RNS Number : 9257D
  Arko Holdings PLC
  22 September 2008
   
    Stock Exchange Announcement
    22 September 2008
    For release at: 07:00 hours.

    Arko Holdings plc ("the Company" or "Arko")
    Results of the Company for the interim period ended 30 June 2008.
    The Board of Arko announces the results of the Company for the interim period ended 30 June 2008, which are set out below. Copies of the
Company's interim report and accounts will be sent to shareholders on 24 September 2008 and will be available on the Company's website
www.arkoholdings.com from that date.

    CHAIRMAN'S STATEMENT
    I am pleased to report the unaudited interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 June
2008.
    During the period under review the Company made progress with its shipping and container terminal businesses.  The closure and write
down of the power plant in second half year of 2007 enabled the Company to focus on managing its profitable container terminal and shipping
businesses. It has invested more resources in upgrading the container terminal and the river trade fleet.
    Results 
    The Company reported revenue of US$6.33 million, representing an increase of US$247,000 or 4.06% from the US$6.08 million reported for
the comparable period in 2007.  Gross profit increased by 3.79% to US$2.30 million (2007: US$2.21 million). Gross margins decreased to
36.26% for the six months ended 30 June 2008 from 36.35% for the same period last year.  The net operating profit of US$592,000 for the six
month period ended June 2008 was US$126,000 greater than the net operating profit of US$466,000 for the same period in 2007, representing an
increase of 27% as there are no losses incurred from discontinued operations - Huibei Changzhou Power Development Ltd. The Company regards
the revenue and gross margin of its principal container terminal operation and river trade shipping business between Hong Kong and Guangdong
Province as its key performance metrics.  
    As at 30 June 2008, the Company's NAV per share was US$0.0146, which represented a decrease of 51.66% compared to 30 June 2007 (2007:
US$0.0302). This figure reflects the effect of the write down of the power plant. Cashflow from operating activities increased to US$2.65
million from US$1.37 million compared to the same period last year.  There was a decrease in the Company's cash and cash equivalents to
US$189,000 versus US$834,000 at 30 June 2007; this was primarily due to increased expenditure on purchasing machinery and equipment for the
Company's container terminal operation. During the six month period to 30 June 2008, the Company incurred capital expenditure of US$2.88
million (2007: US$1.11 million), predominantly on such purchases.
    Summary and Outlook 
    The sales results for the first half of 2008 reflect the continued effect of the expansion of the terminal and shipping logistics
business. We expect a stronger second half for the current year as throughput and turnover in the shipping business have significantly
increased, a trend which started in the second quarter of 2008. As a result of the write down of the power plant in 2007, we expect a
profitable year in 2008. However, the Board believes that pressure on gross margins is unlikely to be alleviated in the short-term should
the fuel price remain at current levels.  Coupled with the new labour law in China as well as other inflationary pressure on the cost base
of the business, we remain cautious on the operating profit margins for the business as a whole.  The Board believes that the economic
environment is unlikely to improve in the short term so management have been directed to manage the business more prudently.  In the
meantime, we will closely monitor our cash position and continue to explore options this year to strengthen our liquidity by raising additional necessary capital. 
    In order to facilitate the rapid growth in throughput, a new depot has been identified near the terminal for an unspecified lease term
and negotiation is underway with the local government to purchase the freehold interest. On the other hand, we anticipate a delay for the
delivery of the brand new 45 tonne quayside container cranes due to delays in agreeing terms for the lease finance.  The Company's
management is now negotiating with the supplier to find payment alternatives in the event that lease finance cannot be found within the
necessary time. We expect the first crane, costing US$2.1 million, will be funded by internally generated cash and it that will be delivered
by end of the year 2008.
    In summary, on the assumption that trading continues at existing levels, the Board expects to deliver a satisfactory outcome for the
current year. The Board remains confident in its strategy for growth and in the prospects for the Group in the future.
    Resignation of the Nominated Advisor 
    The Board made an announcement on 1 September 2008 in relation to the resignation of Nabarro Wells & Co. Limited, the Company's
Nominated Adviser. The resignation will take effect from 1 October 2008.  In accordance with Rule 1 of the AIM Rules, in the absence of the
appointment of a replacement Nominated Adviser on or before 1 October 2008, the Company's shares will be suspended from trading on AIM.   If
within one month of that suspension the Company has failed to appoint a replacement Nominated Adviser, the admission of its shares to
trading on AIM will be cancelled. The Company is currently in discussions with a potential replacement Nominated Adviser and will provide a
further update on progress in due course.
    Qin Shun Chao
    Chairman.






