FTO.L Regulatory News (FTO)

24 Sep 2007 07:01

Fortune Oil PLC24 September 2007 24 SEPTEMBER 2007 FORTUNE OIL PLC ("Fortune Oil" or "the Company") Announcement of Interim Results for 6 Months Ended 30 June 2007 Fortune Oil focuses on oil and gas supply and infrastructure projects in China.The Company is quoted on the full list of the London Stock Exchange and has itsheadquarters in Hong Kong. FINANCIAL PERFORMANCE • Revenues including share of jointly controlled entities increased by 26 per cent to £115.0 million (restated 2006: £91.2 million). • Profit from operations increased by 44 per cent to £5.0 million (2006: £3.5 million). • Earnings per share grew by 80 per cent to 0.14p (2006: 0.08p), a record first half performance for Fortune Oil. • Sales of natural gas almost tripled to 105 million cubic metres. • Net profit at Bluesky almost doubled to £6.5 million with volume sales up by 11 per cent and increased margin resulting from government compensation mechanism. • US$50 million loan facility signed with syndicate of international banks. OPERATIONAL HIGHLIGHTS • Significant progress in developing an independent integrated gas business with Fortune Oil becoming the first foreign company in China to produce and distribute both LNG and CNG (liquefied and compressed natural gas). • Partnership established with Chinese government for utilisation of gas from coal reserves in Shanxi Province. • Ongoing drilling of pilot gas production wells to exploit the estimated 40 billion cubic metres of coal bed methane at the Liulin block in Shanxi Province. • Continued growth in volumes and profitability in the oil sector operations. Mr Qian Benyuan, Chairman of Fortune Oil, commented: "Fortune Oil performed very well in the first half of 2007 with revenues,profits from operations and earnings per share all increasing strongly. We arenow building a significant gas business, from upstream supply to downstreamdistribution. Combined with ongoing growth in our oil sector operations thispromises an exciting and prosperous future for the Company and its shareholders." ENQUIRIES: Fortune Oil PLC Tel: 00 852 2583 3113(Hong Kong)John Pexton, Deputy Chief Executive Pelham Public Relations Tel: 020 7742 6679 / 07802 442486Archie Berens FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2007 CHIEF EXECUTIVE'S REVIEW Fortune Oil performed very strongly in the first half of 2007 as earningsattributable to shareholders increased 80 per cent to £2.4 million. The mostsignificant contribution was the recovery in Bluesky's operating margin althoughthere was an increase in profit contribution from every other Group business.Fortune Oil continues to benefit from the strong growth of China and our uniquepositioning in the China oil and gas markets. Results for the six months ending 30 June 2007: • Revenues including the Group's share of jointly controlled entities increased to £115.0 million, up 26 per cent from the same period last year. • Profit from operations increased by 44 per cent to £5.0 million. • Retained profits attributable to equity shareholders rose to £2.4 million and earnings per share grew to 0.14 pence, an increase of 80 per cent over the same period in 2006. • Volume at Bluesky increased by 11 per cent and the increased margin from the compensation mechanism resulted in a doubling of Bluesky's profit contribution compared to the first half of 2006. • Volume sales of natural gas almost tripled to 105 million cubic metres and the profit contribution increased 53 per cent compared to the same period in 2006. • The above record improvement was even higher in RMB terms, the primary currency of our operations, because of a 6 per cent strengthening of sterling against the RMB. Operational Progress This year we have made major strides in creating an independent integrated gasbusiness. In July we acquired control of Henan Fortune Green Energy DevelopmentCompany, a LNG (liquefied natural gas) and CNG (compressed natural gas) businessoriginally developed within Sinopec. We also recently announced a partnershipwith the Chinese government for the utilisation of gas from coal reservesthroughout Shanxi Province. This will take advantage of the Group's expertisein distributing natural gas as CNG, LNG or piped gas and will complement ourgrowing downstream gas operations. At the Liulin block in Shanxi Province we now have two pilot wells in dewateringphase prior to producing CBM (coal bed methane) and have