TIDMACHL
RNS Number : 3541O
Asian Citrus Holdings Ltd
16 September 2011
ASIAN CITRUS HOLDINGS LIMITED
*
(Incorporated in Bermuda with limited liability)
(Stock Code: HKSE: 73; AIM: ACHL)
ANNOUNCEMENT OF THE ANNUAL RESULTS
FoR THE YEAR ENDED 30 JUNE 2011
The board of directors (the "Board") of Asian Citrus Holdings
Limited (the "Company" or "Asian Citrus") is pleased to announce
the consolidated results of the Company and its subsidiaries
(collectively, the "Group") for the year ended 30 June 2011.
Results Highlights
For illustration
Year ended 30 only Year ended
June 30 June
2011 2010 % change 2011 2010
(RMB m) (RMB m) (GBP m*) (GBP m*)
Reported financial
information
Revenue 1,412.6 812.5 +73.9 136.4 80.0
Gross profit 738.6 468.4 +57.7 71.3 46.1
EBITDA 1,205.8 652.4 +84.8 116.4 64.2
Profit before tax 1,121.3 587.3 +90.9 108.2 57.8
Net profit 1,110.0 585.5 +89.6 107.1 57.6
Basic EPS RMB1.06 RMB0.74 +43.2 10.2p 7.3p
Final Dividend RMB0.10 RMB0.10 - 1.0p 1.0p
Special Dividend RMB0.03 RMB0.02 +50.0 0.3p 0.2p
Total Dividend RMB0.15 RMB0.12 +25.0 1.4p 1.2p
Reported financial information adjusted to exclude biological gain
EBITDA 607.8 346.4 +75.5 58.7 34.1
Profit before tax 523.3 281.3 +86.0 50.5 27.7
Net profit 512.0 279.5 +83.2 49.4 27.5
Basic EPS RMB0.49 RMB0.35 +40.0 4.7p 3.4p
Payout ratio 35.6% 37.0%
* Conversion at GBP1 = RMB10.36 and RMB10.16 for the year ended
30 June 2011 and 2010 respectively for reference only
Business Overview
Continued to expand our direct sales to 20 supermarket chains
with total supply of approximately 68,480 tonnes of oranges
(2009/10: 61,157 tonnes), up approximately 12.0%
Sold approximately 620,000 self-bred saplings to local farmers
offering the Group the first right to purchase their oranges
Achieved the annual renewal of the "Organic Products"
accreditation by the China Organic Food Certification Center in
both Hepu Plantation and Xinfeng Plantation
Completed the acquisition of 92.94% equity interest in Beihai
Perfuming Juice Co., Ltd ("Beihai BPG") on 30 November 2010
Expanding the production capacities of Beihai BPG by
constructing a new production facility located in Baise city of the
Guangxi Region with annual capacity of approximately 40,000 tonnes.
The construction is expected to be substantially completed by the
end of 2011 with trial production expected to commence before
mid-2012.
Continued the construction of the Hunan Plantation with 427,000
summer orange trees planted during the year
Completed the share placement of 175,000,000 new ordinary shares
in December 2010
Recommended the final dividend of RMB0.10 and special dividend
of RMB0.03 per share. Together with the interim dividend of RMB0.02
(2010: RMBNil) per share, will make a total of RMB0.15 (2010:
RMB0.12) per share for the whole year ended 30 June 2011. This
equates to approximately 35.6% of the adjusted earnings excluding
fair value gain of biological assets.
Operational Highlights
Hepu Plantation
Fully developed with approximately 1.3 million orange trees, of
which 1.1 million are fruit-bearing trees
Production slightly decreased as expected by approximately 2.5%
to 123,711 tonnes (2009/10: 126,919 tonnes) due to the reduction in
the number of productive winter orange trees under the replanting
programme
Replanting programme underway with 63,584 winter trees replaced
during the year
The first batch of 55,185 summer orange trees replanted in 2007
commenced its first crop yielding approximately 646 tonnes
Xinfeng Plantation
Fully planted with 1.6 million winter orange trees, of which all
are producing
Production increased by approximately 55.3% to 93,181 tonnes
(2009/10: 60,019 tonnes)
Hunan Plantation
First batch of 427,000 summer orange trees planted
RMB286.7 million invested which mainly represents expenditure
for land clearing, land cultivation, planting costs and other
farmland infrastructure
Beihai BPG
Sold a total of approximately 20,653 tonnes of juice
concentrates, 3,616 tonnes of fruit purees and 9,634 tonnes of
frozen and dried fruits and vegetables for the seven months ended
30 June 2011
Tony Tong, Chairman, commented:
"During the year, we made very good progress in increasing the
volume of direct sales to supermarkets. The acquisition of Beihai
BPG is an important step for the Group in moving downstream and
provides the Group with better flexibility to meet the changing
needs of the consumer market and to explore other opportunities in
the agricultural sector. The acquisition of Beihai BPG brought the
Group an accretive effect to the earnings per share from
operations, thus creating better shareholders' value.
The Group aims to increase its production of high quality citrus
fruits through organic growth in production from its existing
plantations, the potential acquisition of high quality and sizeable
citrus plantations in China and the ongoing saplings program with
local farmers which will enable the Group to source high-quality
oranges without major capital expenditure. Apart from fresh citrus
products, the Group is considering the diversification of its
agricultural business into the production of tropical fruits which
will enhance the synergy with Beihai BPG, building on the Group's
successful track record and expertise in the agricultural industry
and extensive distribution network for fresh products.
The outlook for fruit juice consumption in China looks very
positive and the acquisition of Beihai BPG provides us with the
techniques, processing capacity and distribution network for
effective expansion into the concentrated juice market in the PRC.
The addition of new production capacity will strengthen the Group's
leading position in the juice concentrates market in China."
- ends -
For further information please contact:
Asian Citrus Holdings Limited Tel: +852 2559 0323
Tony Tong, Chairman and Chief Executive
Officer
Eric Sung, Finance Director
Weber Shandwick Financial Tel: 020 7067 0700
Nick Oborne, John Moriarty, Stephanie
Badjonat
Seymour Pierce Limited Tel: 020 7101 8000
Nandita Sahgal, Jonathan Wright (NOMAD)
Leti McManus, Richard Redmayne (Broking)
Chairman's Statement
I am very pleased to present the annual results of Asian Citrus
Holdings Limited (the "Company" or "Asian Citrus") and its
subsidiaries (collectively referred to as the "Group") for the year
ended 30 June 2011. For the year ended 30 June 2011, the Group's
revenue increased by approximately 73.9% from RMB812.5 million to
RMB1,412.6 million while the net profit increased by approximately
89.6% from RMB585.5 million to RMB1,110.0 million.
Strategic Overview
During the year ended 30 June 2011, the Group continued to
expand our direct sales of oranges to supermarket chains in China.
The Group supplied a total of 68,480 tonnes of oranges directly to
20 supermarket chains in most of the major cities and coastal
provinces in China. This represented an increase of approximately
12.0% from 61,157 tonnes sold directly to supermarket chains in the
previous year. The volume and revenue of sales to supermarkets
accounted for approximately 31.6% and 39.0% of the Group's
production and revenue from sales of oranges, respectively. We will
continue to expand our supermarket sales coverage with increased
volume and a wider customer base in the coming year.
The Group continues to mass produce self-bred saplings at both
the Hepu Plantation and Hunan Plantation. In addition to supplying
these saplings to these plantations under the replanting and the
new planting programmes, we sold approximately 620,000 saplings to
local farmers during the year. The continuous development of our
nursery function along with our sales of self-bred saplings
provides the Group with a long-term stable supply of high-quality
oranges as there are reciprocal agreements with the farmers which
offer the Group the first right to purchase their oranges.
Strict quality control and food safety of our products are
always a top priority. During the year, our Hepu and Xinfeng
Plantations both successfully achieved their annual renewal of the
"Organic Products" accreditation by the China Organic Food
Certification Center which evidences the outstanding quality of our
products.
The acquisition of our 92.94% equity interest in Beihai
Perfuming Garden Juice Co., Ltd. ("Beihai BPG") was completed on 30
November 2010 and this represents a major milestone for the Group
to expand into the concentrated juice market in China. In addition
to the existing production facilities of approximately 60,000
tonnes annual production capacity located in Beihai city and Hepu
county of Guangxi Zhuang Autonomous Region (the "Guangxi Region"),
we are currently expanding the production capacities of Beihai BPG
by establishing a new production facility in Baise city of the
Guangxi Region with an annual output capacity of approximately
40,000 tonnes. We expect to substantially complete the construction
of this new juicing plant by the end of 2011 and the trial
production is expected to commence before mid-2012.