    ARKO HOLDINGS PLC

    FINANCIAL HIGHLIGHTS
    FOR THE SIX MONTHS ENDED 30 JUNE 2008 



                                                                     (Audited)  
                                            (Unaudited)            Year ended   
                                     Six months ended 30 June      31 December  
                                          2008           2007             2007  
                                       US$'000        US$'000          US$'000  
                                                                                
 Turnover                                6,330          6,083           10,860  
                                                                                
 EBITDA * - Continuing operations          572          1,297         (19,413)  
                                                                                
  Profit/(loss) after tax for the          592            466         (32,239)  
               period                                                           
                                                                                
 Shareholders' equity and minority      28,931         59,677           27,644  
 interest                                                                       
                                                                                

    *Earnings/ (loss) attributable to equity holders before interest, tax, depreciation and goodwill impairment on continuing operations.

    -ends-



    For further information:

    Angela Leung                          + 852 2219 9999
    Arko Holdings plc

    Marc Cramsie                     + 44 (0) 20 7634 4705
    Nominated Adviser                    
    Nabarro Wells & Co. Limited    









                ARKO HOLDINGS PLC

    CONDENSED CONSOLIDATED INCOME STATEMENT
    FOR THE SIX MONTHS ENDED 30 JUNE 2008 

                                                                                          (Audited  )
                                                              (Unaudited)              Year ended 
                                                       Six months ended 30 June        31 December
                                                            2008           2007               2007
                                         Note            US$'000        US$'000            US$'000
                                                                                     
 Turnover                                 3                6,330          6,083             10,860
                                                                                     
 Cost of sales                                           (4,035)        (3,872)            (7,972)
                                                                                     
          Gross profit                                     2,295          2,211              2,888
                                                                                     
 Other income                                                 62            322                605
                                                                                     
 Administrative expenses                                 (1,420)        (1,285)            (4,041)
 Impairment of property, plant and equipment,                  -              -            (1,131)
 investment                                                                          
 Impairment of goodwill                                        -              -            (9,010)
                                                                                     
          Profit / (Loss) from operations                    937          1,248           (10,689)
 Finance costs                                                 -              -                  -
                                                                                     
 Profit / (Loss) before                                      937          1,248           (10,689)
 taxation                                                                            
                                                                                     
 Taxation                                 4                (345)          (320)              (142)
                                                                                     
 Profit / (Loss) for the period from continuing              592            928           (10,831)
 operations                                                                          
 Loss for the period from discontinued operations              -          (462)           (21,408)
 Profit / (Loss) for the period                              592            466           (32,239)
                                                                                     
 Attributable to :                                                                   
 Equity holders of the parent Company                        117            259           (31,275)
 Minority interest - continuing                              475            207              (964)
 operations                                                                          
                                                             592            466           (32,239)
                                                                                     
                                                                                     
 Earnings / (Loss) per share                                                         
 (US cents):                                                                         
 Continuing operations:                                                              
   Basic and diluted earnings             5                0.006          0.036            (0.499)
                                                                                     
 Continuing and discontinued                                                         
 operations:                                                                         
   Basic and diluted earnings             5                0.006          0.013            (1.580)
                                                                                     




    ARKO HOLDINGS PLC

    CONDENSED CONSOLIDATED BALANCE SHEET
    AS AT 30 JUNE 2008 

                                                                     (Audited)  
                                                (Unaudited)              As at  
                                              As at 30 June        31 December  
                                     Note      2008        2007           2007  
                                            US$'000     US$'000        US$'000  
 NON-CURRENT ASSETS                                                             
   Goodwill                           7       1,834      20,807          1,834  
   Property, plant and equipment      8      25,640      33,237         24,376  
   Available-for-sale investment                 12          12             12  
                                             27,486      54,056         26,222  
                                                                                
