TIDMACHL
RNS Number : 0549Y
Asian Citrus Holdings Ltd
24 February 2012
Under embargo 7.00am Friday 24 February 2012
Asian Citrus Holdings Limited
Interim Results for the six months ended 31 December 2011
Asian Citrus Holdings Limited ("Asian Citrus"), the largest
orange plantation owner and operator in China, announces interim
results for the six months ended 31 December 2011.
Key Highlights
For illustration
only
--------------------- ------------ ------------ --------- ----------------------
Six months ended Six months ended
31 December 31 December
--------------------- -------------------------- --------- ----------------------
2011 (RMBm) 2010 (RMBm) 2011 2010
% change (GBPm**) (GBPm**)
--------------------- ------------ ------------ --------- ---------- ----------
Reported financial information
------------------------------------------------- --------- ---------- ----------
Revenue 1,043.4 624.0 +67.2% 101.8 61.7
--------------------- ------------ ------------ --------- ---------- ----------
Gross profit 406.3 275.4 +47.5% 39.6 27.2
--------------------- ------------ ------------ --------- ---------- ----------
EBITDA 470.4 578.5 -18.7% 45.9 57.2
--------------------- ------------ ------------ --------- ---------- ----------
Profit before
tax 391.5 526.4 -25.6% 38.2 52.0
--------------------- ------------ ------------ --------- ---------- ----------
Profit attributable
to shareholders 383.6 523.4 -26.7% 37.4 51.7
--------------------- ------------ ------------ --------- ---------- ----------
Basic EPS RMB 0.32 RMB 0.59 -45.8% 3.1p 5.8p
--------------------- ------------ ------------ --------- ---------- ----------
Interim dividend RMB 0.03 RMB 0.02 +50.0% 0.3p 0.2p
--------------------- ------------ ------------ --------- ---------- ----------
Special dividend RMB 0.02 - N/A 0.2p -
--------------------- ------------ ------------ --------- ---------- ----------
Total dividend RMB 0.05 RMB0.02 +150.0% 0.5p 0.2p
--------------------- ------------ ------------ --------- ---------- ----------
Core net profit #
------------------------------------------------------------------------------------
EBITDA 395.6 259.8 +52.3% 38.6 25.7
--------------------- ------------ ------------ --------- ---------- ----------
Profit before
tax 316.7 207.8 +52.4% 30.9 20.5
--------------------- ------------ ------------ --------- ---------- ----------
Profit attributable
to shareholders 308.8 204.7 +50.9% 30.1 20.2
--------------------- ------------ ------------ --------- ---------- ----------
Basic EPS RMB 0.25 RMB 0.23 +8.7% 2.4p 2.3p
--------------------- ------------ ------------ --------- ---------- ----------
# Core net profits refers to profit for the period excluding net
gain on change in fair value of biological assets and share-based
payment. The Group's management considers this revised presentation
more appropriately reflects the performance of the core operations.
In order to conform to the current period's presentation, certain
comparative figures for prior reporting period have been
reclassified.
** Conversion at GBP1 = RMB10.25 and RMB10.12 for the six months
ended 31December 2011 and 2010 respectively for reference only
*For identification purposes only
Business Highlights
-- Revenue up 67.2% to RMB1,043.4m (2010/11:RMB624.0m)
-- EBITDA, excluding net gain on change in fair value of
biological assets and share-based payments up 52.3% to RMB395.6m
(2010/11:RMB259.8m)
-- Total production 171,607 tonnes up 19.4% from 143,698 tonnes in 2010/2011
-- Continued to expand our direct sales to 22 supermarket chains
(in 2010, sales were to 20 supermarket chains)with total supply of
approximately 48,447 tonnes of oranges (2010/11: 38,572 tonnes), up
approximately 25.6%
-- Continued the construction of the new production facility of
Beihai Perfuming Juice Company Limited ("Beihai BPG") in Baise city
of the Guangxi Region with an annual capacity of approximately
40,000 tonnes. The progress is broadly in line with our expectation
but the trial production is revised to commence shortly after mid
2012 due to administrative issues
-- Sold approximately 191,000 self-bred saplings to local
farmers which offers the Group the first right to purchase their
oranges
-- Continued the construction of the Hunan Plantation with
280,000 summer orange trees planted during the current period with
another 343,000 summer orange trees to be planted before March
2012
-- Recommended an interim dividend of RMB0.03 (2010/11: RMB0.02
per share)and a special dividend of RMB0.02 per share (2010/11:
Nil) and this equates to approximately 19.9% (2010/11: 11.9%) of
the core net profit excluding net gain on change in fair value of
biological assets and share-based payment
-- Approved a programme to buy back up to HK$250 million of
Asian Citrus shares by way of "on-market repurchases" from now till
the next annual general meeting
Hepu Plantation
-- Fully developed with approximately 1.3m orange trees, of which 1.0m are fruit-bearing trees
-- Production decreased by approximately 11.1% to 44,906 tonnes
(2010/11: 50,517 tonnes) due to the reduction in the number of
productive winter orange trees under the replanting programme
-- Replanting programme underway with 66,449 winter trees, to be
replaced and replanted with the same number of new species of
summer orange trees before March 2012
-- The second batch of 76,135 summer orange trees replanted in
2008 will commence production in the coming summer of 2012
Xinfeng Plantation
-- Fully planted with 1.6m winter orange trees, of which all are producing
-- Production increased by approximately 36.0% to 126,701 tonnes (2010/11: 93,181 tonnes)
Hunan Plantation
-- 707,000 summer orange trees have been planted as at 31 December 2011
-- Another 343,000 summer orange trees are expected to be planted before March 2012
-- RMB375.6m invested which mainly represents expenditure for
land clearing, land cultivation, planting costs and other farmland
infrastructure
Beihai BPG
-- Sold a total of approximately 14,604 tonnes of juice
concentrates, 15,076 tonnes of fruit purees and 8,738 tonnes of
frozen and dried fruits and vegetables for the period
-- As of the reporting date, RMB54.3m invested in the new
juicing facility in Baise city which mainly represents expenditure
for production machinery, land improvements and prepayments for
land use rights and other construction works
-- The utilisation rate of production facilities in Beihai city
and Hepu county was approximately 92.2% and 93.4% respectively
Tony Tong, Chairman, commented:
The Group is progressing well as a comprehensive fruit and juice
production company with an increasing presence in the Chinese
retail market with higher production volume and market penetration.
With the continuous growth of the Chinese economy and the
government's promotion of domestic consumption, we are confident
that the demand for consumables such as fruits and juice
concentrates in China will continue to grow, providing the Group
with an exciting opportunity to further expand its business in both
the agricultural and fruits processing businesses through both
organic growth and potential acquisitions.
- ends -
Asian Citrus
Tony Tong, Chairman and Chief Executive
Officer
Eric Sung, Finance Director 852 2559 0323
Seymour Pierce Limited
Nandita Sahgal, Jonathan Wright (NOMAD) 020 7101 8000
Richard Redmayne (Broking)
Weber Shandwick Financial 020 7067 0700
Nick Oborne, Stephanie Badjonat, John
Moriarty
Chairman's Statement
I am very pleased to report the results of Asian Citrus Holdings
Limited (the "Company" or "Asian Citrus") and its subsidiaries
(collectively referred to as the "Group") for the six months ended
31 December 2011. For the six months ended 31 December 2011, the
Group's revenue increased by 67.2% from RMB624.0 million to
RMB1,043.4 million, core net profit before net gains on change in
fair value of biological assets and share based payments increased
by 50.9% from RMB204.7 million to RMB308.8 million while net
profit, after net gains on change in fair value of biological
assets and share based payments decreased by 26.7% from RMB523.4
million to RMB383.6 million.