Operating Review
There are approximately 1.3 million orange trees in the Hepu
Plantation of which approximately 1.1 million trees were producing
oranges during the year ended 30 June 2011. Production output for
the year was approximately 123,711 tonnes, representing a decrease
of approximately 2.5% over the previous year's production of
126,919 tonnes. This slight decrease was due mainly to the
reduction in the number of productive winter orange trees due to
the replanting programme, partially offset by the increase in
production from some of the winter orange trees as they become more
mature and the first crop from the summer orange trees replanted in
2007.
The Group's replanting programme in the Hepu Plantation is
ongoing and so far this year, 63,584 winter trees have been removed
and replanted with the same number of the new species of summer
orange trees. There are currently approximately 120,000 winter
orange trees at the Hepu Plantation, all of which are due to be
replaced over the next two years. We are very confident that the
replanting programme will deliver long term economic benefits by
increasing average yields and achievable revenue per tonne from the
improved species of summer oranges trees. The first batch of 55,185
orange trees replanted in 2007 commenced its first crop in the
summer of 2011, yielding approximately 646 tonnes of oranges. We
expect the later batches of replanted trees to commence their
production in the coming few years. As a result, the Hepu
Plantation will soon be producing increasing tonnage of summer
oranges benefiting from both the commencement of production from
the replanting programme and increasing maturity of the replanted
summer orange trees.
The Xinfeng Plantation is fully planted with 1.6 million winter
orange trees all of which were producing, albeit at different
stages of maturity. During the year they yielded approximately
93,181 tonnes of oranges, representing an increase of approximately
55.3% over the previous year's production of 60,019 tonnes. This
growth was mainly due to the increased production from the first
three batches of 1.2 million winter oranges trees, which are yet to
achieve full maturity, together with trial production from the
final batch of 400,000 trees.
During the year, the Group continued the construction of the
Hunan Plantation with an investment of approximately RMB185.7
million. As at 30 June 2011, approximately RMB286.7 million has
been invested in the Hunan Plantation. As of the date of this
report, 427,000 summer orange trees have been planted in the Hunan
Plantation and we expect the entire Hunan planting programme will
be completed by 2013.
Following its acquisition in November 2010, Beihai BPG continues
to deliver strong operational and financial results with optimal
utilisation of its production facilities. During the seven months
ended 30 June 2011, Beihai BPG sold a total of approximately 20,653
tonnes of juice concentrates, 3,616 tonnes of fruit purees and
9,634 tonnes of frozen and dried fruits and vegetables.
Share Placement
In December 2010, 175,000,000 new ordinary shares were placed at
HK$8.88 each, raising net proceeds of approximately HK$1,510
million. The proceeds have been used for paying the cash
consideration of HK$780 million in relation to the acquisition of
Beihai BPG, and will be used for financing the expansion of the
production capacity of Beihai BPG; and financing the corresponding
additional working capital requirement resulting from the expansion
of its production capacity.
Dividends
The Board recommends the payment of a final dividend of RMB0.10
and a special dividend of RMB0.03 per share for the financial year
ended 30 June 2011. Together with the interim dividend of RMB0.02
per share, this equates to approximately 35.6% of the adjusted
earnings excluding fair value gain of biological assets for the
year ended 30 June 2011 which the Board views as an appropriate
payout to provide shareholders with an attractive yield while
leaving the Group with sufficient capital for further developments.
The Company has decided to institute a Scrip Dividend Scheme
whereby shareholders will be offered the opportunity to elect to
receive the final and special dividend for the year ended 30 June
2011 in the form of shares. A document providing further details of
this Scrip Dividend Scheme will be sent to shareholders in due
course.
The final and special dividend, if approved at the Annual
General Meeting on 8 November 2011 will be paid in sterling or HK
Dollars on or before 30 December 2011, to shareholders on the
register on 11 November 2011, with an ex-dividend date of 10
November 2011 and 9 November 2011 on The Stock Exchange of Hong
Kong Limited and London Stock Exchange PLC, respectively. The
actual translation rate for the purpose of dividend payment in
sterling or HK Dollars will be determined by reference to the
exchange rate on 15 November 2011.
Corporate governance
Following the Company's listing on AIM of the London Stock
Exchange in 2005, we have consistently provided a return for our
shareholders by way of dividends and the dividend payout ratio has
always been 25% or more of the adjusted earnings excluding fair
value gain of biological assets for the respective financial
year.
In addition to the consistent dividend policy, the Group is
committed to protect our shareholders' interest by way of securing
proper titles over our major assets. We have properly secured the
land use rights for all our plantations by way of leasing contracts
in accordance with the PRC Rural Land Contracting Law. The Group is
also duly registered as the owners of the orange trees at the Hepu
Plantation and Xinfeng Plantation in accordance with the PRC
Property Law and the PRC Forestry Law. The Group will register its
ownership over the orange trees at the Hunan Plantation once the
construction work at the Hunan Plantation is completed.
Outlook
During the year, we made very good progress in increasing the
volume of direct sales to supermarkets. The acquisition of Beihai
BPG is an important step for the Group in moving downstream and
provides the Group with better flexibility to meet the changing
needs of the consumer market and to explore other opportunities in
the agricultural sector. The acquisition of Beihai BPG brought the
Group an accretive effect to the earnings per share from
operations, thus creating better shareholders' value.
The Group aims to increase its production of high quality citrus
fruits through organic growth in production from its existing
plantations, the potential acquisition of high quality and sizeable
citrus plantations in China and the ongoing saplings program with
local farmers which will enable the Group to source high-quality
oranges without major capital expenditure. Apart from fresh citrus
products, the Group is considering the diversification of its
agricultural business into the production of tropical fruits which
will enhance the synergy with Beihai BPG, building on the Group's
successful track record and expertise in the agricultural industry
and extensive distribution network for fresh products.
The outlook for fruit juice consumption in China looks very
positive and the acquisition of Beihai BPG provides us with the
techniques, processing capacity and distribution network for
effective expansion into the concentrated juice market in the PRC.
The addition of new production capacity will strengthen the Group's
leading position in the juice concentrates market in China.
On behalf of the Board, I would like to express my deepest
gratitude to the management and our employees for their dedication
and contributions to the growth of Asian Citrus. In addition, I
would also like to take this opportunity to thank all our
shareholders, business partners and investors for their continuous
support and care. We are very excited about our growth in both the
agricultural and processing businesses and we are confident that
Asian Citrus will continue to deliver value to its shareholders in
the context of continuing economic growth in China and the
increasing health consciousness of its people.
Tony Tong
Chairman
16 September 2011
Management Discussion and Analysis
OPERATING PERFORMANCE
Revenue
The breakdown of revenue by types is as follows:
For the year ended 30 June
2011 2010
% of % of
RMB'000 total revenue RMB'000 total revenue
Hepu Plantation 631,139 44.7% 583,649 71.8%
Xinfeng Plantation 330,988 23.4% 194,016 23.9%
--------- ------------- ------- -------------
Sale of oranges 962,127 68.1% 777,665 95.7%
Sale of processed fruit 417,393 29.5% - 0.0%
Sale of self-bred saplings 6,903 0.5% 7,056 0.9%
Sale of properties 26,198 1.9% 27,761 3.4%
--------- ------------- ------- -------------
Total revenue 1,412,621 100.0% 812,482 100.0%
The Group's revenue increased by approximately 73.9% from
RMB812.5 million to RMB1,412.6 million for the year ended 30 June
2011.
Sale of oranges
Revenue from sale of oranges grew by approximately 23.7% to
RMB962.1 million for the year ended 30 June 2011. This was achieved
by an increase of approximately 16.0% in the Group's production to
216,892 tonnes combined with an increase in the average selling
price of oranges in different plantations of approximately 10.0%
year on year.
The production yield from Hepu Plantation decreased by
approximately 2.5% to 123,711 tonnes for the year ended 30 June
2011 due to the ongoing replanting programme. In the previous year,
64,194 winter orange trees were removed and replanted with the same
number of the summer orange trees. As the orange trees continued to
mature and more trees reached orange-bearing age, the production
yield from the Xinfeng Plantation increased significantly by 55.3%
to 93,181 tonnes for the year ended 30 June 2011 from 60,019 tonnes
in the comparable year.
The following table sets out the average selling prices of
oranges in different plantations:
Year ended 30 June
2011 2010
RMB RMB
(per tonne) (per tonne)
Hepu Plantation
- Winter Oranges 3,922 3,567
- Summer Oranges 6,061 5,516
Xinfeng Plantation
- Winter Oranges 3,660 3,330
All of the Group's oranges were sold domestically. The Group's
customers for the sale of oranges can be divided into three
categories, namely corporate customers, wholesale customers, and
supermarket chains. The breakdown of the types of customers is as
follows:
For the year ended 30 June
2011 2010
% of sale of oranges
Types of customers
Supermarket chains 39.0% 40.8%
Corporate customers 30.5% 34.5%
Wholesale customers 30.0% 23.8%
Other 0.5% 0.9%
------------- -------------
Total 100.0% 100.0%
For the year ended 30 June 2011, the production volume and
revenue to supermarket chains represented approximately 31.6% and
39.0%, respectively, of the Group, compared to approximately 32.7%
and 40.8%, respectively, for the year ended 30 June 2010. For the
Hepu Plantation, the production volume and revenue to supermarket
chains increased to approximately 37.3% and 47.0%, respectively,
(2010: 35.7% and 45.6%). As the Xinfeng Plantation was still at the
early stage, the oranges were mainly sold to corporate and
wholesale customers, thereby reducing the percentage of sales to
supermarket chains.