           CURRENT ASSETS                                                       
             Inventories                        138         100            124  
     Trade and other receivables              9,235      10,303          8,312  
   Cash and cash equivalents                    189         834            428  
                                              9,562      11,237          8,864  
                                                                                
 TOTAL ASSETS                                37,048      65,293         35,086  
                                                                                
                                                                                
 CAPITAL AND RESERVES                                                           
   Share capital                      10     14,922      14,922         14,922  
   Share premium                             15,662      15,662         15,662  
   Merger reserve                            26,043      26,043         26,043  
   Exchange reserve                           1,940           -          1,440  
   Retained earnings                       (43,771)    (11,771)       (44,139)  
   Other reserve                              1,681       1,682          1,681  
   Total equity attributable to              16,477      46,538         15,609  
 equity holders of                                                              
   the Company                                                                  
   Minority Interest                         12,454      13,139         12,035  
 TOTAL EQUITY                                28,931      59,677         27,644  
                                                                                
 NON-CURRENT LIABILITIES                                                        
   Bank loans                                 1,915       1,906          1,915  
   Obligations under finance lease                9           -              -  
   Loans from fellow investors in               787         783            787  
 subsidiary                                                                     
   companies                                                                    
                                              2,711       2,689          2,702  
                                                                                
 CURRENT LIABILITIES                                                            
   Trade and other payables                   4,036       2,384          3,606  
   Taxation                           4       1,370         543          1,134  
                                              5,406       2,927          4,740  
                                                                                
 TOTAL LIABILITIES                            8,117       5,616          7,442  
                                                                                
 NET CURRENT ASSETS                           4,156       8,310          4,124  
                                                                                
 TOTAL EQUITY AND LIABILITIES                37,048      65,293         35,086  


    ARKO HOLDINGS PLC
    CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
    FOR THE SIX MONTHS ENDED 30 JUNE 2008

                                                 Unaudited attributable to equity holders of the Company                                    
                      
                                   Share                     Statutory                            Accumulated       Total    Minority
interests  
                                 capital                      surplus                                 losses/                               
    
                                                               reserve                               retained                               
    
                                                                                                       profit                               
    
                                                                                                                                            
    
                                                                                                                                            
         Total
                                                                                                                                            
    
                                            Share premium                  Merger    Exchange                                               
    
                                                                          reserve     reserve                                               
    
                                 US$'000          US$'000      US$'000    US$'000     US$'000         US$'000     US$'000              
US$'000     US$'000
                                                                                                                                            
    
 At 1 January 2007                14,922                         1,681                                             44,913               
12,932  
                                                   15,662                  26,043       (531)        (12,864)                               
        57,845
 (as restated *)                                                                                                                            
    
 Exchange translation                  -                -            -          -           -                       1,372                   
 -  
 difference                                                                                                                                 
    
                                                                                                                                            
    
                                                                                                        1,372                               
         1,372
 Profit for the period                 -                -            -          -           -                         259                  
207  
                                                                                                          259                               
           466
                                                                                                                                            
    
 At 30 June 2007                  14,922                         1,681     26,043                                  46,544               
13,139  
                                                   15,662                               (531)        (11,233)                               
        59,683
                                                                                                                                            
    
                                                                                                                                            
    
                                                                                                                                            
    
 At 1 January 2008                                               1,681                                             15,609               
12,035  
                                  14,922           15,662                  26,043       1,440        (44,139)                               
        27,644
 Exchange translation                  -                             -          -                                     751                 
(56)  
 difference                                                                                                                                 
    
                                                                                                                                            
    
                                                        -                                 500             251                               
           695
 Profit for the period                 -                             -          -                                     117                  
475  
                                                        -                                   -             117                               
           592
                                                                                                                                            
