the analysis of turnover by
origin.
3. OTHER INCOME
2003 2002
US$ US$
Net profit from investment in property 286,982 -
Others 53,297 -
340,279 -
4. IMPAIRMENT OF FIXED ASSETS
Due to technology evolution, management expect the life of fixed assets from
Changzhou Power Development Company Limited ("CZPD") would be substantially
shortened and a provision of US$5.9 million has therefore been made.
This provision is to ensure that the fixed assets from CZPD are recorded in the
financial statements herein at no more than their recoverable amounts in
accordance with FRS 11. Measures have also been taken to adhere to the relevant
depreciation policy as stated in Note 1 of these financial statements.
As the minority interest of CZPD is of 40.8%, the impairment is shared
proportionally by the minority shareholders. Of the provision of US$5.9 million,
the amount borned by the minority shareholders is in excess of US$2.4 million.
5. OPERATING PROFIT
31.12..03 31.12.02
US$ US$
Operating profit is stated after
charging / ( crediting):
Auditor's remuneration
- UK 23,121 23,086
- Overseas 80,727 8,957
103,848 32,043
Depreciation of tangible assets
- owned assets 3,964,236 2,031,072
- leased assets 545 545
Amortisation of positive goodwill 1,394,698 937,377
Loss on disposal of fixed assets 11,792 -
Impairment of tangible assets 5,954,871 -
Rentals under operating leases
- land and buildings 636,432 295,942
- barges and containers 1,425,187 949,997
- motor vehicles 181,656 145,392
Directors' ( see below) 31,414 -
remuneration
Staff costs 1,375,243 1,819,921
Exchange loss 96,421 9,404
Write back of negative goodwill - (740,334)
Fees of US$214,311 were paid to certain directors through Winbest Resources
Limited, a company in which Messrs. QIN Bing Qiang and SHI Yan are directors and
is ultimately controlled by Chin Dynasty Foundation Limited ("CDFL"). These
fees are additional to US$31,414 that was paid to one of the non executive
directors.
6. PARTICULARS OF EMPLOYEES
Staff costs are analysed as below:
31.12.03 31.12.02
US$ US$
Wages and salaries
- included in costs of sales 29,979 602,421
- included in operating expenses 1,156,731 1,041,215
Social security costs 141,101 91,888
Pension costs 40,139 31,703
Other staff welfare 7,293 52,694
1,375,243 1,819,921
Average number of staff employed during the year was as follows:
Number Number
Management and administration 110 142
Sales and distribution 18 23
Operations 450 386
578 551
7. EXCEPTIONAL ITEMS
In last period ended 31 December 2002, due to group restructuring, exceptional
items were incurred as follows:
(a) Gain of US$95,068 on disposal of tangible fixed assets.
(b) Loss on disposal of investments of US$202,160 arising from the
disposal of Arko Shipping Limited to Zhejiang Yicheng Industrial Company Limited
("ZYCIL"), a fellow investor in Fujian Sanko Mining Limited ("FSML"), at a
consideration US$2,050,804
(c)
Additional costs associated with the sale of the Company's former
subsidiaries in the prior period.
8. INTEREST RECEIVABLE
Year 9 months
ended ended
31.12.2003 31.12.2002
Interest income US$ US$
- Bank 735 973
- Other 537,390 707,973
538,125 708,946
9. INTEREST PAYABLE
Year 9 months
ended ended
31.12.2003 31.12.2002
US$ US$
Bank loans wholly repayable within five years 1,194 158,636
Other loans wholly repayable within five years 716,516 44,910
Finance charges payable under finance lease 584 530
718,294 204,076
10. TAXATION
(a) Analysis of tax charge
Year 9 months
ended ended
31.12.2003 31.12.2002
US$ US$
Current tax:
UK corporation tax on profits of the period - -
Adjustment in respect of prior periods - -
Foreign tax
Current year 1,116,715 842,911
Adjustment in relation to prior year (521,819) -
Total current tax 594,896 842,911
Deferred tax - -
Tax on profit on ordinary activities 594,896 842,911
(b) Factors affecting tax charge for the period
The tax assessed for the year/period is lower than the standard rate of corporation tax in
the UK (30%).