For the Hepu Plantation and Xinfeng Plantation, the production
volume sold to supermarkets was 46,156 tonnes and 22,324 tonnes for
the year ended 30 June 2011, increased from 45,298 tonnes and
15,859 tonnes for the year ended 30 June 2010, respectively.
Sale of processed fruits
After the completion of acquisition of 92.94% equity interest of
Beihai BPG on 30 November 2010, the results of Beihai BPG have been
consolidated into the Group.
For the seven months ended 30 June 2011, the revenue from the
sale of processed fruits such as fruit juice concentrates, fruit
purees, frozen fruits and vegetables and dried fruits and beverages
was approximately RMB417.4 million.
The following table sets out the volume and revenue from the
sale of processed fruits:
For the year ended 30 June
2011 2010
Volume Revenue Volume Revenue
(Tonnes) RMB'000 (Tonnes) RMB'000
Pineapple juice concentrates 16,636 222,283 - -
Other fruit juice concentrates 4,017 87,340 - -
Fruit purees 3,616 25,783 - -
Frozen and dried fruits
and vegetables 9,634 81,987 - -
33,903 417,393 - -
Beihai BPG processes over 22 different types of tropical fruits,
including pineapples, passion fruit, lychees, mangoes and papayas.
Only single product accounting for over 10% of the revenue from the
sale of processed fruits is shown separately in the table
above.
The ultisation rate of two existing processing plants in Beihai
and Hepu is approximately 92.7% (2010: 89.9%) and 90.4% (2010:
84.5%) for the year ended 30 June 2011, respectively.
Beihai BPG currently generates most of its sales from the PRC
market, with key customers being beverage mixers supplying major
beverage groups.
Whilst tropical fruits juice concentrates and purees continue to
be its major product, Beihai BPG started to increase the production
of orange juice concentrate in December 2010 with revenue and sales
volume of RMB4.2 million and 241 tonnes, respectively, for the
seven months ended 30 June 2011.
Sale of self-bred saplings
For the year ended 30 June 2011, approximately RMB6.9 million
was recognised from the sale of approximately 620,000 self-bred
saplings to local farmers.
Sale of properties
In addition, the transfer of ownership and titles of 49
wholesale units of Phase I of the Xinfeng Development was completed
during the year ended 30 June 2011. The Group recognised revenue
and corresponding costs (excluding business tax and other relevant
taxes and charges that may be levied) of approximately RMB26.2
million and RMB13.7 million, respectively.
Cost of sales
The breakdown of cost of sales of the Group is as follows:
For the year ended 30 June 2011
2011 2010
% of % of
cost of sales cost of sales
of respective of respective
RMB'000 segment RMB'000 segment
Inventories used
Fertilisers 193,713 50.8% 164,613 51.2%
Packaging materials 42,907 11.2% 39,982 12.4%
Pesticides 32,010 8.4% 27,153 8.5%
------- -------------- ------- --------------
268,630 70.4% 231,748 72.1%
Production overheads
Direct labour 37,140 9.7% 30,855 9.6%
Depreciation 50,498 13.2% 49,637 15.4%
Others 25,481 6.7% 9,266 2.9%
------- -------------- ------- --------------
Cost of sales of oranges 381,749 100% 321,506 100%
------- -------
Fruit 205,920 74.8% - -
Packaging materials 18,136 6.6% - -
Direct labour 15,041 5.5% -
Other production overheads 36,196 13.1% - -
------- -------------- ------- --------------
Cost of sales of processed
fruits 275,293 100% - -
------- -------
Cost of sales of self-bred
saplings 3,235 2,262
Cost of sales of properties 13,742 20,337
------- -------
Total 674,019 344,105
Cost of sale of oranges principally consists of the costs of raw
materials such as fertilisers, packaging materials, pesticides and
other direct costs such as direct labour, depreciation and
production overheads. The production cost of oranges increased by
approximately 18.7% from RMB321.5 million to RMB381.7 million. The
increase in production costs was mainly due to an increase in raw
materials utilised for higher production volume and the trial
production of the final batch of 400,000 orange trees in Xinfeng
Plantation and the first batch of 55,185 orange trees replanted in
Hepu Plantation in 2007.
The unit cost of production in the Hepu Plantation maintained at
approximately RMB1.49 per kg for the year ended 30 June 2011 (2010:
RMB1.49 per kg).
The unit cost of production in the Xinfeng Plantation decreased
by 4.5% to approximately RMB2.12 per kg for the year ended 30 June
2011 (2010: RMB2.22 per kg) as a result of the better economies of
scale achieved from the increased maturity of the orange trees.
The combined unit cost of production increased by approximately
2.3% to RMB1.76 per kg from 1.72 per kg in the last year.
Cost of sales of processed fruits mainly includes the cost of
fruits and packaging materials and other direct costs such as
direct labour, depreciation and production overheads. For the seven
months ended 30 June 2011, the cost of sales of processed fruits
was approximately RMB275.3 million.
The fruit cost is the most significant part of our cost of
processed fruit. For the seven months ended 30 June 2011, the fruit
cost accounted for approximately 74.8% of the cost of processed
fruit. The packaging material, direct labor and other production
overhead accounted for approximately 6.6%, 5.5% and 13.1%,
respectively of the cost of processed fruit, for the seven months
ended 30 June 2011.
Gross profit
The Group's overall gross profit increased by approximately
57.7% to approximately RMB738.6 million for the year ended 30 June
2011 (2010: RMB468.4 million). The improvement in gross profit was
the result of an increase in the production output of orange of
approximately 16.0%, an increase in the average selling price of
oranges in different plantations year on year and the inclusion of
the seven months' gross profit of Beihai BPG of RMB142.1
million.
The following table sets out a breakdown of the Group's gross
profit margin by plantation:
For the year ended 30 June
2011 2010
Hepu Plantation 70.9% 67.7%
Xinfeng Plantation 40.2% 31.3%
The following table sets out a breakdown of the Group's gross
profit margin by business:
For the year ended 30 June
2011 2010
Sale of oranges 60.3% 58.7%
Sale of processed fruits 34.0% N/A
Sale of self-bred saplings 53.1% 67.9%
Sale of properties 47.5% 26.7%
------------- -------------
Overall gross profit margin 52.3% 57.6%
The gross profit margin of the Hepu Plantation increased to
approximately 70.9% (2010: 67.7%) as a result of the higher average
selling price achieved but partially offset by the decrease of the
production volume of winter oranges as a result of the ongoing
replanting programme.
The Xinfeng Plantation, benefiting from trees continuing to
mature and an increase in the number of trees reaching orange
bearing age, saw the gross profit margin rising to approximately
40.2% for the year ended 30 June 2011 (2010: 31.3%). As a result of
the continuous growth in production volume and better economies of
scale, we expect the gross profit margin of the Xinfeng Plantation
will continue to grow over the medium term.
Combined the above, the overall gross profit margin from sale of
oranges slightly increased to approximately 60.3% (2010: 58.7%) for
the year ended 30 June 2011.
Beihai BPG processes over 22 different types of fruit with
different profit margin. The normalised profit margin of Beihai BPG
for the seven months ended 30 June 2011 was 34.0%.
Gain on change in fair value of biological assets
The Group recorded a gain of approximately RMB598.0 million from
changes in fair value of biological assets for the year ended 30
June 2011, compared to a gain of RMB306.0 million for the last
year. The increase was mainly due to the higher average selling
price of the oranges achieved by the Group and the transfer of
455,185 infant trees to orange trees and the increased maturity of
orange trees in Xinfeng Plantation during the year.
Selling and distribution expenses
Selling and distribution expenses mainly comprise sales
commissions, advertising, salaries and welfare of sales personnel,
traveling and transportation expenses. The selling and distribution
expenses of the Group increased from approximately RMB45.5 million
for the year ended 30 June 2010 to approximately RMB63.3 million
for the year ended 30 June 2011, representing an increase of
approximately 39.1%, mainly resulting from the increased sale
activities in Xinfeng Plantation and Beihai BPG.
Selling and distribution expenses represented 4.5% of the
Group's revenue, a decrease of 1.1 percentage points as compared to
5.6% year-on-year, demonstrating that the Group was able to control
cost effectively amid rapid business expansion.