    
 At 30 June 2008                  14,922                         1,681     26,043                                  16,477               
12,454  
                                                   15,662                               1,940        (43,771)                               
        28,931
                                                                                                                                            
    
                                                                                                                                            
    
                                                                                                                                            
    
 At 1 January 2007                                               1,681                                             44,913               
12,932  
                                  14,922           15,662                  26,043       (531)        (12,864)                               
        57,845
 (as restated *)                                                                                                                            
    
 Exchange translation                  -                             -          -                                   1,971                   
67  
 difference                                                                                                                                 
    
                                                                                                                                            
    
                                                        -                               1,971               -                               
         2,038
 Loss for the period                   -                             -          -                                (31,275)                
(964)  
                                                        -                                   -        (31,275)                               
      (32,239)
                                                                                                                                            
    
 At 31 December 2007              14,922                         1,681     26,043                                  15,609               
12,035  
                                                                                                                                            
    
                                                                                                                                            
    
                                                   15,662                               1,440        (44,139)                               
        27,644

    *    represented the restatement of opening balances in respect of exchange reserve and accumulated losses in order to reflect the
first-year adoption of IFRS as adopted by EU and conform with the presentation of the 2007 annual financial statements.
      ARKO HOLDINGS PLC

    CONDENSED CONSOLIDATED CASH FLOW STATEMENT
    FOR THE SIX MONTHS ENDED 30 JUNE 2008 


                                              Six months ended      Year ended  
                                                   30 June         31 December  
                                                2008       2007           2007  
                                             US$'000    US$'000        US$'000  
                                                                                
 Cashflow from operating activities                                             
   Profit /(Loss) before taxation                                               
   - Continuing operations                       937       1248       (10,689)  
   - Discontinued operation                        -      (462)       (21,408)  
                                                 937        786       (32,097)  
                                                                                
 Adjustments for :                                                              
   Interest expenses                               -          -            120  
   Interest income                                 -          -           (14)  
   Depreciation                                  110        718          1,579  
   Loss on disposal of property, plant and         2          -             95  
 equipment                                                                      
   Impairment loss - goodwill                      -          -         18,977  
   Impairment loss - property, plant and           -          -         13,194  
 equipment                                                                      
   Exchange adjustments                        2,211      1,372            728  
                                                                                
 Operating profit before working capital       3,260      2,876          2,582  
 changes                                                                        
   Increase in inventories                      (14)       (23)           (47)  
   (Increase) / decrease in receivables        (923)      (155)          1,836  
   Increase / (decrease) in payables             430    (1,007)            567  
                                                                                
 Net cashflow generated from operations        2,753      1,691          4,938  
   Interest paid                                   -          -          (120)  
   Taxes paid                                  (108)      (320)          (152)  
                                                                                
 Net cash generated from operating             2,645      1,371          4,666  
 activities                                                                     
                                                                                
 Investing activities                                                           
   Purchase of property, plant and           (2,884)    (1,113)        (5,187)  
 equipments                                                                     
   Sales proceeds on disposal of property,         -          -             97  
 plant and equipments                                                           
   Interest Income                                 -          -             14  
                                                                                
 Net cash used in investing activities       (2,884)    (1,113)        (5,076)  
                                                                                
 Financing activities                                                           
   Increase / (decrease) in advances from          -      (262)              -  
 fellow investors                                                               
                                                                                
 Net cash used in financing activities             -      (262)              -  
                                                                                
 Net decrease in cash and cash equivalents     (239)        (4)          (410)  
                                                                                
 Cash and cash equivalents at the beginning      428        838            838  
 of the period                                                                  
                                                                                
 Cash and cash equivalents at the end of         189        834            428  
 the period                                                                     
                                                                                
                                                                                


                        ARKO HOLDINGS PLC

    NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
    FOR THE SIX MONTHS ENDED 30 JUNE 2008

    1.    GENERAL INFORMATION

    The Company is a public limited company incorporated and domiciled in the United Kingdom. The registered office of the Company is
located at 2 Bloomsbury Street, London WC1B 3ST. Its principal place of business is located at Hong Kong and People's Republic of China.
        