The differences are explained below:
Year 9 months
ended ended
31.12.2003 31.12.2002
US$ US$
(Loss)/profit on ordinary activities before tax (9,602) 5,531,404
(Loss)/profit on ordinary activities at standard
rate of corporation tax in the UK of 30%
(year ended 31.12.2002 :30%) (2,881) 1,659,359
Expenses not deductible for tax purposes 2,723,301 118,886
Capital allowances in excess of depreciation (6,901) (34,461)
Lower tax rates on overseas earnings (670,887) (1,005,850)
Non-taxable income (1,185,121) (80,614)
Tax losses available for set off 259,204 185,591
1,116,715 842,911
(c) Factors that may affect future tax charges
In respect of subsidiaries operating in Hong Kong , provisions for Hong Kong
profits tax are calculated at 17.5% (2002 : 16%) of the estimated assessable
profits for the year.
In respect of subsidiaries operating in PRC, they are subject to enterprise
income tax ("EIT") at rates ranging from 15% to 33%. However, certain of them
are subject to tax holidays from the local tax authorities under the income tax
law of PRC whilst certain had tax losses brought forward from previous years.
Accordingly, no provision for EIT has been made for the period.
No deferred tax is recognized on the unremitted earnings of the overseas
subsidiaries, as no dividends payments, due to the UK parent company are
expected to be made in the foreseeable future.
At At
31.12.2003 31.12.2002
Deferred tax - Unprovided for US$ US$
Accelerated capital allowances - (19,143)
Tax losses carried forward 1,816,412 252,070
1,816,412 232,927
11. EARNINGS PER SHARE
Basic earnings per share for the year is based on a profit of US$1,553,687
(2002: US$3,992,479) and the weighted average number of shares in issue and to
be issued of 1,973,935,044 (2002: 1,688,444,775).
Diluted earnings per share for the year is based on a profit of US$1,553,687.
(2002:US$3,992,479) The weighted average number of shares used to calculate
diluted earnings per share incorporates the weighted average number of shares in
issue and to be issued of 1,973,935,044 plus dilutive potential ordinary shares
arising from share options of 2,966,667 totalling 1,976,901,711.
12. INTANGIBLE FIXED ASSET
Goodwill on
acquisition of
subsidiaries
US$
Cost
At 1 January 2003 and at 31 December 2003 27,890,148
Accumulated amortization
At 1 January 2003 897,605
Amortisation for the year 1,394,698
At 31 December 2003 2,292,303
Net book value
At 31 December 2003 25,597,845
At 31 December 2002 26,992,543
13. TANGIBLE FIXED ASSETS
Furniture
Land and Plant and fixtures Oil Motor Construction
and storage
Group buildings machinery equipments tanks Vessels vehicles in progress Total
US$ US$ US$ US$ US$ US$ US$ US$
B/F 21,246,987 23,040,843 2,357,209 1,745,568 3,823,225 604,328 1,011,952 53,830,112
Exchange (108,977) (118,176) (11,233) (15,138) - (3,034) (5,192) (261,750)
differences
Transfers 987,306 - - - - - (987,306) -
Additions 104,553 1,576,482 28,501 - 205,088 60,696 7,857,779 9,833,099
Disposals - - - (182,526) (205,088) (13,074) - (400,688)
22,229,869 24,499,149 2,374,477 1,547,904 3,823,225 648,916 7,877,233 63,000,773
Accumulated depreciation
B/F 2,734,350 4,600,797 848,275 67,884 468,844 327,997 - 9,048,147
Exchange (30,003) (56,855) (10,754) (818) (806) (2,563) (18,105) (119,904)
differences
Charges 1,068,862 2,096,736 252,312 108,757 383,129 54,985 - 3,964,781
Impairment 2,289,037 3,089,966 453,483 - 58,536 45,744 18,105 5,954,871
Disposal - - - (17,239) - (1,310) - (18,549)
6,062,246 9,730,644 1,543,316 158,584 909,703 424,853 - 18,829,346
At 16,167,623 14,768,505 831,161 1,389,320 2,913,522 242,063 7,877,233 44,171,427
31.12.2003
At 31.12. 18,512,637 18,440,046 1,508,934 1,677,684 3,354,381 276,331 1,011,952 44,781,965
2002
During the year, the Company acquired 2 plots of land amounting to RMB60 million
(equivalent to US$7.2 million). Due to certain administrative procedures,
certificate of land use right has not been issued. The land has therefore been
classified under construction in progress
At 31 December 2003, the net book values of land and building, plant and machinery, furniture, fixtures and
equipment are further analysed as follows:
Power Mining
Terminal plant zone Others Total
US$ US$ US$ US$ US$
Land
- short leases 2,756,615 - - - 2,756,615
- unspecified 1,378,309 - - - 1,378,309
leases
4,134,924 - - - 4,134,924
Buildings 8,753,831 - - 8,753,831
Land and buildings - 2,314,847 964,021 - 3,278,868
12,888,755 2,314,847 964,021 - 16,167,623
Plant and 3,299,204 11,469,301 - - 14,768,505
machinery
Furniture,
fixtures
and equipment 57,308 644,810 4,846 124,197 831,161
The oil storage tanks are situated in PRC.