drilled further datawells to exploit the estimated 40 billion cubic metres of gas resource. Our new investments have been funded through a US$50 million loan facilitysigned in April with a syndicate of international banks in Hong Kong. Outlook Fortune Oil has become the first foreign company to produce and distribute bothLNG and CNG in China. Our experience with CBM development and gas distributionin Shanxi Province has now enabled us to create a unique platform with theprovincial and national governments to access further gas in the province and toexpand our downstream network. China is putting increasing emphasis on thesafe and efficient utilisation of gas from coal seams and we will be at theheart of this development. Combined with ongoing growth in our oil sectoroperations this promises an exciting and prosperous future for the Company andits shareholders. BUSINESS REVIEW CHINA REVIEW Economic Growth The PRC government continues to tighten monetary policy in order to curb theburgeoning demand growth and consequent inflation. The consumer price indexrose by 6.5 per cent year-on-year to August 2007 and the central bank (thePeoples' Bank of China) has been steadily increasing interest rates in responseto the 10-year record inflation rates. These moves reflect the central bank'sconfidence in China's strong growth prospects despite the recent problems inglobal markets as other central banks plan cuts in interest rates. Thisconfidence has been shared by investors in China's stock markets, which haverisen substantially as many of the domestic companies report strong earningsgrowth. China's demand for crude oil grew by 7.7 per cent year on year for the firsthalf of 2007 but most of this increase in demand was met by imports, accordingto the National Bureau of Statistics. For the past five years the governmenthas gradually stepped up the domestic prices of transportation fuels asinternational prices have increased, although domestic prices have beengenerally kept below international levels. Despite these rising prices there islittle noticeable impact on the rising domestic appetite for road and airtravel. Gas Market Developments The natural gas market in China has been developing in the way previouslyanticipated by Fortune Oil. Supply of natural gas as a clean fuel in Chinacontinues to lag demand, particularly for residential and commercial customers.The PRC government has recognised the need to ensure adequate supplies as thegas market expands, initially through importing LNG by sea and then by importingpiped gas from Russia and Turkmenistan. The negotiated LNG price for the firstLNG terminal in China, which started up in 2006 in Guangdong, was set at ahistorical low and plans for further terminals were delayed when internationalprices increased. However China has now rejoined the global gas markets asPetroChina recently agreed long term LNG supply contracts with Australiansuppliers at international market prices, which are currently three times higherthan that for Guangdong. The NDRC (National Development and Reform Commission), the government bodyresponsible for energy policy, has reiterated that prices for domestic gas willcontinue to increase and will eventually be linked to international prices.Domestic production of gas will be encouraged and priority will be given toutilisation of gas for residential, commercial and vehicular use, particularlyin areas such as Shanxi province where coal will remain the primary source ofpower. These assumptions have underpinned Fortune Oil's strategy in developingan integrated gas distribution business, focusing particularly on ShanxiProvince. Coal Seam Gas There is an increasing government focus on ensuring the safe and efficientproduction of coal, which will be the cheapest and dominant source of energy forChina for the foreseeable future. Incentives have already been announced forcoal mines to extract gas from coal seams prior to mining and we expectregulatory changes to reinforce these objectives. Few of these coal minecompanies can mobilise the expertise for the required drilling operations, andeven fewer are able to then efficiently utilise or distribute this gas to thelocal communities. Fortune Oil is well positioned in the CBM development andgas distribution industries to help China address this major social andenvironmental challenge. OIL SECTOR OPERATIONS South China Bluesky Aviation Oil Company Bluesky's sales of jet fuel increased