During the year, the Group incurred a one-off loss of HK$91.4 million from the disposal of the loss-making natural gas pipeline business in Xinjiang, China, resulting in a loss for the year of HK$140.1 million (2007: loss of HK$7.9 million). The loss from continuing operations was HK$48.7 million (2007: HK$35.9 million). The Group did not recommend the payment of a final dividend.
Mr Terence Kong, Chairman of Genesis Energy, remarked: ¡§2008 was a tough year as we saw extreme volatility in commodities prices. There was also a one-off loss from our discontinued downstream gas pipeline operations. In order to turnaround our performance, in addition to cost control, we have been actively seeking for new stable sources of revenue in addition to our oil and gas operations. Our recent penetration into the waste-to-energy segment is our medium to achieving a long-term stable cash flow with moderate risk.¡¨
The Group holds two blocks of oil fields, namely Grassy Trails and Squaw Canyon, in Utah and the Four Corners Area in the United States. In February 2008, the Group completed the first horizontal drilling at Grassy Trails, and the proven reserve of crude oil has been revised up to about 1.8 million barrels. However, due to the unprecedented snowstorm in the region, the production of oil has not been stable until August 2008.
The rework on the existing wells at Squaw Canyon has been completed and commercial production has commenced since September 2008. A reserve report prepared at the end of 2008 indicated an estimated reserve of 700,000 barrels of oil.
The volatile energy price movements, with Brent crude price dropping from the mid-year peak of US$144.22 to US$36.55 at the end of 2008, has seriously affected the Group¡¦s financial performance.
Subsequent to the year end, in February 2009, the Group acquired the Liu Luo Yuan oil field in Shaanxi, China. Liu Luo Yuan has over 80 wells and a stable production of 1,000 tonnes per month. Due to the policy of regulated oil price in the PRC, the oil field is expected to provide a stable cash flow contribution to the Group.
In early 2009, the Group took its first step into the waste-to-energy sector with the acquisition of 30% interest in a waste incineration power plant in Datong, Shanxi. The Group believes the investment in waste power will help drive its business development towards a more balanced and stable portfolio in the long term.
At the same time, the Group has formed a strategic alliance with Frankfurt-listed ZhongDe Waste Technology AG Industry in a bid to pursue viable business opportunities in new energy sectors.
Mr Kong added: ¡§With both energy demand and carbon emissions rising, China and the world need to explore every sustainable, affordable energy source available. Genesis Energy intends to meet this growing demand by tapping into alternative energy businesses which have the long-term potential to grow.¡¨
The Group has a sound and healthy balance sheet with a gearing ratio of 0% (2007: 0%) based on total assets, and a current ratio of 2.1 (2007: 2.4), placing the Group in a strong financial position to take advantage of new attractive investment opportunities that may arise.
Financial Highlights| Year ended December 31, | ||
| 2008 | 2007 | |
| RMB '000 | RMB '000 | |
| Continuing operations | ||
| Turnover | 40,064 | 30,314 |
| Gross Profit | 11,871 | 7,909 |
| Loss from continuing operations | (48,719) | (35,974) |
| Discontinued operations | ||
| (Loss)/Profit from discontinued operations | (91,429) | 28,038 |
| Loss for the year | (140,148) | (7,936) |
| (Loss)/Earnings per share - Basic | ||
| - From continuing and discontinued operations | HK (3.31) cents | HK(0.19) cent |
| - From continuing operations | HK (1.15) cents | HK (0.87) cent |
| - From discontinued operations | HK (2.16) cents | HK 0.68 cent |
| As at December 31, | ||
| Gearing ratio | 0% | 0% |
| Current ratio | 2.4 | 2.1 |
About Genesis Energy Issued by : Through :
Genesis Energy Holdings Limited (HKEx: 702) is an energy company with a key focus on oil and gas, as well as other renewable sources of energy. The Group is committed to building a diversified portfolio of energy assets and operations with an aim to developing into one of the leading independent energy businesses in Greater China. The Group currently operates oil and gas fields in the US and the PRC.
Genesis Energy Holdings Limited
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