TIDMACHL
RNS Number : 0788P
Asian Citrus Holdings Ltd
27 September 2013
Hong Kong Exchanges and Clearing Limited and The Stock Exchange
of Hong Kong Limited take no responsibility for the contents of
this announcement, make no representation as to its accuracy or
completeness and expressly disclaim any liability whatsoever for
any loss howsoever arising from or in reliance upon the whole or
any part of the contents of this announcement.
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 2013
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 2013.
Results Highlights
For illustration
Year ended 30 June only
Year ended 30 June
2013 2012 % change 2013 2012
(RMB m) (RMB m) (GBP m**) (GBP m**)
Reported financial information
Revenue 1,485.9 1,776.1 -16.3 158.8 178.7
Gross profit 497.6 792.4 -37.2 53.2 79.7
EBITDA 211.3 876.7 -75.9 22.6 88.2
Profit attributable to
shareholders 114.4 750.2 -84.8 12.2 75.5
Basic EPS RMB0.09 RMB0.62 -85.5 1.0p 6.2p
Final Dividend RMB0.05 RMB0.13 -61.5 0.5p 1.3p
Interim and Special Dividends RMB0.05 RMB0.05 - 0.5p 0.5p
Total Dividend RMB0.10 RMB0.18 -44.4 1.1p 1.8p
Core net profit#
EBITDA 496.5 755.6 -34.3 53.0 76.0
Net profit 399.6 629.1 -36.5 42.7 63.3
Basic EPS RMB0.33 RMB0.52 -36.5 3.5p 5.2p
** Conversion at GBP1 = RMB9.36 and RMB9.94 for the years ended
30 June 2013 and 2012 respectively for reference only.
# Core net profits refers to profit for the year excluding net
gain on change in fair value of biological assets and share-based
payment.
- Total orange production decreased by 10.2% to 218,600 tonnes
due to the replanting programme and outbreak of citrus canker in
Hepu Plantation.
- Taken measures to combat the citrus canker such as trimming,
additional application of fertilisers, pesticides and bactericides
and strengthening the inspection.
- Core net profit was RMB399.6 million (2012: RMB629.1 million).
- Strong operating cash inflow of RMB560.3 million (2012:
RMB754.7 million) and cash and cash equivalent of RMB2,141.2
million as at 30 June 2013 (2012:RMB2,388.1 million).
- Planted approximately 1.4 million summer orange and grapefruit
trees in Hunan Plantation with an additional 400,000 grapefruit
trees scheduled for planting before end of 2013.
- Commenced trial production at the 40,000 tonnes fruit
processing plant in Basie City Guangxi, which is expected to start
normal operation in the 2013/2014 financial year. This is the
Group's third processing plant.
- Diversified our product mix to plant banana trees and
grapefruit trees in Hepu Planation and Hunan Plantation
respectively.
- Recommended final dividend of RMB0.05 (2012: RMB0.13) per
share which together with the interim and special dividends of
RMB0.05 per share, will represent a total dividend of RMB0.10
(2012: RMB0.18) per share for the full year ended 30 June 2013.
This equates to approximately 30.7% of the core net profit.
- Confident of more encouraging results in the year ahead.
For further enquiries please contact:
Asian Citrus
Tony Tong / Tommy Tong, Executive Director +852 2559 0323
Cantor Fitzgerald Europe (NOMAD and
Joint Broker)
Rick Thompson / David Foreman (Corporate
Finance) +44 (0) 20 7894 7000
Richard Redmayne (Corporate Broking)
Liberum Capital Limited (Joint Broker)
Clayton Bush / Richard Bootle +44 (0) 20 3100 2222
Weber Shandwick Financial
Nick Oborne, Stephanie Badjonat, John +44 (0) 20 7067 0700
Moriarty +44 (0) 79 7140 2224
Chairman's Statement
For the year ended 30 June 2013, we again faced a number of
challenges. These for the most part proved
to be of a temporary nature and are currently being
resolved.
The most serious challenge we experienced was the decline in
production of winter and summer oranges at our Hepu Plantation in
Guangxi, which led to a drop in revenue for the year. There were
two reasons for the decrease in our crop yield. First was the
ongoing replanting programme for replacing our existing winter
orange trees at the Hepu Plantation. The second, also at Hepu, was
an outbreak of citrus canker caused by the severe weather
conditions of last year.