by 11 per cent to 777,000 tonnes in thefirst half of 2007 (2006: 700,000 tonnes). The major growth continues to be atthe Guangzhou Baiyun International Airport, where there is ongoing expansion ofthe existing refuelling facilities in addition to construction of the newFederal Express hub. Both passenger and cargo traffic continue to growsignificantly in China and, despite the high jet fuel prices, Bluesky's majorcustomers such as China Southern Airlines have recently returned to profit andare making large orders for additional aircraft. Net profit at Bluesky rose by 97 per cent to £6.5 million (RMB 98.7 million)compared to £3.3 million (RMB 46.6 million) for the same period last year. Thetemporary decline in operating margin in early 2006 had been due to disparitiesin price between domestic and international jet fuel. The PRC governmentinstituted measures in mid-2006 obliging the airlines to compensate jet fuelsuppliers for such disparities, which has since restored the operating margin. Bluesky continues to invest in new infrastructure as many of the airportsexpand. For example, in order to meet the growth in passenger traffic, a newterminal has recently opened at Zhengzhou with new international routes, a newterminal is under construction at Wuhan, a new terminal is being designed forChangsha and relocation of the Shantou airport is currently at the planningstage. For each of these developments Bluesky needs to plan and invest in newfacilities for jet fuel supply, storage and refuelling. More refining capacityis being constructed in southern China, particularly at Guangzhou and Hainan,which will help meet the incremental fuel demand. Maoming Single Point Mooring In the first six months of 2007 the Maoming SPM delivered crude oil from 24tankers (2006: 23) with a total throughput of 4.8 million tonnes (2006: 5.3million tonnes). Accrued demurrage charges totalling £0.6 million (RMB 9.5million) were written back such that the MKM joint venture's earnings rose to£3.0 million (RMB 45.0 million) for the period (2006: £2.7 million, RMB 38.9million). The facility continues to operate efficiently with minimal expenserequired for maintenance of the buoy and subsea pipeline and MKM continues tohave an accident-free and spill-free record. Products Terminals and Supply At the West Zhuhai Terminal (South China Petroleum Company) the throughput inthe first half of 2007 was 1.0 million tonnes, similar to the previous period.The net profit contribution to Fortune Oil increased to £0.3 million (RMB 4.2million) from £0.2 million (RMB 2.8 million) in the same period last year. Thiswas principally due to the Company's shareholding increasing from 18.5 per centto 37 per cent following the acquisition of Vitol's interests in 2006. In 2007Fortune Oil also received the first ever dividend payment from the West Zhuhaijoint venture, being £0.5 million (RMB 7.4 million) in respect of the 2006results following repayment of the joint venture bank loan last year. The major customer of the terminal continues to be PetroChina but 9 per cent ofthe storage revenue for the period came from a local independent petrochemicalcompany. This is the first third party use of the terminal's oil productscapacity since its construction ten years ago and reinforces our confidence inthe terminal's future as an independent storage facility. Operations at the Zhanjiang Fu Duo LPG joint venture continue to be contractedout to management. One subsidiary was sold in July 2007 and there still remainssome value to the Company in the land rights. The Trading business has continued to develop its operations in 2007,particularly in the cross-border supply of non-regulated oil products andpetrochemicals. The trading business, including the Shantou terminal andBeijing retail stations, increased revenues to £32.2 million (RMB 490.9 million)(2006: £19.1 million, RMB 274.7 million) with a half year operating profit of£0.2 million (RMB 3.7 million). NATURAL GAS Fortune Gas Sales of natural gas soared to 105 million cubic metres (m3) in the first halfof 2007, a 171 per cent increase over the same period last year. This alreadyrepresents 86 per cent of total sales in 2006 (122 million m3). Growth camefrom increased utilisation at existing operations, in particular sales of CNG atTongzhou in Beijing and increased throughput in spur pipelines. Connection feeswere also generated from 4,660 new customers who were connected to our city gasnetworks