Fortune Oil PLC4 – 4A Des Voeux Road, Central Hong Kong CITIC Bank International Limited 80 Fl....

Fortune Oil PLChalf year report 2013

BankersMorgan Stanley Asia LimitedLevel 46 International Commerce Centre1 Austin Road WestKowloon, Hong Kong

Standard Chartered Bank (Hong Kong) LimitedStandard Chartered Bank Building4 – 4A Des Voeux Road, CentralHong Kong

CITIC Bank International Limited80 Fl. International Commerce Centre 1 Austin Road WestKowloon, Hong Kong

Malayan Banking Berhad18/F., CITIC Tower1 Tim Mei Avenue, CentralHong Kong

DBS Bank (Hong Kong) Limited16th Floor, The Center99 Queen’s Road Central Central, Hong Kong

Shenzhen Development Bank Co., Ltd.Guangzhou BranchNo. 66 Huacheng DadaoZhujiang Xincheng, GuangzhouChina

Barclays Bank plcKnightsbridge Business CentreP.O. Box 32014London NW1 2ZGUnited Kingdom

P R AdviserBell Pottinger5th Floor, Holborn Gate330 High HolbornLondon WC1V 7QDUnited Kingdom

Financial Adviser & Stockbroker Oriel Securities Limited150 CheapsideLondon EC2V 6ETUnited Kingdom

Corporate ConsultantS.Goschalk Limited41 MeadwayLondon NW11 7AXUnited Kingdom

Corporate AdviserVSA Capital LimitedFourth FloorNew Liverpool House15-17 Eldon StreetLondonEC2M 7LD

SolicitorsJun He Law OfficesSuite 2208, 22/F., Jardine HouseOne Connaught PlaceCentral, Hong Kong

Reed Smith LLPThe Broadgate Tower20 Primrose StreetLondon EC2A 2RSUnited Kingdom

DirectorsQIAN BenyuanChairman (Non-executive)

Daniel CHIUExecutive Vice-Chairman

TEE Kiam PoonChief Executive

LI Ching (Ms)Executive Director

Frank ATTWOODSenior Independent Director

LIN XizhongMAO TongDennis CHIULouisa HO (Ms)Ian TAYLORWANG JinjunZHI YulinNon-executive Directors

Company SecretarySandi CHOI (Ms)

Registered Office6/F., Belgrave House76 Buckingham Palace RoadLondon SW1W 9TQUnited Kingdom

Registered Number2173279

AuditorsDeloitte LLP2 New Street SquareLondon EC4A 3BZUnited Kingdom

company information

1 Fortune Oil PLC half year report 2013

Financial Highlights

• Revenues including share of jointly controlled entities increased by 10 per cent to £372.0 million (H1 2012: £338.8 million) with no revenues being accounted for from the Maoming single point mooring business (“SPM”) after expiration of the joint venture agreement in February 2013.

• Group profit from operations, excluding gains on disposal, decreased by 10 per cent to £12.8 million (H1 2012: £14.3 million) principally due to an inventory loss in the aviation refuelling business as a result of aviation fuel price movements and the exclusion of any potential profits from the SPM business after the joint venture agreement expired.

• Earnings per share was 0.32p (H1 2012: 0.55p). Earnings per share, excluding gains on disposal was 0.32p (H1 2012: 0.31p).

The Board is excited by the medium term growth prospects as Fortune Oil continues to strengthen its position in China’s rapidly expanding natural gas industry.

• Net assets further increased to £327.4 million as at 30 June 2013 (31 December 2012: £246.8 million) including a net gain of £74.6 million in fair value in respect of the Company’s China Gas Holdings Limited (“CGH”) shares.

• The Annual General Meeting on 19 June 2013 approved a dividend payment of 0.16p per share for 2012 which was paid on 15 August 2013.

• Proposed special interim dividend of 2.36p per share (“Special Dividend”) to be put to shareholders in a general meeting.

• Loan from Fortune Dynasty Holdings Limited (“FDH”) of US$12 million to the Group to cover working capital needs and certain material near-term capital expenditure as a result of the delay in completion of the sale to CGH of Fortune Gas Investment Holdings Limited (“FGIH”) (the “FGIH Transaction”).

Profit Attributable to Shareholders £ million

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chief executive’s review


Corporate Matters

• The Company announced on 7 August 2013 that it will be putting the following inter-conditional proposals to shareholders in a general meeting:

• The acquisition of Wilmar International Limited’s interest in the consideration receivable as a result of the conditional disposal of FGIH. The total consideration is US$60 million payable to FDH in Ordinary Shares in Fortune Oil (the “Proposed Acquisition”).

• Subject to the waiver from the UK Takeover Panel, amendment of the loan received from FDH of US$12 million, such that it will be repayable in Ordinary Shares in Fortune Oil (the “Loan Settlement”)

• Waiver to be sought from the UK Takeover Panel, and of independent shareholders of the Company, of the requirement of Rule 9 of the UK Takeover Code for a general offer to be made for the Company by persons who, by receiving Ordinary Shares through the Loan Settlement and the Proposed Acquisition, would own more than 56.9 per cent of the Company’s issued share capital.

• The Company intends, subject to approval by the UK Takeover Panel, to send a circular to shareholders providing information about, among other things, the Proposed Acquisition, the Loan Settlement and the Special Dividend, convening a general meeting of the Company at which the approval of the Proposed Acquisition, the Rule 9 waiver resolution and the payment of the Special Dividend will be put to a vote of the shareholders of the Company. The date of the general meeting of the Company has not yet been set but it will be held as soon as practicable.

Operational Highlights

Natural Gas Business

• On 12 August 2013, the Company announced that regulatory approval had been received in respect of the sale of FGIH to CGH, with completion expected during Q3 2013. Consequently the assets and liabilities associated with FGIH continue to be classified as “held for sale” in the accounts.

Natural Gas Supply

• Operating profits increased by 44 per cent to £8.9 million (H1 2012: £6.2 million).

• Sales volumes of natural gas increased by 20 per cent to 287 million cubic metres compared to H1 2012.

• Completed natural gas connections to a further 32,497 new customers which brings the total number of customers to approximately 312,500 (H1 2012: 31,031 new customers connected).

• Construction is under way for the first permanent LNG ship refuelling station on the Yangtze River near Chongqing. Fortune Oil also received the first full approval for a LNG dual fuel ship to enter commercial operations.

Coal Bed Methane (“CBM”)

• Regulatory approval obtained to progress the construction of the gas gathering system and construction is under way funded out of Group resources.

• Total field production from the Fortune Liulin Gas (“FLG”) wells has exceeded 70,000 cubic metres per day. The most successful well to date has produced 20,000 cubic metres per day, a rate which exceeds all previous wells drilled by FLG and is in line with Company projections.

• Chinese Reserve Certification obtained across the Liulin block for seams 3, 4, 5, 8 and 9. The Chinese certification reported total gas in place of 21.8 billion cubic metres.

• Initial commercial gas sales expected H2 2013 depending on completion of the gas gathering system.

China Gas Holdings Limited (“CGH”)

• The Anti-Monopoly Bureau of the Ministry of Commerce of the People’s Republic of China (“MOFCOM”) approved the FGIH Transaction in relation to Fortune Oil’s natural gas business. Completion of the FGIH Transaction is expected to occur during Q3 2013.

• China Gas Group Limited (“CGG”), a joint venture company between the Company and Mr Liu Ming Hui, acquired the 207,968,000 CGH shares previously purchased by Fortune Max, a private company controlled and beneficially owned by Mr Daniel Chiu. As at the date of this report CGG owns 702,446,000 CGH shares, representing 14.66 per cent of CGH’s total issued share capital.



Oil Business

• Bluesky continues to perform well. Fortune Oil’s share of net profit was £5.2 million in the first half of 2013 (H1 2012: £6.0 million), with an 11 per cent increase in sales volumes to 1.6 million tonnes (H1 2012: 1.4 million tonnes), driven by the continued increase in domestic air travel demand. The reduction in profit contribution from Bluesky is a result of inventory stock losses due to the reduction in aviation fuel prices during the period.

• Fortune Oil and Sinopec are in the final stage of negotiating a replacement structure for the Maoming SPM partnership, for which the existing joint venture period expired in February 2013. This is expected to include the development of a new pipeline and buoy, increasing the capacity of the terminal. Although the SPM continues to operate, the results from the existing venture are presented as discontinued operations during this period.

• West Zhuhai Products Terminal throughput volume was up 22 per cent to 1.4 million tonnes (H1 2012: 1.1 million tonnes) and profit contribution to the Group increased to £0.6 million (H1 2012: £0.4 million), a 46 per cent increase due to increased utilisation of the terminal by PetroChina.

• Fortune Oil has obtained a license allowing it to supply and trade diesel in China, a first for a foreign company.

Resources

• Basic engineering design, finalisation of transportation costs and customer off-take arrangements for the Armenian Iron Ore development are progressing and the economic viability of the project continues to be assessed.

There were no lost time incidents recorded in any of the Group’s operations during the period.

OutlookOverall, the rate of China’s economic growth continued to cool in the first half of 2013, with Q2 GDP decelerating to 7.5 per cent from 7.7 per cent in Q1 compared with the government official growth target of 7.5 per cent for 2013. This will be the slowest rate of growth for more than two decades as China’s leaders seek to achieve the long-term goal of rebalancing the economy away from an over-reliance on exports and investment, and focusing instead on increased domestic consumer spending.

In spite of the slowing of the Chinese economy, growth in energy demand remains strong with 7 per cent growth in Q2, amidst signs in June 2013 that oil and power demand is improving. China’s implied gas consumption increased by 13.1 per cent year on year, to 81.5 billion cubic metres (“bcm”) in H1 2013 with gas production increasing 9 per cent to 58.8 bcm according to the National Development and Reform Commission (“NDRC”). Demand for air travel in China also remained strong. The civil aviation industry in China saw its passenger volume increase 11 per cent year on year to 170 million in the first half of the year, according to figures from the Civil Aviation Administration of China.

Therefore, it appears likely that even with the economic slowdown, China is expected to continue to provide growth opportunities in both the oil and gas markets from which the Company can benefit.