    The principal activities of the Company and its subsidiaries (hereinafter collectively referred to as the "Group") are terminal
operation and shipping logistics.
        
    The Company's shares were admitted to trading on the Alternative Investment Market ("AIM") of the London Stock Exchange. These condensed
consolidated interim financial statements are presented in United States Dollars, unless otherwise stated, and were reviewed by the Audit
Committee and approved for issue by the Board of Directors on ___________.


    2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        
    (a)    Basis of preparation and statement of compliance

    The Company has a financial year end date of 31 December. These condensed consolidated interim financial statements for the six months
ended 30 June 2008 have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting". These
condensed consolidated interim financial statements should be read in conjunction with the annual financial statements of the Group for the
year ended 31 December 2007, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted
for use in the European Union ("EU"). 

    EU-endorsed IFRSs may differ from IFRSs, as issued by the International Accounting Standards' Board ("IASB") if, at any point in time,
new or amended IFRSs have not been endorsed by the EU. At 30 June 2008, there were no unendorsed standards effective for the period ended 30
June 2008 affecting these condensed consolidated interim financial statements, and there was no difference between IFRSs endorsed by the EU
and IFRSs issued by the IASB in terms of their application to Arko Holdings Plc. 

    (b)    Significant accounting policies

    The condensed consolidated interim financial statements have been prepared under the historical cost convention except for certain
financial assets and liabilities which are stated at fair values.

    The accounting policies and methods of computation used in the preparation of these condensed consolidated interim financial statements
are consistent with those used in the annual financial statements for the year ended 31 December 2007 except for the adoption of standards,
amendments and interpretations issued by the IASB mandatory for annual financial periods beginning 1 January 2008.

    The adoption of these standards, amendments and interpretations was not material to the Group's results of operations or financial
position.

    The presentation of comparative information in respect of the six months ended 30 June 2007 which appears in these condensed interim
financial statements has been reclassified to conform to the presentation adopted in the 2007 annual financial statements.

               (c)   Possible impact of amendments, new standards and interpretations issued but not yet effective for the
                  six months ended 30 June 2008.

    Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations
which are not yet effective for the period ended 30 June 2008 and which have not been adopted in these condensed consolidated interim
financial statements.

    The Group has not early adopted the following new and revised standards, amendment, or interpretations that have been issued but are not
yet effective.

                                                   Effective for accounting
                                                         periods beginning 
                                                                on or after

 IFRS 8                Operating segments                    1 January 2009

 Revised IAS 1         Presentation of financial             1 January 2009
                                statements

 Revised IAS 23             Borrowing costs                  1 January 2009

 Revised IFRS 3          Business combinations                  1 July 2009

 Amendments to IAS 27  Consolidated and separate                1 July 2009
                           financial statements

 IFRIC 13                  Customer loyalty                     1 July 2008
                                programmes

    The Group is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is
expected to be in the period of initial application. The directors do not anticipate that the adoption of these IFRSs in future periods will
have a material impact on the Group's result of operations and financial position.

      (d)    Use of estimates and assumptions

    The preparation of financial information requires the use of estimates and assumptions about future conditions. The use of available
information and the application of judgement are inherent in the formation of estimates. Actual results in the future may differ from those
reported as a result of the use of estimates and assumptions about future conditions. Management believes that the Company's critical
accounting estimates involving a higher degree of judgement or complexity with those assumptions and estimates mainly relate to the
impairment of loans and advances, the goodwill impairment and the valuation of financial instruments. 

    (e)  Consolidation

    The condensed consolidated interim financial statements of Arko Holdings Plc comprise the financial statements of Arko Holdings Plc. and
its subsidiaries.


    3.    TURNOVER AND SEGMENT INFORMATION

    The principal activities of the Group are the provision of logistics and other related services including sea freight forwarding and
barge hire.