STRATEGIC OVERVIEW
Agricultural business
The Group continued to expand its direct sales to supermarkets.
During the six months ended 31 December 2011, the Group sold
approximately 48,447 tonnes of oranges directly to 22 supermarket
chains, representing an increase of approximately 25.6% over the
comparable period's volume of sales to supermarkets of 38,572
tonnes. The Group believes that the increasing volume of direct
sales to supermarkets will continue to enhance the Group's
profitability and lead to better product recognition within
China.
The Group continued to mass produce self-bred saplings from both
the Hepu Plantation and Hunan Plantation. In addition to using
these saplings for our own replanting programme at the Hepu
Plantation and the new planting in our Hunan Plantation, the Group
sold approximately 191,000 self-bred saplings to local farmers
during the six months ended 31 December 2011. The sales of
self-bred saplings provide the Group with a high margin revenue
stream and the capability to secure long-term supplies of high-
quality oranges through reciprocal agreements with the farmers,
which offer the Group the first right to purchase their
oranges.
Fruit-processing business
The Group conducts its fruit processing business through Beihai
Perfuming Garden Juice Company Limited ("Beihai BPG") and our
customers include most of the major food and beverages producers in
China and globally. In addition to the existing production
facilities with an annual output capacity of approximately 60,000
tonnes located in Beihai city and Hepu county of Guangxi Zhuang
Autonomous Region (the "Guangxi Region"), we are expanding the
production capacities of Beihai BPG by establishing a new juicing
facility with an annual output capacity of approximately 40,000
tonnes in the Baise city of the Guangxi Region. The construction
progress of the new production facility is broadly in line with our
expectation but the trial production is revised to commence shortly
after mid 2012 due to certain administrative issues.
OPERATIONS REVIEW
Agricultural business
The Hepu Plantation is fully planted with approximately 1.3
million orange trees of which 1.0 million are currently producing
oranges. Output from the Hepu Plantation was approximately 44,906
tonnes for the six months ended 31 December 2011 which represents a
decrease of approximately 11.1% over the comparable year's
production of 50,517 tonnes. The decrease in production volume was
mainly due to the ongoing replanting programme at the plantation
where 63,584 winter orange trees were replaced with the same number
of summer orange trees during the year ended 30 June 2011.
The Group's replanting programme in the Hepu Plantation
continues and there were approximately120,000 winter oranges trees
as at 31 December 2011 which are expected to be replanted in the
next two years. 66,449 winter orange trees are expected to be
removed and the corresponding land area to be replanted with the
same number of the new species of summer orange trees before the
end of March 2012. We believe the improved species of trees being
planted will deliver long term economic benefits by increasing
average yields and achievable revenue per tonne. It is expected
that the second batch of 76,135 trees replanted during 2008 will
commence production in the coming summer of 2012 which will add to
our existing summer oranges production.
The Xinfeng Plantation is fully planted with 1.6 million winter
orange trees. During the six months ended 31 December 2011, all the
1.6 million trees were producing oranges (2010: 1.6 million),
yielding approximately 126,701 tonnes of oranges, which represents
an increase of approximately 36.0% over the previous year's
production of 93,181 tonnes. Growth was mainly due to increased
production from the winter oranges trees, which are still yet to
achieve their full maturity.
During the six months ended 31 December 2011, the Group
continued to invest in the Hunan Plantation. As at 31 December
2011, the Group has invested approximately RMB375.6 million in the
Hunan Plantation which mainly represents expenditure for land
clearing, land cultivation, planting costs for the orange trees and
other farmland infrastructure. The development of this plantation
is in line with our expectations and approximately 707,000 orange
trees have been planted as at 31 December 2011. Another 343,000
orange trees are expected to be planted in the Hunan Plantation
before end of March 2012. Expenditure for the infant trees in the
Hunan Plantation, comprising mainly fertilisers, pesticides and
staff costs, of approximately RMB11.4 million (2010: Nil) was
expensed as general and administrative expenses for the six months
ended 31 December 2011.
Fruit-processing business
For the six months ended 31 December 2011, Beihai BPG sold a
total of approximately 14,604 tonnes of juice concentrates, 15,076
tonnes of fruit purees and 8,738 tonnes of frozen and dried fruits
and vegetables.
As at 31 December 2011, the Group has invested approximately
RMB54.3 million in the new juicing facility in Baise city which
mainly represents expenditure for production machinery, land
improvements and prepayments for land use rights and other
construction works. The utilisation rate of the production
facilities in Beihai city and Hepu county was approximately 92.2%
and 93.4% respectively.
Dividends
The Board recommended the payment of an interim dividend of
RMB0.03 and a special dividend of RMB0.02 per share for the six
months ended 31 December 2011. We believe that the declaration of
the interim and special dividends is in the interest of the
shareholders and allow our shareholders to share the successful
results of the Group.
The interimand specialdividends will be paid in sterling or HK
Dollars on or before 4 May 2012 to shareholders that appear on the
Company's register of members at the close of business on the
record date of 9 March 2012, with an ex-dividend date of 8 March
2012 and 7 March 2012 on The Stock Exchange of Hong Kong Limited
("HKEx") 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
13 March 2012.
In order to qualify for receiving the interim and special
dividends, 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 9
March2012.
Share Repurchase Programme
On 24 February 2012, the Board approved a programme to buy back
up to HK$250 million of Asian Citrus shares by way of "on-market
repurchases" from now till the next annual general meeting. The
share repurchase programme will be funded by the Company's free
cash flow as well as existing working capital.
Investor relations and Corporate Governance
The Board is convinced that transparency and accountability are
key elements in maintaining good investor relationships. The
Group's management pays regular visits to institutional investors
and private client investment advisers and attends investor
conferences in order to update existing shareholders and potential
investors on the Group's latest business developments.
The Board is fully committed to adhering to the corporate
governance best practices as set out in the Combined Code, which is
the key source of corporate governance recommendations for UK
listed companies. The Group has also adopted the code provisions
set out in the Code on Corporate Governance Practices contained in
Appendix 14 to the Rules Governing the Listing of Securities on the
HKEx as its additional code on corporate governance practices. The
Board is continuing to improve our corporate governance and
transparency by increasing information disclosure on our website
and public documents.
Outlook
The Group is progressing well as a comprehensive fruit and juice
production company with an increasing presence in the Chinese
retail market with higher production volume and market penetration.
With the continuous growth of the Chinese economy and the
government's promotion of domestic consumption, we are confident
that the demand for consumables such as fruits and juice
concentrates in China will continue to grow, providing the Group
with an exciting opportunity to further expand its business in both
the agricultural and fruits processing businesses through both
organic growth and potential acquisitions.
On behalf of the Board, I would also like to take this
opportunity to thank our shareholders, business partners, customers
and employees for their continuous support and contribution to the
growth of Asian Citrus. I am very confident that Asian Citrus will
continue to deliver strong operational performances and create more
success in the future.
Tony Tong Wang Chow
Chairman
24 February 2012
Management Discussion and Analysis
OPERATING PERFORMANCE
Revenue
The breakdown of revenue by types is as follows:
For the six months ended 31 December
2011 2010
% of % of
RMB'000 total revenue RMB'000 total revenue
Hepu Plantation 180,405 17.3% 194,736 31.2%
Xinfeng Plantation 463,873 44.5% 330,988 53.0%
--------- ------------- ------- -------------
Sales of oranges 644,278 61.8% 525,724 84.2%
Sales of processed fruits 396,903 38.0% 69,410 11.1%
Sales of self-bred saplings 2,235 0.2% 2,705 0.5%
Sales of properties - - 26,198 4.2%
Total revenue 1,043,416 100.0% 624,037 100.0%
========= ============= ======= =============
The Group's revenue increased by approximately 67.2% from
RMB624.0 million to RMB1,043.4 million for the six months ended 31
December 2011.
