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Admission to AIM

30 Sep 2013

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THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER FOR SALE OR AN INVITATION TO SUBSCRIBE FOR, OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR, GREKA ENGINEERING SHARES OR GREEN DRAGON SHARES IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION IS UNLAWFUL AND, SUBJECT TO CERTAIN EXCEPTIONS, IS NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA.  THE GREKA ENGINEERING SHARES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (AS AMENDED) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES OR UNDER THE APPLICABLE SECURITIES LAWS OF CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED FOR SALE OR SUBSCRIPTION, OR SOLD OR SUBSCRIBED DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA OR TO OR BY ANY NATIONAL, RESIDENT OR CITIZEN OF SUCH COUNTRIES.

THE DISTRIBUTION OF THIS ANNOUNCEMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. ACCORDINGLY, NEITHER THIS ANNOUNCEMENT NOR ANY ADVERTISEMENT OR ANY OTHER OFFERING MATERIAL MAY BE DISTRIBUTED OR PUBLISHED IN ANY JURISDICTION EXCEPT IN COMPLIANCE WITH ANY APPLICABLE LAWS OR REGULATIONS. PERSONS OUTSIDE THE UNITED KINGDOM INTO WHOSE POSSESSION THIS ANNOUNCEMENT COMES SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH RESTRICTIONS.  ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF ANY SUCH JURISDICTIONS.

30 September 2013

GREKA ENGINEERING & TECHNOLOGY LTD.

("Greka Engineering" or the “Company")

Admission to AIM

Greka Engineering & Technology Ltd. (AIM:GEL), the unconventional gas sector engineering and technology business with pipeline, gas compression and power generation assets in China, announces that trading in Greka Engineering’s Ordinary Shares is expected to commence on AIM at 8.00 a.m. today.

The demerger dividend, previously announced by Greka Engineering’s former parent company Green Dragon Gas Ltd, involves the distribution of 409,622,133 Ordinary Shares in Greka Engineering (representing 100% of Greka Engineering's issued Ordinary Shares) to Green Dragon shareholders.  CREST accounts of Green Dragon shareholders will be credited with Greka Engineering shares at 8.00 a.m. today and share certificates are expected to be despatched to Green Dragon shareholders who hold their shares in certificated form by 7 October 2013.

Greka Engineering provides engineering, procurement, construction and management services for infrastructure projects in the unconventional gas sector in China.  The Company is also involved in the research, development and delivery of technologies specific to the unconventional gas sector and incorporating such technologies into industry-specific hardware manufactured in-house.

The Board believes that China is at the start of an unconventional gas revolution which will see unconventional gas production grow to 6 Bcf per day in 2020, representing 30% of the domestic energy supply, from the current level of less than 1 Bcf per day, and that Greka Engineering is well placed to benefit from the anticipated growth of the unconventional gas sector in China.

 

Randeep S. Grewal, Executive Chairman of Greka Engineering, commented:

"Following the successful demerger of Greka Drilling (AIM:GDL) in 2011, it has become increasingly clear that a similar opportunity existed for Green Dragon to demerge Greka Engineering – allowing Greka Engineering to take full advantage of the exciting opportunities offered by the rapidly growing unconventional gas market. In addition, this dividend provides Green Dragon’s shareholders with an opportunity to continue to grow with this niche business or monetise their investment, at their discretion."

 

Certain capitalised terms in this announcement are as defined in the Greka Engineering admission document dated 24 September 2013, available on Greka Engineering’s website, www.grekaengineering.com.

 
Contacts:
 
Randeep Grewal
Greka Engineering
+852 3710 0168
Dr Azhic Basirov / David Jones / Ben Jeynes
Smith & Williamson
Nominated Adviser
+44 20 7131 4000
Sarah Wharry
RFC Ambrian
Broker
+44 20 3440 6800
Tim Feather
WH Ireland
Broker
+44 113 394 6600
Paul McManus / Guy McDougall
Walbrook
Media & Investor Relations
+ 44 20 7933 8780
get@walbrookpr.com

BACKGROUND INFORMATION

Business of Greka Engineering

The Group’s business includes the provision of engineering, procurement, construction and management (EPCM) services for infrastructure projects in the unconventional gas sector in China. Projects completed include the design, construction and management of gas gathering systems, a gas compression facility, the installation and commissioning of a 10MW gas-fired power facility and the construction of seven CNG retail stations. All of these projects were completed for Green Dragon and a number of them (including the Integrated Pipeline Facility and pipeline system located in Green Dragon’s Shizhuang South production block) will at Admission be owned by members of the Group. The Group has also completed a gas pipeline connecting a Green Dragon gas producing block in Shanxi Province to the China West-East pipeline and a pipeline which connects a number of Green Dragon’s producing wells to the Group’s integrated production facility.

The Group is also involved in the research, development and delivery of technologies specific to the

unconventional gas sector and incorporating such technologies into industry-specific hardware manufactured in-house such as well-head and gas gathering system compressors, CNG and LNG dispensers, Integrated Circuit Card Point of Sale (ICC POS) gas station systems and a SCADA (supervisory control and data acquisition) system used for remote supervision and management of drilling operations, gas gathering systems, power facilities, vehicles and retail gas stations.

The Company’s board of directors consists of Randeep Grewal (Executive Chairman), Sanjay Saxena (Non-Executive Director) and Bryan Smart (Non-Executive Director).

Summary financial information

 

12 months ended 31 December 2010

 Audited

US$000

12 months ended 31 December 2011

 Audited

US$000

12 months ended 31 December 2012

Audited

US$000

6 months ended 30 June

 2013

Unaudited

US$000

 

Revenue

1,463

5,400

5,204

1,663

 

Gross profit

323

942

1,195

539

 

EBITDA

15

41

89

(169)

 

Loss for the period from continuing operations

 

(600)

(991)

(1,304)

(797)

Total assets

8,262

22,357

43,252

42,985

The basis on which certain Group revenues are generated changed with effect from 1 January 2013. For example within GTIG, equipment rental income previously charged to Green Dragon has been replaced by PNG and CNG processing and electricity generation revenues.  The Directors have recalculated the historical annual income statements of GTIG as if its current basis of operation had been in place throughout the three years ended 31 December 2012 (i.e. GTIG’s activities consisted only of the gas compression and electricity generation businesses, and the commercial agreements governing trade between Green Dragon and GTIG had been in place).  The resulting annual turnover for the Group as recalculated by the Directors on an illustrative basis is £3.6 million, £3.1 million, and £1.6 million in each of the three years ended 31 December 2012, 2011 and 2010 respectively.

The unaudited pro forma net assets of Greka Engineering as at 30 June 2013 were US$32.4 million.

The financial information set out above has been extracted from the Company’s admission document which is available on www.grekaengineering.com.