General and administrative expenses
General and administrative expenses comprise mainly salary,
office administration expenses, depreciation, amortisation, raw
material utilised for infant trees and research costs. The general
and administrative expenses of the Group were approximately
RMB161.6 million for the year ended 30 June 2011 (2010: RMB143.3
million), representing an increase of approximately 12.8%. The
increase was mainly due to an increase in share based payment of
approximately RMB37.3 million in relation to the employee share
option scheme, more raw materials amounting to approximately
RMB21.8 million utilised for the infant trees replanted in Hepu
Plantation and the first batch of 427,400 infant trees planted in
Hunan Plantation during the year and inclusion of the general and
administrative expenses amounting to approximately RMB11.1 million
of Beihai BPG.
The increase was partially offset by less raw materials amounted
to approximately RMB45.9 million being utilised for the infant
trees in Xinfeng Plantation as all trees became fruit bearing
during the year and there was no one-off listing expenses of
approximately RMB16.3 million this year.
General and administrative expenses represented 11.4% of the
Group's revenue, a decrease of 6.2 percentage points as compared to
17.6% year-on-year, demonstrating the Group's ability to achieve
economies of scale after acquisition of Beihai BPG.
Profit
The profit attributable to shareholders for the year ended 30
June 2011 increased to approximately RMB1,110.0 million, compared
to approximately RMB585.5 million for 2010, representing an
increase of approximately 89.6%.
The profit attributable to shareholders excluding the biological
gain for the year ended 30 June 2011 was approximately RMB512.0
million, compared to approximately RMB279.5 million for 2010,
representing an increase of approximately 83.2%.
The increase was mainly attributable to an increase in
production volume of oranges, the increase in average selling price
of oranges in different plantations year on year, the results of
Beihai BPG having been consolidated into the Group after the
completion of acquisition of 92.94% equity interest of Beihai BPG
by the Group on 30 November 2010 and the net gain on change in fair
value of the biological assets.
Final and Special Dividend
The Directors are pleased to recommend that a final dividend of
RMB0.10 and a special final of RMB0.03 (2010: RMB0.10, special
dividend of RMB0.02) per share. The final and special dividend,
together with the interim dividend of RMB0.02 (2010: RMB Nil) per
share, will make a total of RMB0.15 (2010: RMB0.12) per share for
the whole year ended 30 June 2011. This equates to approximately
35.6% of the adjusted earnings excluding fair value gain of
biological assets for the year.
Productivity
The increasing maturity of the oranges trees together with
effective managerial planning and production supervision, have led
to productivity gains.
For the year ended 30 June
2011 2010
% of % of
Types of produce Tonnes Total output Tonnes total output
Winter oranges 143,698 66.3% 114,530 61.3%
Summer oranges 73,194 33.7% 72,408 38.7%
------- -------
Total 216,892 186,938
The production volume of winter oranges increased to 143,698
tonnes for the year ended 30 June 2011, representing an increase of
approximately 25.5%. The production volume of winter oranges in
Hepu Plantation decreased by approximately 7.3% from 54,511 tonnes
for the year ended 30 June 2010 to 50,517 tonnes for the year ended
30 June 2011 due to the replanting programme. With the increased
maturity and more trees becoming fruit bearing during the year, the
production volume of winter oranges from Xinfeng Plantation
increased significantly by approximately 55.3% to 93,181 tonnes for
the year ended 30 June 2011 from 60,019 tonnes in the last
year.
The production volume of summer oranges increased slightly to
73,194 tonnes for the year ended 30 June 2011 (2010: 72,408
tonnes).
Capital Structure
As at 30 June 2011, there were 1,215,156,963 shares in issue.
Based on the closing price of HK$7.07 as at 30 June 2011, the
market capitalisation of the Company was approximately HK$8,591.2
million (GBP688.7 million).
Human Resources
There were a total of 1,730 employees of the Group as at 30 June
2011. The Group aims to attract, retain and motivate high calibre
individuals with a competitive remuneration package. Remuneration
packages are performance-linked and business performance, market
practices and competitive market conditions are all taken into
consideration. The Group reviews the employees' remuneration
packages on an annual basis. The Group also places heavy emphasis
on staff training and development so that employees can reach their
maximum potential.
Financial Performance
30 June 2011 30 June 2010
Current ratio (x) 41.05 21.33
Quick ratio (x) 37.83 19.21
Asset turnover (x) 0.18 0.21
Basic earnings excluding revaluation
from biological assets per share (RMB) 0.49 0.35
Basic earnings per share (RMB) 1.06 0.74
Net debt to equity (%) Net cash Net cash
Liquidity
The current ratio and quick ratio was approximately 41.05 and
37.83, respectively. The liquidity of the Group remained healthy
with sufficient reserves for both current operation and future
development.
Profitability
The asset turnover of the Group dropped to approximately 0.18
(2010: 0.21) for the year ended 30 June 2011 as we only
consolidated seven months' result of Beihai BPG during the
year.
Basic earnings per share for the year ended 30 June 2011 was
approximately RMB1.06 (2010: RMB0.74).
Basic earnings excluding biological gain per share for the year
ended 30 June 2011 increased to approximately RMB0.49 (2010:
RMB0.35).
Debt ratio
The net cash positions of the Group were approximately
RMB2,232.2 million and RMB975.1 million at 30 June 2011 and 2010,
respectively.
Internal cash resource
The Group's major internal cash resource is its cash and cash
equivalents. The Group did not have any outstanding bank borrowings
as at 30 June 2011.
Charge on assets and contingent liabilities
None of the Group's assets were pledged and the Group did not
have any material contingent liabilities as at 30 June 2011.
Capital Commitments
As at 30 June 2011, the Group had capital commitments of
approximately RMB149.0 million mainly in relation to the
construction of the farmland infrastructure in the Hunan Plantation
and the new juicing plant in Baise city.
Foreign exchange risk
The Group is exposed to currency risk primarily through its cash
and cash equivalents that are denominated in a currency other than
the functional currency of the operation to which they related. The
currencies giving rise to this risk are primarily Hong Kong
dollars, United States dollars and British pounds.
The Group undertakes certain transactions denominated in foreign
currencies, hence exposures to exchange rate fluctuation arise. The
Group currently does not use any derivative contracts to hedge
against its exposure to currency risk. Management manages its
currency risk by closely monitoring the movement of the foreign
currency rate and considers hedging significant foreign currency
exposure should the need arise.
Plantations
The Group has three orange plantations in the PRC occupying in
total approximately 155,000 mu (equivalent to approximately 103.3
sq.km.) of land, with approximately 46,000 mu (equivalent to
approximately 30.7 sq.km.) Hepu Plantation located in the Hepu
county of the Guangxi Zhuang Autonomous Region, approximately
56,000 mu (equivalent to approximately 37.3 sq.km.) Xinfeng
Plantation in the Xinfeng county of the Jiangxi province and
approximately 53,000 mu (equivalent to approximately 35.3 sq.km) in
the Dao county of the Hunan province.
Hepu Plantation
The Hepu Plantation is fully planted and comprises approximately
1.3 million orange trees and in which, approximately 1.1 million
trees were producing oranges during the year ended 30 June 2011.
During the year, 63,584 winter orange trees were removed and the
same number of summer orange trees were replanted due to the
ongoing replanting programme.
Xinfeng Plantation
The Xinfeng Plantation is fully planted and comprises 1.6
million winter orange trees and all of which are now producing
oranges during the year ended 30 June 2011.
Hunan Plantation
The Hunan Plantation is still under development and 427,400
summer orange trees were planted during the year ended 30 June
2011.