Sale of oranges
Revenue from sale of oranges grew by 22.6% to RMB644.3 million
for the six months ended 31 December 2011. This was achieved by an
increase of approximately 19.4% in the Group's production to
171,607 tonnes combined with increase in average selling price of
oranges of approximately 3.0% to 4.2%year on year.
The production yield from Hepu Plantation decreased by 11.1%
from 50,517 tonnes to 44,906 tonnes for the six months ended 31
December 2011 due to the ongoing replanting programme. In the
previous year, 63,584 winter orange trees were removed and
replanted with the same number of the summer orange trees. As the
orange trees continue to mature, the production yield from the
Xinfeng Plantation increased significantly by 36.0% to 126,701
tonnes for the six months ended 31 December 2011 from 93,181 tonnes
in the comparable period last year.
The following table sets out the average selling prices of
winter oranges in different plantations.
For the six months ended 31 December
2011 2010
RMB RMB
(per tonne) (per tonne)
Hepu Plantation 4,085 3,922
Xinfeng Plantation 3,770 3,660
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 six months ended 31 December
2011 2010
% of sale of oranges % of sale of oranges
Types of customers
Corporate customers 42.9% 40.3%
Supermarket chains 32.0% 31.4%
Wholesale customers 24.6% 27.6%
Others 0.5% 0.7%
Total 100.0% 100.0%
==================== ====================
For the six months ended 31 December 2011, the production volume
and revenue to supermarket chains represented approximately 28.2%
and 32.0% respectively of the Group, compared to approximately26.8%
and 31.4% for the six months ended 31 December 2010. For the Hepu
Plantation, the production volume and revenue to supermarkets
increased to 35.9% and 48.0% of the Group respectively (12/2010:
32.2% and 44.1%).
Sale of processed fruits
The table sets out the volume and revenue from the sale of
processed fruits:
For the six months ended 31 December
2011 2010
Production Production
Volume Revenue Volume Revenue
(Tonnes) RMB'000 (Tonnes) RMB'000
Pineapple juice concentrates 9,421 114,129 2,475 30,707
Other fruit juice concentrates 5,183 79,668 443 11,710
Mango purees 7,966 57,187 91 683
Papayas purees 6,825 48,970 771 5,233
Other fruit purees 285 3,566 - -
Frozen and dried fruits
and vegetables 8,738 62,970 265 5,201
38,418 366,490 4,045 53,534
Fruit juice trading N/A 30,413 N/A 15,876
---------- -------- ---------- --------
38,418 396,903 4,045 69,410
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 are shown separately in the table
above.
Revenue from the sale of processed fruits increased by 471.9% to
RMB396.9 million for the six months ended 31 December 2011. It is
mainly attributable by the six months results of Beihai BPG which
are consolidated into the Group's results for the six months ended
31 December 2011 compared to one month results of Beihai BPG being
consolidated into the Group's results for the six months ended 31
December 2010 follow by the completion of the acquisition as of 30
November 2010.
The utlisation rate of two existing processing plants in Beihai
and Hepu is approximately 92.2% and 93.4% for the six months ended
31 December 2011 respectively.
Beihai BPG currently generates most of its sales from the
People's Republic of China("PRC") market, with key customers being
beverage mixers supplying major beverage groups.
Sale of self-bred saplings
For the six months ended 31 December 2011, RMB2.2 million was
recognised from the sales of the approximately 191,000 selfbred
saplings developed from the nursery centre at the Hepu Plantation
to local farmers.
Cost of sales
The breakdown of cost of sales is as follows:
For the six months ended 31 December
2011 2010
% of % of
cost of sales cost of sales
of respective of respective
RMB'000 segment RMB'000 segment
Agricultural business
Inventories used
Fertilisers 204,504 57.5% 158,326 55.6%
Packaging materials 14,405 4.1% 16,643 5.8%
Pesticides 34,427 9.7% 25,095 8.8%
253,336 71.3% 200,064 70.2%
Production overheads
Direct labour 32,487 9.1% 26,902 9.5%
Depreciation 44,114 12.4% 41,546 14.6%
Others 25,502 7.2% 16,127 5.7%
Cost of sales of oranges 355,439 100% 284,639 100%
Fruit processing business
Fruit 217,593 77.4% 40,694 82.8%
Packaging materials 18,870 6.7% 2,539 5.2%
Direct labour 11,115 4.0% 1,651 3.4%
Other production overheads 33,336 11.9% 4,226 8.6%
Cost of sales of
processed fruits 280,914 100% 49,110 100%
Cost of sales of self-bred
saplings 789 1,109
Cost of sales of property
units - 13,742
Total 637,142 348,600
-------- -------
Cost of sales 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 sales of oranges
increased 24.9% to RMB355.4 million (12/2010: RMB284.6 million).
The increase in production costs was principally due to the
increase in fertilisers and pesticides utilised for higher
production volumes and generally warmer weather during the
period.
The unit cost of production in the Hepu Plantation remained at
approximately RMB1.76 per kg for the six months ended 31 December
2011 (12/2010: RMB1.72 per kg).
The unit cost of production in the Xinfeng Plantation slightly
increased by 2.8% to RMB2.18 per kg for the six months ended 31
December 2011 (12/2010: RMB2.12 per kg) as a result of higher
amount of pesticides used and related expenses due to generally
warmer weather during the period.
The combined unit cost of production increased by 4.5% to
RMB2.07 per kg from RMB1.98 per kg in the comparable period due to
higher contribution from Xinfeng Plantation with relatively higher
unit cost.
Cost of sales of processed fruit mainly includes the costs of
fruit and packaging materials and other direct costs such as direct
labour, depreciation and production overheads. For the six months
ended 31December 2011, the cost of processed fruits increased by
472.1% from RMB49.1 million to RMB280.9 million. The increase was
mainly due to six months results of Beihai BPG which are
consolidated into the Group's results for the six months ended 31
December 2011 compared to one month results of Beihai BPG being
consolidated into the Group's results for the six months ended 31
December 2010 follow by the completion of acquisition as of 30
November 2010.
Gross profit
The Group's overall gross profit increased by 47.5% to
approximately RMB406.3 million for the six months ended 31 December
2011 (12/2010: RMB275.4 million). The improvement in gross profit
was due to an increase in the production output of the Group's
winter orange trees of 19.4%, an increase in the average price of
oranges of approximately 3.0% to 4.2% year on year and inclusion of
the six months gross profit of Beihai BPG of RMB116.0 million.
The overall gross profit margin decreased from 44.1% to 38.9%
for the six months ended 31 December 2011 due to higher
contribution from processed fruits segment which has a relatively
lower margin.
The following table sets forth a breakdown of the Group's gross
profit margin by plantation:
For the six months ended 31 December
2011 2010
Hepu Plantation 56.2% 55.4%
Xinfeng Plantation 40.4% 40.2%
------------------ ------------------
The following table sets out a breakdown of the Group's gross
profit margin by business:
For the six months ended 31 December
2011 2010
Sales of oranges 44.8% 45.9%
Sales of processed fruits 29.2% 29.2%
Sales of self-bred saplings 64.7% 59.0%
Sales of properties N/A 47.5%
Overall gross profit margin 38.9% 44.1%
================== ==================
The gross profit margin of the Hepu Plantation kept at 56.2% for
the six months ended 31 December 2011 (12/2010: 55.4%).
Despite better economies of scale being achieved, the gross
profit margin of Xinfeng Plantation only grew to 40.4% (12/2010:
40.2%) due to a higher amount of pesticides used and related
expenses as a result of generally warmer weather in current period.