China’s recent gas price reform will also incentivise domestic gas supply. New pricing policy has made the economics of domestic gas production, including coal bed methane, more attractive. During 2013, we have continued to progress the installation of the gas gathering system required to commercialise gas produced from the Liulin CBM block. We have also continued to expand our provision of CNG and LNG in the transportation market alongside expansion in our network of CNG and LNG refuelling stations to support the growing fleets of buses and trucks which use natural gas as a fuel due to it being cheaper than petrol or diesel.

The Armenia iron ore development is still under evaluation and, as with all our projects, we are continuing to assess the project’s economic viability. This is particularly important as projections of the long term iron ore price appear to be softening due to the slowdown in economic growth globally, particularly in China.

The Board is excited by the medium term growth prospects. Fortune Oil continues to strengthen its position in the Chinese natural gas industry and will see further expansion of its customer base as natural gas availability increases. The development with CGH will further enhance our exposure to China’s rapidly expanding natural gas industry.

TEE Kiam PoonChief Executive21 August 2013



increased by 24.6 per cent year on year to 24.7 bcm whilst domestic gas output during the period rose 9 per cent year on year to 58.8 bcm, in line with projections that Chinese gas demand will grow faster than GDP due to government policies on gas utilisation in the industrial and residential sectors. The central government is encouraging the substitution of coal in industrial sectors due to environmental concerns and substituting LPG in the residential sector especially in the coastal regions, since natural gas is cheaper than LPG. The transportation sector is one of the areas where there is a significant potential for fuel switching, particularly through the use of LNG in heavy duty trucks and the marine sectors. Recent gas price reforms will incentivise domestic gas supply as the new pricing makes the economics of domestic gas production including unconventional gas such as CBM more attractive. The expectation is that the Chinese Government will continue to provide incentives for unconventional gas developers to encourage the investment needed to bring these resources on stream.

NATURAL GAS BUSINESS

The Company has continued to expand rapidly the natural gas business focussing on several of the high margin sectors supplying gas to industrial users and to the natural gas vehicle refuelling market. The fundamental drivers for the natural gas business remain firmly in place, with demand in China for natural gas continuing to outstrip supply. The Company has steadily expanded its upstream and midstream operations as well as its downstream city-gas and refuelling operations and continues to make significant progress on the new natural gas projects announced over the past 18 months.

Revenue of the natural gas business in H1 2013, including the share of jointly controlled entities, increased by 28 per cent to £49.3 million (H1 2012: £38.4 million) and the gas sales volume increased to 287 million cubic meters (H1 2012: 239 million cubic meters) as operations at the new projects came on stream. The operating profit for the natural gas business increased by 44 per cent to £8.9 million (H1 2012: £6.2 million) driven by increased connections and rising gas sales margins.

A further 32,497 new customers were connected in this period (H1 2012: 31,031 new customers), representing a 5 per cent increase in the rate of connections, demonstrating the continued growth as new city gas networks are connected to gas supply. This brings the total number of connected customers to approximately 312,500.

CHINESE ENERGY MARKET

The first half of 2013 has seen a continued deceleration in China’s economic growth. China gross domestic product (“GDP”) growth for Q2 2013 was 7.5 per cent, the lowest for two decades and down from 7.7 per cent in Q1 2013. However, China’s economic growth rate is still expected to reach 7.5 per cent in 2013. The country’s domestic demand in the first half was sufficient to support 9 per cent growth whilst weak exports sapped the economy’s momentum.

China’s central bank has maintained its one-year benchmark lending rate at 6 per cent since the last reduction in July 2012 but liquidity remains tight as the government seeks to restrict some of the excessive lending which has occurred previously. There are currently no signs that the new leadership will boost demand by spending more on public housing, railways and other infrastructure projects as it did in 2009 following the global economic crisis. Recently, policy makers have announced fresh moves to boost growth, including suspension of value-added tax for small businesses and simplified customs clearance procedures on the exports of small and medium-sized private enterprises.

Despite the slow down in economic growth, energy demand in China has remained strong. Oil demand averaged 10.0 million barrels per day, which was 5.2 per cent higher compared to the same period in 2012. Industrial output growth in June 2013 further declined to 8.9 per cent from 9.2 per cent in May, whilst apparent oil demand surged 11 per cent in June year on year. This has been the strongest growth in oil demand since early 2011, although this was helped by the weak performance in the previous year. Underpinning the strong demand for refined products, which surged 10.1 per cent year on year in June, is the growth in vehicle sales. In June 2013, passenger car sales increased 9.3 per cent as Chinese consumers bought 1.4 million cars. Total refining throughput reached 238.5 million tonnes, which was 5.4 per cent higher than the same period in 2012.

China’s gas demand has been through a decade of rapid growth. Since 2001 gas demand has grown at a compound annual growth rate (“CAGR”) of 17 per cent expanding from 28 bcm in 2001 to 154 bcm in 2012. The government estimates that gas demand will further increase to 230 bcm in 2015 and 400 bcm in 2020. In the first six months of 2013 demand for natural gas rose 13.1 per cent year on year to 81.5 bcm, according to NDRC. Natural gas imports, comprising LNG and pipeline supply from Central Asia,

business review


business review

The Company continues to make good progress in developing natural gas as a fuel for buses and heavy duty trucks and for ships on the Yangtze River with the capital expenditure requirements for these refuelling stations being funded by the shareholder loan from FDH of US$12 million.

1. LNG and CNG Refuelling Stations

The Company has steadily expanded its network of LNG and CNG refuelling stations. In Xinyang the Company has opened a liquid natural gas based (“LCNG”) station which can refuel both LNG and CNG vehicles and is currently refuelling heavy duty LNG trucks. In Sishui the Company has opened up a CNG refuelling station and is currently planning to install a total of five LNG refuelling stations to support fleets of long distance heavy duty coal trucks operating in Quyang region. Other CNG and L-CNG stations are under construction in Sishui and Xinyang. The Company currently has 10 CNG refuelling stations in operation.

The Company is already fuelling long distance buses with LNG in Liaoning province which is the first state wide project of its type. We expect demand for LNG as a fuel for transport in China to continue to grow in the future and accordingly we intend to continue to further increase our exposure in this high margin growth market predominantly through our investment in CGH, following completion of the FGIH Transaction.

2. Yangtze River LNG Ship Refuelling

The Company is developing the infrastructure to supply natural gas as a fuel to ships on the Yangtze River. The sites for the first three permanent LNG ship refuelling stations have been identified. Construction is in progress on the station near Chongqing which will be operational by the end of 2013. Approval has been obtained for the second station at Er Zhou near the Three Gorges Dam and the design work has started on the third location near Nanjing. These are the first of a number of stations the Company is planning to build along the Yangtze River.

The Company holds the intellectual property rights and know-how to the leading Chinese LNG dual fuel technology and has reached agreement to supply dual fuel ships to a number of leading shipping companies. The Company converted LNG dual fuel ships are the first to receive the full regulatory approval to enter commercial operations in China. Fortune Oil is establishing a new technical centre in Wuhan which will be responsible for developing and implementing Fortune Oil’s LNG dual fuel technology.

3. CBM

FLG continues to make progress at its Liulin CBM operations and the project is on track for first commercial gas sales in H2 2013 following the completion of the gas gathering system. FLG has obtained the necessary approvals to progress the construction of the gas gathering system and construction of this is under way with the current target for this to be completed in Q3 2013.

Total field production from the FLG horizontal wells has exceeded 70,000 cubic metres per day with the most successful well to-date producing up to 20,000 cubic metres per day, a rate which exceeds all previous wells drilled by FLG. Until the gas gathering system is in place, the bottom hole pressure (“BHP”) and gas flow rates are being managed to avoid unnecessary flaring of gas. Including the gas production from the CUCBM wells, the total gas field production from the Liulin block has exceeded 100,000 cubic metres per day.

Chinese Reserve Certification has now been obtained across the Liulin block for all of the main coal seams that contain gas. An additional Chinese reserve certification of 16.3 bcm gas reserves were obtained for seams 3, 4 and 5 in the southern part of the Liulin block and for seams 8 and 9 for the whole Liulin block. The total gas in place for the whole Liulin block (seams 3, 4, 5, 8 and 9) is therefore estimated by the Chinese approval agencies to be 21.8 bcm. The Chinese Reserves Certification is a requirement of the Overall Development Plan (“ODP”) approval process.

The documentation for the above ground and subsurface aspects of the ODP has been completed. The ODP is the final approval procedure required for full commercial operations and marks the transition of the field from exploration to development and operation.

4. Strategic Investment in China Gas Holdings Limited

(“CGH”)

The Company announced on 17 December 2012 that it had reached a conditional agreement (the “FGIH Sale Agreement”) for the disposal of its natural gas business, FGIH, owned 85 per cent by the Company and 15 per cent by Wilmar International Limited (“Wilmar”), to China Natural Gas Investment Limited (“CGI”), a subsidiary of CGH, for a total consideration of US$400 million, comprising US$200 million upon completion of the FGIH Sale Agreement and a further US$200 million of deferred consideration (the “Deferred Consideration”).


business review

On 27 June 2013, due primarily to a delay in receiving approval from the Anti-Monopoly Bureau of the Ministry of Commerce of the People’s Republic of China (“MOFCOM”), the Company announced that it, Wilmar and CGI and the other parties to the FGIH Sale Agreement had entered into a supplementary agreement to extend the date by which the conditions of the FGIH Sale Agreement must be satisfied from 30 June 2013 to 30 September 2013.

On 12 August the Company announced that MOFCOM approval had been received in respect to the FGIH Transaction and completion is expected to occur during Q3 2013.

By written notice to CGI between 1 November 2013 and 31 December 2013, the Company (through its subsidiary Fortune Oil PRC Holdings Limited) may elect to receive the Deferred Consideration by way of shares in CGH in accordance with the terms of the FGIH Sale Agreement. The issue of shares in CGH as the Deferred Consideration is subject to approval of the board of directors of CGH and listing permission from the Hong Kong Stock Exchange. Where the Company does not exercise the right, or where the right is exercised but the conditions for the issue of shares in CGH are not satisfied, such cash amount (being the Deferred Consideration plus interest) will be payable within 30 days of either 31 December 2013 or the date on which CGH is aware that one or both of the conditions are not satisfied, respectively.

