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Yinggao Holdings plc 

('the Company')

Interim Results

The Company is pleased to announce its results for the 6 month period ended 30 June 2009.

FINANCIAL HIGHLIGHTS

The group made a profit after tax of US$965,000 during the six months to 30 June 2009 on total revenues of US$8.5 million. Total revenues increased by 35% for the first six months of 2009 compared to the first six months of 2008 (H1 2008: US$6.3 million).  Gross profit for the period was US$2.7 million, an increase of 16.6% compared to the first six months of 2008 (H1 2008: US$2.3 million). 

 Administrative expenses increased by a modest 7% to US$1.5 million (H12008: US$1.4 million). This increase is relatively insignificant in the context of the group's increased level of activity, and was also partly a  result  of  the depreciation cost amounting to US$0.94 million compared to US$0.11 million in the same period last year.  

Earnings per share increased to US$0.03 (H1 2008: US$0.01).

BUSINESS REVIEW

Review of Container Terminal Business

For the six months ended 30 June 2009, Keen Chance Terminal reported total revenues of US$6.9 million compared to US$5.5 million for H1 2008, an increase of 25%. This was achieved despite the continuing difficult economic climate in our business, and reflects the conservative expectations of management. Nevertheless, despite an increase in overall throughput, the profit margin decreased by 0.9%, due to an increase in turnover of 18% offset by an increase in operating cost and general and administrative expenses of 20% and 26% respectively.  Excluding the loan interest paid to Arko Terminal Limited, there was an increase of 27% in profit compared to the same period of last year generated from the container terminal operation.  The Keen Chance businesses generated a period end cash balance of US$0.26 million, amounting to a 63% increase compared with the H1 2008 period end cash balance of US$0.16 million. Overall, the Board is very encouraged by the results from the terminal operation.

Review of Barging Service Business

During the six months ended 30 June 2009, the company  through its subsidiary, Yinggao Shipping (H.K.) Limited., operated seven river trade vessels which contributed revenue of US$1.7million (H1 2008: US$0.9 million) to the group, representing a 89% increase compared to the same period of last year.  The operating margin has increased from 6.5% in H1 2008 to 12.7% in H1 2009 as a result of an improvement in the carrying capacity of the vessels driving operational efficiency.

DISPOSAL OF EQUITY INTEREST IN LONG PROSPERITY INDUSTRIAL LIMITED

An announcement was made on 9 September 2009 by the company in relation to the disposal of its equity interest in Long Prosperity Industrial Limited ('LPIL'), a wholly owned subsidiary of the company, which owns a 59.2% stake in Changzhou Power Development Company Limited ('CZPD'), which operated the now-closed  coal-fired power plant in Hubei province, China. This sale was to a related company, Winko Foundation Limited ('WFL'). It was reported to the shareholders that the result of the sale of the shares in LPIL to WFL is that the liabilities that currently sit in LPIL and its subsidiary CZPD will thereafter be outside the group and the group's consolidated accounts will have significant liabilities removed from them.

OUTLOOK

The group results for the first half of the year are in line with the management's expectations. Although the increased cost in wages was offset by operating efficiencies and other cost savings, we shall endeavour to further reduce operating costs so as to increase our profit margin by the end of the year.

During the second half of 2009, the group will continue building its business and focus on  its  strengths to achieve  its  targets  in cost control and increasing competitiveness of its fleet and terminal operation. The extension of the adjacent quay is near to completion and we expect to start operation by the end of the year,  which should coincide with the commencement of operation of the brand new 45 tonne quayside container crane. The Board is confident that the growth rate in the annual throughput will be satisfactory and the container terminal business will continue playing an important role in the group's revenue streams.

The weaker economic situation, however, has impacted our barging service business. Despite a growth in turnover of Yinggao Shipping (H.K.) Limited in the first half year of 2009, income per vessel has reduced. Insufficiency of carrying cargo per vessel will no doubt increase the operating costs and result in a decrease in profit margin.