Over the medium term, as the continuous growth in production volume
and better economies of scale, we expect the margin of the Xinefeng
Plantation will grow again.
Due to higher contribution from Xinfeng Plantation with a
relatively lower margin, the overall gross profit margin from sales
of oranges slightly dropped to approximately 44.8% (12/2010: 45.9%)
for the six months ended 31 December 2011.
Beihai BPG processes over 22 different types of fruit with
different gross profit margins. The normalised gross profit margin
of Beihai BPG for the six months ended 31 December 2011 was
unchanged at 29.2% compared to one month ended 31 December
2010.
Gain on change in fair value of biological assets
The Group recorded a gain of RMB100.6 million from net gain on
change in fair value of biological assets for the six months ended
31 December 2011, compared to a gain of RMB338.2 million for the
corresponding period last year in 2010. The lower increase was
mainly due to all the orange trees in the Xinfeng Plantation
becoming fruit bearing in the previous period and there was no
transfer of infant trees to orange trees during the six months
ended 31 December 2011. The net gain on change in fair value of
biological assets does not have any effect on the cash flow of the
Group for the six months ended 31 December2011.
The gain on change in fair value of biological assets is
summarised as follows:
For the six months ended 31 December
2011 2010
RMB'000 RMB'000
Gain due to transfer of infant trees
to orange trees - 151,895
Gain due to price change 37,430 140,141
Decrease due to replanting programme (70,213) (64,251)
Gain due to yield maturity, cost
and other changes 133,391 110,419
Total 100,608 338,204
================== ==================
Selling and distribution expenses
Selling and distribution expenses mainly comprise sales
commissions, advertising, salaries and welfare of sales personnel,
travelling and transportation expenses. The selling and
distribution expenses of the Group increased from approximately
RMB27.4 million for the six months ended 31 December 2010 to
approximately RMB29.0 million for the six months ended 31 December
2011, representing an increase of 5.8%, mainly resulting from the
increased sale activities in Xinfeng Plantation and Beihai BPG.
Selling and distribution expenses represented 2.8% of the
Group's revenue, a decrease of 1.6 percentage points as compared to
4.4% in corresponding period last year, demonstrating the Group's
ability to achieve economies of scale amid rapid development.
General and administrative expenses
General and administrative expenses comprise mainly salary,
office administration expenses, depreciation, amortization, raw
material utilised for infant trees and research costs. The general
and administrative expenses of the Group were approximately RMB94.3
million for the six months ended 31 December 2011 (12/2010: RMB63.9
million). The increase was mainly due to the raw materials and
related expenses of of RMB11.4 million utilised for the first batch
of 427,000 infant trees planted in Hunan Plantation last year,
inclusion of the general and administrative expenses of RMB6.4
million of Beihai BPG, the increase of the share based payment of
RMB6.3 million in relation to the employee share options and higher
research expenses of RMB4.3 million for developing and testing new
species of orange.
General and administrative expenses represented 9.0% of the
Group's revenue, a decrease of 1.2 percentage points as compared to
10.2% in last corresponding period, demonstrating the Group was
able to control the cost effectively amid rapid business
expansion.
Profit
The profit attributable to shareholders for the six months ended
31 December 2011 decreased to approximately RMB383.6 million,
compared to approximately RMB523.4 million for corresponding period
last year, representing a decrease of approximately 26.7%. The
decrease in profit is mainly due to lower increase in the net gain
on change in fair value of biological assets as all the orange
trees in the Xinfeng Plantation becoming fruit bearing in the
previous period and there was no transfer of infant trees to orange
trees during the six months ended 31 December 2011.
The core net profit, which refers to profit for the period
excluding net gain on change in fair value of biological assets and
share-based payments, for the six months ended 31 December 2011 was
approximately RMB308.8 million, compared to approximately RMB204.7
million for corresponding period last year, representing an
increase of approximately 50.9%. The increase was mainly
attributable to the increase in production volume of winter orange,
the increase in average selling price of oranges and six months
results of Beihai BPG are consolidated into the Group during the
period compared to one month results in corresponding period last
year.
INTERIM DIVIDEND
The Directors are pleased to declare an interim dividend of
RMB0.03 (12/2010: RMB0.02)and a special dividend of RMB0.02
(12/2010: Nil) per share.
PRODUCTIVITY
The production volume of winter oranges increased to 171,607
tonnes for the six months ended 31 December 2011, representing an
increase of 19.4%.
The production volume of winter oranges in Hepu Plantation
dropped from approximately 50,517 tonnes last year to approximately
44,906 tonnes in the current year, representing a decrease of
approximately11.1%, which was due to the ongoing replanting
programme. In the year to 30 June 2011, 63,584 winter orange trees
were removed and replanted with the same number of the summer
orange trees.
In addition, the production volume of winter orange from the
Xinfeng Plantation increased from approximately 93,181 tonnes last
year to approximately 126,701 tonnes in the current year,
representing an increase of approximately 36.0% due to increased
maturity during the period.
CAPITAL STRUCTURE
As at 31 December 2011, there were 1,228,052,182 shares in
issue. Based on the closing price of HKD4.09, the market
capitalisation of the Company was approximately HKD5,022.7 million
as at 31 December 2011 (GBP417.2 million).
HUMAN RESOURCES
There were a total of 1,595 employees of the Group as at 31
December 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
31 December 2011 30 June 2011
Current ratio (x) 38.51 41.05
Quick ratio (x) 36.96 37.83
Net debt to equity (%) Net cash Net cash
For the six months ended
31 December 31 December
2011 2010
Asset turnover (x) 0.13 0.08
Core net profit per share (RMB) 0.25 0.23
Basic earnings per share (RMB) 0.32 0.59
Liquidity
The current ratio and quick ratio was 38.51 and 36.96
respectively. The liquidity of the Group remains healthy with
sufficient reserves for both operation and development.
Profitability
The asset turnover of the Group improved to 0.13 (12/2010: 0.08)
for the six months ended 31 December 2011. The higher asset
turnover was mainly due to six months results of Beihai BPG being
consolidated into Group in current period compared to one month
results in last corresponding period.
The basic earnings per share for the six months ended 31
December 2011 was RMB0.32 (12/2010: RMB0.59). This was driven by
the 26.7% decrease in profit attributable to shareholders for the
period and the dilution effect from the issuance of new ordinary
shares in December 2010. The decrease in profit attributable to
shareholders is mainly due to substantial decrease in the net gain
on change in fair value of biological assets as all the orange
trees in the Xinfeng Plantation becoming fruit bearing in the
previous and there was no transfer of infant trees to orange trees
during the six months ended 31 December 2011.
The core net profit per share for the six months ended 31
December 2011 increased to RMB0.25 (12/2010: RMB0.23).
Debt ratio
The net cash positions of the Group were RMB2,413.6 million and
RMB2,232.2 million at 31 December 2011 and 30 June 2011
respectively.
Internal cash resource
The Group's major internal cash resource is its cash and bank
balances. The Group did not have any outstanding bank borrowings as
at 31 December 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 31 December
2011.
Capital commitment
As at 31 December 2011, the Group had a capital commitment of
approximately RMB69.8 million mainly in relation to the
construction of the farmland infrastructure in the Hunan Plantation
and the new juicing plant in Basie 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 operations to which they relate. 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.) located in the Hepu county of the
Guangxi Zhuang Autonomous Region, the Hepu Plantation,
approximately 56,000 mu (equivalent to approximately 37.3 sq.km.)
in the Xinfeng county of the Jiangxi province, the Xinfeng
Plantation and approximately 53,000mu (equivalent to approximately
35.3 sq.km) in the Dao county of the Hunan province, the Hunan
Plantation.