Wilmar entered into an agreement with First Marvel Investment Limited (“First Marvel”), effective as of 23 July 2013, pursuant to which, for cash consideration of US$60 million, First Marvel agreed to accept all the rights and benefits and to perform and discharge all liabilities and obligations of Wilmar under the FGIH Sale Agreement (to the extent relating to the period after completion of such agreement).

First Marvel is a wholly-owned subsidiary of Fortune Dynasty Holdings Limited. FDH is a joint venture company owned 55 per cent by First Level Holdings Limited, a company controlled by Daniel Chiu, executive vice chairman and a director of the Company, and 45 per cent by Vitol Energy (Bermuda) Limited, a member of the Vitol Group of companies of which Ian Taylor, a non-executive director of the Company, is president and chief executive officer.

The Company entered into a deed of assignment and novation on 6 August 2013 between the parties to the FGIH Sale Agreement and First Marvel under which the rights and obligations of Wilmar under the FGIH Sale Agreement were assigned and novated to First Marvel effective as from completion of the FGIH Sale Agreement.

On 7 August 2013, the Company entered into a sale and purchase agreement (the “SPA”) and an unsecured fixed rate loan note instrument (the “Loan Instrument”) with FDH.

Under the SPA, the Company has conditionally agreed to purchase from FDH the entire issued share capital of FDH wholly-owned subsidiary, First Marvel for a consideration of US$60 million (the “Proposed Acquisition”). The consideration payable by the Company for First Marvel will be satisfied by the issue to FDH of 500,266,580 new ordinary shares of 1 penny each in the share capital of the Company at an issue price of 7.81 pence per ordinary share (“Ordinary Shares”). The SPA is conditional upon, among other things, the passing of the Rule 9 waiver resolution pursuant to the UK Takeover Code.

Under the Loan Instrument, FDH has agreed to subscribe in cash at par for US$12 million nominal amount of fixed rate unsecured loan notes issued by the Company (the “Loan Notes”). The Loan Notes have a maturity date of 7 February 2014. Interest is payable on the Loan Notes at a rate of 7 per cent per annum (with an additional 2 per cent in respect of default interest), such interest accruing daily and calculated on the basis of a 365-day year. The proceeds of the Loan Notes will be used for near-term capital expenditure and for general working capital purposes. The Loan Notes are repayable in cash.

The Company and FDH propose, subject to the UK Takeover Panel agreeing to waive the requirements of Rule 9 of the UK Takeover Code and the passing of the Rule 9 waiver resolution, to modify the Loan Instrument to provide that the Loan Notes be settled by the issue of Ordinary Shares (the “Loan Settlement”). Upon the passing of the Rule 9 waiver resolution pursuant to the UK Takeover Code, in accordance with the Loan Settlement the Company will be obliged to redeem all the Loan Notes by issuing in exchange for almost the entirety of the principal amount of such redeemed Loan Notes 99,373,000 Ordinary Shares at an issue price of 7.81 pence per Ordinary Share (the same issue price as for the Ordinary Shares issued in connection with the Proposed Acquisition described above). All accrued interest plus the remainder of the principal amount not repaid by the issue of the Ordinary Shares on the redeemed Loan Notes at the date of such redemption will be paid in cash to the holders of the Loan Notes. If the Rule 9 waiver resolution is not passed then the Proposed Acquisition will not occur, the Loan Instrument will not be amended and the Company shall redeem the outstanding Loan Notes in cash at par together with accrued interest (including any accrued default interest and, in so far as required, after deduction of tax) in accordance with the terms of the Loan Instrument.


business review

The reason for the entry into the Loan Instrument was the delay in receiving MOFCOM approval, and therefore completion of the sale of FGIH pursuant to the FGIH Sale and Purchase Agreement. The Company is required to continue to fund the working capital needs of FGIH, including certain material near term capital expenditure necessary to progress FGIH with a view to achieving the minimum profits guaranteed by the Company under the FGIH Sale and Purchase Agreement. This will ensure that the Company receives a maximum value for the sale of FGIH, whose growth will be to the benefit of all shareholders of the Company. It is expected that these proposals will ultimately provide additional sources of demand for, and improve the marketability of, the ordinary shares of Fortune Oil.

These developments are in line with our stated strategic objectives for participation in the Chinese natural gas supply market.

OIL BUSINESS

Aviation Refuelling (South China Bluesky Aviation Oil Company)The Bluesky joint venture achieved jet fuel volume growth of 11 per cent to 1.6 million tonnes with revenues of £1,100.9 million (H1 2012: £980.1 million), resulting in net profits of £21.3 million in H1 2013 (H1 2012: £24.3 million). The reduction in profit contribution from Bluesky is a result of inventory stock losses due to the reduction in aviation fuel prices during the period. Bluesky is committed to keeping sufficient storage to supply jet fuel at each of its airports for approximately two weeks to ensure that operations remain uninterrupted. We remain confident in achieving a good performance in 2013 due to the continued strong demand for domestic air travel in China.

Maoming Single Point MooringWe continue to make good progress in finalising the arrangements with Sinopec, our joint venture partner, for a replacement structure for the Maoming SPM partnership, for which the existing joint venture period expired in February 2013. Management remains optimistic of a satisfactory outcome to these discussions, and although under the new structure, the Company will no longer hold a controlling equity stake in the Maoming SPM joint venture, the scope of the joint venture with Sinopec will be expanded. Since the joint venture contract expired in February 2013 the Maoming SPM business has been deconsolidated and the net amount expected to be recovered on dissolution of the joint venture has been recognised as “receivable on dissolution” on the balance sheet as at 30 June 2013.

The SPM facility continues to operate efficiently and with an accident-free and spill-free record. Financial results up until the date of contract expiry are presented as discontinued operations and the Company will not include the financial or operating performance post the joint venture expiration date in its results until the new joint venture agreement is in place. The new joint venture is expected to be an associate to the Group, and equity accounting should be adopted once the joint venture has been set up.

Products Terminal and SupplyThe performance of the West Zhuhai Products Terminal (South China Petroleum Company) improved during 2013 with increased utilisation. Volumes increased by 22 per cent in the first half of 2013 to 1.4 million tonnes (H1 2012: 1.1 million tonnes). The profit contribution to Fortune Oil increased to £0.6 million compared to £0.4 million in H1 2012.

This terminal continues to play an important role for PetroChina given its strategic position in the downstream business in Southern China. Options to diversify the terminal’s customer base continue to be evaluated.

TRADING BUSINESS

The Trading Business continues to focus on oil and petrochemicals products with turnover for the period remaining virtually unchanged at £45.6 million (H1 2012: £45.7 million). Profits from operations amounted to £0.2 million in H1 2013 (H1 2012: £0.5 million).

The trading business continues to explore options for the expansion of the types of products that it trades. The Company obtained one of the first licences issued in China to enable the supply and trading of diesel and other refined products and agreement has been reached with Tianjin Gas Company to supply LNG to the city of Tianjin via the LNG import terminal.

RESOURCES

Design work has continued on the Hrazdan iron ore mine and ore beneficiation plant. Sinosteel is progressing basic engineering design work with a focus on reducing the capital expenditure requirements of the ore beneficiation plant. SRK Consulting (UK) and Sinosteel are carrying out additional test studies to reduce the land requirements of the tailings and waste rock areas and reduce capital expenditure requirements. Fortune Oil is also evaluating the Abovyan and Svarants iron ore assets and has met fully the requirements of the exploration licenses of both of these assets to ensure that none of the licence area is relinquished through non-performance.


business review

Fortune Oil has met with several key Armenian government officials and the Armenian and Georgian railway companies to discuss the need for cost competitive transportation to ensure that the potential iron ore from the Hrazdan mine can be transported economically to the key target markets in the region. A triparty memorandum of understanding has been signed between Fortune Oil, the Armenian railway company and the Georgian railway company and a joint working team established to achieve this.

Fortune Oil is in discussions with a number of customers in the neighbouring countries for an iron ore off-take from the Hrazdan mine. Transport costs will be reduced significantly if the iron ore concentrate product can be sold to local steel producers avoiding the need to export overseas.

The target is to have completed the basic engineering design in Q4 2013 and to have finalised product off take and transportation agreements to ensure the economic viability of developing the Hrazdan mine under long term iron ore price projections, which have continued to soften as key demand centres, particularly China, slow down.

FINANCIAL REVIEW

Disposal Group Held for Sale and Discontinued OperationsThe assets and associated liabilities of the Group’s natural gas business upon completion of the FGIH Transaction, have been classified in the balance sheet as held for sale as at 30 June 2013. As a consequence of this classification and since the Maoming SPM business is undertaking a dissolution procedure following the expiration of the joint venture contract in February 2013, the results of the Group’s natural gas business and the Maoming SPM business are presented as discontinued operations in the income statement and cash flow statement for the period ended 30 June 2013, and the results for the period ended 30 June 2012 have been presented on the same basis.

In order to provide a comprehensive review of all of the Group’s operations, on a basis comparable with that provided to shareholders in previous periods, the discussion of financial results below relates to continuing operations and discontinued operations combined. The income statement also distinguishes the results of discontinued operations from those of continuing operations.

Revenue and ExpenditureRevenue from all operations including the Group’s share of jointly controlled entities increased by 10 per cent to £372.0 million in H1 2013 from £338.8 million in H1 2012. This was largely driven by the growth in the Group’s aviation

refuelling and the natural gas businesses, netting off the sharp decrease in the SPM business, due to the fact that no revenue has been included from the time of the expiry of the existing joint venture agreement in February 2013. Group revenue from all operations excluding jointly controlled entities has also increased slightly to £88.4 million in H1 2013 from £87.8 million in H1 2012.

Operating profit from all operations combined, before the gains on disposals, decreased to £12.8 million in H1 2013, compared with £14.3 million in H1 2012, a decrease of 10 per cent. The decrease was mainly due to the combined effect of the inventory loss in aviation refuelling as a result of aviation fuel price movement, exclusion of the result of the Maoming SPM facility from the time of expiry of the joint venture agreement, and partly netting off by the steady growth in the natural gas business.