in the period. As a consequence the total revenues from natural gas sales doubled to £10.4million (RMB 157.8 million) (2006: £5.2 million, RMB 74.1 million). Theearnings contribution increased by 53 per cent to £0.8 million (RMB 11.6million) in the first half of 2007 (2006: £0.5 million, RMB 7.2 million). The existing joint ventures continue to expand their operations. In particularthe Tianjin Tianhui joint venture (Fortune Oil indirect interest of 40 per cent)will invest £1.7 million (RMB 26 million) in constructing two pipelines, fiftyper cent of which will be financed from local banks. These will enable thejoint venture to supply Tuanbo New City, a suburb of Tianjin with a currentpopulation of 150,000 and which has been selected as a major development area.In addition the two city gas joint ventures at Qufu in Shandong Province are nowbeing connected by gas pipeline to the PetroChina gas network, which will ensurea more reliable supply of gas at a lower price. In locations such as Qufu newretail CNG stations are being developed as the local government encourages thegrowth in natural gas powered vehicles. In early 2007 Fortune Oil obtained approvals to establish a China-registeredholding company, Fortune Gas Investment Company Limited, which will help developand manage an integrated gas business in a tax-efficient manner. The naturalgas subsidiaries are gradually being injected into this holding company, whichis now also being used as a primary acquisition vehicle, for example in relationto Green Energy. Green Energy LNG/CNG In June 2007 Fortune Oil announced the acquisition of a 51 per cent controllinginterest in Henan Fortune Green Energy Development Company ("Green Energy")which operates an LNG manufacturing plant, CNG retail stations and a fleet ofLNG/CNG road tankers. Green Energy was previously owned by Sinopec and it wasthe first company in China to produce and sell LNG. Fortune Oil provided £4.7million (RMB 71.4 million) in new equity and a loan of £4.9 million (RMB 74.3million) to Green Energy in exchange for a controlling interest. Payment wasmade in July after drawdown from the Company's loan facility. The remaining 49per cent interest in Green Energy is held by the employees, who have significantexpertise in LNG and CNG technology. The supply of gas to Green Energy's LNG plant and CNG stations is guaranteed bySinopec from its Zhongyuan gas field. The agreement with Sinopec includes anevergreen minimum volume of 130 million m3 per year from 2009, which is a smallfraction (eight per cent) of the field's current production. Following FortuneOil's investment in Green Energy new compressors have now been installed toraise the throughput of the LNG plant to its design capacity of 55 million m3per year. The guarantee from Sinopec provides opportunities for Green Energy toincrease gas sales through investment in new LNG facilities and CNG stations. This acquisition is a major step forward for Fortune Oil in creating anintegrated gas company as LNG and CNG road tankers are now vital means oftransporting natural gas in China. Green Energy substantially increases theCompany's gas supply and sales network and also brings the ability for FortuneOil to design, construct and operate LNG production facilities in the future.This will be a key strategic strength for Fortune Oil as we exploitopportunities to produce and utilise gas such as coal bed methane from isolatedlocations. Shanxi CBM Distribution Fortune Oil recently announced an investment to secure a 50 per cent interest inChina United Shanxi CBM Company Limited (Shanxi CBM) for the utilisation of CBMthroughout Shanxi Province. Our partners in this joint venture are ShanxiEnergy Industries Group Ltd, an arm of the Shanxi provincial government, andChina United Coalbed Methane Corporation Ltd (CUCBM), the principal nationalgovernment body for CBM development in China. This is the first time that aforeign company has partnered the Chinese government in such a CBM distributionventure. The Shanxi CBM joint venture will be a major platform for Fortune Oil to collectand market coal seam gas in Shanxi Province through the acquisition anddevelopment of gas infrastructure in this gas-rich region. Investment byFortune Oil in this platform, initially at RMB 21 million (£1.4 million) forconstruction of new retail CNG stations, will increase as the joint ventureprovides greater access to gas and downstream opportunities. COAL BED METHANE