As the recent recovery in global markets remains fragile it is difficult to predict the timing and extent of a return to growth in trade, on which our business depends. Nevertheless, having reviewed the forecast we made at the beginning of the year, we regard the group performance in the first half of the year to be satisfactory. The Board, therefore, remains optimistic about the group's prospects for the full year. 

RETIREMENT OF THE CHAIRMAN

Last but not least I would like to thank our shareholders, business partners, customers, directors and employees for their continuing support to Yinggao.  Since the group has now reached a stable stage and its business has maintained steady growth over the past few years, I have decided to step down from the board and retire upon the publication of these interim results. I wish the group continued success in the second half of 2009 and I believe Angela Leung, one of our executive directors, will prove a very capable successor as Chairman.  

        

Qin Shun Chao

Chairman

For further information:

Angela Leung                            Tel:  + 852 2219 9999

Yinggao Holdings plc

www.yinggaoholdings.com

Paul Shackleton

Daniel Stewart & Company plc        Tel: + 44 (0) 207 776 6550

www.danielstewart.co.uk

						(Audited)
	(Unaudited)					Year ended
	Six months ended 30 June					31 December
	2009		2008			2008
	US$'000		US$'000			US$'000
Turnover	8,540		6,330			14,300
EBITDA * - Continuing operations	1,644		572			2,531
Profit for the period	965		592			1,068
Shareholders' equity and minority interest	30,850		28,931			30,009

*Earnings attributable to equity holders before interest, tax, depreciation and goodwill impairment on continuing operations

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2009

		(Unaudited)						(Audited)
		Six months ended  30 June						Year ended 31 December
		2009		2008				2008
	Note	US$'000		US$'000				US$'000
Revenue	3	8,540		6,330				14,300
Cost of sales		(5,863)		(4,035)				(9,850)
Gross profit		2,677		2,295				4,450
Other income		2		62				155
Administrative Expenses		(1,521)		(1,420)				(3,114)
Profit from operations		1,158		937				1,491
Finance Costs		(1)		-				(176)
Profit before taxation		1,157		937				1,315
Taxation	4	(192)		(345)				(247)
Profit for the period from continuing operations		965		592				1,068
Profit for the period		965		592				1,068
Attributable to :
Equity holders of the parent Company		510		117				360
Minority interest - continuing operations		455		475				708
		965		592				1,068
Earnings per share - Basic and fully diluted    (US cents):	5
Continuing operations		0.03		0.01				0.02
Continuing and discontinued operations		0.03		0.01				0.02

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2009

		(Unaudited)						(Audited)
		Six months ended  30 June						Year ended 31 December
		2009		2008				2008
	Note	US$'000		US$'000				US$'000
Profit for the period	7	965		592				1,068
Other comprehensive income for the
period
Currency translation difference		(124)		695				1,297
		(124)		695				1,297
Total comprehensive income for the period		841		1,287				2,365
Attributable to:
Equity shareholders of the company		385		868				1,323
Minority interests		456		419				1,042
Total comprehensive income for the period		841		1,287				2,365

						(Audited)
		(Unaudited)				As at
		As at 30 June				31 December
	Note	2009		2008		2008
		US$'000		US$'000		US$'000
NON-CURRENT ASSETS
Goodwill		1,835		1,834		1,835
Property, plant and equipment	8	27,099		25,640		27,375
Available-for-sale investment		12		12		12
		28,946		27,486		29,222
CURRENT ASSETS
Inventories		140		138		137
Trade and other receivables		9,623		9,235		8,103
Cash and cash equivalents		310		189		780
		10,073		9,562		9,020
CURRENT LIABILITIES
Trade and other payables		3,852		4,036		3,907
Obligations under finance leases		569		-		599
Taxation	4	939		1,370		695
		5,360		5,406		5,201
NET CURRENT ASSETS		4,713		4,156		3,819
TOTAL ASSETS LESS     CURRENT LIABILITIES		33,659		31,642		33,041
NON-CURRENT LIABILITIES
Bank loan		1,915		1,915		1,915
Obligations under finance leases		107		9		330
Loans from fellow investors in subsidiaries		787		787		787
		2,809		2,711		3,032
NET ASSETS		30,850		28,931		30,009
CAPITAL AND RESERVES
Share capital	10	14,922		14,922		14,922
Share premium		15,662		15,662		15,662
Merger reserve		26,043		26,043		26,043
Exchange reserve		2,252		1,940		2,377
Accumulated losses		(43,053)		(43,771)		(43,621)
Statutory surplus reserve		1,491		1,681		1,549
Total equity attributable to equity holders of     the Company		17,317		16,477		16,932
Minority Interest		13,533		12,454		13,077
TOTAL EQUITY		30,850		28,931		30,009