The below table sets out the age profile as at 30 June 2011 and
the production volume of the plantations for the year ended 30 June
2011:
Summer Orange Trees
Hepu Hunan
Hepu Plantation Hunan Plantation
Age Plantation Yield Plantation Yield Total Total Yield
No. of No. of No. of
trees (tonnes) trees (tonnes) trees (tonnes)
0 63,584 - 427,400 - 490,984 -
1 64,194 - - - 64,194 -
2 81,261 - - - 81,261 -
3 76,135 - - - 76,135 -
4 55,185 646 - - 55,185 646
14 29,996 2,775 - - 29,996 2,775
15 128,966 15,552 - - 128,966 15,552
16 186,003 23,676 - - 186,003 23,676
17 223,741 30,545 - - 223,741 30,545
909,065 73,194 427,400 - 1,336,465 73,194
Winter orange trees
Hepu Xinfeng
Hepu Plantation Xinfeng Plantation Total
Age Plantation Yield Plantation Yield Total Yield
No. of No. of No. of
trees (tonnes) trees (tonnes) trees (tonnes)
4 - - 400,000 3,600 400,000 3,600
5 - - 400,000 23,200 400,000 23,200
6 46,077 1,935 400,000 28,800 446,077 30,735
8 180,180 17,742 400,000 37,581 580,180 55,323
9 42,300 4,221 - - 42,300 4,221
14 91,386 23,107 - - 91,386 23,107
15 10,133 1,536 - - 10,133 1,536
16 12,988 1,976 - - 12,988 1,976
383,064 50,517 1,600,000 93,181 1,983,064 143,698
Grand
total 3,319,529 216,892
The below table sets out the age profile as at 30 June 2010 and
the production volume of the plantations for the year ended 30 June
2010:
Summer Orange Trees
Hepu Plantation
Age Hepu Plantation Yield Total Total Yield
No. of trees (tonnes) No. of trees (tonnes)
0 64,194 - 64,194 -
1 81,261 - 81,261 -
2 76,135 - 76,135 -
3 55,185 - 55,185 -
13 29,996 2,649 29,996 2,649
14 128,966 14,969 128,966 14,969
15 186,003 23,646 186,003 23,646
16 223,741 31,144 223,741 31,144
845,481 72,408 845,481 72,408
Winter orange trees
Hepu Xinfeng
Hepu Plantation Xinfeng Plantation Total
Age Plantation Yield Plantation Yield Total Yield
No. of No. of No. of
trees (tonnes) trees (tonnes) trees (tonnes)
3 - - 400,000 - 400,000 -
4 - - 400,000 4,009 400,000 4,009
5 46,077 1,228 400,000 23,195 446,077 24,423
7 180,180 12,766 400,000 32,815 580,180 45,581
8 42,300 3,996 - - 42,300 3,996
13 154,970 32,940 - - 154,970 32,940
14 10,133 1,590 - - 10,133 1,590
15 12,988 1,991 - - 12,988 1,991
446,648 54,511 1,600,000 60,019 2,046,648 114,530
Grand
total 2,892,129 186,938
Valuation Of Bological Assets
The Group has engaged Vigers Appraisal & Consulting Limited
("Vigers"), an independent valuer, to determine the fair value of
the orange trees less estimated point-of-sale costs as at 30 June
2011.
The valuations of the Group's orange trees were conducted on the
basis of discounted cash flow. The discount rate being applied to
the discounted cash flow model is based on Capital Asset Pricing
Model. Vigers begins with the appraised value of the Group's orange
trees by discounting the future income streams attributable to the
Group's orange trees to arrive at a present value and deducts the
tangible assets (including plantation related machinery and
equipment and land improvements) from the appraised value which are
employed in the operation of the Group's plantations.
Vigers conducted inspections of the plantations and performed
sample counts on the oranges trees in connection with their
valuation exercise of the Group's orange trees.
Major Assumptions
The discounted cash flow method adopted a number of key
assumptions, which include the discount rate, market prices of
oranges, production yield per tree, related production costs, etc.
The values of such variables are determined by Vigers using
information supplied by the Group, as well as proprietary and
third-party data, as follows:
1) The discount rate applied for the year ended 30 June 2011 was
20.0% (2010: 19.8%). The discount rate reflected the expected
market return on the asset and can be affected by the interest
rate, market sentiments and risk of the asset versus the general
market risk.
2) The yield per tree variables represent the harvest level of
the orange trees. The yield of orange trees is affected by the age,
species and health of the orange trees, the climate, location, soil
conditions, topography and infrastructure. In general, yield per
tree increases from age 3 to 10, remains stable for about 22 years,
and then decreases until age 35. Vigers' agricultural consultant
estimates that the yield per tree based on field inspection of
general growth conditions of orange trees and average yield data of
typical orange plantations in the PRC.
3) The market prices variables represent the assumed market
price for the Summer Oranges and Winter Oranges produced by the
Group. Vigers adopted the market sales prices prevailing as of the
relevant balance sheet date for each type of orange produced by the
Group as the sales price estimate. Such estimation was based on
real terms without considering inflationary effect and planned
future business activity that may impact the future prices of
oranges harvested from the Group's plantations. The selling prices
of winter oranges and summer oranges from the Hepu Plantation and
winter oranges from the Xinfeng Plantation adopted were RMB3,230
per tonne, RMB5,300 per tonne and RMB3,660 per tonne, respectively,
for the year ended 30 June 2011 and RMB2,990 per tonne, RMB4,830
per tonne and RMB3,330 per tonne, respectively, for the year ended
30 June 2010.
4) The direct production cost variables represent the direct
costs necessary to bring the oranges to their sales form, which
mainly include raw material costs and direct labour costs. The
direct production cost variables are determined by reference to
actual costs incurred for areas that have been previously harvested
and cost information for comparable areas with regards to areas
that have not been harvested previously. Vigers applied direct
production costs of 34% (2010: 32% to 37%) and 34% to 55% (2010:
32% to 77%) of sale of oranges for the Hepu Plantation and the
Xinfeng Plantation, respectively, during the year ended 30 June
2011.
Sensitive Analysis
1) Changes in the discount rate applied result in significant
fluctuations in the Group's gain from changes in fair value of
orange trees less estimated point-of-sale costs. The following
table illustrates the sensitivity of the Group's gain from changes
in fair value of orange tree less estimated point-of-sale costs to
increases or decreases by 100 basis points in the discount rate of
20.0% applied by Vigers for the year ended 30 June 2011:
100 basis points 100 basis points
Decrease Base Case Increase
Discount rate 19.0% 20.0% 21.0%
Net gain on change in fair
value of biological assets
(RMB'000) 747,000 598,000 461,000
2) Changes in the yield per orange tree can also result in
significant fluctuations in gain from changes in fair value of
orange trees less estimated point-of-sale costs. The following
table illustrates that sensitivity of the Group's gain from changes
in fair value of orange trees less estimated point-of-sale costs to
5.0% increase or decrease in the yield per tree applied for the
year ended 30 June 2011:
5.0% Decrease Base Case 5.0% Increase
Net gain on change in fair
value of biological assets
(RMB'000) 455,000 598,000 742,000
3) Changes in assumed market prices of the oranges can also
result in significant fluctuations in gain from changes in fair
value of orange trees less estimated point-of-sale costs. The
following table illustrates the sensitivity of the Group's gain
from changes in fair value of orange trees less estimated
point-of-sale costs to 5.0% increase or decrease in the assumed
market prices of oranges as at 30 June 2011 used to calculate gain
from changes in fair value of orange trees less estimated
point-of-sale costs for the year ended 30 June 2011:
5.0% Decrease Base Case 5.0% Increase
Net gain on change in fair
value of biological assets
(RMB'000) 467,000 598,000 730,000
4) Changes in the assumed direct production costs can also
result in significant fluctuations in gain from changes in fair
value of orange trees less estimated point-of-sale costs. The
following table illustrates the sensitivity of the Group's gain
from changes in fair value of orange trees less estimated
point-of-sale costs to 5.0% increases or decreases in the Group's
assumed direct production costs used to calculate gain from changes
in fair value of orange trees less estimated point-of-sale costs
for the year ended 30 June 2011:
5.0% Decrease Base Case 5.0% Increase
Net gain on change in fair
value of biological assets
(RMB'000) 706,000 598,000 491,000
The above sensitivity analyses are intended for illustrative
purposes only, and any variation could exceed the amounts shown
above.
Valuation
According to the valuation report of Vigers, the aggregate value
of the orange trees in the Hepu Plantation and Xinfeng Plantation
as at 30 June 2011 was estimated to be approximately RMB2,045
million (2010: RMB1,443 million).