    Turnover represents income earned from the provision of logistics and other related services. Business (primary) segment information is
as follows:

    Segment revenue and result:
 (i)                                  Six months ended 30 June (Unaudited)
                                        Revenue          Segment profit/(loss)
                                      2008       2007        2008         2007
                                   US$'000    US$'000     US$'000      US$'000
 Continuing operations:                                
       Terminals and shipping        6,330      6,083         592          928
            logistics                                  
         Trading and others              -          -           -            -
               Mining                    -          -           -            -
                                     6,330      6,083         592          928
                                                       
 Discontinued operations:                              
            Power plant                  -          -           -        (462)
                                     6,330      6,083         592          466

      
 (ii)                                 Year ended 31 December 2007 (Audited)
                                      Revenue          Segment profit/(loss)
                                           2007                          2007
                                        US$'000                       US$'000
 Continuing operations:
   Terminals and shipping logistics      10,860                         (820)
          Trading and others                  -                       (8,776)
                Mining                        -                       (1,235)
                                         10,860                      (10,831)

 Discontinued operations:
             Power plant                      -                      (21,408)
                                         10,860                      (32,239)

    During the second half of 2007, the Group has discontinued the power plant operation owing to State Council and local government
macroeconomic and administrative measures in closing down small and ineffective coal-fired power plants in Hubei province. The discontinued
operations contributed to a segment loss of approximately US$ 21 million.

    4.    TAXATION

                                               (Unaudited)           (Audited)
                                           Six months ended        Year ended 
                                                30 June            31 December
                                              2008       2007          2007
                                           US$'000    US$'000       US$'000
 PRC Enterprise income tax for the period      345        320           142

    The Group has no estimated assessable profits in Hong Kong and the United Kingdom for the period (2007: Nil).    

    In respect of subsidiary companies operating in Hong Kong, provisions for Hong Kong profits tax 2008/2009 are calculated at 16.5%
(2007/2008 : 17.5%) of the estimated assessable profits for the period.

    PRC corporate income tax represents the tax charged on the estimated assessable profits arising from PRC subsidiaries in China. Pursuant
to the PRC corporate income tax law passed by the 10th National People's Congress on 16 March 2007, the new corporate income taxes for
domestic and foreign enterprises are to be unified at 25% on a gradual basis over 5 years effective from 1 January 2008. As a result, the
corporate income tax rate of PRC subsidiaries of the Group will be gradually changed from 18% to 25% with effect from 1 January 2008.

    No deferred tax is recognised on the unremitted earnings of the overseas subsidiary companies, as no dividend payments due to UK parent
company are expected to be made in the foreseeable future.  

    5.    EARNINGS (LOSS) PER SHARE 

        Basic and diluted earnings (loss) per share are calculated by dividing the earnings (loss) attributable to equity holders of the
parent by the weighted average number of ordinary shares in issue during the periods ended 30 June 2008, 30 June 2007 and 31 December 2007.

                                           (Unaudited)                   (Audited)
                                       Six months ended                Year ended 
                                            30 June                    31 December
                                          2008             2007             2007
     Continuing operations:                                      
 Profit / (Loss) attributable                                    
 to equity                                 117              721          (9,867)
   holders of the parent (US$                                    
 '000)                                                           
                                                                 
 Weighted average number of                                      
 shares in                       1,978,895,097    1,978,895,097    1,978,895,097
   issue                                                         
                                                                 
 Earnings / (Loss) per share                                     
   (Basic and diluted) (US               0.006            0.036          (0.499)
 cents)                                                          
                                                                 
 Continuing and discontinued                                     
 operations:                                                     
 Profit / (Loss) attributable                                    
 to equity                                 117              259         (31,275)
   holders of the parent (US$                                    
 '000)                                                           
                                                                 
 Weighted average number of                                      
 shares in                       1,978,895,097    1,978,895,097    1,978,895,097
   issue                                                         
                                                                 
 Earnings / (Loss) per share                                     
   (Basic and diluted) (US               0.006            0.013          (1.580)
 cents)                                                          
    
 
6.            DIVIDEND

    The directors do not recommend the payment of any dividend.