Group	Share capital	Share premium	(note i) Statutory surplus reserve	(note ii) Merger reserve	Exchange reserve	Accumulated losses	Total attributable  to equity holders  of the parent	Minority interest	Total
	US$'00	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 1 January 2008	14,922	15,662	1,681	26,043	1,440	(44,139)	15,609	12,035	27,644
Profit for the period	-	-	-	-	-	117	117	475	592
Other comprehensive income	-	-	-	-	500	251	751	(56)	695
Total comprehensive income for the    period	-	-	-	-	500	368	868	419	1,287
Balance at 30 June 2008 (Unaudited)	14,922	15,662	1,681	26,043	1,940	(43,771)	16,477	12,454	28,931
Balance at 1 January 2009	14,922	15,662	1,549	26,043	2,377	(43,621)	16,932	13,077	30,009
Profit for the period	-	-	-	-	-	510	510	455	965
Overprovision in statutory surplus reserve	-	-	(58)	-	-	58	-	-	-
Other comprehensive income	-	-	-	-	(125)	-	(125)	1	(124)
Total comprehensive income for the period	-	-	(58)	-	(125)	568	385	456	841
Balance at 30 June 2009 (Unaudited)	14,922	15,662	1,491	26,043	2,252	(43,053)	17,317	13,533	30,850
Balance at 1 January 2008	14,922	15,662	1,681	26,043	1,440	(44,139)	15,609	12,035	27,644
Profit for the year	-	-	-	-	-	360	360	708	1,068
Overprovision in statutory surplus reserve	-	-	(158)	-	-	158	-	-	-
Other comprehensive income	-	-	26	-	937	-	963	334	1,297
Total comprehensive income for the period	-	-	(132)	-	937	518	1,323	1,042	2,365
Balance at 31 December 2008 (Audited)	14,922	15,662	1,549	26,043	2,377	(43,621)	16,932	13,077	30,009

Notes:

(i)    Statutory surplus reserve:

In accordance with the law of the People's Republic of China (the 'PRC') and the articles of association of certain of the Company's subsidiaries, directors of these subsidiaries may at their discretion make appropriations to a statutory surplus reserve equivalent to 10% of the subsidiaries' net profits. Appropriations may also be made to statutory public welfare reserve equivalent to 5 to 10% of the net profits of these operating subsidiaries. Distribution of profits to shareholders can only be made after such appropriations. 

 The statutory surplus reserve may be used to reduce any losses incurred or be capitalised as paid up capital. The use of the statutory public welfare reserve is restricted to capital expenditure incurred for staff welfare facilities. The statutory public welfare reserve is not available for distribution.

(ii)    The merger reserve represents the difference between the nominal value of shares of the subsidiary company acquired, and the nominal value of the Company's shares issued in 2002.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 June 2009