Consolidated Income Statement
For the year ended 30 June 2011
2011 2010
Note RMB'000 RMB'000
Turnover 4 1,412,621 812,482
Cost of sales (674,019) (344,105)
--------- --------
Gross profit 738,602 468,377
Other income 9,787 1,845
Net gain on change in fair value of
biological assets 598,000 306,000
Selling and distribution expenses (63,314) (45,502)
General and administrative expenses (161,621) (143,318)
--------- --------
Profit from operations 1,121,454 587,402
Finance costs (177) (81)
--------- --------
Profit before income tax 6 1,121,277 587,321
Income tax expense 7 (1,785) (1,854)
--------- --------
Profit for the year 1,119,492 585,467
Attributable to
Equity shareholders of the Company 1,109,992 585,467
Non-controlling interest 9,500 -
--------- --------
1,119,492 585,467
RMB RMB
Earnings per share 8
- Basic 1.056 0.741
- Diluted 1.050 0.735
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2011
2011 2010
RMB'000 RMB'000
Profit for the year 1,119,492 585,467
Other comprehensive income for the year
Exchange differences on translation of financial
statements of foreign operations, net of Nil
tax 901 -
Total comprehensive income for the year 1,120,393 585,467
Attributable to
Equity shareholders of the Company 1,110,893 585,467
Non-controlling interest 9,500 -
1,120,393 585,467
Consolidated Statement of Financial Position
At 30 June 2011
2011 2010
Note RMB'000 RMB'000
ASSETS
Non-current assets
Property, plant and equipment 1,638,339 1,161,437
Land use rights 69,889 54,841
Construction-in-progress 70,611 64,328
Biological assets 2,055,298 1,449,565
Intangible assets 53,287 36,800
Interest in an associate - -
Deposits 114,500 -
Goodwill 1,157,261 -
5,159,185 2,766,971
Current assets
Biological assets 145,561 90,221
Properties for sale 5,830 18,497
Inventories 46,407 841
Trade and other receivables 10 96,503 19,629
Cash and cash equivalents 2,232,203 975,074
2,526,504 1,104,262
Total assets 7,685,689 3,871,233
2011 2010
Note RMB'000 RMB'000
EQUITY AND LIABILITIES
Equity
Share capital 12,030 8,767
Reserves 7,523,764 3,810,687
Total equity attributable to equity
shareholders of the Company 7,535,794 3,819,454
Non-controlling interest 87,310 -
7,623,104 3,819,454
Non-current liability
Obligations under finance leases 1,034 -
Current liabilities
Trade and other payables 11 58,461 44,391
Due to a related party 3,000 7,110
Obligations under finance leases 90 -
Income tax payable - 278
61,551 51,779
Total liabilities 62,585 51,779
Total equity and liabilities 7,685,689 3,871,233
Net current assets 2,464,953 1,052,483
Total assets less current liabilities 7,624,138 3,819,454
Consolidated Cash Flow Statement
For the year ended 30 June 2011
2011 2010
RMB'000 RMB'000
Cash flows from operating activities
Profit before income tax 1,121,277 587,321
Adjustments for:
Interest income (7,308) (1,845)
Finance costs 177 81
Depreciation 94,830 68,492
Share-based payments 47,715 10,363
Amortisation of land use rights 1,312 1,244
Amortisation of intangible assets 5,562 2,400
Loss on disposal of property, plant and
equipment 148 -
Net gain on change in fair value of
biological assets (598,000) (306,000)
--------- --------
Operating profit before working capital changes 665,713 362,056
Movements in working capital elements:
Properties for sale 12,667 19,656
Inventories (23,979) (202)
Biological assets (55,340) (35,583)
Trade and other receivables 34,885 (4,728)
Trade and other payables (10,623) (4,344)
Due to a related party (4,110) 4,356
--------- --------
Cash generated from operations 619,213 341,211
Income tax paid (2,063) (1,883)
--------- --------
Net cash generated from operating activities 617,150 339,328
--------- --------
Cash flows from investing activities
Proceeds from disposal of property plant and
equipment 46 -
Purchase of property, plant and equipment (8,832) (1,698)
Additions to construction-in-progress (201,976) (133,822)
Deposits paid for acquisition of property,
plant and equipment (21,538) -
Net addition to biological assets (7,733) (1,540)
Additions to intangible assets (6,600) (8,500)
Increase in time deposits with terms over three
months (166,000) -
Interest received 7,308 1,845
Acquisition of subsidiaries (161,083) -
--------- --------
Net cash used in investing activities (566,408) (143,715)
--------- --------
2011 2010
RMB'000 RMB'000
Cash flows from financing activities
Proceeds from issue of new shares from
placement, net of shares issuance costs 1,284,621 328,375
Proceeds from issue of new shares upon exercise
of share options 30,893 10,138
Obligations under finance leases 1,124 -
Repayment of amount due to a shareholder (213,788) -
Dividends paid (62,286) (20,212)
Finance costs paid (177) (81)
--------- -------
Net cash generated from financing activities 1,040,387 318,220
--------- -------
Net increase in cash and cash equivalents 1,091,129 513,833
Cash and cash equivalents at beginning of year 975,074 461,241
--------- -------
Cash and cash equivalents at end of year 2,066,203 975,074
Major non-cash transactions
During the year, additions to construction-in-progress included
an amount of RMB47,388,000 transferred from the non-current
deposits.
Notes To The Consolidated Financial Statements
1 GENERAL INFORMATION
Asian Citrus Holdings Limited (the "Company") was incorporated
in Bermuda on 4 June 2003 as an exempted company with limited
liability under the Companies Act of Bermuda and its shares are
listed on the Main Board of the Stock Exchange Hong Kong Limited
(the "HKEx"), AIM of the London Stock Exchange and PLUS Markets
plc.
The address of the registered office of the Company is Clarendon
House, 2 Church Street, Hamilton, HM11, Bermuda. The principal
place of business of the Company is located at Rooms 1109 - 1112,
Wayson Commercial Building, 28 Connaught Road West, Hong Kong.
The principal activities of the Company and its subsidiaries
(together the "Group") are planting, cultivation and sale of
agricultural produce, manufacture and sale of fruit juice
concentrates, fruit purees, frozen fruits and vegetables, and
developing and sale of property units in an agricultural wholesale
market and orange processing centre.
2 SIGNIFICANT ACCOUNTING POLICIES
a) Statement of compliance
These consolidated financial statements have been prepared in
accordance with all applicable International Financial Reporting
Standards ("IFRSs"), which comprise International Financial
Reporting Standards, International Accounting Standards ("IAS") and
Interpretations, issued by the International Accounting Standards
Board ("IASB") and the International Financial Reporting
Interpretations Committee, and the disclosure requirements of the
Hong Kong Companies Ordinance. The consolidated financial
statements also comply with the applicable disclosure provisions of
the Rules Governing the Listing of Securities on the HKEx and the
AIM Rules.
The IASB has issued certain new and revised IFRSs that are first
effective or available for early adoption for the current
accounting period of the Group. Note 3 provides information on any
changes in accounting policies resulting from initial application
of these developments to the extent that they are relevant to the
Group for the current and prior accounting periods reflected in
these consolidated financial statements.
b) Basis of preparation of the consolidated financial
statements
These consolidated financial statements are presented in
Renminbi ("RMB"), which is also the functional currency of the
Group, rounded to the nearest thousand, unless otherwise stated.
They have been prepared under the historical cost convention, as
modified by the revaluation of biological assets which are carried
at their fair values.
The preparation of consolidated financial statements in
conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies
and reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
3 CHANGES IN ACCOUNTING POLICIES
The IASB has issued one new IFRS, a number of amendments to
IFRSs and new Interpretations that are first effective for the
current accounting period of the Group and the Company. Of these,
the following developments are relevant to the Group's consolidated
financial statements:
Amendments to IFRS 2 "Share-based Payment - Group Cash-settled
Share-based Payment Transactions"
Improvements to IFRSs (2009)
Amendments to IFRSs contained in Improvements to IFRSs (2010)
and effective for accounting periods on or after 1 July 2010
The above amendments to IFRSs have had no material impact on the
Group's results of operations and financial position, or do not
contain any additional disclosure requirements specifically
applicable to the consolidated financial statements.
Up to the date of issue of the consolidated financial
statements, the IASB has issued a number of amendments, new
standards and interpretations which are not yet effective for the
year ended 30 June 2011 and which have not been adopted in the
consolidated financial statements. Of these developments, the
following relate to matters that may be relevant to the Group's
operations and consolidated financial statements:
Effective for
accounting periods
beginning on
or after
IAS 24 (revised 2009), Related party disclosures 1 January 2011
Amendments to IFRSs contained in Improvements to 1 January 2011
IFRSs (2010)
IFRS 9, Financial instruments 1 January 2013
Amendments to IAS 12, Income taxes 1 January 2012
Amendments to IAS 1, Presentation of financial 1 July 2012
statements
IAS 27 (2011), Separate consolidated financial 1 January 2013
statements
IFRS 10, Consolidated financial statements 1 January 2013
IFRS 12, Disclosure of interests in other entities 1 January 2013
IFRS 13, Fair value measurement 1 January 2013
The directors have confirmed that the Group is in the process of
making an assessment of what the impact of these amendments and new
standards is expected to be in the period of initial application.
So far it has concluded that their adoption is unlikely to have a
significant impact on the Group's results or financial
position.
4 TURNOVER
Turnover represented the total invoiced value of goods supplied
to customers and completed property units delivered to buyers. The
amount of each significant category of revenue recognised in
turnover is as follows:
2011 2010
RMB'000 RMB'000
Sales of oranges 962,127 777,665
Sales of self-bred saplings 6,903 7,056
Sales of processed fruits 417,393 -
Sales of property units 26,198 27,761
1,412,621 812,482
5 SEGMENT INFORMATION
The Group manages its business by lines of business. 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
resources allocation and performance assessment. The Group has
three reportable segments. The segments are managed separately as
each business offers different products and requires different
business strategies. The following summary describes the operations
in each of the Groups reportable segment:
Agricultural produce - planting, cultivation and sale of
agricultural produce
Processed fruits - manufacture and sale of fruit juice
concentrates, fruit purees, frozen fruits and vegetables
Others - developing and sale of property units in an
agricultural wholesale market and orange processing centre
Following the completion of acquisition of BPG Food &
Beverage Holdings Ltd. ("BPG Food & Beverage") and its
subsidiaries (together the "BPG group") on 30 November 2010, the
Group has expanded its business into processed fruits
operation.