At 31 December 2003, a guarantee was given by Keen Chance Terminal (GZ) Company
Limited ("KCT") for banking facilities granted to a fellow investor, Miaotou
Economic Development Company Limited ("MEDCL"), in KCT (see note 27(b)).
The Group obtained land use right and real estates certificates on the
terminal's land under short leases from the local land authority. Land with a
value of US$1,378,309 held under unspecified leases of the terminal is land held
for industrial use for which the relevant land use right certificate was not
obtained and thus the term of the lease has yet to be agreed.
Included in the land and buildings of the power plant are short leases land on
which the power plant, related ash storage pools and ancillary facilities are
located. In addition, they also include land held for industrial use in respect
of which the Group has not obtained the relevant land use right certificate. Due
to the lack of historic accounting records, the Group has no record of the split
of the net book value between land and buildings.
The Group did not obtain any building ownership certificate in respect of the
buildings of the Group.
Under the Law of PRC, the land held for industrial use and the buildings without
building ownership certificate can only be used for identified industrial
purposes. The Group cannot legally sell or mortgage such properties until the
relevant land taxes are paid to the local land authority. However there is no
binding agreement for the taxes to be paid.
At 31 December 2003, the net book value of fixed assets held under finance
leases amounted to US$4,715 (2002:US$5,104).
14. INVESTMENTS IN SUBSIDIARIES
Total
US$
Company
Interest in subsidiary undertakings
Cost at 1.1.2003 and 31.12.2003 56,014,662
Included in the above is the initial consideration of US$50.4 million and
deferred consideration of US$5.6 million for acquiring the various investments.
Following the Group restructuring in the previous period, all of the Company's
subsidiaries are indirectly owned through a directly owned subsidiary, Arko
Investments Limited (formerly known as Arko Holdings Limited).
At 31 December 2003, the Company held 100% of the ordinary shares of Arko
Investments Limited, a company incorporated in the Republic of Seychelles ("RS
"), whose principal activity was that of a holding company. Arko Investments
Limited had the following subsidiary undertakings:
Holding
ordinary
shares/ Country of
registered incorporation/
Name capital Business activities establishment
Arko Enterprises Limited 100% Investment holding RS
(formerly known as
Arko Energy Limited)
Arko Management Limited 100% Providing management RS
services
Arko Harbour Limited 100% Investment holding RS
Long Prosperity Industrial 100% Investment holding RS
Limited
Arko Mining Limited 100% Investment holding BVI
Arko Silicon Limited 100% Dormant Hong Kong
Jin Jian International 100% Trading Hong Kong
Limited
Arko Silicon (Hubei ) 100% Dormant PRC
Limited
Arko Terminal Limited (" 100% Investment holding RS
ATL")
Arko Energy Limited 100% Investment holding British Virgin Islands
Sanko Mineral Limited 100% Investment holding British Virgin Islands
Arko Satellite Limited 100% Holding intellectual British Virgin Islands
property relating to
a satellite tracking
system for vessels
Arko International Trading 100% Trading Hong Kong
Limited
Arko Logistics Limited 100% Providing logistics Hong Kong
services
Changzhou Power 59.2% Operating a coal-fired PRC
Development
Company Limited thermal power plant
Keen Chance Terminal (GZ) 40% Investing in and PRC
Company Limited operation of a
(See Note below) terminal and
providing logistics
services
Fujian Sanko Mining 70% Investing in a granite PRC
Limited
stone quarry mine
Linko Mineral (Ningxia) 60% Not yet commenced PRC
Limited ("LMNL") (See Note business
below)
Notes:
At 31 December 2003 and up to the date of this report, the 40% equity interest
in KCT was still held by Keen Lloyd Energy Limited ("KLEL"), which is a
subsidiary of Keen Lloyd Holdings Limited ("KLHL" ). KLHL is in the process of
transferring its interests to ATL. In the opinion of the directors, the transfer
of the 40% equity interests in KCT will be successful and hence the latter is
regarded as an investment of Arko Holdings plc.
