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SCMP Reporter

Fortune Oil has warned shareholders it cannot guarantee an escape from Y2K computer problems.

 The oil trading and infrastructure company, which is listed in London but does all its business in the mainland, said its extensive dealings with traders and its mainland joint ventures could be affected.

 'The group trades with a large number of counter-parties and whilst efforts have been made to check their year 2000 compliance, there can be no assurance that such counter-parties may not suffer disruption that affects the group's business,' Fortune said.

 'Similarly the group has a number of joint ventures which are important to the group's business . . . however there can be no assurance that the businesses of the joint ventures may not suffer disruption.'  Fortune has already suffered a sharp deterioration in the group's performance which resulted in the dismissal of chief executive Barry Cheung Chun-yuen.

 The company made the Y2K warning as it unveiled its interim results to June 30.

 Turnover was down sharply to GBP65.1 million (about HK$829.15 million), from GBP183.9 million in the same period last year.

 Fortune made a pre-tax loss of GBP960,000, against profits of GBP2.05 million in the previous year's first half.

 The group has been badly hit by a sharp rise in overdue trade accounts and by Beijing's ban on diesel and petrol imports.

 But new chief executive Richard Wong Shiu-ki said Fortune was undergoing an overhaul to focus on oil-trading and infrastructure.

 'Costs have been reduced significantly, the riskier parts of our trading business have been eliminated, and we can now focus with confidence on infrastructure projects that offer significant long-term potential for growth,' he said.

 Cost-savings of GBP2.5 million on an annualised basis had been achieved, the company said, and it had completed the disposal of a trading joint venture.

 Fortune also reported that China National Petroleum, the mainland's largest oil group, was to take a controlling 45 per cent stake in Fortune's West Zhuhai Oil Products Terminal and Oil Storage Facility.

 The deal should boost the facility's performance and make it 'the most used oil product terminal in southern China', Fortune said.

 Fortune said it would retain an 18 per cent stake and that the terminal was already seeing increased throughput since the deal.

 The group has also sold its branded lubricants business, although it has retained the Fortune name, which it said gave it scope for re-entering the business at a later date.

 The company said it had also received expressions of interest from mainland and multinational oil companies, to operate the group's network of petrol stations.

 Turnover in the trading business plunged to GBP33.7 million, from GBP174.4 million, although the company believes there are signs that crude-oil imports to the mainland will increase in the second half of the year.

ENERGY 



Fortune Oil sounds warning over Y2K as results sink into red