	(Unaudited)				(Audited)
	Six months ended				Year ended
	30 June				31 December
	2009		2008		2008
	US$'000		US$'000		US$'000
Cash flow from operating activities
Profit before taxation
- Continuing operations	1,157		937		1,315
	1,157		937		1,315
Adjustments for :
Interest on finance leases	1		-		43
Interest on bank loan	-		-		133
Interest income	(1)		-		(1)
Depreciation	941		110		1,748
Gain on disposal of a subsidiary	(1)		-		-
Loss on disposal of property, plant and equipment	144		2		3
Loss on written off of investment in a subsidiary	1		-		-
Exchange adjustments	(79)		2,211		(291)
Operating profit before working capital changes	2,163		3,260		2,950
Increase in inventories	(3)		(14)		(13)
(Increase) / decrease in trade and other receivables	(1,520)		(923)		209
(Decrease) / increase in trade and other payables	(55)		430		301
Net cash flow generated from operations	585		2,753		3,447
Interest paid	-		-		-
Taxes paid	52		(108)		(686)
Net cash generated from operating activities	637		2,645		2,761
Investing activities
Purchase of property, plant and equipments	(855)		(2,884)		(1,959)
Sales proceeds on disposal of a subsidiary	1		-		-
Interest Income	1		-		1
Net cash used in investing activities	(853)		(2,884)		(1,958)
Financing activities
Repayment on finance lease obligations	(253)		-		(275)
Interest on finance leases	(1)		-		(43)
Interest on bank loan	-		-		(133)
Net cash used in financing activities	(254)		-		(451)
Net (decrease) / increase in cash and cash equivalents	(470)		(239)		352
Cash and cash equivalents at the beginning of the period/year	780		428		428
Cash and cash equivalents at the end of the period/year	310		189		780

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) 

For the period ended 30 June 2009

1.    GENERAL INFORMATION

The company is a public limited company incorporated and domiciled in the United Kingdom. The registered office of the company is located at 2 Bloomsbury Street, London WC1B 3ST. Its principal place of business is in Hong Kong and the People's Republic of China ('PRC').

    

The principal activities of the company and its subsidiaries (hereinafter collectively referred to as the 'group') are terminal operation and barging services provision.

    

The company's shares were admitted to trading on the AIM Market of the London Stock Exchange. These condensed consolidated interim financial statements are presented in United States Dollars, unless otherwise stated, and were reviewed by the Audit Committee and approved for issue by the Board of Directors on 18 September 2009.

2.    SUMMARY OF  SIGNIFICANT ACCOUNTING POLICIES

(a)    Basis of  preparation and statement of compliance

The company has a financial year end date of 31 December. These condensed consolidated interim financial statements for the six months ended 30 June 2009 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting'. These condensed consolidated interim financial statements should be read in conjunction with the annual financial statements of the group for the year ended 31 December 2008, which have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted for use in the European Union ('EU'). 

EU-endorsed IFRSs may differ from IFRSs, as issued by the International Accounting Standards' Board ('IASB') if, at any point in time, new or amended IFRSs have not been endorsed by the EU. At 30 June 2009, there were no unendorsed standards effective for the period ended 30 June 2009 affecting these condensed consolidated interim financial statements, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to Yinggao Holdings Plc. 

  (b)     Significant accounting policies

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

The accounting policies and methods of computation used in the preparation of these condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2008 except for the adoption of standards, amendments and interpretations issued by the IASB mandatory for annual financial year beginning 1 January 2009.

For the period ended 30 June 2009, the group have adopted the following new and revised standards, amendment, or interpretations that have been issued.

		Effective for accounting periods beginning  on or after
IFRS 8	Operating segments	1 January 2009
IAS 1 (revised 2007)	Presentation of financial    statements	1 January 2009

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) 

For the period ended 30 June 2009

(b)     Significant accounting policies (Continued)

IFRS8 'Operating segments' (see note 3) is a disclosure standard that has resulted in a redesignation of the group's reportable segments, but has had no impact on the reported results or financial position of the group.

IAS1 'Presentation of financial statements (revised 2007)' has introduced a number of terminology changes (including revised titles for the condensed consolidated financial statements) and has resulted in a number of changes in presentation and disclosure. However, IAS1 (revised 2007) has had no impact on the reported results or financial position of the group.

            (c)     Possible impact of amendments, new standards and interpretations issued but not yet effective for the six months 
                      ended 30 June 2009

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

The group is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application. The directors anticipate that the adoption of these Standards and Interpretations as appropriate in future periods will have no material impact on the financial statements of the group when the relevant standards come into effect for periods commencing on or after 1 July 2009.