The net profit from all operations attributable to owners of the parent was £6.1 million in H1 2013, a decrease of 42 per cent compared with £10.5 million in H1 2012. The Group did not realise a gain on disposal in H1 2013 compared to a gain on disposal of £4.6 million in H1 2012 when the Group disposed of its available for sale investments in respect of shares held in China Gas Holdings Limited (“CGH”), a listed company on the Hong Kong Stock Exchange. The shares were held by a wholly owned subsidiary and were sold to China Gas Group Limited (“CGG”), a jointly controlled entity.

The underlying net profit from all operations attributable to owners of the parent before gains on disposals was also £6.1 million in H1 2013, an increase of 5 per cent compared with £5.9 million in H1 2012. Earnings per share from all operations decreased to 0.32 pence in H1 2013, compared with 0.55 pence in H1 2012 as the prior year included gains on disposals.

Net profit from continuing operations was £1.1 million in H1 2013, a decrease of 83 per cent compared with £6.5 million in H1 2012. Earnings per share from continuing operations decreased to 0.06 pence in H1 2013, compared with 0.34 pence in H1 2012. This is mainly due to the aforementioned gain on disposal of £4.6 million in H1 2012 and the decrease in profit contribution from the aviation refuelling business.

Other Comprehensive IncomeOther comprehensive income from all operations was £88.1 million in H1 2013, compared with the other comprehensive loss from all operations of £2.6 million in H1 2012. This is mainly due to the net gain of £74.6 million in fair value of available for sale investments in respect


business review

of CGH shares held by CGG, together with the effect of exchange differences arising on translation of foreign operations of the Group.

Capital ExpenditureDuring the period, the Group invested £7.5 million as capital expenditure, which mainly consisted of the expansion of gas pipeline networks, construction of LNG/CNG refuelling stations, and additions to exploration and evaluation assets in respect of the iron ore mining licence in Armenia.

Financial PositionThe net assets of the Group as at 30 June 2013 were £327.4 million, compared with £246.8 million as at 31 December 2012. Investments in jointly controlled entities of the Group at 30 June 2013 were £252.9 million (including the investments as at 31 December 2012 in jointly controlled entities of £44.1 million in the natural gas business), compared with £175.4 million (including the investments in jointly controlled entities of £39.8 million in the natural gas business). The increase was mainly the result of the revaluation of CGH shares (£74.6 million) disclosed within “other comprehensive income” above.

The net borrowing position as at 30 June 2013 was £69.3 million (after excluding a net cash of £12.0 million in the natural gas business) compared with £61.1 million (after excluding a net cash of £13.1 million in the natural gas business) as at 31 December 2012. However, with a cash balance of £46.8 million (after excluding a cash balance of £22.8 million in the Group’s natural gas business) as at 30 June 2013, together with the loan from Fortune Dynasty Holdings Limited of US$12 million (or £7.9 million) and the anticipated cash consideration received from CGH transaction after the period end the Group envisages no difficulties in meeting both current loan repayment obligations and investment commitments.

As a result of repayment of the syndicated loan during the period, the net gearing ratio (after deduction of cash) for the Group was 21 per cent as at 30 June 2013 and 25 per cent as of 31 December 2012.

Financial Costs and TaxFinance expenses for the Group from all operations were £2.5 million in H1 2013, compared with £3.3 million in H1 2012, mainly due to the decrease in the weighted average Group borrowing throughout the period.

The Group’s total tax charge in H1 2013 from all operations was £2.9 million (H1 2012: £3.0 million) representing an effective tax rate of 27 per cent compared with 25 per cent

(when excluding the non-taxable capital gains on disposal of £4.4 million) in H1 2012.

Foreign ExchangeThe revenues and expenses of the Group are mainly denominated in China’s renminbi (RMB). The remaining expenses are denominated either in pound sterling (£) or in Hong Kong dollars (HK$), which is pegged to the US dollar, or in US dollars (US$). On average for the six months ended 30 June 2013, the RMB appreciated against the US$ by 2.2 per cent and the pound sterling depreciated by 3.2 per cent against the US$, hence there was an overall 5.3 per cent depreciation of the pound sterling against the RMB. This currency movement has had the effect of increasing our profits as measured in pound sterling.

The assets and liabilities of the Group are also primarily denominated in RMB, with our Armenian investment being denominated in US$. The remaining balance, which represents a small proportion of the assets and liabilities, are denominated in pound sterling and HK$. Similar to the average rates, the closing pounds sterling depreciated against the RMB and US$ by 7.3 per cent and 5.9 per cent, respectively.

The Group does not have a policy to hedge currency risk and therefore any changes in the RMB/£ exchange rate are likely to affect the Groups’ results which are presented in pounds sterling.

Capital StructureMost of the Group’s investments and expenses take place in the People’s Republic of China and are held through Fortune Oil PRC Holdings Limited, a wholly owned Hong Kong based subsidiary of the Company. To facilitate inter-company restructuring, most of the investments in China are held through subsidiary Hong Kong registered companies. The Group’s interests in Armenia are held through a separate investment structure. The Group’s UK operations consist only of local representation as a direct expense to the Company.

DividendIt is not generally the Company’s policy to pay ordinary interim dividends although as a result of the proposed CGH transaction the Company is requesting that the shareholders approve the payment of a special interim dividend in 2013. A final dividend of 0.16 pence per ordinary share was paid to shareholders on 15 August 2013, in respect of 2012 financial year.


business review

PRINCIPAL RISK AND UNCERTAINTIES

Our business is supplying China with energy and resources, principally oil and natural gas with a recent expansion into iron ore mines in Armenia. There are a number of potential risks and uncertainties which could have a material impact on the Group’s performance over the remaining six months of the financial year and could cause actual results to different materially from expected and historical results. These risks have not changed since the date of Annual Report 2012, where the principal risks and uncertainties, their effects and our management strategy are detailed on pages 24 and 25 of that report.

The principal risks and uncertainties facing Fortune Oil’s operations include: concentration risks, pricing risks, regulatory and relationships risks, health, safety and environment risks, attraction and retention of key employees, development risks, uninsured risks and investment risks.

GOING CONCERN STATEMENT

The Group’s business activities and associated opportunities and risks are set out above in the “Business Review” and “Principal Risks and Uncertainties”. The financial position of the Group, its cash flows and liquidity position is described in the Financial Review. In the management of liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operation and mitigate the effects of fluctuations in cash flows. The Group expects to meet its capital expenditure requirements from medium term loan facilities and the cash consideration from CGH for the transaction in relation to the Group’s natural gas business.

The current economic conditions may create uncertainty over:

• The level of demand for the Group’s products and services

• International exchange rates that affect commodity prices and hence the Group’s revenues in China as denominated in US dollars or pound sterling

• The availability of bank or equity finance in the foreseeable future

• Counterparty credit risk

As at 30 June 2013, the Group had a cash balance of £46.8 million (after excluding a cash balance of £22.8 million in the natural gas business) and a net borrowing position

of £69.3 million (after excluding net cash of £12.0 million in the natural gas business). With the loan from Fortune Dynasty Holdings Limited of US$12 million (or £7.9 million) and the anticipated cash consideration received from CGH for the transaction in relation to the Group’s natural gas business, the Group’s current forecasts and projections, adjusting for reasonably possible changes in trading conditions, show that the Group will be able to repay the interest and principal payments in a timely manner and in accordance with loan agreements and to operate within the required covenants.

The Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, Fortune Oil continues to adopt the going concern basis in preparing the half year report and accounts.

RESPONSIBILITY STATEMENT PURSUANT TO DTR 4.2

The names and functions of the Directors of Fortune Oil are listed in the Company’s Annual Report for 2012. We confirm that, to the best of each person’s knowledge:

1) The condensed set of financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4R;

2) The interim management report includes a fair review of important events that have occurred during the first six months of the financial year, and their impact on the half yearly financial report and a description of the principal risks and uncertainties for the remaining six months of the financial year in accordance with DTR 4.2.7R; and

3) The interim management report includes a fair review of disclosures of related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or the performance of the Group during that period and any changes in the related party transactions described in the last annual report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year in accordance with DTR 4.2.8R.

These interim results have not been audited.

By order of the Board



6 months ended 6 months ended

Amount in £’000 Notes

Continuing operations

30.06.13 (Unaudited)

Discontinued operations


Total




Discontinued operations


Total


Revenue including share of

jointly controlled entities 3 321,095 50,868 371,963 291,405 47,357 338,762

Share of revenue of

jointly controlled entities 3 (275,506) (8,065) (283,571) (245,739) (5,247) (250,986)

Group revenue 3 45,589 42,803 88,392 45,666 42,110 87,776

Cost of sales (44,942) (27,160) (72,102) (45,346) (26,536) (71,882)

Gross profit 647 15,643 16,290 320 15,574 15,894

Distribution expenses – (4,361) (4,361) (81) (3,278) (3,359)

Administrative expenses (2,461) (3,501) (5,962) (2,027) (3,381) (5,408)

Share of results of

jointly controlled entities 9 5,348 1,483 6,831 6,507 664 7,171

Share of results of associates 10 – (25) (25) – (48) (48)

Profit from operations 3,534 9,239 12,773 4,719 9,531 14,250

Other gains – – – 4,668 – 4,668

Finance costs (2,092) (456) (2,548) (2,798) (535) (3,333)

Investment revenue 222 256 478 282 487 769

Profit before tax 1,664 9,039 10,703 6,871 9,483 16,354

Income tax charge 4 (598) (2,313) (2,911) (500) (2,454) (2,954)

Profit for the period 1,066 6,726 7,792 6,371 7,029 13,400

Attributable to

Owners of the parent 1,128 4,996 6,124 6,460 4,067 10,527

Non-controlling interests (62) 1,730 1,668 (89) 2,962 2,873

1,066 6,726 7,792 6,371 7,029 13,400

Earnings per share

Basic 6 0.06p 0.26p 0.32p 0.34p 0.21p 0.55p

Diluted 6 0.06p 0.26p 0.32p 0.34p 0.21p 0.55p

half year financial statementsconsolidated income statement


Amount in £’000

6 months ended


6 months ended


Profit for the period 7,792 13,400

Exchange differences arising on translation of foreign operations 13,426 (2,533)