Hepu Plantation
The Hepu Plantation is fully planted and comprises approximately
1.3 million orange trees of which, approximately 1.0 million trees
were producing oranges.
Xinfeng Plantation
The Xinfeng Plantation is fully planted and comprises 1.6
million winter orange trees, all of which are now producing
oranges.
Hunan Plantation
The Hunan Plantation is still under development and comprises
approximately 0.7 million summer orange trees as at 31 December
2011. During the period, approximately 280,000 summer orange trees
were planted with a futher approximately 340,000 summer orange
trees to be planted in the second half of financial year ending 30
June 2012.
The below table sets out the age profile as at 31 December 2011
and the production volume of the plantations for the six months
ended 31 December 2011:
Summer orange trees
Hepu Plantation Hunan Plantation
Age Hepu Plantation Yield Hunan Plantation Yield Total Total Yield
No. of No. of No. of
trees (tonnes) trees (tonnes) trees (tonnes)
0 - - 280,000 - 280,000 -
1 63,584 - 427,400 - 490,984 -
2 64,194 - - - 64,194 -
3 81,261 - - - 81,261 -
4 76,135 - - - 76,135 -
5 55,185 - - - 55,185 -
15 29,996 - - - 29,996 -
16 128,966 - - - 128,966 -
17 186,003 - - - 186,003 -
18 223,741 - - - 223,741 -
909,065 - 707,400 - 1,616,465 -
Winter orange trees
Xinfeng
Hepu Plantation Xinfeng Plantation
Age Hepu Plantation Yield Plantation Yield Total Total Yield
No. of No. of No. of
trees (tonnes) trees (tonnes) trees (tonnes)
5 - - 400,000 23,243 400,000 23,243
6 - - 400,000 28,023 400,000 28,023
7 46,077 3,364 400,000 33,604 446,077 36,968
9 180,180 19,597 400,000 41,831 580,180 61,428
10 42,300 4,974 - - 42,300 4,974
15 91,386 13,469 - - 91,386 13,469
16 10,133 1,524 - - 10,133 1,524
17 12,988 1,978 - - 12,988 1,978
383,064 44,906 1,600,000 126,701 1,983,064 171,607
Grand total 3,599,529 171,607
The below table sets out the age profile as at 31 December 2010
and the production volume of the plantations for the six months
ended 31 December 2010:
Summer orange trees
Hepu Plantation Hunan Plantation
Age Hepu Plantation Yield Hunan Plantation Yield Total Total Yield
No. of No. of No. of
trees (tonnes) trees (tonnes) trees (tonnes)
0 - - 120,760 - 120,760 -
1 64,194 - - - 64,194 -
2 81,261 - - - 81,261 -
3 76,135 - - - 76,135 -
4 55,185 - - - 55,185 -
14 29,996 - - - 29,996 -
15 128,966 - - - 128,966 -
16 186,003 - - - 186,003 -
17 223,741 - - - 223,741 -
845,481 - 120,760 - 966,241 -
Winter orange trees
Xinfeng
Hepu Plantation Xinfeng Plantation
Age Hepu Plantation Yield Plantation Yield Total 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
14 154,970 23,107 - - 154,970 23,107
15 10,133 1,536 - - 10,133 1,536
16 12,988 1,976 - - 12,988 1,976
446,648 50,517 1,600,000 93,181 2,046,648 143,698
Grand total 3,012,889 143,698
VALUATION OF BOLOGICAL ASSETS
The valuation of the Group's orange trees as at 31 December 2011
was conducted on the basis of discounted cash flow. The discount
rate being applied to the discounted cash flow model is based on
The Capital Asset Pricing Model. We begin with the appraised value
of the orange trees by discounting the future income streams
attributable to the orange trees to arrive at a present value and
deduct the tangible assets (including plantation related machinery
and equipment and land improvements) from the appraised value which
are employed in the operation of the plantations.
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 as follows:
1) The discount rate applied for the six months ended 31
December 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.
3) The market prices variables represent the assumed market
price for the Summer Oranges and Winter Oranges produced by the
Group. We adopted the market sales prices prevailing as of the
relevant balance sheet date for each type of orange produced 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 plantations. The selling prices of winter oranges and
summer oranges from the Hepu Plantation and winter oranges from the
Xinfeng Plantation adopted were RMB3,310 per tonne, RMB5,300 per
tonne and RMB3,730 per tonne, respectively, for the six months
ended 31 December 2011 and RMB3,230 per tonne, RMB4,830 per tonne
and RMB3,660 per tonne, respectively, for the six months ended 31
December 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. We applied direct
production costs of 34% (2010: 32% to 37%) and 34% to 50% (2010:
32% to 65%) of sale of oranges for the Hepu Plantation and the
Xinfeng Plantation, respectively, during the six months ended 31
December 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 costs to sell. The following table illustrates
the sensitivity of the Group's gain from changes in fair value of
orange tree less costs to sell to increases or decreases by 100
basis points in the discount rate of 20.0% applied for the six
months ended 31 December 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) 248,399 100,608 (35,361)
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 costs to sell. The following table illustrates
that sensitivity of the Group's gain from changes in fair value of
orange trees less costs to sell to 5.0% increase or decrease in the
yield per tree applied for the six months ended 31 December
2011:
5.0% Decrease Base Case 5.0% Increase
Net gain on change in
fair value of biological
assets (RMB'000) 5,783 100,608 195,435
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 costs to sell. The following table
illustrates the sensitivity of the Group's gain from changes in
fair value of orange trees less costs to sell to 5.0% increase or
decrease in the assumed market prices of oranges as at 31 December
2011 used to calculate gain from changes in fair value of orange
trees less costs to sell for the six months ended 31 December
2011:
5.0% Decrease Base Case 5.0% Increase
Net gain on change in fair
value of biological assets
(RMB'000) (45,406) 100,608 246,623
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 costs to sell. The following table
illustrates the sensitivity of the Group's gain from changes in
fair value of orange trees less costs to sell 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
costs to sell for the six months ended 31 December 2011:
5.0% Decrease Base Case 5.0% Increase
Net gain on change in
fair value of biological
assets (RMB'000) 206,341 100,608 (5,124)
The above sensitivity analyses are intended for illustrative
purposes only, and any variation could exceed the amounts shown
above.
Valuation
The aggregate value of the orange trees in the Hepu Plantation
and Xinfeng Plantation as at 31 December 2011 was estimated to be
approximately RMB2,146 million.