    7.    PROFIT / (LOSS) FOR THE PERIOD IS ARRIVED AFTER CHARGING THE FOLLOWING :-

                                               (Unaudited)         (Audited)
                                           Six months ended      Year ended 
                                                30 June          31 December
                                              2008       2007        2007
                                           USD'000    USD'000     USD'000
 Depreciation on property, plant and                           
   equipment                                   110        718       1,579
 Loss on disposal of property, plant and                       
   equipment                                     2          -          95
 Impairment loss on goodwill                     -          -      18,977
 Impairment loss on property, plant and                        
   equipment                                     -          -      13,194

        The impairment loss on goodwill in the year ended 31 December 2007 is in respect of the cessation of the Group's power plant
operation and other discontinued activities during that period. The goodwill balance at 30 June 2008 relates to the Group's remaining
terminal and logistics operations.

        The impairment loss on property, plant and equipment in the year ended 31 December 2007 has been made as a result of the cessation
of the Group's power plant operation during that period.

    8. PROPERTY, PLANT AND EQUIPMENT

    During the period , the Group spent approximately US$2,884,000 in acquiring property, plant and equipments (Six months ended 30 June
2007: US$1,113,000).


    9.  SUBSIDIARY COMPANIES
        
    At 30 June 2008, the company held 100% of the ordinary shares of Arko Offshore Holdings Limited, a company incorporated in the British
Virgin Islands ("BVI"), whose principal activity was that of a holding company. Arko Offshore Holdings Limited had the following subsidiary
undertakings:
      
                               Equity interests
                                attributable 
 Name                            to the group    Principal activities        Place of
                                                                          incorporation
       Arko Energy Ltd.              100%         Investment holding           BVI
    Arko Consultants Ltd.            100%             Providing                BVI
                                                 management services
      Arko Pacific Ltd.              100%         Investment holding           BVI
 Long Prosperity Industrial          100%         Investment holding       Republic of
             Ltd. *                                                         Seychelles
 Arko Silicon (Hubei) Ltd. *         100%              Dormant         People's Republic of

                                                                              China
     Sanko Mineral Ltd. *            100%           Sub-letting of             BVI
                                                  yachts, ships and
                                                       vessels
     Arko Shipping Ltd. *            100%        Providing logistics        Hong Kong
    (Formerly known as Arko                      and related services
        Logistics Ltd.)
    Arko Satellite Ltd. *            100%              Dormant                 BVI
 Arko Terminal Ltd. ("ATL")*         100%         Investment holding       Republic of
                                                                            Seychelles
       Changzhou Power              59.2%              Inactive        People's Republic of
      Development Company 
             Ltd.*                                                            China
  Keen Chance Terminal (GZ)          40%          Investing in and     People's Republic of
     Company Ltd. ("KCT") *                        operation of a 
                                                     terminal and             China
                                                 providing logistics
                                                       services
  Fujian Sanko Mining Ltd. *         70%               Dormant         People's Republic of

                                                                              China
        
    *a subsidiary indirectly held by Arko Offshore Holdings Limited
    .
    In the opinion of directors and a Hong Kong lawyer expressed his view that KCT is a subsidiary of ATL under Companies Act 1985 as it
could controls the board of KCT.

    During the second half 2007, pursuant to an agreement signed with the Hubei Provincial Economic Committee Bureau, Suizhou City
Government and the Hubei Provincial Electricity Co., Ltd. on 30 June 2007, the power plant factory of Changzhou Power Development Company
Ltd. has been ordered to close down its operation from July 2007 onwards owing to the macroeconomic and administrative measures imposed by
the order of State Council to clear off those ineffective coal-fired power plants in Hubei Province. Thereafter, Changzhou Power Development
Company Ltd. becomes inactive.

      10. SHARE CAPITAL
                                             Ordinary shares of 
                                             0.5 sterling pence each
                                             No. of shares    (equivalent) US$
 Authorised:                                          '000  
   At 30 June 2007, 31 December 2007 and 30     30,000,000         265,395,280
 June 2008                                                  
                                                            
 Issued and fully paid:                                     
   At 30 June 2007, 31 December 2007 and 30      1,978,895          14,921,520
 June 2008                                                  

    There is no movement in authorised and issued capital during the periods ended 30 June 2008, 30 June 2007 and 31 December 2007.