Net gain in fair value of available for sale financial assets – 926

Disposal of available for sale financial assets – (4,106)

Share of net gain in fair value of available for sale financial assets

in jointly controlled entities 74,641 3,081

Other comprehensive income for the period 88,067 (2,632)

Total comprehensive income for the period 95,859 10,768

Attributable to

Owners of the parent 89,838 8,768

Non-controlling interests 6,021 2,000

95,859 10,768

half year financial statementsconsolidated statement of comprehensive income



Before the reclassification


Disposal Group


After the reclassification


Before the reclassification

31.12.12 (Audited)

Disposal Group

31.12.12 (Audited)

After the reclassification

31.12.12 (Audited)

AssetsNon-current assetsProperty, plant and equipment 7 68,666 68,325 341 64,723 60,504 4,219Goodwill 3,226 3,226 – 3,007 3,007 –Intangible assets 8 57,019 19,177 37,842 52,622 14,155 38,467Prepaid lease payments 2,993 2,993 – 2,749 2,749 –Other non-current receivables 1,538 1,538 – 3,839 1,426 2,413Investments in jointly controlled entities 9 252,890 44,130 208,760 175,351 39,832 135,519Investments in associates 10 1,019 1,019 – 969 969 –Available for sale investments 11 2,070 – 2,070 1,948 – 1,948

389,421 140,408 249,013 305,208 122,642 182,566

Current assetsInventories 17,968 6,026 11,942 9,948 3,564 6,384Trade and other receivables 12 58,799 20,211 38,588 42,193 19,682 22,511Cash and cash equivalents 69,622 22,807 46,815 73,849 23,123 50,726

146,389 49,044 97,345 125,990 46,369 79,621

Assets classified as held for sale 13 – (189,452) 189,452 – (169,011) 169,011

146,389 (140,408) 286,797 125,990 (122,642) 248,632

Total Assets 535,810 – 535,810 431,198 – 431,198

LiabilitiesCurrent liabilitiesBorrowings 14 124,941 8,889 116,052 76,956 8,745 68,211Trade and other payables 66,728 26,396 40,332 47,156 23,962 23,194Current tax liabilities 2,461 2,156 305 3,199 2,306 893

194,130 37,441 156,689 127,311 35,013 92,298Liabilities directly associated with assets classified as held for sale 13 – (42,120) 42,120 – (38,894) 38,894

194,130 (4,679) 198,809 127,311 (3,881) 131,192

Non-current liabilitiesBorrowings 14 1,893 1,893 – 44,879 1,298 43,581Deferred tax liabilities 3,621 2,786 835 4,069 2,583 1,486Other non-current liabilities 8,729 – 8,729 8,129 – 8,129

14,243 4,679 9,564 57,077 3,881 53,196

Total Liabilities 208,373 – 208,373 184,388 – 184,388

Net Assets 327,437 – 327,437 246,810 – 246,810

EquityCapital and reservesOrdinary shares 15 19,875 19,875Treasury shares (678) (678)Share premium 10,129 10,129Other reserves 114,988 40,347Foreign currency translation reserve 34,262 25,189Retained earnings 96,322 93,551

Equity attributable to owners of the parent 274,898 188,413

Non-controlling interests 52,539 58,397

Total Equity 327,437 246,810

half year financial statementsconsolidated statement of financial position



6 months ended


6 months ended


Net cash used in operating activates 17 (1,646) (1,875)

Interest received 478 769

Dividend received from jointly controlled entities 14,586 352

Payment for property, plant and equipment (6,503) (7,947)

Payment for other intangible assets (7) (248)

Payment for exploration and evaluation assets (962) (3,135)

Payment for prepaid lease payments (59) (12)

Consideration paid on acquisition of additional interests in subsidiaries (1,396) –

Receipt from disposal of property, plant and equipment 22 3

Investment in jointly controlled entities – (1)

Loan to jointly controlled entities (4,110) (38,570)

Net cash from/(used in) investing activities 2,049 (48,789)

Interest paid (2,548) (2,517)

Dividend payment to owners of the parent 5 (3,056) (3,424)

Net loans repayment of loans to non-controlling shareholders 493 44

Dividend paid to non-controlling shareholders (1,833) (179)

Net proceeds from issue of new borrowings 13,455 8,565

Repayment of borrowings (16,937) (6,246)

Net cash used in financing activities (10,426) (3,757)

Decrease in cash and cash equivalents (10,023) (54,421)

Cash and cash equivalents at beginning of the period 73,849 128,440

Cash flow effect of foreign exchange rate changes 5,796 (2,142)

Cash and cash equivalents at end of the period 69,622 71,877

Cash and cash equivalents at end of the period-discontinued operations (22,807) –

Net cash and cash equivalents at end of the period 46,815 71,877

half year financial statementsconsolidated cash flow statement


ForeignIssued capital currency Attributable Non-

Ordinary Treasury Share Other translation Retained to owners controllingAmount in £’000 shares shares premium reserves reserve earnings of the parent interests Total

Balance at 1 January 2012 19,875 (878) 10,129 3,180 28,534 80,241 141,081 55,411 196,492

Profit for the period – – – – – 10,527 10,527 2,873 13,400

Exchange differences arising on translation of foreign operations – – – – (1,660) – (1,660) (873) (2,533)

Net gain in fair value of available for sale financial assets – – – 926 – – 926 – 926

Disposal of available for sale financial assets – – – (4,106) – – (4,106) – (4,106)

Share of net gain in fair value of available for sale financial assets in jointly controlled entities – – – 3,081 – – 3,081 – 3,081

Total comprehensive income for the period – – – (99) (1,660) 10,527 8,768 2,000 10,768

Payment of dividends to non-controlling interests – – – – – – – (3,967) (3,967)

Dividend paid to owners of the parent – – – – – (3,424) (3,424) – (3,424)

Adjustment arising from changes in non-controlling interest – – – – – 2,156 2,156 (2,156) –

Share-based payments – – – – – 400 400 – 400

Balance at 30 June 2012 (Unaudited) 19,875 (878) 10,129 3,081 26,874 89,900 148,981 51,288 200,269

Balance at 1 January 2013 19,875 (678) 10,129 40,347 25,189 93,551 188,413 58,397 246,810

Profit for the period – – – – – 6,124 6,124 1,668 7,792

Exchange differences arising on translation of foreign operations – – – – 9,073 – 9,073 4,353 13,426

Share of net gain in fair value of available for sale financial assets in jointly controlled entities – – – 74,641 – – 74,641 – 74,641

Total comprehensive income for the period – – – 74,641 9,073 6,124 89,838 6,021 95,859

Payment of dividends to non-controlling interests – – – – – – – (1,833) (1,833)

Dividend paid to owners of the parent – – – – – (3,056) (3,056) – (3,056)

Net capital contribution from non-controlling interest – – – – – – – 1,817 1,817

Adjustment arising from changes in non-controlling interest – – – – – (297) (297) (1,090) (1,387)

Dissolution of subsidiary – – – – – – – (10,773) (10,773)

Balance at 30 June 2013 (Unaudited) 19,875 (678) 10,129 114,988 34,262 96,322 274,898 52,539 327,437

half year financial statementsconsolidated statement of changes in equity


1. Basis of preparation

The condensed financial statements have been prepared in accordance with International Accounting Standard 34 Interim

Financial Reporting, as adopted by the European Union.

The financial information for the six months ended 30 June 2013 and 30 June 2012 was neither audited nor reviewed by the auditors. The information for the year ended 31 December 2012 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor’s report on these accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of no less than twelve months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements. Detail of the factors that which have been taken into account in assessing the Group’s going concern status are set out in the Business Review on page 10.

2. Significant accounting policies

The condensed financial statements have been prepared under the historical cost convention, except for the revaluation of certain properties and financial instruments.

The same accounting policies, presentation and methods of computation have been followed in these condensed financial statements as were applied in the preparation of the Group’s financial statements for the year ended 31 December 2012, with the following exceptions. In the current year, the Group has applied, for the first time, the following new and revised Standards and Interpretations, which are effective for the Group’s financial year beginning 1 January 2013, but have not had any significant impact on the financial statements for the period to 30 June 2013.

IFRS 1 (amended) Government loansIFRS 7 (amended) Disclosures: Offsetting financial assets and financial liabilitiesIFRS 10 Consolidation financial statementsIFRS 11 Joint arrangementsIFRS 12 Disclosure of interests in other entitiesIFRS 13 Fair value measurementIAS 19 (revised) Employee benefitsIAS 27 (revised) Separate financial statementsIAS 28 (revised) Investments in associates and joint ventures: Annual improvements to IFRS 2009-2011 cycle (various standards)

notes


notes

3. Segmental reporting

The Group has adopted IFRS 8 Operating Segments to identify eight operating segments on the basis of internal reports about components of the Group which are reviewed regularly by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

The Group has classified the operating divisions and the reportable segments under IFRS 8 as “Investment Holding”, “Natural Gas”, “Single point mooring facility”, “Aviation Refuelling”, “Trading”, “Products Terminal”, “Resources” and “Others”.