Condensed Consolidated Income Statement
For the six months ended 31 December 2011
Six months ended Year ended
31 December 30 June
2011 2010 2011
Note (Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Turnover 5 1,043,416 624,037 1,412,621
Cost of sales (637,142) (348,600) (674,019)
----------------- -------------- ------------
Gross profit 406,274 275,437 738,602
Other income 6 8,008 4,201 9,787
Net gain on change in fair
value of biological assets 100,608 338,204 598,000
Selling and distribution
expenses (29,016) (27,434) (63,314)
General and administrative
expenses (94,346) (63,937) (161,621)
Profit from operations 391,528 526,471 1,121,454
Finance costs 7(a) (39) (25) (177)
----------------- -------------- ------------
Profit before income tax 7 391,489 526,446 1,121,277
Income tax expense 8 - (1,785) (1,785)
----------------- -------------- ------------
Profit for the period/year 391,489 524,661 1,119,492
================= ============== ============
Attributable to
Equity shareholders of the
Company 383,552 523,351 1,109,992
Non-controlling interest 7,937 1,310 9,500
----------------- -------------- ------------
391,489 524,661 1,119,492
================= ============== ============
RMB RMB RMB
Earnings per share 9
- Basic 0.316 0.586 1.056
================= ============== ============
- Diluted 0.314 0.583 1.050
================= ============== ============
Details of dividends payable to equity shareholders of the
Company attributable to the profit for the period/year are set out
in note 10.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2011
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Profit for the period/year 391,489 524,661 1,119,492
Other comprehensive income
for the period/year
Exchange differences on translation
of financial statements of
foreign operations, net of
nil tax (658) 2,045 901
--------------------- ------------- -----------
Total comprehensive income
for the period/year 390,831 526,706 1,120,393
===================== ============= ===========
Attributable to
Equity shareholders of the
Company 382,894 525,396 1,110,893
Non-controlling interest 7,937 1,310 9,500
--------------------- ------------- -----------
390,831 526,706 1,120,393
===================== ============= ===========
Condensed Consolidated Statement of Financial Position
At 31 December 2011
31 December 30 June
2011 2010 2011
Note (Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
ASSETS
Non-current assets
Property, plant and equipment 1,787,784 1,479,227 1,638,339
Land use rights 69,208 70,569 69,889
Construction-in-progress 59,966 131,943 70,611
Biological assets 2,158,118 1,791,810 2,055,298
Intangible assets 56,102 52,598 53,287
Deposits 18,132 161,888 114,500
Goodwill 1,157,261 1,157,261 1,157,261
------------- ------------- -----------
5,306,571 4,845,296 5,159,185
------------- ------------- -----------
Current assets
Biological assets 33,833 3,412 145,561
Properties for sale 5,830 5,280 5,830
Inventories 67,926 20,446 46,407
Trade and other receivable 11 162,762 141,088 96,503
Cash and cash equivalents 2,413,626 2,929,439 2,232,203
------------- ------------- -----------
2,683,977 3,099,665 2,526,504
------------- ------------- -----------
Total assets 7,990,548 7,944,961 7,685,689
============= ============= ===========
Condensed Consolidated Statement of Financial Position
(continued)
At 31 December 2011
31 December 30 June
2011 2010 2011
Note (Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
EQUITY AND LIABILITIES
Equity
Share capital 12,145 12,013 12,030
Reserves 7,812,422 6,924,690 7,523,764
----------- ----------- -----------
Total equity attributable to
equity
Shareholders of the Company 7,824,567 6,936,703 7,535,794
Non-controlling interest 95,247 79,120 87,310
----------- ----------- -----------
7,919,814 7,015,823 7,623,104
----------- ----------- -----------
Non-current liabilities
Obligations under finance leases 1,034 - 1,034
----------- ----------- -----------
Current liabilities
Trade and other payables 12 69,610 928,966 58,461
Due to a related party - - 3,000
Obligations under finance leases 90 - 90
Income tax payable - 172 -
----------- ----------- -----------
69,700 929,138 61,551
----------- ----------- -----------
Total liabilities 70,734 929,138 62,585
----------- ----------- -----------
Total equity and liabilities 7,990,548 7,944,961 7,685,689
=========== =========== ===========
Net current assets 2,614,277 2,170,527 2,464,953
=========== =========== ===========
Total assets less current liabilities 7,920,848 7,015,823 7,624,138
=========== =========== ===========
Condensed Consolidated Cash Flow Statement
For the six months ended 31 December 2011
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Cash flows from operating activities
Profit before income tax 391,489 526,446 1,121,277
Adjustments for:
Interest income (6,451) (2,290) (7,308)
Finance costs 39 25 177
Depreciation 61,478 38,887 94,830
Share-based payments 25,811 19,542 47,715
Amortisation of land use rights 681 632 1,312
Amortisation of intangible assets 4,805 1,651 5,562
Loss on disposal of property, plant
and equipment 259 71 148
Net gain on change in fair value
of biological assets (100,608) (338,204) (598,000)
Operating profit before working
capital changes 377,503 246,760 665,713
Movements in working capital elements:
Properties for sales - 13,217 12,667
Inventories (21,519) 1,982 (23,979)
Biological assets 111,728 86,809 (55,340)
Trade and other receivables (57,087) (9,700) 34,885
Trade and other payables 10,491 (19,286) (10,623)
Due to a related party (3,000) (7,110) (4,110)
------------- ------------- -----------
Cash generated from operations 418,116 312,672 619,213
Income tax paid - (1,891) (2,063)
------------- ------------- -----------
Net cash generated from operating
activities 418,116 310,781 617,150
------------- ------------- -----------
Condensed Consolidated Statement of Cash Flows (continued)
For the six months ended 31 December 2011
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Cash flows from investing activities
Proceeds from disposal of property,
plant and equipment 27 - 46
Purchase of property, plant and
equipment (6,440) (2,338) (8,832)
Additions to construction-in-progress (106,928) (101,998) (201,976)
Deposits paid for acquisition of
property, plant and equipment - (21,538) (21,538)
Net addition to biological assets (2,212) (4,041) (7,733)
Additions to intangible assets (7,620) (2,000) (6,600)
Increase in time deposits with
terms over three months (82,094) - (166,000)
Interest received 6,451 2,290 7,308
Acquisition of subsidiaries - 505,427 (161,083)
------------- ------------- -----------
Net cash ( used in )/generated
from investing activities (198,816) 375,802 (566,408)
------------- ------------- -----------
Cash flows from financing activities
Proceeds from issue of new shares
from placement, net of shares issuance
costs - 1,284,878 1,284,621
Proceeds from issue of new shares
upon exercise of share options 12,457 28,122 30,893
Shares repurchased and cancelled (15,871) - -
Obligations under finance leases - - 1,124
Repayment of amount due to a shareholder - - (213,788)
Dividend s paid (116,518) (45,193) (62,286)
Finance costs paid (39) (25) (177)
------------- ------------- -----------
Net cash ( used in )/generated
from financing activities (119,971) 1,267,782 1,040,387
------------- ------------- -----------
Net increase in cash and cash equivalents 99,329 1,954,365 1,091,129
Cash and cash equivalents at beginning
of period/year 2,066,203 975,074 975,074
------------- ------------- -----------
Cash and cash equivalents at end
of period/year 2,165,532 2,929,439 2,066,203
============= ============= ===========
Major non-cash transactions
During the six months ended 31 December 2011, purchase of
property, plant and equipment included an amount of RMB87,196,000
(six months ended 31 December 2010: RMBNil, year ended 30 June
2011: RMBNil) transferred from non-current deposits, and additions
to construction-in-progress included an amount of RMBNil (six
months ended 31 December 2010: RMBNil, year ended 30 June 2011:
RMB47,388,000) transferred from non-current deposits.
Notes to the Interim Financial Information
1 GENERAL INFORMATION
Asian Citrus Holdings Limited 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 of 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 BASIS OF PREPARATION
This interim financial information has been prepared in
accordance with International Accounting Standard ("IAS") 34,
Interim financial reporting, issued by the International Accounting
Standards Board ("IASB"), the applicable disclosure provisions of
the Rules Governing the Listing of Securities on the HKEx and the
AIM Rules issued by the London Stock Exchange. The interim
financial information is presented in Renminbi ("RMB"), rounded to
the nearest thousand, unless otherwise stated.
The interim financial information has been prepared under the
historical cost convention, as modified by the revaluation of
biological assets which are carried at their fair values. The
principal accounting policies adopted in the preparation of this
interim financial information are consistent with those followed in
the Group's annual financial statements for the year ended 30 June
2011, except for the accounting policy changes that are expected to
be reflected in the Group's annual financial statements for the
year ending 30 June 2012. Details of these changes in accounting
policies are set out in note 3.
The preparation of interim financial information in conformity
with IAS 34 requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses on a year to
date basis. Actual results may differ from these estimates.