 

 

       (d)    Use of estimates and assumptions

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

(e)      Consolidation

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

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) 

For the period ended 30 June 2009

3.    SEGMENT REPORTING

The group manages its businesses by type of services provided and also by geographical division. It is similar to 2008 except the terminal and barging services were separated into 2 reportable segments by geographical divisions.  It is the first time the group adopted of IFRS 8, Operating segments and in a manner consistent with the way in which information is reported internally to the group's most senior executive management for the purposes of resource allocation and performance assessment. The group has identified the following five reportable segments.   Revenue and expenses are allocated to the reportable segments based on the type of services and sub-divided into geographical location.

	Continuing operations								Discontinuing operations		Total
	Terminal and barging services				Trading and others		Mining		Power plant
	Hong Kong		Mainland China
For the six months ended (Unaudited)	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Revenue from external customers	1,644	851	6,896	5,479	-	-	-	-	-	-	8,540	6,330
Inter-segment revenue	-	-	-	-	-	-	-	-	-	-	-	-
Reportable segment revenue	1,644	851	6,896	5,479	-	-	-	-	-	-	8,540	6,330
Reportable segment profit / (loss)	366	(141)	599	733	-	-	-	-	-	-	965	592
As at the period / year ended	30  June 2009 (Unaudited)	31 December 2008 (Audited)	30  June 2009 (Unaudited)	31 December 2008 (Audited)	30  June 2009 (Unaudited)	31 December 2008 (Audited)	30  June 2009 (Unaudited)	31 December 2008 (Audited)	30  June 2009 (Unaudited)	31 December 2008 (Audited)	30  June 2009 (Unaudited)	31 December 2008 (Audited)
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Reportable segment assets	2,203	861	34,766	34,154	2,046	3,224	-	-	4	3	39,019	38,242

4.    TAXATION

	(Unaudited)					(Audited)
	Six months ended  30 June					Year ended  31 December
	2009		2008			2008
	US$'000		US$'000			US$'000
PRC Enterprise Income Tax for the period	192		345			247

In respect of subsidiaries operating in Hong Kong, no provision for Hong Kong profits tax are provided as there are tax losses brought forward to set off against current period's assessable profit. (2008 : Nil)

Subsidiaries operating in the PRC are subject to Enterprise Income Tax ('EIT') at a rate of 18%. However, certain subsidiaries are subject to tax holidays from the local tax authorities under income tax law. Others had tax losses brought forward from previous years.

On 16 March 2007, the National People's Congress passed the Corporate Income Tax Law of the PRC (the 'new tax law'). Under the new tax law, the statutory income tax rate applicable to the company's subsidiaries in Guangzhou is changed from 15% to 25% progressively within five years from 1 January 2008 (2008: 18%; 2009: 20%; 2010: 22%; 2011: 25%). The new tax law has been applied when measuring the group's current tax payable as at 30 June 2009..

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

5.    EARNINGS PER SHARE 

    Basic and diluted earnings per share are calculated by dividing the earnings attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the periods/year ended 30 June 2009, 30 June 2008 and 31 December 2008.

	(Unaudited)				(Audited)
	Six months ended    30 June				Year ended  31 December
	2009		2008		2008
Continuing operations:
Profit attributable to equity    holders of the parent (US$ '000)	510		117		360
Weighted average number of shares in    issue	1,978,895,139		1,978,895,139		1,978,895,139
Earnings per share    (Basic and diluted) (US cents)	0.03		0.01		0.02
Continuing and discontinued operations:
Profit attributable to equity    holders of the parent (US$ '000)	510		117		360
Weighted average number of shares in    issue	1,978,895,139		1,978,895,139		1,978,895,139
Earnings per share   (Basic and diluted) (US cents)	0.03		0.01		0.02

6.    DIVIDEND

    The directors do not recommend the payment of any dividend.

7.    PROFIT FOR THE PERIOD IS ARRIVED AFTER CHARGING THE FOLLOWING :-

	(Unaudited)				(Audited)
	Six months ended     30 June				Year ended  31 December
	2009		2008		2008
	USD'000		USD'000		USD'000
Depreciation on property, plant and   equipment	941		110		1,748
Gain on disposal of a subsidiary	(1)		-		-
Loss on written of investment in a subsidiary	1		-		-
Loss on disposal of property, plant and    Equipment	144		2		3

8.     PROPERTY, PLANT AND EQUIPMENT

During the period, the group spent approximately US$855,000 in acquiring property, plant and equipment (Six months ended 30 June 2008: US$2,884,000).