Pursuant to an agreement dated 5 April 2002 entered into between KLEL and MEDCL,
a shareholder of KCT who held a 30% equity interest in KCT, MEDCL agreed to vote
in accordance with the instructions of KLEL at board meetings in view of its
indebtedness to KLEL, for an approximate sum of RMB78 million (equivalent to
US$9.4 million), and KLEL intended to convert the outstanding loan into the
registered capital of KCT.
On 22 April 2003, KLEL entered into a shareholder agreement with MEDCL and
Harbour Economic Development Company Limited ("HEDCL"), another shareholder of
KCL, whereby all parties agreed that MEDCL has unconditionally transferred the
authority empowered to its directors representative (including their rights and
obligations) to KLEL until KLEL transferred the 40% equity interests in KCL to
ATL to reiterate the aforesaid agreement dated 5 April 2002.
On 16 May 2003, a supplemental agreement was entered into between ATL, KLEL,
MEDCL and HEDCL by which all parties agreed that the above authority transferred
to KLEL would be vested in ATL after KLEL completed the transfer of equity
interests in KCL to ATL.
As per a legal opinion from a PRC lawyer, in accordance with the terms and
conditions set forth in the above agreements, KLEL effectively controlled the
board of KCT and this arrangement was confirmed by the shareholders of KCT. In
2002, a Hong Kong Lawyer also expressed his view that KCT is a subsidiary of
KLEL under the Hong Kong Companies Ordinance however, KLEL was transferred
beneficial control to ATL and therefore in the opinion of the directors, KCT is
a subsidiary of ATL under UK Companies Act 1985.
In addition, KCT will be a legal subsidiary of ATL immediately upon the
completion of transfer of the 40% of equity in KCT from KLEL to ATL.
LMNL is a sino-foreign joint venture company which was established on 18 May
2001 for investing in a coal mine in the Ningxia Province of China. The business
licence of LMNL expired on 18 May 2002. Due to change of business environment,
the company has changed its business strategy, the management therefore decides
to make full provision for LMNL.
All material subsidiaries are included in the consolidated financial statements.
15. INVESTMENT IN ASSOCIATES
RMB 2003 2002
US$ US$
Share of Net Assets 9,000,000 1,092,836 -
During the year, the Company acquired 30% of Suizhou Winko Building Material Co
Ltd, a company newly incorporated in the PRC with total registered capital of
RMB30,000,000 (equivalent to US$3,602,755). The associate intends to carry out
business of producing building material.
16. STOCKS
Stocks represent coal and consumables. There were no significant difference
between the replacement cost and the value shown in the balance sheet.
17. DEBTORS
Group Company
31.12.03 31.12.02 31.12.03 31.12.02
US$ US$ US$ US$
Amounts falling due within one
year:
Trade debtors 2,600,347 6,052,622 - -
Other debtors ( Note i) 2,177857 712,523 - -
Prepayment 465,774 634,812 983 13,899
5,243,978 7,399,957 983 13,899
Amounts falling due
after more than one year
Trade debtors - 1,805,230 - -
Security ( Note ii) 2,782,357 3,138,486 - -
deposit
Deposits for ( Note iii) 3,438,183 3,450,857 - -
fixed assets
6,220,540 8,394,573 - -
Notes:
(i) Included in other debtors is an amount of US$52,836 due
from Tanko Industrial Limited, a company which is ultimately controlled by CDFL.