This interim financial information contains condensed
consolidated financial statements and explanatory notes. The notes
include an explanation of events and transactions that are
significant to an understanding of the changes in financial
position and performance of the Group since the2011 annual
financial statements. The condensed consolidated financial
statements and notes thereon do not include all of the information
required for a full set of financial statements prepared in
accordance with International Financial Reporting Standards
("IFRSs").
The interim financial information is unaudited, but has been
reviewed by the Company's Audit Committee. This interim financial
information has also been reviewed by the Company's auditor in
accordance with International Standard on Review Engagements 2410,
Review of interim financial information performed by the
independent auditor of the entity.
3 CHANGES IN ACCOUNTING POLICIES
The IASB has issued a number of new IFRS and 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 financial
statements:
-- Amendments to IFRSs contained in Improvements to IFRSs (2010)
-- Disclosures - Transfers of financial assets (Amendments to IFRS 7)
-- IAS 24 (Revised 2009), Related party disclosures
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 interim financial information.
Up to the date of issue of this interim financial information,
the IASB has issued a number of amendments, new standards and
interpretations which are not yet effective for the year ending 30
June 2012 and which have not been adopted in the interim financial
information. Of these developments, the following relates to
matters that may be relevant to the Group's operations and
financial statements:
Effective for
accounting periods
beginning on or
after
Amendments to IAS 12, Income taxes 1 January 2012
Amendments to IAS 1, Presentation of financial 1 July 2012
statements
IAS 19, Employee benefits 1 January 2013
IAS 27, Separate financial statements 1 January 2013
IFRS 9, Financial instruments 1 January 2013
IFRS 10, Consolidated financial statements 1 January 2013
IFRS 12, Disclosure of interests in other 1 January 2013
entities
IFRS 13, Fair value measurement 1 January 2013
The Group is in the process of making an assessment of what the
potential impact of these amendments is expected to be in the
period of initial application but is not yet in a position to
determine whether their adoption will have a significant impact on
the Group's results of operations and financial position.
4 SEGMENT INFORMATION
The Group manages its businesses 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 identified three reportable segments. The segments are
managed separately as each business offers different products and
required different business strategies. The following summary
describes the operations in each of the Group's reportable
segments:
-- 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 and its subsidiaries (together the "BPG group") on 30
November 2010, the Group has expanded its businesses into processed
fruits operation.
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.
4 SEGMENT INFORMATION (continued)
Segment results, assets and liabilities
Six months ended 31 December 2011:
Agricultural Processed
produce fruits Others Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
RMB'000 RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and revenue from external
customers 646,513 396,903 - 1,043,416
------------ ----------- ----------- -----------
Reportable segment results 322,487 109,326 (1,615) 430,198
------------ ----------- ----------- -----------
Unallocated corporate
expenses (41,539)
Unallocated corporate
other revenue 2,830
-----------
Profit before income
tax 391,489
Income tax expense -
-----------
Profit for the period 391,489
===========
ASSETS
Segment assets 4,774,471 1,441,153 156,877 6,372,501
Unallocated corporate
assets 1,618,047
-----------
Total assets 7,990,548
===========
LIABILITIES
Segment liabilities (57,728) (8,719) (2,216) (68,663)
Unallocated corporate
liabilities (2,071)
-----------
Total liabilities (70,734)
===========
OTHER INFORMATION
Additions to segment
non-current assets 97,106 111,000 - 208,106
============ =========== =========== ===========
4 SEGMENT INFORMATION (continued)
Segment results, assets and liabilities (continued)
Six months ended 31 December 2010:
Agricultural Processed
produce fruits Others Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
RMB'000 RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and revenue from external
customers 528,429 69,410 26,198 624,037
------------ ----------- ----------- -----------
Reportable segment results 529,007 18,031 9,310 556,348
------------ ----------- ----------- -----------
Unallocated corporate
expenses (32,381)
Unallocated corporate
other revenue 2,479
-----------
Profit before income
tax 526,446
Income tax expense (1,785)
-----------
Profit for the period 524,661
===========
ASSETS
Segment assets 3,973,328 1,141,093 162,033 5,276,454
Unallocated corporate
assets 2,668,507
-----------
Total assets 7,944,961
===========
LIABILITIES
Segment liabilities (32,301) (226,989) (1,583) (260,873)
Unallocated corporate
liabilities (668,265)
-----------
Total liabilities (929,138)
===========
OTHER INFORMATION
Additions to segment
non-current assets 105,679 657 - 106,336
============ =========== =========== ===========
4 SEGMENT INFORMATION (continued)
Segment results, assets and liabilities (continued)
Year ended 30 June 2011:
Agricultural Processed
produce fruits Others Total
(Audited) (Audited) (Audited) (Audited)
RMB'000 RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and revenue from external
customers 969,030 417,393 26,198 1,412,621
------------ --------- --------- ---------
Reportable segment results 1,042,192 131,845 6,035 1,180,072
------------ --------- --------- ---------
Unallocated corporate
expenses (63,073)
Unallocated corporate
other revenue 4,278
---------
Profit before income
tax 1,121,277
Income tax expense (1,785)
---------
Profit for the year 1,119,492
=========
ASSETS
Segment assets 4,308,483 1,341,034 158,962 5,808,479
Unallocated corporate
assets 1,877,210
---------
Total assets 7,685,689
=========
LIABILITIES
Segment liabilities (40,244) (17,268) (2,687) (60,199)
Unallocated corporate
liabilities (2,386)
---------
Total liabilities (62,585)
=========
OTHER INFORMATION
Additions to segment
non-current assets 236,521 28,197 - 264,718
============ ========= ========= =========
5 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:
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Sales of oranges 644,278 525,724 962,127
Sales of self-bred saplings 2,235 2,705 6,903
Sales of processed fruits 396,903 69,410 417,393
Sales of property units - 26,198 26,198
1,043,416 624,037 1,412,621
=========== =========== ==========
6 OTHER INCOME
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Interest income 6,451 2,290 7,308
Reversal of impairment loss
on interest in an associate - 1,703 1,703
Government grants 1,450 - 315
Sundry income 107 208 461
----------- ----------- ----------
8,008 4,201 9,787
=========== =========== ==========
7 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting)
the following:
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
(a) Finance costs
Bank charges 39 25 81
Finance charges on obligations
under finance lease - - 96
----------- ----------- ----------
39 25 177
----------- ----------- ----------
(b) Staff costs (including
directors' emoluments)
- Salaries, wages and other
benefits 56,039 36,429 73,498
- Share-based payments 25,811 19,542 47,715
* Contribution to defined contribution retirement plans 1,150 446 1,561
----------- ----------- ----------
83,000 56,417 122,774
----------- ----------- ----------
(c) Other items
Amortisation of land use
rights 681 632 1,312
Amortisation of intangible
assets 4,805 1,651 5,562
Auditor's remuneration 1,200 650 1,755
Cost of agricultural produce
sold# 356,228 285,748 384,984
Cost of property units sold - 13,742 13,742
Cost of inventories of processed
fruits recognised as expenses## 280,914 48,700 275,293
Depreciation of property,
plant
and equipment 61,478 38,887 94,830
Add: Realisation of depreciation
previously capitalised
as
biological assets 21,821 12,746 12,746
Less: Amount capitalised
as
biological assets (9,879) (1,891) (22,796)
----------- ----------- ----------
73,420 49,742 84,780
Exchange losses, net 6,551 1,218 10,475
Operating lease expenses
- plantation base 6,365 4,378 8,641
- properties 630 1,525 941
Research and development costs 3,888 4,753 8,164
Loss on disposal of property,
plant
and equipment 259 71 148
=========== =========== ==========
7 PROFIT BEFORE INCOME TAX (continued)
# Cost of agricultural produce sold includes RMB81,689,000 (six
months ended 31 December 2010: RMB73,097,000, year ended 30 June
2011: RMB96,330,000) 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 RMB30,097,000 (six months ended 31 December 2010:
RMB3,937,000, year ended 30 June 2011: 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.