During the period, the group demolished its oil storage tanks, which served in the terminal and barging services segment in PRC, with a carrying amount of USD160,000.  There are no sales proceeds for this demolishment. The group also disposed a vessel with a carrying amount of USD308,000 for sales proceeds of USD324,000.

9.  INVESTMENTS IN SUBSIDIARIES

At 30 June 2009, the Company held 100% of the ordinary shares of Yinggao Investments Limited (Formerly known as Arko Offshore Holdings Ltd.), a company incorporated in the British Virgin Islands ('BVI'), whose principal activity was that of an investment holding company. Yinggao Investments Limited had the following subsidiaries' undertakings:

	Equity interests
	attributable		Place of
Name	to the group	Principal activities	incorporation
Yinggao Energy Limited * #	100%	Investment holding	BVI
Yinggao Ship Chartering Limited *	100%	Sub-letting of vessels	Hong Kong
Yinggao Consultants Limited * #	100%	Providing management services	BVI
Yinggao Pacific Limited * #	100%	Investment holding	BVI
Long Prosperity Industrial Limited. ##	100%	Investment holding	Republic of Seychelles
Sanko Mineral Limited	100%	Sub-letting of yachts, ships and vessels	BVI
Yinggao Shipping (H.K.) Limited.  #	100%	Providing logistics and related services	Hong Kong
Arko Terminal Limited ('ATL') #	100%	Investment holding	Republic of Seychelles
Changzhou Power    Development company Limited  ##	59.2%	Inactive	PRC
Keen Chance Terminal (GZ)   Company Limited ('KCT')	40%	Investing in and  operation of a terminal  and providing logistics services	PRC
Fujian Sanko Mining Limited.	70%	Dormant	PRC

*        Directly held by Yinggao Investments Limited.  All other subsidiaries are indirectly held.
#     During the period, the group has changed the name of certain of its subsidiaries as listed below by passing relevant board resolutions in each of the group companies to match their core businesses with present operating activities in terminal operation and barging service operation in the PRC:
		Present names	Previous names	Effective Date
	1.	Yinggao Investments Limited	Arko Offshore Holdings Limited	09 June 2009
	2.	Yinggao Energy Limited	Arko Energy Limited	11 June 2009
	3.	Yinggao Consultants Limited	Arko Consultants Limited	09 June 2009
	4.	Yinggao Pacific Limited	Arko Pacific Limited	09 June 2009
	5.	Yinggao Shipping (H.K.) Limited	Arko Shipping Limited	12 June 2009
##     Subsequently disposed of on 9 September 2009

9.  INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The 40% equity interest in Keen Chance Terminal (GZ) company Limited ('KCT') previously held by Keen Lloyd Energy Limited ('KLEL'), a subsidiary of Keen Lloyd Holdings Limited ('KLHL'), has been transferred to ATL. The transfer has been submitted for registration to the relevant PRC authorities. 

Pursuant to an agreement dated 5 April 2002 entered into between KLEL and Miaotou Economic Development company Limited ('MEDCL'), (a shareholder of KCT who held a 30% equity interest in KCT), MEDCL agreed to vote in accordance with the instructions of KLEL at board meetings in view of its indebtedness to KLEL, for an approximate sum of RMB78 million (equivalent to US$9.4 million), and KLEL intended to convert the outstanding loan into registered capital of KCT.

On 22 April 2003, KLEL entered into a shareholder agreement with MEDCL and Harbour Economic Development company Limited ('HEDCL'), another shareholder in KCT, whereby all parties agreed that MEDCL has unconditionally transferred the authority empowered to its directors representative (including their rights and obligations) to KLEL until KLEL transferred the 40% equity interests in KCL to ATL to reiterate the aforesaid agreement dated 5 April 2002.