It is interest free, unsecured and repayable on demand.
(ii) In 2002, a prepayment was made to a local supplier for
stabilizing the sourcing of coal supply during the period from 5.3.2002 to
4.3.2005. During the year, part of the payment has been utilized by the company.
(iii) Deposits for fixed assets include US$2,359,805 in respect of
the acquisition of mining equipment and US$1,078,378 in respect of the acquiring
of vessels. Due to the length of time it may take for the Group to take delivery
for these assets, these debtors may not be recoverable within one year.
18. CREDITORS
Group Company
At At At At
31.12.2003 31.12.2002 31.12.2003 31.12.2002
US$ US$ US$ US$
(a) Amounts falling due within one year:
Bank loans (Note i) 1,898,652 1,908,441 - -
Trade creditors 1,286,581 762,398 - -
Amount due to immediate
holding company (Note ii) 131,521 5,971,216 - 485,933
Amount due to related companies (Note 1,286,918
iii)
Amount due to subsidiary - - 1,091,644 -
Obligations under finance leases 2,084 1,836 - -
Profits tax 1,303,464 876,947 - -
Other creditors, accrual and deferred 2,607,449 1,891,278 237,216 219,497
income
Dividends payable to
minority interests - 615,811 - -
8,516,669 12,027,927 1,328,860 705,430
(b) Amounts falling due after one year:
Obligations under 21,834 3,814
finance leases (Note iv) - -
Other loan - 357,598 - -
Advances from fellow
investors (Note v) 1,202,215 1,232,555 - -
1,224,049 1,593,967 - -
Notes:
(i) The bank loans originated from the PRC and are unsecured.
Interest accrues at the rate of 5.85% per annum
(ii) This amount is due to KLHL, and is interest-free, unsecured
and has no fixed terms of repayment.
(iii) The amounts are due to Walton Enterprises Limited and
Guangzhou Keen Lloyd Copper Industry Company Limited, in which Mr. Chin Kam Chiu
was a director.
(iv) Obligations under finance leases are secured on the underlying
assets and repayable between two to five years
(v) The amount was advanced from MEDCL of US$1,22,215 (2002:
US$1,170,728)
19. BANK, OTHER LOANS AND FINANCIAL INSTRUMENTS
At At
31.12.2003 31.12.2002
US$ US$
Bank and other loans instalments by reference
To the balance sheet date:
Under one year 1,920,841 1,910,276
One to two years 1,203,944 74,508
Two to five years - 1,451,558
Over five years - 67,901
3,124,785 3,504,243
Bank and other loans analysis by origin:
Hong Kong 3,813 5,649
PRC 3,120,972 3,498,594
3,124,785 3,504,243
The Company had no financial liabilities.
The Group holds financial instruments in order to finance its operations and to
manage interest rate and currency risks. Group operations are financed by means
of retained profits and a mixture of both short and medium term debts. The Group
borrows, through local banks and from related parties in PRC, in local
currencies at fixed rates. The Group does not trade in any way in financial
instruments.
The principal risks arising from the Group's financial instruments are interest
rate risk, liquidity risk and exchange rate risk. The Group board reviews and
agrees policies for managing each of these risks and these are summarized below.
These policies have been developed during the current accounting period as a
consequence of the Group's expansion.
Interest rate risk
Group borrowings are held in local currencies. Current loans are at fixed rates.
The Group's policy for future borrowings will be to take floating rates unless
fixed rate finance is available at particularly attractive rates.