8 INCOME TAX EXPENSE
Income tax expense in the condensed consolidated income
statement represents:
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Current Tax
PRC enterprise income tax -
provision for the period/year - 983 983
Land appreciation tax - provision
for the period/year - 802 802
- 1,785 1,785
=================== ============= ===========
(i) Pursuant to the rules and regulations of Bermuda, Cayman
Islands and the 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 profits 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 thePRC 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.
8 INCOME TAX EXPENSE (continued)
(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 31 December 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.
9 EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is based
on the following:
Six months ended Year ended
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Earnings
Profit attributable to equity
shareholders of the Company
used in basic and diluted earnings
per share calculation 383,552 523,351 1,109,992
============= ============= =============
Weighted average number of shares '000 '000 '000
Issued ordinary shares at beginning
of period/year 1,215,157 852,650 852,650
Effect of shares issued to shareholders
participating in the scrip dividend 51 38 3,650
Effect of shares upon exercise
of share options 1,433 8,308 11,352
Effect of shares issued as part
of the consideration for acquisition
of subsidiaries - 28,549 95,344
Effect of shares upon placement - 3,804 88,219
Effect of shares repurchased
and cancelled (1,114) - -
Weighted average number of ordinary
shares used in basic earnings
per share calculation 1,215,527 893,349 1,051,215
Effect of dilutive potential
shares in respect of share options 4,401 3,690 6,044
Weighted average number of ordinary
shares used in diluted earnings
per share calculation 1,219,928 897,039 1,057,259
============= ============= =============
10 DIVIDENDS
An interim dividend of RMB0.03 (six months ended 31 December
2010: RMB0.02)and a special dividend of RMB0.02 (six months ended
31 December 2010: Nil) per ordinary share in respect of the six
months ended 31 December 2011 was declared after the end of the
reporting period. The interim and special dividends have not been
recognised as a liability at the end of the reporting period.
Final dividend of RMB0.10 and special dividend of RMB0.03 per
ordinary share in respect of the year ended 30 June 2011 were
approved on 8 November 2011 and paid on 30 December 2011.
11 TRADE AND OTHER RECEIVABLES
Included in trade and other receivables are trade receivables
with the ageing analysis based on invoice date is as follows:
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Less than 1 month 76,798 54,282 22,262
1 to 3 months 20,309 1,067 4,894
3 to 6 months 26 1 79
6 to 12 months 18 - 1,240
over 1 year 75 2,805 186
97,226 58,155 28,661
=========== =========== =========
Trade receivables from sales of goods are normally due for
settlement within 30 to 45 days from the date of billing, while
that from sales of property units are due for settlement in
accordance with the terms of the related sale and purchase
agreements.
The ageing analysis of trade receivables that are neither
individually nor collectively considered to be impaired is as
follows:
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Neither past due nor impaired 88,022 57,972 22,191
----------- ----------- ---------
Less than 1 month past due 8,451 - 5,064
1 to 3 months past due 645 - 220
3 to 6 months past due 10 43 87
6 to 12 months past due 66 35 1,024
over 1 year past due 32 105 75
Amount past due but not
impaired 9,204 183 6,470
----------- ----------- ---------
97,226 58,155 28,661
=========== =========== =========
11 TRADE AND OTHER RECEIVABLES (continued)
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.
12 TRADE AND OTHER PAYABLES
Included in trade and other payables are trade payables and
amount due to a related party with the ageing analysis based on
invoice date is as follows:
31 December 30 June
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
RMB'000 RMB'000 RMB'000
Due within 3 months on demand 19,815 11,612 28,456
Due after 3 months but within
6 months 246 413 93
Due after 6 months but within
1 year 423 104 126
Due over 1 year 90 59 136
----------- ----------- ----------
20,574 12,188 28,811
=========== =========== ==========
Represented by:
Trade payables 20,574 12,188 25,811
Amount due to a related party - - 3,000
----------- ----------- ----------
20,574 12,188 28,811
=========== =========== ==========
13 FINANCIAL INFORMATION
The results announcement was approved by the Board on 24
February 2012. The interim financial information has been prepared
on a going concern basis in accordance with IAS 34, Interim
financial reporting. The accounting policies applied in preparing
the interim financial information are consistent with those adopted
and disclosed in the Group's consolidated financial statements for
the year ended 30 June 2011.
Other Information
DIVIDENDS
The Board recommended the payment of an interim dividend of
RMB0.03 and a special dividend of RMB0.02 per share for the six
months ended 31 December 2011. We believe that the declaration of
the interim and special dividends is in the interest of the
shareholders and allow our shareholders to share the successful
results of the Group.
The interim and special dividends will be paid in sterling or HK
Dollars on or before 4 May 2012 to shareholders that appear on the
Company's register of members at the close of business on the
record date of 9 March 2012, with an ex-dividend date of 8 March
2012 and 7 March 2012 on The HKEx 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 13 March 2012.
In order to qualify for receiving the interim and special
dividends, 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 9
March2012.
Purchase, Sale and Redemption of the Company's Listed
Securities
During the six months ended 31 December 2011, the Company
repurchased 3,500,000 ordinary sharesof HK$0.01 on the HKEx at an
aggregate consideration of HK$17,633,690 before expenses. The
repurchased shares were subsequently cancelled. The repurchases
were effected by the Board for the enhancement of shareholder value
in the long term. Details of the repurchases are as follows:
Purchase consideration
Month of purchase No. of per share Aggregate
in the six months shares Highest Lowest Consideration
ended 31 December 2011 purchased price paid price paid paid
HK$ HK$ HK$
October 2,000,000 5.20 5.09 10,362,420
November 1,500,000 5.00 4.69 7,271,270
--------- -------------
Total 3,500,000 17,633,690
========= =============
Saved as disclosed above, neither the Company nor any of its
subsidiaries had purchased, sold or redeemed any of the Company's
listed securities during the six months ended 31 December 2011.
Code on Corporate Governance Practices
The Directors, where practicable for an organisation of the
Group's size and nature, sought to comply with the UK 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:-
1. Directors;
2. Directors' Remuneration;
3. Accountability and Audit;
4. Relations with Shareholders; and
5. 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 ("Code") contained in
Appendix 14 to the HKEx Listing Rules as its additional code on
corporate governance practices on 17 November 2009. The Company
complied with applicable code provisions in the Code throughout the
six months ended 31 December 2011, with deviation(s) listed
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.
Compliance with the Model Code for Securities Transactions by
Directors of Listed Issuers
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 Company also adopted the
Model Code for Securities Transactions by Directors of Listed
Issuers ("Model Code") set out in Appendix 10 to the HKEx Listing
Rules. The Directors have confirmed, following a specific enquiry
by the Company, that they have fully complied with the required
standard as set out in the Model Code throughout the period ended
31 December 2011.
REVIEW OF FINANCIAL STATEMENTS
The Audit Committee comprises three independent non-executive
directors. Mr. Ma Chiu Cheung Andrew acts as Chairman of the
committee with Mr. Nicholas Smith and Mr. Yang Zhenhan acting as
members. The arrangement of AuditCommittee is in compliance with
Rule 3.21 of the HKEx 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 unaudited financial
statements for the period ended 31 December 2011.
PUBLICATION OF INTERIM REPORT
The interim report will be published on the respective websites
of the Company (www.asian-citrus.com) under the investor relations
section and theHong Kong Exchanges and Clearing Limited
(www.hkex.com.hk).
BY ORDER OF THE BOARD
Asian Citrus Holdings Limited
Tong Wang Chow
Chairman
Hong Kong, 24 February 2012
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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