Information regarding these segments is presented below.

a) Operating segments

Oil

Investment Holding Aviation Refuelling Trading Products Terminal Resources Others**


Single point mooring facility Natural Gas

Discontinued operations Group

2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012Amount in £’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue including share of jointly controlled entities – – 269,716 240,110 45,589 45,666 1,540 1,314 – – 4,250 4,315 321,095 291,405 1,602 8,938 49,266 38,419 50,868 47,357 371,963 338,762

Share of revenue of jointly controlled entities – – (269,716) (240,110) – – (1,540) (1,314) – – (4,250) (4,315) (275,506) (245,739) – – (8,065) (5,247) (8,065) (5,247) (283,571) (250,986)

Group revenue – – – – 45,589 45,666 – – – – – – 45,589 45,666 1,602 8,938 41,201 33,172 42,803 42,110 88,392 87,776

Profit from operations (including share of results of jointly controlled entities) (650) (22) 5,201 5,952 207 460 568 388 (67) – 73 180 5,332 6,958 383 3,359 8,856 6,172 9,239 9,531 14,571 16,489

Office overheads* (1,798) (2,239) – – – – – – (1,798) (2,239)

Operating profit, net of overheads 3,534 4,719 383 3,359 8,856 6,172 9,239 9,531 12,773 14,250

Other gains or losses – 4,668 – – – – – – – – – – – 4,668 – – – – – – – 4,668

Finance costs (2,092) (2,798) (456) (535) (2,548) (3,333)

Investment revenue 222 282 256 487 478 769

Profit before taxation 1,664 6,871 9,039 9,483 10,703 16,354

Taxation (598) (500) (2,313) (2,454) (2,911) (2,954)

Profit for the period 1,066 6,371 6,726 7,029 7,792 13,400

Attributable to

Owners of the parent 1,128 6,460 4,996 4,067 6,124 10,527

Non-controlling interests (62) (89) 1,730 2,962 1,668 2,873


notes

3. Segmental reporting continued

Oil

Investment Holding Aviation Refuelling Trading Products Terminal Resources Others**


Single point mooring facility Natural Gas

Discontinued operations Group

30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12 30.06.13 31.12.12Amount in £’000 (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)

Net assets: by class of business

Assets

Segment assets 177,617 98,655 25,377 31,981 83,416 53,798 6,048 5,154 42,504 46,288 5,042 8,691 340,004 244,567 6,027 17,129 189,452 169,011 195,479 186,140 535,483 430,707

Unallocated assets 327 491 – – – – – – 327 491

Consolidated total assets 340,331 245,058 6,027 17,129 189,452 169,011 195,479 186,140 535,810 431,198

Liabilities

Segment liabilities – – (518) (484) (33,767) (17,283) – – (8,750) (8,327) (2,539) (2,328) (45,574) (28,422) – (2,582) (42,120) (38,894) (42,120) (41,476) (87,694) (69,898)

Unallocated liabilities*** (120,679) (114,490) – – – – – – (120,679) (114,490)

Consolidated total liabilities (166,253) (142,912) – (2,582) (42,120) (38,894) (42,120) (41,476) (208,373) (184,388)

174,078 102,146 6,027 14,547 147,332 130,117 153,359 144,664 327,437 246,810

* Includes overheads in United Kingdom, Hong Kong and PRC offices.** Others include retail and distribution.*** Includes bank loan, deferred tax and dividend withholding tax.

b) Analysis of group revenue

Amount in £’000

6 months ended


6 months ended


Sales of goods 78,507 78,346Income from gas connection contracts 9,762 8,905Rental income 5 463Others 118 62

88,392 87,776Investment revenue 478 769

88,870 88,545

4. Income tax charge

Interim period income tax is accrued based on the average effective income tax rate of 27.2 per cent (6 months ended 30 June 2012: 18.1 per cent).

The Group tax charge does not include corporate income tax for jointly controlled entities, whose results are disclosed in the statement of comprehensive income net of tax.

Please refer to the financial review for discussion on the tax charges during the period.


notes

5. Dividends

6 months ended Year endedAmount in £’000 30.06.13 30.06.12 31.12.12

Amounts recognised as distributions to equity holders in the period:Final dividend for the year ended 31 December 2012 of 0.16p (2011: 0.18p) per share 3,056 3,424

Proposed final dividend for the year ended 31 December 2012 3,180

The Directors do not recommend the payment of an interim dividend in respect of the 6 months ended 30 June 2013.

6. Earnings per share

Earnings per share has been calculated by dividing earnings attributable to the shareholders by the weighted average number of shares in issue during the respective periods, as indicated below:

30.06.13No.

‘000 penceNo.

‘000 penceNo.

‘000 penceContinuing operations Discontinued operations Total

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Basic 1,901,970 0.06 1,901,970 0.26 1,901,970 0.32Share option adjustment 19,204 – 19,204 – 19,204 –

Diluted 1,921,174 0.06 1,921,174 0.26 1,921,174 0.32

30.06.12No.

‘000 penceNo.

‘000 penceNo.


(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)


Diluted 1,912,259 0.34 1,912,259 0.21 1,912,259 0.55

31.12.12No.

‘000 penceNo.

‘000 penceNo.


(Audited) (Audited) (Audited) (Audited) (Audited) (Audited)


Diluted 1,916,778 0.42 1,916,778 0.40 1,916,778 0.82


notes

7. Property, plant and equipment

During the period, the Group spent approximately £6.5 million on assets in the course of construction, consisting of gas pipeline networks, motor vehicles and fixtures and fittings.

The Group also disposed of certain parts of its motor vehicles and fixtures and fittings with a carrying amount of £0.7 million.

The depreciation charge for the period was £2.1 million (6 months ended 30 June 2012: £3.5 million).

8. Intangible assets

During the period, the Group spent approximately £1 million (June 2012: £3 million) on exploration and evaluation assets in Armenia.

The amortisation charge for the period was £0.2 million (6 months ended 30 June 2012: £0.2 million).

9. Investments in jointly controlled entities

There were no acquisitions during the period and the movement was mainly due to the share of the profit, share of reserves and loans to the jointly controlled entities, and exchange gains of £5 million. On 17 December 2012, the Group announced that it has conditionally agreed to inject its natural gas business into China Gas Holdings Limited. Therefore, all assets and liabilities of natural gas group which were generated during the period were reclassified as assets held for sale at the end of the period. Details are as follows:

Jointly controlled entities Amount in £’000

Interest in jointly

controlled entities

Net loans to jointly

controlled entities

Total jointly

controlled entities

Share of net assets/costAt 1 January 2013 79,495 56,024 135,519Exchange rate difference 1,978 3,499 5,477Advances – 4,110 4,110Dividend (14,586) – (14,586)Share of profit 6,831 – 6,831Share of reserves 74,641 – 74,641Transfer to assets held for sale (456) (2,776 ) (3,232)

At 30 June 2013 147,903 60,857 208,760

10. Investments in associates

There were no acquisitions during the period and the movement was due to exchange rate differences and share of losses of associates. On 17 December 2012, the Group announced that it has conditionally agreed to inject its natural gas business into China Gas Holdings Limited. Therefore, all assets and liabilities of natural gas group which generate during the period were reclassified as assets held for sale at the ended of the period. Details are as follows:

Associates Amount in £’000

Interest in associates

Share of net assets/costAt 1 January 2013 –Exchange rate difference 14Share of loss (25)Transfer to assets held for sale 11

At 30 June 2013 –


notes

11. Available for sales investments

There were no acquisitions during the period. The movement represents the exchange gain.

12. Trade and other receivables

Included in trade and other receivables is an amount of £6 million that represents the net amount expected to be recovered on dissolution of the joint venture in Maoming King Ming Petroleum Company Limited that was dissolved on 5 February 2013. From this date control has been lost and therefore consolidation is no longer appropriate.

13. Assets classified as held for sale

On 17 December 2012, the Group announced it had conditionally agreed to inject its natural gas business into China Gas Holdings Limited for a total consideration of £247.5 million (US$400 million) (the “Proposed Transaction”), of which the Group shares is £210.4 million (US$340 million), with the balance payable to non-controlling interest.

The major classes of assets and liabilities of the subsidiary classified as held for sale are as follows:

Amount in £’000Fortune Gas Investment

Holdings Ltd

Interests in jointly controlled entities 44,130Interests in an associate 1,019Property, plant and equipment 68,325Intangible assets 19,177Goodwill 3,226Prepaid lease payment 2,993Other non-current receivables 1,538Inventories 6,026Bank and cash balance 22,807Trade and other receivables 20,211

Total assets classified as held for sale 189,452

Trade and other payables (28,552)Borrowings (10,782)Deferred tax liabilities (2,786)

Total liabilities classified as held for sale (42,120)

The cash flow statement for discontinued operations is as follows:

Amount in £’000

Net cash from operating activities 13,446Net cash used in investing activities (13,340)Net cash used in financing activities (2,342)

Net decrease in cash and cash equivalent (2,236)Cash and cash equivalents at beginning of the period 23,123Effect of foreign exchange rate changes 1,920

Cash and cash equivalents at end of the period 22,807

The disposal group is all of the natural gas operating segment. Subsequent to the date of the report, all sales conditions have been met.


notes

14. Borrowings

Except for the additional short term bank loan from the Maybank Hong Kong of £2 million for the trading purpose, there were no additional bank loans drawn during the period. The remainder of the movement mainly represents the exchange gain during the period. These loans are being used for general working capital requirements of the Group.

15. Issued capital

Issued capital as at 30 June 2013 amounted to £19.9 million. There were no movements in the issued capital of the Company during the period.

16. Financial instruments’ fair value disclosures

Financial instruments that are measured subsequent to initial recognition at fair value are grouped into level 1 to 3 based on the degree to which the fair value is observable:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that included inputs for the asset or liabilities that are not based on observable market date (unobservable inputs).

The fair value of the derivative financial liabilities are determined in accordance with generally accepted pricing models based on the fair value of Fortune Liulin Gas Company Limited. The fair value measurements were derived from valuation techniques that included inputs that are not based on observable market data and as such have been classified as a Level 3 fair value measurement.