The interest rate risk profile of the Group's financial assets and liabilities are as follows:
Financial Fixed rate
liabilities
Fixed rate weighted
weighted average time
average for which rate
Total Interest-free Fixed rate interest rate at is fixed
31.12.2003 31.12.2003 31.12.2003 31.12.2003 31.12.2003
US$ US$ US$
Currency
Hong Kong 3,813 - 3,813 11.96 2
dollars
RMB 3,120,972 1,202,215 1,918,757 5.85 1
3,124,785 1,202,215 1,922,570
The Group had no financial liabilities as at 31 December 2003.
Financial assets
Floating Floating
Total rate rate
31.12.2003 31.12.2003 31.12.2002
US$ US$ US$
Currency
Sterling 30 30 2,724
Hong Kong 127,305 127,305 20,451
dollars
RMB 112,525 112,525 12,853
239,860 239,860 36,028
Financial assets represent cash at bank and in
hand.
Liquidity risk
The Group's policy is to ensure that sufficient facilities would be available to
satisfy its peak borrowing requirements. As at 31 December 2003, the Group was
within its bank borrowing facilities. The Group drew down all committed
facilities at the period end.
Foreign currency risk
All trading is undertaken in local currencies. Funding is also in local
currencies other than inter-company investments and loans and it is not the
Group's policy to cover these amounts as the date of repayment is uncertain.
20. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Year 9 months
ended ended
31.12.2003 31.12.2002
US$ US$
Operating profit 170,567 5,133,626
Depreciation charges 3,964,781 2,031,617
Amortisation of goodwill 1,394,698 937,377
Impairment of fixed assets 5,954,871 -
Loss on disposal of fixed assets 11,792 -
Negative goodwill written back - (740,334)
Decrease in stocks 95,209 179,961
Decrease in debtors 4,330,011 4,847,530
Decrease in creditors (3,881,176) (5,916,585)
Exchange adjustments (455,426) 177,959
Net cash inflow from operating activities 11,585,327 6,651,151
21. ANALYSIS OF CHANGES IN NET DEBT
Other
At Cash Repayment non-cash At
31.12.2002 flows of Loans changes 31.12.2003
US$ US$ US$ US$ US$
Bank balances 429,151 (189,291) - - 239,860
Obligations under
finance leases (5,650) - 5,226 (23,494) (23,918)
Bank loan (1,908,441) - 9,789 - (1,898,652)
Other loan (357,599) - 357,599 - -
Advances from (1,232,555) - 30,340 - (1,202,215)
investors
Total (3,075,094) (189,291) 402,954 (23,494) (2,884,925)
22. SHARE CAPITAL
At 31.12.2003 At 31.12.2002
Number # Number #
Authorised:
Ordinary shares of 0.5p each 30,000,000,000 150,000,000 30,000,000,000 150,000,000
US$ US$
Equivalent to: 265,395,280 265,395,280
Allotted, called up and fully paid: US$ US$
Ordinary 1,786,109,383 13,167,451 1,782,076,048 13,134,525
On 7-Jan-03, 647,059 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided.
On 17-Jan-03, 317,647 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided.
On 21-Jan-03, 100,000 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's legal advisers as part of their remuneration
for the services provided.
On 13-Feb-03, 100,000 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's legal advisers as part of their remuneration
for the services provided.
On 2-Oct-03, 735,295 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided.