No inter-segment transactions incurred within the Group
companies.
No customer accounted for 10% or more of the total revenue for
the both years.
As majority of the Group's non-current assets and revenue are
located in / derived from the PRC, geographical information is not
presented.
The directors assess the performance of the operating segments
based on a measure of reportable segment results. This measurement
basis excludes the central other income, expenses and finance
costs.
Segment assets mainly exclude goodwill, certain property, plant
and equipment land use rights and other assets that are managed on
a central basis. Segment liabilities mainly exclude liabilities
that are managed on a central basis.
Agricultural
produce Processed fruits Others Total
2011 2010 2011 2010 2011 2010 2011 2010
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
RESULTS
Reportable
segment
revenue and
revenue from
external
customers 969,030 784,721 417,393 - 26,198 27,761 1,412,621 812,482
Reportable
segment
results 1,042,192 625,115 131,845 - 6,035 2,707 1,180,072 627,822
Unallocated
corporate
expenses (63,073) (40,667)
Unallocated
corporate
other
revenue 4,278 166
Profit before
income tax 1,121,277 587,321
Income tax
expense (1,785 ) (1,854 )
Profit for
the year 1,119,492 585,467
ASSETS
Segment
assets 4,308,483 3,377,498 1,341,034 - 158,962 165,624 5,808,479 3,543,122
Unallocated
corporate
assets 1,877,210 328,111
Total assets 7,685,689 3,871,233
LIABILITIES
Segment
liabilities (40,244) (36,170) (17,268) - (2,687) (13,599) (60,199 ) (49,769 )
Unallocated
corporate
liabilities (2,386 ) (2,010 )
Total
liabilities (62,585 ) (51,779 )
OTHER
INFORMATION
Additions to
segment
non-current
assets 236,521 137,604 28,197 - - 307 264,718 137,911
Amortisation
of land use
rights - - 70 - 1,054 1,053 1,124 1,053
Amortisation
of
intangible
assets 4,383 2,400 1,179 - - - 5,562 2,400
Depreciation 62,468 62,195 21,320 - 702 666 84,490 62,861
Gain/(loss)
on disposal
of property,
plant and
equipment 46 - (152 ) - - - (106 ) -
Interest
income 2,740 1,444 1,694 - 300 235 4,734 1,679
Finance
charges on
obligations
under
finance
lease (96 ) - - - - - (96 ) -
Net gain or
charge in
fair value
of
biological
assets 598,000 306,000 - - - - 598,000 306,000
Share-based
payments (19,569 ) (6,126 ) (11,172 ) - - - (30,741 ) (6,126)
6 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting)
the following:
2011 2010
RMB'000 RMB'000
(a) Finance costs
Bank charges 81 81
Finance charges on obligations under
finance leases 96 -
--------- ---------
177 81
Staff costs (including directors'
(b) emoluments)
- salaries, wages and other benefits 73,498 45,632
- share-based payments 47,715 10,363
- contributions to defined contribution
retirement plans 1,561 631
--------- ---------
122,774 56,626
(c) Other items
Amortisation of land use rights 1,312 1,244
Amortisation of intangible assets 5,562 2,400
Auditor's remuneration 1,755 1,319
Cost of agricultural produce sold(#) 384,984 321,506
Cost of property units sold 13,742 20,337
Cost of inventories of processed
fruits
recognised as expenses(##) 275,293 -
Depreciation of property, plant and
equipment 94,830 68,492
Add: Realisation of depreciation
previously capitalised as
biological assets 12,746 8,021
Less: Amount capitalised as biological
assets (22,796 ) (13,332 )
--------- --- --------- ---
84,780 63,181
Exchange losses, net 10,475 1,277
Operating lease expenses
- plantation base 8,641 7,410
- properties 941 775
Research and development costs 8,164 5,795
Loss on disposal of property, plant 148 -
and equipment
(#) Cost of agricultural produce sold includes RMB96,330,000
(2010: RMB87,205,000) relating to staff costs, depreciation and
operating lease expenses, which amount is also included in the
respective total amount disclosed separately above for each of
these types of expenses.
(##) Cost of inventories of processed fruits recognised as
expenses includes RMB35,615,000 relating to staff costs,
amortisation of land use rights, amortisation of intangible assets
and depreciation, which amount is also included in the respective
total amount disclosed separately above for each of these types of
expenses.
7 INCOME TAX EXPENSE
Income tax expense in the consolidated income statement
represents:
2011 2010
RMB'000 RMB'000
Current tax
PRC enterprise income tax
- Provision for the year 983 1,041
Land appreciation tax
- Provision for the year 802 813
--------- ---------
1,785 1,854
i) Pursuant to the rules and regulations of Bermuda, Cayman
Islands and the British Virgin Islands ("BVI"), the Group is not
subject to any income tax in Bermuda, Cayman Islands and the
BVI.
ii) No Hong Kong profits tax has been provided as the Group did
not have assessable profit arising in or derived from Hong
Kong.
iii) The provision for PRC enterprise income tax is based on the
respective applicable rates on the estimated assessable income of
the Group's subsidiaries in the PRC as determined in accordance
with the relevant income tax laws, rules and regulations of the
PRC.
According to the PRC tax law, its rules and regulations,
enterprises that engage in certain qualifying agricultural business
are eligible for certain tax benefits, including full enterprise
income tax exemption on profits derived from such business. Certain
operating subsidiaries of the Group in the PRC engaged in
qualifying agricultural business are entitled to full exemption of
enterprise income tax.
The applicable enterprise income tax rate of the Group's other
operating subsidiaries in the PRC is 25%.
iv) Land appreciation tax is levied at progressive rates ranging
from 30% to 60% on the appreciation of land value, being the
proceeds of sales of properties less deductible expenses including
costs for land use rights and all property development
expenses.
v) PRC withholding income tax
Under the PRC tax law, profits of the Group's subsidiaries in
the PRC derived since 1 January 2008 is subject to withholding
income tax at rates of 5% or 10% upon the distribution of such
profits to foreign investors or companies incorporated in Hong
Kong, or for other foreign investors, respectively. Pursuant to the
grandfathering arrangements of the PRC tax law, dividends
receivable by the Group from its PRC subsidiaries in respect of the
undistributed profits derived prior to 31 December 2007 are exempt
from the withholding income tax. At 30 June 2011, no deferred tax
liabilities have been recognised in respect of the tax that would
be payable on the unremitted profits of the PRC subsidiaries
derived since 1 January 2008 as the Company is in a position to
control the dividend policies of the PRC subsidiaries and no
distribution of such profits is expected to be declared from the
PRC subsidiaries in the foreseeable future.
8 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is
based on the following:
2011 2010
RMB'000 RMB'000
Earnings
Profit attributable to equity shareholders
of the Company used in basic and diluted earnings
per share calculation 1,109,992 585,467
Weighted average number of shares '000 '000
Issued ordinary shares at beginning of year 852,650 770,560
Effect of shares issued to shareholders
participating in the scrip dividend 3,650 3,981
Effect of shares issued upon exercise of share
options 11,352 2,881
Effect of shares issued as part of the
consideration for acquisition of subsidiaries 95,344 -
Effect of shares issued upon placement 88,219 13,227
Weighted average number of ordinary shares
used in basic earnings per share calculation 1,051,215 790,649
Effect of dilutive potential shares in respect
of share options 6,044 5,673
Weighted average number of ordinary shares
used in diluted earnings per share calculation 1,057,259 796,322
9 Dividends
(i) Dividends payable to equity shareholders of the Company
attributable to the year
2011 2010
RMB'000 RMB'000
Interim dividend declared and paid of RMB0.02
(2010:RMB Nil) per ordinary share 24,267 -
Final dividend of RMB0.10 and special dividend
of RMB0.03 per ordinary share proposed
after the end of the reporting period
(2010: final dividend of RMB0.10 and special
dividend of
RMB0.02 per ordinary share) 157,970 103,359
182,237 103,359
The final and special dividends proposed after the end of the
reporting period have not been recognised as liabilities at the end
of reporting period.