In addition, our fruit processing business continued to suffer
from the lower average selling price of pineapple juice
concentrates, our main product, over the whole year as compared
with the previous year.
Nevertheless, we are confident in the prospects for our business
and have taken proactive measures to ensure 2013/14 will be a more
productive year for Asian Citrus.
Financial Highlights
The Group's total revenues for the year under review decreased
by approximately 16.3% from RMB1,776.6 million to RMB1,485.9
million, whilst core net profit for the year declined by
approximately 36.5% from RMB629.1 million to RMB399.6 million.
Revenue from the sale of oranges at our two operating
plantations (Hepu and Xinfeng) decreased by 13.0% to RMB920 million
for the year ended 30 June 2013. This was mainly due to a decrease
of approximately 10.2% in the Group's production to 218,600 tonnes,
combined with a 2.9% decrease in the average selling price of
oranges.
Revenue from the sale of processed fruits fell by 20.8% to
RMB564.1 million for the year as compared with the same year in
2012, due primarily to the lower average selling price of pineapple
juice concentrates. The price for pineapple juice concentrates
reached a low in August 2012, recovered slightly through to and
during the first quarter of 2013 and remained flat thereafter.
Our fruit processing business, Beihai BPG, processes over 22
different types of fruit with differing gross profit margins. The
normalised gross profit margin of Beihai BPG for the year ended 30
June 2013 decreased to 26.0% compared with 30.8% last year.
Operational Review
Our three plantations in mainland China occupy a total area of
around 103 square kilometres with two currently in operation: Hepu
Plantation in Guangxi Zhuang Autonomous Region ("Guangxi") and
Xinfeng Plantation in Jiangxi Province. Our third plantation in
Hunan province remains on track to begin production in 2014.
For the year to 30 June 2013, the production at Hepu Plantation
decreased by 22.7% from 116,720 tonnes to 90,205 tonnes. This was
mainly due to the ongoing replanting programme started last year to
replace the existing winter orange trees. Another contributing
factor in the decline at the Hepu Plantation was the unstable
weather in 2012 that led to an extensive infection of citrus
canker, a latent infection amongst oranges and other citrus crops
that affects the leaf and the fruit, and causes premature fruit
drop. To combat this outbreak, we have been trimming trees to
reduce the disease's impact and have applied additional
fertilisers, pesticides and bactericide from May to August 2013. We
have also doubled our inspections of the trees from twice a month
to once a week during the typhoon period from June to September.
Although we believe the effect of the citrus canker infection will
be limited to the current year's summer crop, as of the time of
writing there are still two months left in the typhoon season so
the ultimate effectiveness of our treatment programme is yet to be
determined.
The production from the Xinfeng Plantation, on the other hand,
increased by 1.3% to 128,395 tonnes for the year ended 30 June 2013
compared with 126,701 tonnes last year as the orange trees
continued to mature.
Our third plantation in Hunan province, which was developed in
2007, is on schedule to begin first harvesting from the first batch
of the summer orange trees in 2014. By June 2013, our fourth phase
of planting, we had planted 1.4 million trees and will plant
another 400,000 trees by the end of 2013 to reach a total of 1.8
million trees.
Through our 92.94% equity interest in Behai BPG we operate two
fruit processing plants: one in Beihai city and the other in Hepu
county in Guangxi. Covering a total site area of nearly 110,000
square metres, these plants have an annual production capacity of
over 60,000 tonnes with an average utilisation rate of 87.7% for
the year ended 30 June 2013.
We will be increasing our overall production capacity with a
third plant in BaFise City, Guangxi, which has successfully
commenced trial production and is scheduled to start normal
operation in the 2013/2014 financial year. It is expected that in
the first year of full operation, the utilisation rate of the new
plant will not be as high as the two existing plants as it
typically take three to five years for a new plant to achieve full
capacity.
Diversifying Our Product Mix
In order to diversify our product portfolio and minimise the
seasonal impact of relying on one crop, we are replacing some of
our winter orange trees at the Hepu Plantation with banana
trees.
We believe that bananas are an excellent replacement crop.
Unlike orange trees which require four years before first harvest,
new banana trees can be harvested after only 12 months giving us a
faster payback period. Following a trial planting of approximately
220,000 banana trees in August 2013, we expect that we can begin
harvesting in September 2014.