On 30-Jun-03, 50,000 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided
On 8-Sep-03, 275,000 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided
On 5-Sep-03, 100,000 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided
On 22-Sep-03, 250,000 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided
On 26-Sep-03, 100,000 new ordinary shares were issued at 2p on exercise of share
options granted to the Company's nominated advisers as part of their
remuneration for the services provided
On 6-Oct-03, 1,358,334 new ordinary shares were issued at 2p on exercise of
share options granted to the Company's nominated advisers as part of their
remuneration for the services provided
Share Options
The Company operates a share option scheme. During the period ended 31 December 2002, the company granted share
options to its advisors as part of the remuneration for the services provided. Details of the share options
exercised during the year are set out below
Number of Number of Number of
Exercisable Exercise Shares shares shares
Date of From To price Granted exercised outstanding
Granted
at 31.12.2003
10.5.2002 10.5.2002 9.5.2004 2P 2,000,000 1,333,333 666,667
10.5.2002 10.5.2003 9.5.2004 2P 1,500,000 1,000,000 500,000
10.5.2002 10.5.2004 10.5.2005 2P 1,500,000 - 1,500,000
10.5.2002 27.6.2002 10.5.2007 2P 2,500,000 2,200,000 300,000
7,500,000 4,533,333 2,966,667
23. RESERVES
Share Shares to be Merger relief Statutory Profit and loss
Premium issued reserve surplus account
account reserve
Group US$ US$ US$ US$ US$
At 1 January 2003 11,331,474 5,601,466 26,042,970 - 3,780,948
Issue of new shares 98,778 - - - -
Share issue expenses (13,685) - - - -
Profit for the year - - - - 1,355,341
Dividend declared to - - - - (988,501)
minority interest holders
Appropriations - - - 1,394,464 (1,394,464)
At 31 December 2003 11,416,567 5,601,466 26,042,970 1,394,464 2,753,324
Company
At 1 January 2003 11,331,474 5,601,466 26,042,970 - (782,941)
Issue of new shares 98,778 - - - -
Share issue expenses (13,685) - - - -
Loss for the year - - - - (757,399)
At 31 December 2003 11,416,567 5,601,466 26,042,970 - (1,540,340)
Notes:
(i) Shares to be issued:
Pursuant to the acquisition agreements, the company was obligated to issue a
further 190,000,000 ordinary shares of 0.5p (equivalent to 0.88 cent) each to
Keen Lloyd Holdings Limited and Winko Investment Limited, the vendors. In
February 2004, management announced that the profit target had been achieved and
defined shares were issued accordingly.
(ii) Statutory surplus reserve:
In accordance with the PRC laws and the articles of association of the Company's
PRC subsidiaries, directors of these subsidiaries may at their discretion make
appropriations to a statutory surplus reserve equivalent to 10% of the
subsidiaries' net profits. Appropriations may also be made a statutory public
welfare reserve equivalent to 5 - 10% of the net profits of these operating
subsidiaries. Distribution of their profits to shareholders can only be made
after such appropriations.
The statutory surplus reserve may be used to reduce any losses incurred or be
capitalised as paid up capital. The use of the statutory public welfare reserve
is restricted to capital expenditure incurred for staff welfare facilities. The
statutory public welfare reserve is not available for distribution.
24. RELATED PARTY TRANSACTIONS
Apart from the transactions as disclosed in the financial statements, the Group
had the following material transactions which were carried out on an arm's
length basis with its related parties during the year / period:
Year 9 months
ended ended
Name of companies Notes Nature 31.12.2003 31.12.2002
US$ US$
Guangzhou Tung Lloyd (a) Barge hire charges 730,538 480,166
Shipping Company Limited Agency charges 394,491 259,290
Guangzhou Tung Lloyd (a) Agency charges 73,054 48,018
Shipping Agency Limited
Guangzhou Keen Lloyd Copper Industry (b) Sale of raw metals 48,854,690 27,921,897
Company Limited
Purchase of processed - 10,415,083
Metals
Keen Lloyd Energy Limited (b) Interest income - 603,626
Winbest Resources Limited (b) Management fee paid 214,311 187,364
Guangdong Winko Industrial Limited (c) Sale of processed metals 1,731,085 -
Ocean Sound Electronics Limited (d) Management fee received 66,590 -
Winko Metal Limited (c) Hiring charges for Motor 49,239 -
Vehicle
Winko Resources Limited (d) Hiring charges for Motor 65,680 -
Vehicle
KeenLloyd Holdings Limited (e) Hiring charges for Motor 19,629 -
Vehicle
Young Crystal Limited (f) Hiring charges for Motor 19,044 -
Vehicle
Notes:
(a) A company in which the present Chairman, Mr. Qin Shun Chao, is a director.
(b) A company in which Mr. K C Chin was a director.
Mr. Qin Shun Chao, the present Chairman is common director of both companies
(c) A company in which Mr Qin Bing Qiang is a director.
(d) A company controlled by the Group's ultimate shareholder - CDFL.
(e) A company in which, the former Chairman, Mr K C Chin is a director.
