FTO Fortune Oil

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RNS Number : 2134P

Fortune Oil PLC

15 August 2014

15 August 2014

FORTUNE OIL PLC

("Fortune Oil", the "Company" or the "Group")

Q1 2015 Financial Year ("FY") Interim Management Statement

Fortune Oil (LSE: FTO.L) is a company focusing on crude oil, natural gas and resource supply operations and investments primarily in China. The Company is quoted on the main market of the London Stock Exchange and has its head quarters in Hong Kong.

Fortune Oil announces its Interim Management Statement for the period 31 March 2014 to date.

Highlights

-- Bluesky jet fuel sales volumes in Q1 FY2015 increased 11.6 per cent to 888,900 tonnes (Q1 FY2014: 796,700 tonnes).

   --    Maoming single point mooring ("SPM") sales volumes were 2,861,400 in Q1 FY2015. 

-- Trading business sales volumes increased 82.2 per cent to 92,400 tonnes in Q1 FY2015 (Q1 FY2014 50,700 tonnes).

OPERATIONAL OVERVIEW

Natural Gas Business

Fortune Oil continues its participation in the China gas market through a long term strategic investment in China Gas Holdings Limited ("CGH"). CGH has not issued any further public statements since the information contained in Fortune Oil's 2014 annual report.

Oil Business

The Oil business continues its good performance and we continue to expand our supply of crude oil, oil-based products and jet fuel.

-- Bluesky jet fuel sales in Q1 FY2015 were 888,900 tonnes, representing an increase of 11.6 per cent over the same period in 2013 (796,700 tonnes), underpinned by the continued strong demand for domestic air travel in China.

-- Passenger numbers through the Bluesky airports increased 20.7 per cent in Q1 FY2015 to 33.66 million compared to the same period in 2013 (27.89 million).

-- Maoming SPM sales volumes in Q1 FY2015 were 2,861,400 tonnes. In Q1 FY2015 18 vessels delivered crude oil to the SPM compared to 17 vessels in the previous three month period.

-- In Q1 FY2015 West Zhuhai Terminal's volume throughput decreased by 34.0 per cent to 439,200 tonnes compared to the same period in 2013 (665,400 tonnes) due to decreased throughput utilisation by PetroChina. Fortune Oil is using its influence through the board of directors to try to increase the utilisation of the terminal by PetroChina.

Oil demand growth has shown positive momentum in Q2 2014 increasing 1.4 per cent year on year. In June 2014 Chinese oil demand increased 3.8 per cent year on year to 10.3 million barrels per day, a record high. Passenger car sales increased 11.4 per cent year on year in June 2014 as Chinese consumers purchased 1.6 million cars which will support strong gasoline demand. The pick up in oil demand growth is consistent with improvement in industrial output growth and is expected to underpin the continued positive performance of the Company's oil businesses.

Trading Business

The trading business continues to focus on the supply and trading of oil and petrochemical products.

-- In Q1 2014/15, the total quantity traded of base oils and petrochemicals was approximately 92,400 tonnes compared to 50,700 tonnes for the same period in 2013.

FINANCIAL PERFORMANCE

Financial Position

In April 2014, Fortune Oil PRC Holdings Limited, a wholly-owned subsidiary of Fortune Oil, issued a drawdown notice for the remaining US$180 million from the Morgan Stanley facility signed in October 2013. The proceeds will provide the Company with working capital and finance new investment. Except for this drawdown, there has been no material change in the financial position of the Group since the end of the most recent reporting period on 31 March 2014.

As at the date of this announcement, Fortune Oil's balance sheet remains strong and healthy. The Group monitors and maintains a level of cash and cash equivalents considered adequate by management to finance the Group's operations and repayment of bank loans and investment commitments for the foreseeable future.

The Company is principally an investment holding company at the present time with dividend income from each business unit as the core cash inflow to the Company rather than cash flows of the associates and joint controlled entities which we account for on an equity basis. The policy is to pay out a significant share of any surplus dividends but not use borrowing facilities for this purpose. The Company expects growth in dividends from our interests but scale and timing is currently uncertain.

OUTLOOK

Overall business performance is in line with expectations. The Board remains optimistic with regard to Fortune Oil's prospects, despite the Chinese government's plans to accept a slower economic growth than previously with the economic growth rate of 7.5 per cent in Q2 2014 in line with the government growth target of 7 per cent. Although this will slow the growth rate for energy consumption, the Board does not believe it will affect the inevitable move from high carbon/high pollution fuels to natural gas. In addition, the Board believes that the slowing of economic growth will not materially impact the continuing growth in vehicle ownership and air travel, which continues to drive up demand for transport and aviation fuels.

For further details:

 
 Fortune Oil PLC 
  Tian Jun, Acting Chief Executive      Tel: 00 852 2583 3125 
  Bill Mok, Chief Financial Officer     Tel: 00 852 2583 3120 
 VSA Capital Limited 
  Andrew Monk/Andrew Raca               Tel: 00 44 203 005 5000 
 

Background on Fortune Oil

Fortune Oil is a leading independent energy company engaged in the investment and operations of oil and natural gas supply projects in China. With over 20 years of operating history in China, Fortune Oil has formed a strong partnership with domestic and international market leaders. Fortune Oil is listed on the London Stock Exchange with its operational headquarters in Hong Kong.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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