DEVELOPMENT Significant progress has been made at the Liulin CBM block in Shanxi Province,where Fortune Oil has a 60 per cent controlling interest in Fortune Liulin GasCompany (FLG), the foreign party in a production sharing contract with CUCBM.In January 2007 FLG partnered with a Shanxi government laboratory to assess thegas resource at Liulin, now estimated to be 40.5 billion cubic metres. In April2007 FLG commenced the testing of two vertical pilot wells (FL-EP1 and FL-EP2),which are still in the dewatering phase. New pumps will soon be installed tospeed up the dewatering process and Fortune Oil is confident of producing gasfrom the pilot wells. FLG has recently completed drilling and coring from two datawells and is nowspudding two more pilot production wells. The exploration strategy is to obtainsufficient production and geology datapoints so that FLG can meet the governmentrequirements on reserves certification prior to submission of an overalldevelopment plan in 2008. Fortune Oil expects to extend the current explorationperiod of the Liulin block to beyond April 2008 in order to explore othersectors of the block. Expenditure by Fortune Oil in respect of FLG totalled £0.5 million (RMB8.2million) to 30 June 2007 plus accrued commitments of £0.8 million (RMB 11.9million). This satisfies Fortune Oil's US$2.5 million expenditure obligation inacquiring a 60 per cent interest in the FLG joint venture with Molopo. Most ofthe exploration costs will be recoverable in the production period under theproduction sharing contract. The CBM industry in China is at an early stage of development and no productionsharing contract is yet at the production stage with commercial gas sales.However, there is increasing government pressure to develop this industry, giventhe vast resources of coal seam gas in China, and the regulations for coal bedmethane and coal mine methane will also develop further. The Liulin block isregarded by CUCBM as one of China's top-ranked CBM blocks and is situated in themiddle of the gas-rich Hedong plateau. Fortune Oil's experience in exploringthis block has enabled the Company to forge close links with the key CBM and gasdistribution companies in Shanxi Province. As a result Fortune Oil was invitedby the Chinese government to invest in the Shanxi CBM distribution business andto become one of only two foreign founding members of the Coal Bed MethaneIndustry Association of Shanxi Province. SOCIAL RESPONSIBILITY The Group continues to develop and implement policies for enhancing the healthand safety of our employees and our impact on local communities and theenvironment. As China's economy develops there is increasing importance placedon enhancing standards by both government and consumers. As a result the nationcontinues to upgrade regulations relating for example to employment and theenvironment. China is finding its own path in attaining sustainable economicgrowth, modernising while not necessarily westernising. Investment in road infrastructure has been critical factor in allowing China'seconomic growth to exceed that of other emerging nations and this has also beena crucial factor in enabling the Company to source and distribute natural gas.However road safety remains a major issue in China and steps are being taken totrain Group employees so as to reduce the number of road accidents. As part ofthe Company's ongoing environmental programme vapour recovery systems are nowbeing installed in the gasoline retail stations so as to reduce emissions whilefilling the storage tanks. FINANCIAL REVIEW Financial Results Group revenues (including share of jointly controlled entities) increased by 26per cent to £115.0 million in the first half of 2007 (restated 2006: £91.2million), primarily due to a £13 million revenue increase in the Company'strading business and higher sales in Bluesky and Fortune Gas. The Group profitfrom operations was £5.0 million, an increase of 44 per cent above the previousperiod (2006: £3.5 million). The profit attributable to equity shareholders increased by 80 per cent to £2.4million (2006: £1.4 million), a record first half performance for Fortune Oil.The earnings per share were 0.14 pence and there was no change in issued sharecapital during the period. Net assets of the Group increased to £54.4 million (2006: £50.1 million). Theprincipal capital expenditure for the period was £1.8 million investment in CBMassets (including the transfer of