Another advantage of bananas is that less land is needed for
their cultivation, which provides us with greater flexibility to
lease more land should the trial prove successful as anticipated.
Bananas will be sold in the domestic market and processed as frozen
fruit at our processing facilities.
We are also planting another new crop, grapefruit, in the Hunan
Plantation using high quality seedlings from the United States.
This is the first time grapefruits, a type of citrus fruit which
until now have been imported from the US or Thailand, are being
cultivated by a large plantation operation in China. Again,
grapefruits will extend our harvesting period (from mid-August to
Chinese New Year) and help us balance our revenue stream.
In future, we will consider other fruits, such as pineapples for
processing into juice concentrates, and are investigating land
suitable for growing this fruit.
Corporate Governance
During the year, there were a number of changes to our
management and board. On behalf of the Board, I would like to
express my appreciation to Mr. Ip Chi Ming, Mr. Nicholas Smith and
Mr. Sung Chi Keung for the invaluable contributions to the Company.
I would also like to thank and welcome Mr. Ng Hoi Yue to the
Board.
With the changes to the Board's composition, five of the members
(over half) are now Independent Non- Executive Directors, which
more than fulfils the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited ("Hong Kong Listing Rules")
and reflects our commitment to good corporate governance.
Despite the changes in the Board and senior management, the
transition has been smooth with no material impact on our
operations. Further, a committee has been formed to select the
replacement of the Chief Financial Officer of the Company by
December 2013.
Dividend
We have decided to recommend a dividend to our shareholders, in
line with our existing dividend policy of issuing dividends of at
least 30% of our core net profit.
The Directors are pleased to recommend that a final dividend of
RMB0.05(2012: RMB0.13) per share. The final dividend, together with
the interim and special dividends of RMB0.03 (2012: RMB0.03) and
RMB0.02 (2012: RMB0.02) per share, will make a total of RMB0.10
(2012: RMB0.18) per share for the whole year ended 30 June
2013.
The final dividend, if approved at the annual general meeting on
12 November 2013, will be paid in Sterling or HK Dollars on or
before 31 December 2013, to shareholders on the register at the
close of business on 15 November 2013, with an ex-dividend date of
14 November 2013 and 13 November 2013 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 19 November 2013.
In addition to a cash dividend, the Directors have also decided
to continue the Scrip Dividend Scheme, in which shareholders can
choose to receive the final dividend for the year in the form of
shares. This scheme offers an additional option to shareholders as
well as the opportunity to buy more shares at a low price.
Share Repurchase Programme
We instituted a share repurchase programme in October 2011 under
which the repurchased shares are forcancellation. To date, we have
spent close to HK$90 million in share buybacks.
The Year Ahead
The year under review was challenging for Asian Citrus, but we
are confident that the coming year offers much brighter prospects
for our business.
As I mentioned earlier, the severe citrus canker outbreak may be
temporary and we are taking preventive measures to minimize the
risk to our future crops. We also anticipate that production
volumes of summer oranges from the Hepu Plantation will return to
previous levels in the financial year 2014, subject to normal
weather conditions.
Over the medium term, we also expect the Hunan plantation to
begin producing oranges and contribute to the overall production
volume of oranges.
The diversification of our product portfolio with the addition
of bananas, grapefruits and possibly other fruits will help shield
us from the price fluctuations and biological threats that leave us
vulnerable when specialising in a single crop.
We can also expect greater production capacity from our fruit
processing business when the new plant at Baise City comes fully on
stream. Together with our diversification strategy for our
plantations, this will fuel the organic growth of the Company. The
Group will also be seeking opportunities for flexible growth
through suitable merger and acquisition activities.
On behalf of the Board, I would like to take this opportunity to
thank our management team and employees for their unwavering
commitment to the Company. I would also like to extend my gratitude
to our shareholders, business partners and investors for their
continuing support during this challenging period. Although we have
faced challenges over the past year, our fundamentals are sound and
I remain confident that we will begin to provide more encouraging
results in the year ahead.