During the six months ended 30 June 2013, there were no transfers between levels. (2012: nil)


31.12.12 (Audited)

Amount in £’000 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Financial assetsAvailable for sale investments – quoted – – – – – – – –Available for sale investments – unquoted – – 2,070 2,070 – – 1,948 1,948

– – 2,070 2,070 – – 1,948 1,948

Financial liabilitiesDerivative financial liabilities – option – – 72 72 – – 68 68


notes

16. Financial instruments’ fair value disclosures continued

Available for sale investments

Amount in £’000

Balance at 1 January 2013 1,948Exchange difference 122

Balance at 30 June 2013 2,070

Derivative financial liabilities

Amount in £’000

Balance at 1 January 2013 68Exchange difference 4

Balance at 30 June 2013 72

17. Note to cashflow statement

Amount in £’000

6 months ended


6 months ended


Net cash from operating activitiesProfit for the period 7,792 13,400Adjustments for: Share of post-tax results of jointly controlled entities (6,831) (7,171) Share of post-tax results of associates 25 48 Taxation 2,911 2,954 Amortisation 165 165 Depreciation 2,050 3,469 Loss on disposal of property, plant and equipment 631 556 Gain on disposal of available for sales investments – (4,668) Share-based payments – 400 Investment revenue (478) (769) Finance costs 2,548 3,333(Increase)/decrease in inventories (7,235) 4,997Increase in trade and other receivables (5,481) (15,067)Increase in trade and other payables 6,107 1,104

Net cash from operations 2,204 2,751Taxation paid (3,850) (4,626)

Net cash used in operating activities (1,646) (1,875)

Cash and cash equivalentsCash and bank balances 46,815 71,877Cash and bank balances classified as held for sale 22,807 –

69,622 71,877


notes

18. Related party transactions and significant contracts

The Group’s related parties, the nature of the relationship and the extent of transactions with them are summarised below:

Amount in £’000 Sub note30.06.13

(Unaudited) 30.06.12

(Unaudited)31.12.12 (Audited)

Loans from equity non-controlling interests to subsidiaries 1 – (1,619) –Loans to equity non-controlling interests to subsidiaries 1 5,576 5,437 5,349Trade account receivables from non-controlling shareholders 2 – 3,932 876Trade account payables from non-controlling shareholders 2 – 2,719 1,585Shareholder loans to jointly controlled entities 3 60,857 76,449 56,024Sales of goods to jointly controlled entitles 4 2,429 2,049 4,241Purchase of goods from jointly controlled entities 4 1,418 1,132 2,310Current account with Vitol Energy (Bermuda) 4 (498) (482) (476)Current account with jointly controlled entities 4 – (46) –

Sub Notes1. On 17 December 2012, the Group conditionally agreed to inject its natural gas business into China Gas Holdings Limited. Natural gas

group’s loans from equity non-controlling interests in subsidiaries are transferred into assets held for sale at 31 December 2012. The loans of £1,619,000 at 30 June 2012 comprised loans from the non-controlling shareholders of Shuozhou Jingshuo Natural Gas Limited, Luquan Fu Xin Gas Company Limited, Shuozhou Fu Hua Natural Gas Limited, Qufu Fu Hua Gas Company Limited and Fu Song Jin Run Natural Gas Limited (Fu Song). Except for £15,000 from non-controlling shareholders of Fu Song which is interest bearing of 9.2% p.a., the loans are unsecured, interest free and without fixed payment terms. Loans of £5,576,000 (December 2012: £5,349,000) comprised mainly loans to the non-controlling shareholders. A £1,565,000 (December 2012: £1,450,000) loan to the non-controlling shareholders of Beijing Everthriving Energy Technology Company Limited is unsecured, interest free and without fixed payment terms. A £4,011,000 (December 2012: £3,899,000) loan to the non-controlling shareholders of Bounty Resources Armenia Limited is guaranteed, interest bearing at a margin of 4% over LIBOR p.a. and repayable in June 2014.

2. Maoming Petrochemical Corporation (MPCC) is a corporate shareholder of the Group’s subsidiary, Maoming King Ming Petroleum Company Limited. Throughputting turnover from MPCC amounted to £1,602,000 (June 2012: £8,489,000) of which £nil was owed at 30 June 2013 (December 2012: £876,000). Processing fee to MPCC amounted to £442,000 (June 2012: £2,754,000 ) of which £nil was owed at 30 June 2013 (December 2012: £1,585,000).

3. The shareholder loans are part of shareholders’ investment in the jointly controlled entities. These are common methods of making an investment in jointly controlled entities in the PRC. £13,254,000 at 30 June 2012 was due from Tianjin Tianhui Natural Gas Limited, Jining Qufu New Fu Hong Gas Limited, Beijing Fuhua Natural Gas Logistics Limited, Fortune Liulin Gas Company Limited and Xinyang Fortune Vehicle Gas Company Limited. Since the Group was conditionally disposed natural gas business to China Gas Holdings Limited, all amounts due from natural gas group’s jointly controlled entities were transferred into assets held for sale at 31 December 2012. £60,702,000 (December 2012: £55,878,000) was loaned to China Gas Group Limited which is established in Hong Kong and £155,000 (December 2012: £146,000) was due from Zhuhai Special Economic Zone South China Petroleum Company Limited.

4. Purchases from jointly controlled entity – Jining Qufu New Fu Hong Gas Limited amounted to £1,418,000 (June 2012: £1,132,000). Sales from Group’s subsidiary, Xinyang Fortune Gas Company Limited and Beijing Fuhua Natural Gas Limited to Group’s jointly controlled entity, Xinyang Fortune Vehicle Gas Company Limited and Beijing Fuhua Natural Gas Logistics Limited, amounted to £2,308,000 and £121,000 (June 2012: £2,049,000 and £nil) respectively.

Current account due to Vitol Energy (Bermuda) Limited amounted to £498,000 (December 2012: £482,000). Since the Group conditionally disposed the natural gas business, all current account with jointly controlled entities was transferred into assets held for sale at 31 December 2012. Current account due to jointly controlled entity, Jining Qufu New Fu Hong Gas Limited, amounted to £46,000 in 30 June 2012.


notes

18. Related party transactions and significant contracts continued

5. Fortune Max Holdings Limited (“FMH”) is a private company controlled and beneficially owned by Mr Daniel Chiu. During 2012, FMH has entered into arrangements with lenders to finance the purchase of China Gas Holdings Limited (“CGH”) shares, and then entered into a verbal understanding to sell any such CGH shares to CGG, at all cost associated with the purchase and financing of any CGH shares acquired as and when these are transferred to CGG, and any losses arising on the CGH shares acquired by FMH. In April 2013, CGG has acquired all the 207,968,000 CGH shares previously purchased by FMH by its own financing capacity.

6. On 7 August 2013, the Group entered into a conditional sale and purchase agreement to purchase the entire issued share capital of First Marvel Investment Limited (“First Marvel”) from a related party. Further details are included in note 19.

7. Included in trade and other receivables is an amount of £6 million that represents the net amount expected to be recovered on dissolution of the joint venture in Maoming King Ming Petroleum Company Limited that was dissolved on 5 February 2013. From this date control has been lost and therefore consolidation is no longer appropriate.

19. Post balance sheet events

On 17 December 2012 the Company announced that it and Wilmar International Limited, the 15 per cent shareholder of Fortune Gas Investment Holdings Limited (“FGIH”), had entered into a conditional contract to sell their entire interest in FGIH to China Gas Holdings Limited. Completion of the transaction (the “FGIH Transaction”) was subject to certain conditions, including regulatory approval from MOFCOM (the anti-monopoly bureau of the Ministry of Commerce of the People’s Republic of China), being satisfied by 30 June 2013 (or such later date as agreed in writing) (the “Long Stop Date”). Given additional time was required for the fulfilment of the MOFCOM regulatory approval condition, the Company, Wilmar International Limited and China Gas Holdings Limited entered into a supplementary agreement on 27 June 2013 in order to extend the Long Stop Date to 30 September 2013. On 12 August 2013, Fortune Oil announced that China Gas Holdings Limited informed the Company that the MOFCOM regulatory approval had been obtained. It is anticipated that completion of the FGIH Transaction will occur after all of the normal handover procedures have been completed.

On 7 August 2013, the Group entered into a conditional sale and purchase agreement to purchase the entire issued share capital of First Marvel Investment Limited (“First Marvel”) which has been incorporated for the purpose of acquiring Wilmar International Limited’s interest in the consideration receivable as a result of the FGIH Transaction (the “Wilmar Consideration”). First Marvel is a wholly-owned subsidiary of Fortune Dynasty Holdings Limited (“FDH”), a joint venture company owned 55 per cent by First Level Holdings Limited, which is in turn controlled by Daniel Chiu, executive vice chairman and director of the Group. The conditional sale and purchase agreement includes consideration of £39.4 million (US$60 million), and an unsecured fixed rate loan note instrument with FDH. Under the Loan Instrument, FDH has agreed to subscribe in cash at par for £7.9 million (US$12 million) nominal amount of fixed rate unsecured loan notes issued by the Group (the “Loan Notes”). The Loan Notes have a maturity date of 7 February 2014. Interest is payable on the Loan Notes at a rate of 7% per annum.

On 7 August 2013, the Company announced that it would be putting inter-conditional proposals to shareholders in General Meeting relating, amongst other things, to approve the acquisition of First Marvel (the “Proposed Acquisition”) and the amendment of the loan received from Fortune Dynasty Holdings Limited amounting to US$12 million, such that it will be repayable in shares in Fortune Oil (the “Loan Settlement”). A waiver is being sought from the Takeover Panel of the requirements of Rule 9 of the Takeover Code for a general offer to be made for the Company by parties (the “Concert Party”) who, by receiving Ordinary Shares through the Loan Settlement and the Proposed Acquisition, would own more than 56.9 per cent of the Company’s issued share capital. The Company intends, subject to approval by the Panel, to send a circular to shareholders providing information about the Proposed Acquisition and the Loan Settlement, convening a general meeting of the Company at which the Rule 9 Waiver resolution will be put to a vote of the shareholders of the Company. The date of the general meeting of the Company has not yet been set but it will be held as soon as practicable.


notes

20. Litigation

In April 2012, an action was commenced in the High Court of Hong Kong by Caspian Resources Development Pte Limited (“CRDPL”) against Fortune Oil, Giant Global Development Limited (“GGDL”), a wholly owned subsidiary of Fortune Oil, and George Howard Richmond (“Mr Richmond”) in relation to the sale of a 16.7 per cent shareholding in Caspian Bounty Steel Limited (“CBSL”) by Mr Richmond to GGDL in January 2011. CBSL is the company through which Fortune Oil holds, partly, its interests in an iron ore mining project located in Armenia. GGDL successfully applied in September 2012 to the High Court of Hong Kong for security for costs to be given by CRDPL. Although a concurrent writ of summons and a summons for judgment were delivered to the Company in March and July 2013 respectively, both Fortune Oil and GGDL deny all allegations against them and will strenuously defend their case. The statement of claim does not include the amount claimed.

Fortune Oil is currently unable to quantify the potential damages that could arise from this claim, however, the management believes that the claim is less than likely to happen and should not have any significant adverse effect on the Group.