assets from Molopo into FLG following thefinalisation in April of agreements with CUCBM) and £1.0 million investment inCNG distribution and pipeline assets. The cash balance of £18.3 million at 30June 2007 included funds earmarked for investment in Green Energy. Accountsreceivables increased to £11.1 million (2006: £5.6 million) principally becauseof payments due from Sinopec to the MKM joint venture. These receivables andcorresponding accounts payable by MKM are now in the process of being settled. While the most significant contributions to growth in earnings were from theBluesky and Fortune Gas operations, almost every Group company increasedprofitability via higher volume sales. The long-established Bluesky and MaomingSPM joint ventures still provide the majority of the Group's profit but thecontribution from the natural gas operations has now increased to 15 per cent ofGroup operating profit. Operating margins for each company depend on the characteristics of theirbusiness. For example typically the margins for a tolling operation such as theMaoming SPM would be higher than those for a trading business, the margins forCNG sales would be higher than those for a gas pipeline tarriff. Therefore theoverall margin will change as the revenue mix changes. Fortune Oil managementtrack net profit and overall development strategy rather than overall margin inguiding the business growth. All of the Group's operating income and most of the expenses are denominated inrenminbi (RMB). The RMB continues to strengthen against the US dollar as thecurrency peg is loosened and the RMB/US$ exchange rate decreased 5 per cent to7.6 over the 12 months to June 2007. However this has been offset by thestrengthening of the pound sterling such that the profit and loss results are 6per cent higher if reported in RMB. Financing and Tax In April 2007 the Company signed a dual currency (US dollar/Hong Kong dollar)US$50 million loan facility with 18 international and regional banks. Thefacility has a tenor of three years with a margin of 1.1 per cent above LIBOR orHIBOR. The first drawdown was in June 2007 such that net interest payments inthe first half of 2007 were similar to the same period in 2006 at £0.2 million,and the Group maintained a zero net gearing at the end of June 2007. Fulldrawdown is expected by the end of the availability period in October 2007 andthe proceeds are being utilised for investments in new projects. Trade finance facilities totalling US$100 million have also been signed withCommerzbank, DBS, Standard Chartered and UOB in support of anticipated growth inthe cross-border supply business. Under the unified PRC income tax law effective from January 2008, the standardtax rate for all companies will be 25 per cent, but with a four year grandfatherprovision for companies currently taxed at a lower rate such as Fortune Oil'sgas joint ventures. The PRC authorities have also announced that CBM, gasprocessing and distribution businesses will qualify as "state-encouraged" andtherefore incur a lower tax rate of 15 per cent. Therefore we expect the newtax laws to have a minimal impact on the Company's profit going forward. FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2007 GROUP INCOME STATEMENT (restated) 6 months 6 months 12 months ended ended ended 30.06.07 30.06.06 31.12.06 Amount in £'000 (Unaudited) (Unaudited) (Audited) Revenue including share of jointly controlled entities 115,015 91,178 175,771 Share of revenue of jointly controlled entities (69,026) (61,473) (132,500) Group revenue 45,989 29,705 43,271 Cost of sales (40,624) (25,041) (33,912) Gross profit 5,365 4,664 9,359 Exceptional gains - - 2,551 Exceptional charges - - (834) Administrative expenses (2,351) (2,188) (4,444) Share of results of jointly controlled entities 1,993 1,010 2,942 Profit from operations 5,007 3,486 9,574 Finance costs (301) (236) (471) Investment income 50 79 168 Profit before taxation 4,756 3,329 9,271 Taxation (338) (290) (617) Profit for the period / year 4,418 3,039 8,654 Attributable to Equity shareholders 2,438 1,355 4,307 Minority interests 1,980 1,684 4,347 4,418 3,039 8,654 Earnings per share Basic 0.14p 0.08p 0.24p Diluted 0.14p 0.08p 0.24p FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2007 GROUP BALANCE SHEET 6 months 6 months 12 months ended ended ended 30.06.07 30.06.06 31.12.06Amount in £'000 (Unaudited) (Unaudited) (Audited)AssetsNon-current assetsProperty, plant and equipment 