On 16 May 2003, a supplemental agreement was entered into between ATL, KLEL, MEDCL and HEDCL by which all parties agreed that the above authority transferred to KLEL would be vested in ATL after KLEL completed the transfer of equity interests in KCT to ATL.

In accordance with the terms and conditions set out in the above agreements, KLEL effectively controls the board of KCT and this arrangement has been confirmed by the shareholders of KCT. In 2002, a Hong Kong lawyer expressed his view that KCT is a subsidiary of KLEL under Hong Kong company Law. Control of KLEL has been transferred to ATL and therefore in the opinion of the directors, KCT is a subsidiary of ATL under the Companies Act 1985.

KCT will be a legal subsidiary of ATL immediately upon the registration of the transfer of the 40% of equity in KCT from KLEL to ATL.

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

  

10.    share capital
	Number	£
Authorised:  Ordinary shares of 0.5p each
At 30 June 2009, 31 December 2008 and 30 June 2008	30,000,000,000	150,000,000
Equivalent to:		US$  265,395,280
Allotted, called up and fully paid:   Ordinary shares of 0.5p each
At 30 June 2009, 31 December 2008 and 30 June 2008	1,978,895,139	US$  14,921,520

11.    OPERATING LEASE COMMITMENTS

At 30 June 2009, the group had total commitments in respect of land and building and berth charge under operating leases:

	(Unaudited)				(Audited)
	Six months ended    30 June				Year ended  31 December
	2009		2008		2008
	USD'000		USD'000		USD'000
Leases which expire:
- in the next year	405		181		354
- in the second to fifth years	466		299		1,089
	871		480		1,443
					-

12.    CAPITAL COMMITMENTS

Capital commitments outstanding at 30 June 2009 in respect of the acquisition of a set of quayside container crane from a non-related supplier in the financial statements were as follows:

	(Unaudited)				(Audited)
	Six months ended  30 June				Year ended  31 December
	2009		2008		2008
	USD'000		USD'000		USD'000
Contracted, but not provided for	1,227		6,898		740
					-

13.    CONTINGENT LIABILITIES

(a)    On 23 July 1998, a subsidiary of the company, Keen Chance Terminal (GZ) Company Limited ('KCT'), gave a guarantee for RMB50 million (equivalent to approximately US$5.9 million) in favour of the Huangpu Branch of the Industry and Commercial Bank of China for banking facilities granted to Harbour Economic Development Company Limited ('HEDCL'), a fellow investor in KCT and its ultimate controlling party, Guangzhou Huangpu Foreign Trade group Company Limited and secured over their equity interests in KCT. HEDCL was unable to repay the loans due to the bank. The bank took action against KCT to enforce the guarantee for the outstanding loan.

           (b)    On 9 November 1999, KCT gave a guarantee for RMB18 million (equivalent to approximately US$2.1 million) in favour of Nangang Rural Credit Co-operation Bank for banking facilities granted to Miaotou Economic Development Company Limited ('MEDCL'), a fellow investor in KCT, secured over its equity interests in KCT. MEDCL was unable to repay the outstanding loan.

On 27 September 2001, the Guangzhou Law Court delivered an order and notice that the guarantees above were invalid and MEDCL's equity interest in KCT was frozen.

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

    KCT maintains that the guarantee given was invalid on the following grounds:

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

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

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

(c)    Following the closure of the power plant on 30 June 2007, the group may be required to incur decommissioning costs of approximately Great British Pound 300,000, in respect of the power plant site held under Changzhou Power Development Company Limited ('CZPD'), if it is not sold before the end of 2010 (the date at which the plant is required to be demolished). After the period end, on September 9, 2009, Yinggao Energy Limited ('YEL') sold 100% of its equity interest in Long Prosperity Industrial Limited ('LPIL') and its subsidiary CZPD to Winko Foundation Limited ('WFL'). The result of the sale of the shares is that the liabilities and issues that currently sit in LPIL and its subsidiary CZPD will thereafter be outside the group's consolidated accounts. Since LPIL and CZPD were subsequently disposed of, it is not probable that an outflow of economic resources will be required and accordingly no provision is made in respect of these costs in these condensed consolidated interim financial statements.

