China Oil And Gas (HKG:0603) announced that, based on its audited financial statements as at 31 December 2011, the total amount standing to the credit of the share premium account and the accumulated losses of the company were HK$1.964 billion and HK$331.289 million respectively.

It is proposed that the amount of HK$400 million standing to the credit of the share premium account be cancelled, with part of the credit arising therefrom being applied towards offsetting the entire amount of the accumulated losses of the company as at the effective date and the remaining balance being credited to the contributed surplus account of the company.

Upon the share premium reduction becoming effective, all the accumulated losses of the company will be eliminated.

The directors consider that it would be inappropriate for the company to pay dividends while the company has accumulated losses. They consider that the share premium reduction will allow the company to eliminate the accumulated losses and provide the company with more flexibility to declare dividends to its shareholders at the earliest opportunity in the future as and when the directors consider appropriate.

Source:chinesestock