    11. OPERATING LEASE COMMITMENTS

    At 30 June 2008, the Group was committed to make the following payments in respect of land and building under operating leases :

                               US$'000
     Leases which expire:
 in the next year                  181
 in the second to fifth years      299
                                   480


    12. CAPITAL COMMITMENTS  

    At 30 June 2008, the Group had capital commitments contracted in respect of the acquisition of 3 sets of "45t quayside container cranes"
from a non-related supplier in the sum of RMB51,000,000 intended for use by a subsidiary company, Keen Chance Terminal (GZ) Company Limited.
At 30 June 2008, the Group has settled RMB3,440,986.

    The Company had no other significant capital commitments.


    13. CONTINGENT LIABILITIES   
    (a)    On 23 July 1998, a subsidiary of the Company, Keen Chance Terminal (GZ) Company Limited ("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 Harbour Economic Development Company Limited ("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 US$2.1 million) in favour of
Nangang Rural Credit Co-operation Bank for banking facilities granted to Miaotou Economic Development Company Limited ("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 guarantees above were invalid and MEDCL's equity
interest in KCT was frozen.

        Based on legal advice, the equity interests had no material impact on the operations of KCT and the directors consider that no
provision is required.

                          KCT maintains that the guarantee given was invalid on the following grounds:
    *     such guarantee did not have approval from the board of directors of KCT;
    *     in accordance with the law of the People's Republic of China, the board of directors and the management of KCT cannot give KCT's
properties for guarantee to its shareholder; and
    *     the controlling party of HEDCL has not held a valid business licence since 1998 and ceased operations in 1999. In accordance with
the banking regulations of the People's Republic of China, the bank cannot lend money to enterprises which do not have a valid business
licence.

    The legal proceedings are still in progress. Based on legal advice, the directors are of the opinion that, the loan agreement was void
because it was illegal and accordingly, the guarantee contract was also invalid.

    Furthermore, Keen Lloyd Holdings Limited, the Company's parent company, has indemnified the Group against any loss KCT will suffer
should the guarantee be enforceable.

    Accordingly, the directors are of the opinion that no provision should be made in the financial statements for any possible claim from
the bank in respect of the litigation.

    (c)        Following the closure of the power plant on 30 June 2007, the Group may be required to incur decommissioning costs in respect
of the power plant site.  The Group is unable to estimate such costs since the power plant can be sold to other larger power plant companies
in China before end of 2010 (the date at which the plant is required to be demolished). If a sale is achieved, no decommissioning costs will
be incurred. Accordingly, no provision is made in respect of these costs in these financial statements.


    14.  RELATED PARTY TRANSACTIONS

    Other than transactions otherwise disclosed in the financial statements, the Group and the Company had the following material
transactions which were carried out on an arm's length basis with related parties during the following periods :
      
                                                                         (Unaudited)       (Audited)
                                                                                         
                                                                                         
                                                                                         
                   Six months ended                              Year ended 
                        30 June                                  31 December
                   2008         2007                           2007
 Name of company         Note                Nature                  US$'000    US$'000    US$'000
 Guangzhou Tung          (a)          Agency charges                      41         39       77  
   Lloyd Shipping                                                                        
                                                                                         
   Agency Limited                                                                        
 Winko Metal             (b)          Hiring charges for                   -          8          8
   Limited                            motor vehicle                                      

    Notes:

    (a)  The agency charges are paid to Guangzhou Tung Lloyd Shipping Agency Limited in which the Chairman, Mr Qin Shun Chao, is a
director.

    (b)    There are no hiring charges paid to Winko Metal Limited during the current interim period, which is controlled by Keen Lloyd
Holdings Limited.

    15. FINANCIAL STATEMENTS

    This statement does not comprise full financial statements within the meaning of Section 240 of the Companies Act 1985.




This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
IR FKDKNKBKDNCB

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