24,028 24,524 24,539Investment properties 1,540 1,679 1,577Goodwill 920 1,002 943Other intangible assets 2,722 834 992Investments in jointly controlled entities 22,083 19,025 21,083Other investments 99 109 101 51,392 47,173 49,235Current assetsInventories 849 2,411 1,070Trade and other receivables 11,141 5,583 6,249Cash and cash equivalents 18,344 13,135 8,202 30,334 21,129 15,521Total assets 81,726 68,302 64,756 LiabilitiesCurrent liabilitiesBorrowings 2,540 2,168 3,427Trade and other payables 7,619 9,257 5,362Current tax liabilities 226 186 170 10,385 11,611 8,959 Non-current liabilitiesBorrowings 16,683 6,288 5,567Deferred tax liabilities 265 307 264 16,948 6,595 5,831Total liabilities 27,333 18,206 14,790 Net assets 54,393 50,096 49,966Shareholders' equityOrdinary shares 18,363 18,361 18,363Treasury shares (594) (775) (795)Share premium account 22 37,353 22Translation reserve (3,391) (690) (2,717)Retained earnings 26,112 (16,630) 23,805Total shareholders' equity 40,512 37,619 38,678Minority interests 13,881 12,477 11,288Total equity 54,393 50,096 49,966 FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2007 GROUP CASH FLOW STATEMENT Restated 6 months 6 months 12 months ended ended ended 30.6.07 30.6.06 31.12.06 Amount in £'000 (Unaudited) (Unaudited) (Audited)Cash flows from operating activitiesProfit for the period / year 4,418 3,039 8,654Adjustments for:Share of post-tax results of jointly controlled entities (1,993) (1,010) (2,942)Taxation 338 290 617Amortisation and depreciation 1,307 1,232 2,508Impairment - 58 834Loss on disposal of property, plant and equipment 3 - 35 Profit on disposal of subsidiary undertakings - - (188)Share-based payments 70 - 139Investment income (50) (79) (168)Finance costs 301 236 471Decrease/ (Increase) in inventory 53 (405) 842(Increase)/ decrease in trade and other receivables (4,880) 70 (706)Increase/ (decrease) in trade and other payables 2,245 (95) (3,428)Cash generated from operations 1,812 3,336 6,668 Finance costs (301) (236) (471)Taxation paid (278) (329) (665)Net cash from operating activities 1,233 2,771 5,532Cash flows from investing activitiesInvestment income 50 79 168Dividend received from jointly controlled entities 494 47 2,463Payments for property, plant and equipment (985) (678) (4,708)Payments for intangible assets (1,769) - (223)Receipt from disposal of subsidiary undertakings - - 305Receipt from disposal of property, plant and equipment - - 66Investment in jointly controlled entities - - (3,072)Repayment from jointly controlled entities (28) 8 -Loan to jointly controlled entities - - (335)Total cash flows used in investing activities (2,238) (544) (5,336)Cash flows from financing activitiesProceeds from issue of share capital - 4 34Loan from minority shareholders 159 68 429Repayment of loans to minority shareholders - - (441)Dividend paid to minority shareholders - - (3,265)Capital contribution from minority shareholders 828 - -Repayment of loans - - (689)Increase in loans 10,144 (90) 1,663Total cash flows from/(used in) financing activities 11,131 (18) (2,269)Net increase/(decrease) in cash and cash equivalents 10,126 2,209 (2,073)Cash and cash equivalents at beginning of the period/year 8,202 11,713 11,713Effect of foreign exchange rate changes 16 (787) (1,438)Cash and cash equivalents at end of the period/year 18,344 13,135 8,202 FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2007 GROUP STATEMENT OF CHANGES IN EQUITY Share Total Ordinary Treasury Premium Translation Retained Shareholders' Minority TotalAmount in £'000 Shares Shares Account Reserve Earnings Equity Interests Equity Balance at 1 January 2006 18,351 (760) 37,344 2,062 (17,985) 39,012 11,726 50,738Issue of ordinary shares 10 - 9 - - 19 - 19Movement in treasury shares - (15) - - - (15) - (15)Currency translationdifferences - Group - - - (1,412) - (1,412) (933) (2,345) - Jointly controlled - - - (1,340) - (1,340) - (1,340) entities Profit for the period - - - - 1,355 1,355 1,684 3,039 Balance at 30 June 2006 18,361 (775) 37,353 (690) (16,630) 37,619 12,477 50,096 Balance at 1 January 2007 18,363 (795) 22 (2,717) 23,805 38,678 11,288 49,966Movement in treasury shares - 201 - - (201) - - -Capital contribution byminority shareholders - - - - - - 828 828Currency translationdifferences - Group - - - (148) - (148) (221) (369) - Jointly controlled - - - (526) - (526) - (526) entitiesProfit for the period - - - - 2,438 2,438 1,980 4,418Share-based payments - - - - 70 70 - 70Dividend paid - - - - - - 6 6 Balance at 30 June 2007 18,363 (594) 22 (3,391) 26,112 40,512 13,881 54,393 FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2007 NOTES 1. Basis of preparation and accounting policies The interim financial statements for the six months to 30 June 2007 have beenprepared on the basis of the accounting policies set out in the Company'sfinancial statements for the year ended 31 December 2006. These accountingpolicies are drawn up in accordance with International Accounting Standards(IAS) and International Financial Reporting Standards (IFRS) as issued by theInternational Accounting Standards Board. These interim financial statementshave been prepared in accordance with IAS 34 'Interim financial reporting'. The financial information for the six months ended 30 June 2007 and 30 June 2006was neither audited nor reviewed by the auditors and does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. A copyof the statutory accounts for the year to 31 December 2006 has been delivered tothe Registrar of Companies. The auditors' report on those accounts wasunqualified and did not contain statements under section 237 (2) or (3) of theCompanies Act 1985. 2. Segmental Analysis (a) Business segments Single point mooring facility Aviation Natural Gas 2007 2006 2007 2006 2007 2006Amount in £'000Revenue including share of 6,036 5,778 64,171 59,028 10,368 5,164 jointly controlled entitiesShare of revenue of - - (64,171) (59,028) (1,923) - jointly controlled entities Group revenue 6,036 5,778 - - 8,445 5,164 Profit from operations (including 3,173 2,863 1,572 797 764 500share of results of jointly controlledentities)Finance costsInvestment incomeProfit before taxationTaxationProfit for the period Attributable toEquity shareholdersMinority interests 2. Segmental Analysis (continued) Oil Trading Others** Central Group & storage* administration (restated) (restated)Amount in £'000 2007 2006 2007 2006 2007 2006 2007 2006 Revenue including share of 32,245 19,147 2,195 2,061 - - 115,015 91,178jointly controlledentitiesShare of revenue of (737) (408) (2,195) (2,037) - - (69,026) (61,473) jointly controlledentitiesGroup revenue 31,508 18,739 - 24 - - 45,989 29,705Profit from operations (230) (315) 113 46 (385) (405) 5,007 3,486(including share ofresults of jointlycontrolled entities)Finance costs (301) (236)Investment income 50 79Profit before taxation 4,756 3,329Taxation (338) (290)Profit for the period 4,418 3,039Attributable toEquity shareholders 2,438 1,355Minority interests 1,980 1,684 * Includes overheads in Hong Kong/PRC offices. The comparatives for the six months period ending 30 June 2006 have beenrestated to reflect the sub-contracting out of operations in certain subsidiarycompanies within the "Oil Trading and storage" business segment. The impact ofthis change has been to reduce revenue by £3.7 million. This adjustment has noimpact on previously reported profits or net assets. ** Others include distribution and CBM unit. b) Geographical operations With the exception of operating loss of £343,000 (2006: £345,000) in respect ofcentral administration in the United Kingdom, all of the Group's activities arecarried out in the PRC and Hong Kong. The Directors are of the opinion that thePRC and Hong Kong form one geographic segment. c) Analysis of group revenue (Restated) 6 months 6 months ended ended 30.06.07 30.06.06Amount in £'000 (Unaudited) (Unaudited) Sales of Goods 44,308 28,618Income from construction contracts 986 802Rental income 555 246Other 140 39 45,989 29,705 3. Dividends were not paid in any of the periods reported upon and nodividend is proposed. 4. Earnings per share has been calculated by dividing earningsattributable to the shareholders by the weighted average number of shares inissue during the respective periods, as indicated below: 30.06.07 30.6.07 30.06.06 30.6.06 31.12.06 31.12.06 No. No. No. '000 pence '000 pence '000 penceBasic 1,776,967 0.14 1,775,612 0.08 1,775,985 0.24Share option adjustment 8,000 - 6,732 - 6,281 -Diluted 1,784,967 0.14 1,782,344 0.08 1,782,266 0.24 5. Copies of the Interim Report 2007 will be sent to shareholders and willbe available from the Group's registered office, 6/F., Belgrave House, 76Buckingham Palace Road, London SW1W 9TQ, United Kingdom. This statement canalso be downloaded from www.fortune-oil.com. This information is provided by RNS The company news service from the London Stock Exchange