(ii) Dividends payable to equity shareholders of the Company
attributable to the previous financial year, approved and paid
during the year
2011 2010
RMB'000 RMB'000
Interim dividend for the year, approved
and paid during the year, of RMB0.02 per
ordinary share (2010: RMB Nil per ordinary
share) 24,267 -
Final dividend of RMB0.10 and special dividend
of RMB0.02 per ordinary share in respect
of the previous financial year, approved
and paid during the year (2010: final dividend
of per ordinary share) 104,055 61,645
128,322 61,645
10 TRADE AND OTHER RECEIVABLES
Included in trade and other receivables are trade receivables
with the ageing analysis of trade receivables is as follows:
2011 2010
RMB'000 RMB'000
Neither past due nor impaired 22,191 1,348
--------- ---------
Less than 1 month past due 5,064 116
1 to 3 months past due 220 -
3 to 6 months past due 87 -
6 to 12 months past due 1,024 506
Over 1 year past due 75 545
--------- ---------
Amounts past due but not impaired 6,470 1,167
--------- ---------
28,661 2,515
Rider 1
Trade receivables from sales of goods are normally due for
settlement within 30 to 45 days from the date of billing, while
that from the sale of property units are due for settlement in
accordance with the terms of the related sale and purchase
agreements.
Receivables that were neither past due nor impaired relate to a
wide range of customers for whom there was no recent history of
default.
Receivables that were past due but not impaired relate to a
number of independent customers that have a good track record with
the Group. Based on past experience, management believes that no
impairment allowance is necessary in respect of these balances as
there has not been a significant change in credit quality and the
balances are considered fully recoverable.
11 TRADE AND OTHER PAYABLES
Included in trade and other payables are trade payables with the
ageing analysis of trade payables including amount due to a related
party, by invoice date is as follows:
2011 2010
RMB'000 RMB'000
Due within 3 months or on demand 28,456 26,442
Due after 3 months but within 6 months 93 51
Due after 6 months but within 1 year 126 95
Due over 1 year 136 -
--------- ---------
28,811 26,588
Represented by:
Trade payables 25,811 19,478
Amount due to a related party 3,000 7,110
--------- ---------
28,811 26,588
12 Financial Information
The results announcement was approved by the board on 16
September 2011. The financial information has been prepared on a
going concern basis in accordance with International Financial
Reporting Standards. The accounting policies applied in preparing
the financial information are consistent with those adopted and
disclosed in the Group's consolidated financial statements for the
year ended 30 June 2010, except for the accounting policies changes
as detailed in Note 3.
The consolidated financial statements for the year ended 30 June
2011 will be delivered to the Registrar of Companies following the
Company's annual general meeting. The auditors have reported on the
consolidated financial statements for the year ended 30 June 2011
and their report was unqualified and did not contain a statement
under section 237 (2) or (3) of the Companies Act 1985.
Other information
DIVIDENDS
The Directors are pleased to recommend that a final dividend of
RMB0.10 and a special dividend of RMB0.03 (2010: RMB0.10, special
dividend of RMB0.02) per share on or before 30 December 2011,
subject to the approval of the forthcoming annual general meeting
on 8 November 2011. The final and special dividend, together with
the interim dividend of RMB0.02 (2010: RMB Nil) per share, will
make a total of RMB0.15 (2010: RMB0.12) per share for the whole
year ended 30 June 2011. The actual translation rate for the
purpose of dividend payment in sterling and HK Dollar will be
referenced to exchange rate on 15 November 2011.
The register of members of the Company will be closed on the
record date of 11 November 2011, with an ex-dividend date of 10
November 2011 and 9 November 2011 on The Stock Exchange of Hong
Kong Limited and London Stock Exchange PLC, respectively. Only
shareholders that appear on the Company's register of members on
the record date will be qualified for the proposed dividends.
In order to qualify for receiving the final and special
dividend, shareholders registered on the Hong Kong branch register
of the Company are reminded to ensure that all transfers of shares,
accompanied by the relevant share certificates and transfer forms,
must be lodged with the Company's branch share registrar in Hong
Kong, Computershare Hong Kong Investor Services Limited, at Shops
1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East,
Wanchai, Hong Kong for registration not later than 4:30p.m. on 11
November 2011.
The shareholders will receive their cash dividends in sterling
or HK Dollar. It is also intended that the scrip dividend
alternative to the cash dividend will be offered during 2011. A
document providing further details of his Scrip Dividend Scheme
will be sent to shareholders in due course.
PURCHASE, SALE OR REDEMPTIONS OF THE COMPANY'S LISTED
SECURITIES
Neither the Company nor any of its subsidiaries had purchased,
sold or redeemed any of the Company's listed securities during the
year ended 30 June 2011, except for the issue of 15,345,000
ordinary shares under the Share Option Scheme, the issue of
8,008,223 ordinary shares to shareholders participating in the
scrip dividend scheme and the issue of 164,153,646 ordinary shares
in connection with the acquisition of 92.94% equity interest in
Beihai Perfuming Garden Juice Company Limited on 30 November 2010
and the placing of 175,000,000 ordinary shares to investors in
December 2010 as set out below:
Fund Raising Activity
For the purpose of strengthening the shareholder base and
capital base for further expansion and growth, the Group completed
the following fund raising activity during the period under review.
The Company issued 175,000,000 ordinary shares to eight placees who
and whose ultimate beneficial owners are independent third parties
under a placing agreement with net proceeds of approximately
HK$1,510 million which is intended to be used for (i) paying the
cash consideration of HK$780 million in relation to the acquisition
of the entire issued share capital of BPG Food & Beverage
Holdings Ltd.; (ii) financing the expansion of the production
capacity of BPG Food & Beverage Holdings Ltd.; and (iii)
financing the corresponding additional working capital requirement
for BPG Food & Beverage Holdings Ltd. due to the expansion of
its production capacity, further details of which are stated in the
Company's circular dated 3 December 2010.
Code on corporate governance practices
During the year ended 30 June 2011, the Directors, where
practicable, for an organisation of the Group's size and nature
sought to comply with the Combined Code. The Combined Code is the
key source of corporate governance recommendations for UK listed
companies. It consists of principles of good governance covering
the following areas: (i) Directors; (ii) Directors' remuneration;
(iii) accountability and audit; (iv) relations with shareholders;
and (v) institutional investors.
In connection with the listing of the Company on the HKEx in
November 2009, the Company adopted the code provisions set out in
the Code on Corporate Governance Practices ("CCG") contained in
Appendix 14 to the Hong Kong Listing Rules as its additional code
on corporate governance practices on 17 November 2009.
The Company has complied with the CCG since its listing on the
HKEx on 26 November 2009, except the deviation from provision A.2.1
as described below:
- Code Provision A.2.1.
The roles of Chairman and Chief Executive Officer are performed
by the same individual, Mr. Tong Wang Chow, and are not separated.
The Board meets regularly to consider issues related to corporate
matters affecting operations of the Group. The Board considers the
structure will not impair the balance of power and authority of the
Board and the Company's management and thus, the Board believes
this structure will enable effective planning and implementation of
corporate strategies and decisions.
CODE FOR DIRECTORS' DEALINGS
The Company has adopted a code for Directors' dealings
appropriate for a company whose shares are admitted to trading on
AIM and takes all reasonable steps to ensure compliance by the
Directors and any relevant employees. The form of this code is
substantially the same as that set out in Appendix 10 of the Hong
Kong Listing Rules.
In connection with the listing of the Company on the HKEx in
November 2009, the Company adopted the Model Code for Securities
Transactions by Directors of Listed Issuers (the "Model Code") as
set out in Appendix 10 of the Hong Kong Listing Rules as its own
code of conduct regarding securities transactions by the Directors
on 17 November 2009. Having made specific enquiry, the Company
confirmed that all Directors have complied with the required
standard set out in the Model Code for the year under review.
AUDIT COMMITTEE
The Audit Committee comprises of three independent non-executive
directors. Mr. Ma Chiu Cheung Andrew acts as Chairman of the
committee with Mr. Nicholas Smith and Mr. Yang Zhenhan act as
members. The arrangement of Audit Committee is in compliance with
Rule 3.21 of the Hong Kong Listing Rules.
The Audit Committee has reviewed with management the accounting
principles and practices adopted by the Group, and discussed
auditing, internal control and financial reporting matters
including the review of the Company's audited consolidated
financial statements for the year ended 30 June 2011.
PUBLICATION OF ANNUAL REPORT
The annual report will be published on the respective websites
of the Company (www.asian-citrus.com) under the investor relations
section and the HKEx (www.hkex.com.hk) in due course.
BY ORDER OF THE BOARD
Asian Citrus Holdings Limited
Tong Wang Chow
Chairman
Hong Kong, 16 September 2011
As at the date of this announcement, the board of directors of
the Company comprises five executive directors, namely Mr. Tong
Wang Chow, Mr. Tong Hung Wai, Tommy, Mr. Cheung Wai Sun, Mr. Pang
Yi and Mr. Sung Chi Keung; two non-executive directors, namely Mr.
Ip Chi Ming and Hon Peregrine Moncreiffe and four independent
non-executive directors, namely Mr. Ma Chiu Cheung, Andrew, Mr.
Nicholas Smith, Mr. Yang Zhenhan and Dr. Lui Ming Wah, SBS JP.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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