14.  DISPOSAL OF A SUBSIDIARY

On 23 March 2009, the group disposed 100% of its interest in Arko Satellite Limited. The proceeds on disposal of HK$10,000 were recorded as receivable by the group. 

15.  WRITTEN OFF INVESTMENT IN A SUBSIDIARY

In March 2009, the registered licences of Arko Silicon (Hubei) Limited was de-registered by the PRC Business Bureau. The 100% of its interest in Arko Silicon (Hubei) Limited was written off by the group.

16.  POST BALANCE SHEET EVENTS

 

Subsequent to balance sheet date, the company's name was changed from 'Arko Holdings plc' to 'Yinggao Holdings plc' on 24 August 2009.

The company announced on September 9, 2009 that a wholly owned subsidiary of the company, Yinggao Energy Limited ('YEL') has agreed to sell the 100 per cent. equity interest it owns in Long Prosperity Industrial Limited ('LPIL') to a related company, Winko Foundation Limited ('WFL'), whose sole shareholder, Keen Lloyd Holdings Limited, is also the major shareholder of the company, holding 92.06 per cent. of the company's issued share capital.

The only asset owned by LPIL is a 59.2 per cent stake in Changzhou Power Development Company Limited ('CZPD'), a subsidiary operating a coal-fired power plant in Hubei , China. The power plant ceased operation in the third quarter of 2007 and has shut down following an agreement signed with the local government in June 2007. 

An announcement was made on 4 June 2008 by the company detailing that the value of the property, plant and equipment at the power plant in Hubei was wholly written off. As a result, the power plant now carries no value in the balance sheet of the consolidated accounts of the company and no longer makes any contributions to the company.

In terms of liabilities, CZPD is the borrower in respect of the US$1.9 million loan from Industrial and Commercial Bank of China Limited. This was the disputed loan which lead to the qualification in the audit report for the year ended 31 December 2008. In addition, CZPD may incur decommissioning costs of approximately Great British Pound 300,000 in respect of the power plant if it is not sold prior to 2010. The result of the sale of the shares in LPIL to WFL is that the liabilities and issues that currently sit in either LPIL or its subsidiary CZPD will thereafter be outside the group's consolidated accounts will have significant uncertainties removed from them.

Under the sale and purchase agreement of YEL, it will dispose of the 5,000 ordinary shares it owns in LPIL to WFL for a nominal consideration of HK$1.00. In addition, the agreement states that YEL will be paid 50 per cent. of any amount recoverable by LPIL as a result of the legal proceedings in which LPIL is currently engaged as co-plaintiff with Global Assets Limited and 

b)   Disposal of Equity Interest in Long Prosperity Industrial Limited (Continued)

Walton Enterprises Limited against Sun Hung Kai Securities Limited for breach of contract in relation to the sale of equity in CZPD.

The independent directors of the company, having consulted with Daniel Stewart & Company plc, the company's nominated adviser, consider that the disposal of YEL's equity interest in LPIL is in the best interests of the company and that the terms of the transaction as fair and reasonable insofar as shareholders are concerned.

17.  RELATED PARTY TRANSACTIONS

Other than transactions otherwise disclosed in the financial statements, the group and the Company had the following material transactions which were carried out on an arm's length basis with related parties during the year:

						(Unaudited)				(Audited)
						Six months ended     30th June				Year ended  31st December
						2009		2008		2008
Name of company		Note		Nature		US$'000		US$'000		US$'000
Guangzhou Tung    Lloyd Shipping    Agency Limited		(a)		Agency Charges		44		41		82

Notes:

• A company in which the Chairman, Mr Qin Shun Chao, is a director.

18.   FINANCIAL STATEMENTS

This statement does not comprise full financial statements within the meaning of Section 434 of the Companies Act 2006.

19.   COMPARATIVE FIGURES

Certain comparative figures have been reclassified to confirm with the current period's presentation.

20.   FINANCIAL RISK MANAGEMENT

All aspects of the group's financial risk management objectives and policies are consistent with those disclosed in the annual financial statement for the year ended 31 December 2008.

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