In January 2013, the Company received correspondence from the solicitors of its joint venture partner in Fortune Liulin Gas (“FLG”), Dart Energy (FLG) Pte. Ltd. (“Dart”), alleging that the FGIH Transaction would constitute a breach of the obligations of Fortune Green Energy Limited and Fortune Gas Investment Holdings Limited, both are subsidiaries of Fortune Oil, under the joint venture agreement that governs the operations of FLG. On 14 July 2013, a notice of consent waiver has been sent by Dart, which confirms that Dart irrevocably waive all of their claims in relation to the FGIH Transaction.

21. Approval of half year financial statements

The half year financial statements were approved by the board of directors on 21 August 2013.


shareholder information

RegistrarEnquiries and notifications concerning dividends, share certificates, transfers and address change, replacement share certificate should be addressed to the Company’s Registrar, whose address is:

Capita RegistrarsThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU

Shareholders’ Helpline:UK: 0871 664 0300 (Calls to this number cost 10p per minute plus any network extras. Lines are open from 9am-5.30pm, Monday-Friday)International: + 44 (0) 20 8639 3399

In any correspondence with the registrars, please refer to Fortune Oil PLC and state clearly the registered name and address of the shareholder.

Dividend InformationAnnual General Meeting 18 June 2013Ex-dividend Date 10 July 2013Record Date 12 July 2013Final Dividend Payment Date 15 August 2013

Direct Dividend paymentsIf you would like to have your dividend paid directly into a UK bank or building society account, please contact Capita Registrars by calling their shareholder helpline or completing the dividend mandate attached to your dividend cheque. The associated tax voucher will still be sent to your registered address.

Dividend Reinvestment Plan (DRIP)The Company offers a dividend reinvestment plan to registered shareholders as a cost-efficient way of increasing their shareholding by using cash dividends under a standing election to buy additional shares in the Company. The DRIP is administered by Capita IRG Trustees Ltd (“CIRGT”). CIRGT will instruct the broker to buy shares on the dividend payment date at the then current market price. Any cash left over which is insufficient to purchase a whole share will be carried forward and held, without interest, in a client money bank account. The DRIP commission charged to the shareholder is 1% of the purchase price of the shares, with a minimum charge of £2.50. This is exclusive of stamp duty reserve tax at 0.5% of the deal value.

Should shareholders wish to participate in the DRIP, please contact the Registrar on 0871 664 0381 (calls cost 10p per minute plus network extras. Lines are open from 9am-5.30pm, Monday-Friday) or; if calling from overseas, + 44 20 8639 3402; alternatively you can email [email protected]

International dividend payment serviceCapita Registrars has partnered with Deutsche Bank to provide shareholders with a service that will convert shareholders’ sterling dividends into their local currency at a competitive rate. Shareholders can choose to receive payment directly into the bank account or alternatively, we can send shareholders a currency draft. For further information, please call Capita Registrars on 0871 664 0385 (calls cost 10p per minute plus network extras. Lines are open from 9am-5.30pm, Monday-Friday.) or; if calling from overseas, + 44 20 8639 3405; alternatively you can email [email protected]

Online share portalRegistered shareholders can register and access information regarding their shareholdings by using the Shareholder Portal at www.capitashareportal.com Shareholders will need their investor code (IVC) which can be found on their share certificate(s). The share portal allows shareholders to:

• viewtheirholding• updateaddressdetails• viewdividendhistory• viewtransactionhistory• electtoparticipateinthedividendreinvestmentplan• voteonlineand• registerforecommunicationsallowingFortuneOilto

notify shareholders by email that certain documents are available to view on its website.

Share Dealing ServiceShare dealing services are available for shareholders to either sell or buy Fortune Oil shares.

UK shareholders only – Capita Share Dealing Services www.capitadeal.com (on-line dealing)

0871 664 0454 (telephone dealing – Calls to this number cost 10p per minute plus any network extras. Lines are open from 8am-4.30pm, Monday-Friday)

To deal online or by telephone all you need is your surname, Investor Code reference number, full postcode and your date of birth. Your investor code can be found on a recent share certificate, statement or tax voucher. Please have the appropriate documents to hand when you log on or call, as this information will be needed before you can buy or sell shares.

Full terms, conditions and risks apply and are available on request or by visiting www.capitadeal.com.

This is not a recommendation to buy or sell shares. The price of shares can go down as well as up, and you are not guaranteed to get back the amount that you originally invested.

Capita Share Dealing Services is a trading name of Capita IRG Trustees Limited which is authorised and regulated by the Financial Conduct Authority.


shareholder information

Share Price InformationThe current share price of Fortune Oil PLC is available on the interactive FT Cityline service on 09058 171 690 and listen to current FTSE 100 index, then simply say “Fortune Oil”. Calls are charged at 75p per minute from a BT landline. Average call duration will be 1 minute per stock. Cost from other networks and mobile phones, may be higher.

Warning to shareholders

Unsolicited mailFortune Oil PLC is obliged by law to make its share register publicly available and, as a consequence, some shareholder may receive unsolicited mail. If you wish to limit the receipt of unsolicited mail, you may do so by contacting the Mailing Preference Service, an independent organisation whose services are free to you.

Mailing Preference Service (MPS)MPS FREEPOST 29LON20771London W1E 0ZT

MPS Registration Line: 0845 703 4599

Or via their website at www.mpsonline.org.uk

Unsolicited calls or correspondenceWe are aware that a small number of shareholders have received unsolicited telephone calls concerning their investment in Fortune Oil PLC. These calls are from overseas based organisations who offer to buy Fortune Oil PLC shares for considerably more than the current market price. In some cases the caller has suggested that there is currently a takeover offer for Fortune Oil PLC. There is no such offer and we suspect that the calls were bogus.

Shareholders are advised to be very wary of any unsolicited investment advice, offers of free company reports. Operations, commonly known as “boiler rooms”, are targeting UK shareholders are callers can be very persistent and extremely persuasive. We are aware that they attempt to persuade individuals to provide email addresses or other personal information; shareholders are strongly advised not to provide any such details.

If you receive any unsolicited investment advice:

• checkthattheyareproperlyauthorisedbytheFinancialConduct Authority by visiting http://www.fsa.gov.uk/register/home.do and contacting the firm using the details on the register;

• reportanysuspicionstotheFCAeitherbycalling 0800 111 6768 or by completing an online form at http://www.fca.org.uk/consumers/scams/ investment-scams/share-fraud-and-boiler-room- scams/reporting-form; or

• informCapitaRegistrarson08716640300(Calls cost 10p per minute plus network extras. Lines are open from 9am-5.30pm, Monday-Friday) or email [email protected]. They are not able to investigate such incidents themselves but will record the details and pass them on to us; and

• ifthecallspersist,hangup.

If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme.

Details of any share dealing facilities that the Company endorses is available on www.capitadeal.com

More detailed information on this or similar activity can be found on the FCA website http://www.fca.org.uk/consumers/scams/investment-scams

Electronic and web communicationsAt the annual general meeting of the Company held on 15 June 2010, resolutions were passed, whereby shareholders’ consent was obtained and the new articles of association were adopted, to enable the Company to communicate with shareholders by electronic communications further to the web communication since July 2007.

The Companies Act 2006 permits UK registered companies to send, or make available to their shareholders, their annual reports and accounts, notices of general meetings and other communications (the “Company communication”) by electronic means rather than by means of hard copies sent through the postal service (except to those who have specifically elected to receive a paper copy). Receiving your communications electronically offers advantages in terms of speed and convenience and is a secure method of obtaining your shareholder documentation, which also allows the Company to communicate in a more environmentally friendly and effective way.

Notices of general meetings and the Reports and Accounts, in Adobe Acrobat Portable Document Format (PDF), are supplied via the Company’s website (www.fortune-oil.com) to shareholders who have not requested a hard copy of these documents.

Relating to beneficial owners of shares with “information rights”Please note that beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company’s registrar, Capita Registrars, or to the Company directly.

BankersMorgan Stanley Asia LimitedLevel 46 International Commerce Centre1 Austin Road WestKowloon, Hong Kong

Standard Chartered Bank (Hong Kong) LimitedStandard Chartered Bank Building4 – 4A Des Voeux Road, CentralHong Kong

CITIC Bank International Limited80 Fl. International Commerce Centre 1 Austin Road WestKowloon, Hong Kong

Malayan Banking Berhad18/F., CITIC Tower1 Tim Mei Avenue, CentralHong Kong

DBS Bank (Hong Kong) Limited16th Floor, The Center99 Queen’s Road Central Central, Hong Kong

Ping An Bank Co Ltd1F Xinyuan Building,No.898,Tianhebei Road,Guangzhou,China, 510898

Barclays Bank plcKnightsbridge Business CentreP.O. Box 32014London NW1 2ZGUnited Kingdom

P R AdviserBell Pottinger5th Floor, Holborn Gate330 High HolbornLondon WC1V 7QDUnited Kingdom

Financial Adviser & Stockbroker Oriel Securities Limited150 CheapsideLondon EC2V 6ETUnited Kingdom

Corporate ConsultantS.Goschalk Limited41 MeadwayLondon NW11 7AXUnited Kingdom

Corporate AdviserVSA Capital LimitedFourth FloorNew Liverpool House15-17 Eldon StreetLondonEC2M 7LD

SolicitorsJun He Law OfficesSuite 2208, 22/F., Jardine HouseOne Connaught PlaceCentral, Hong Kong

Reed Smith LLPThe Broadgate Tower20 Primrose StreetLondon EC2A 2RSUnited Kingdom

DirectorsQIAN BenyuanChairman (Non-executive)

Daniel CHIUExecutive Vice-Chairman


LI Ching (Ms)Executive Director

Frank ATTWOODSenior Independent Director

LIN XizhongMAO TongDennis CHIULouisa HO (Ms)Ian TAYLORWANG JinjunZHI YulinNon-executive Directors

Company SecretarySandi CHOI (Ms)

Registered Office6/F., Belgrave House76 Buckingham Palace RoadLondon SW1W 9TQUnited Kingdom

Registered Number2173279

AuditorsDeloitte LLP2 New Street SquareLondon EC4A 3BZUnited Kingdom

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Fortune Oil PLChalf year report 2013

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