(f) A company in which Leung Suk Ching, Angela is a director.
25. OPERATING LEASE COMMITMENTS
At 31 December 2003, the Group was committed to make the following payments during the next year in
respect of land and building under operating leases:
At At
31.12.2003 31.12.2002
US$ US$
Leases which expire:
in the next year 451,627 58,597
in the second to fifth 239,750 396,450
years
691,377 455,047
26. CAPITAL COMMITMENTS
At 31 December 2003, the Group had capital commitments contracted
for in respect of:
- acquisition of eight vessels amounting to US$49,320,000; and
- acquisition of plant, machinery and equipment amounting to
US$40,399,000, primarily mining equipment intended for use by a subsidiary,
FSML.
The Company had no capital commitments.
27. CONTINGENT LIABILITIES
(a) On 23 July 1998, a subsidiary of the Company, KCT, gave a guarantee for
RMB50 million (equivalent to approximately US$5.9 million) in favour of the
Huangpu branch of the Industry and Commercial Bank of China for banking
facilities granted to HEDCL, a fellow investor in KCT and its ultimate
controlling party, Guangzhou Huangpu Foreign Trade Group Company Limited and
secured over their equity interests in KCT. HEDCL was unable to repay the loans
due to the bank. The bank took action against KCT to enforce the guarantee for
the outstanding loan.
(b) On 9 November 1999, KCT gave a guarantee for RMB18 million (equivalent to
approximately #1.4 million) in favour of Nangang Rural Credit Co-operation Bank
for banking facilities granted to MEDCL, a fellow investor in KCT, secured over
its equity interests in KCT. MEDCL was unable to repay the outstanding loan. On
27 September 2001, the Guangzhou Law Court delivered an order and notice that
the guarantee was invalid and MEDCL's equity interests in KCT was frozen.
As per legal opinion, the equity interests frozen had no material impact on the
operations of KCT and the directors consider that no provision is required.
KCT claimed that the guarantee given was invalid based on the following grounds:
(1) such guarantee did not have approval from the board of directors of KCT;
(2) in accordance with the PRC Company Law, the board of directors and the
management of KCT cannot give KCT's properties for guarantee to its shareholder;
and
(3) the controlling party of HEDCL has not obtained a valid business license
since 1998 and has ceased operations since 1999. In accordance with the PRC
banking regulations, the bank cannot lend money to enterprises which do not have
a valid business license.
The legal proceedings are still in progress. Based on the legal opinion from a
PRC lawyer, the loan agreement was void because it was illegal and accordingly,
the guarantee contract was also invalid.
Further KLHL has indemnified the Group against any loss KCT will suffer should
the guarantee be enforceable.
Accordingly, the directors opined that no provision should be made in the
financial statements for any possible claim from the bank for the litigation.
28. ULTIMATE CONTROLLING PARTY
The directors consider that CDFL, a company incorporated in the British Virgin
Islands is the ultimate holding company. CDFL is controlled by Chin Dynasty
Fund.
The Chin Dynasty Fund is a discretionary trust where Mr. Qin Shun Chao is the
settler. The members of Mr. Qin's family are the potential beneficiaries of the
trust and Mr. Qin is the father of Mr. Chin Kam Chiu.
No group financial statements for CDFL are published.
The announcement set out above does not constitute a full financial statement of
the Company's affairs for the year ended 31 December 2003. The Company's
auditors have reported on the full accounts for the said year and have
accompanied them with an unqualified report. The accounts have yet to be
delivered to the Registrar of Companies. The annual report and accounts will be
available from the Company's nominated adviser, Nabarro Wells & Co. Limited,
Saddlers House, Cheapside, London EC2V 6HS.
Enquiries:
Angela Leung - Arko Holdings plc
13th Floor, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong
Tel: 00 852 2219 9999 Email: angelal@arkoholdings.com
Robert Lo - Nabarro Wells & Co. Limited
Tel: 020 7710 7407 Email: robertlo@nabarro-wells.co.uk
Nigel Atkinson- Nabarro Wells & Co. Limited
Tel: 020 7710 7408 Email: nigelatkinson@nabarro-wells.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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