Tony Tong
Chairman
27 September 2013
Management Discussion and Analysis
OPERATING PERFORMANCE
Revenue
The breakdown of revenue by types is as follows:
For the year ended 30 June
2013 2012
% of % of
RMB'000 total revenue RMB'000 total revenue
Hepu Plantation 449,230 30.2% 593,454 33.4%
Xinfeng Plantation 470,753 31.7% 463,873 26.1%
--------- ------------- --------- -------------
Sale of oranges 919,983 61.9% 1,057,327 59.5%
Sale of processed fruit 564,089 38.0% 715,473 40.3%
Sale of self-bred saplings 1,840 0.1% 3,344 0.2%
Total revenue 1,485,912 100.0% 1,776,144 100.0%
========= ============= ========= =============
The Group's revenue decreased by 16.3% from RMB1,776.1 million
to RMB1,485.9 million for the year ended 30 June 2013.
Sale of oranges
Revenue from sale of oranges decreased by 13.0% to RMB920.0
million for the year ended 30 June 2013. This was mainly due to a
decrease of approximately 10.2% in the Group's production to
218,600 tonnes combined with 2.9% decrease in average selling price
of the Group.
The production yield from Hepu Plantation decreased by 22.7%
from 116,720 tonnes to 90,205 tonnesfor the year ended 30 June
2013. This was mainly due to the ongoing replanting programme to
replace the existing winter orange trees in the last year and the
unstable weather conditions experienced during 2012 which led to an
extensive infection of citrus canker, a latent infection amongst
oranges and other citrus crops which is for the most part
controllable in normal weather conditions but to which such crops
are at much higher risk during periods of heavy rainfall and
typhoons, such as those experienced in 2012. The infection resulted
in a significant volume of premature fruit drop in the summer
oranges. The Board considers the effect of this severe outbreak of
citrus canker infection will probably be limited to the current
year's summer crop and anticipates that production volumes of
summer oranges from Hepu Plantation will return in the financial
year 2014 to volumes akin to previously reported levels, subject to
normal weather conditions.
As the orange trees continue to mature, the production yield
from the Xinfeng Plantation increased by 1.3% to 128,395 tonnes for
the year ended 30 June 2013 from 126,701 tonnes in the comparable
year. The unstable weather and persistent heavy rainfall in 2012
also limited the growth of this year's winter orange crop in the
Xinfeng Plantation.
The following table sets out the average selling prices of
oranges in different plantations:
Year ended 30 June
2009 2010 2011 2012 2013
(RMB/tonne) (RMB/tonne) (RMB/tonne) (RMB/tonne) (RMB/tonne)
Hepu Plantation
Winter Oranges 3,470 3,567 3,922 4,085 4,013
Summer Oranges 5,057 5,516 6,061 5,856 5,694
Xinfeng Plantation
Winter Oranges 3,260 3,330 3,660 3,770 3,776
The average selling prices of winter and summer oranges were
relatively stable for the year ended 30 June 2013.
All of the Group's oranges were sold domestically. The Group's
customers from the sale of oranges can be divided into three
categories, namely corporate customers, wholesale customers, and
supermarket chains. The breakdown of types of customers is as
follows:
For the year ended 30 June
2013 2012
% of sale of oranges
Types of customers
Supermarket chains 27.9% 34.8%
Corporate customers 43.6% 36.6%
Wholesale customers 28.1% 28.0%
Other 0.4% 0.6%
------------- -------------
Total 100.0% 100.0%
============= =============
For the year ended 30 June 2013, the volume and revenue from
supermarket chains represented approximately 23.7% and 27.9%
respectively of the Group, compared to approximately 29.5% and
34.8% respectively for the year ended 30 June 2012. As the Xinfeng
Plantation has not yet achieved full maturity, 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 volume sold
to supermarkets was 24,907 tonnes and 26,901 tonnes for the year
ended 30 June 2013, down from 39,423 tonnes and 32,347 tonnes for
the year ended 30 June 2012 respectively. The decrease in Hepu
Plantation was mainly due to the lower production yield of oranges
for the year ended 30 June 2013. Also, starting from this year, the
Group has supplied several major domestic and international
supermarket chains with graded oranges through sizeable
distributors instead of through direct sales.
The Company is selling two types of oranges to customers, namely
ungraded oranges and graded oranges. Ungraded oranges are packaged
and the customers have to arrange for the transportation of the
oranges at their own cost. Usually, the ungraded oranges are sold
to wholesale customers. Graded oranges are oranges that the Company
grades, packages and delivers to the customers at our cost, usually
to supermarket customers. The graded oranges are sold under the
"Royal Star" brand to supermarket customers at a premium price
compared to the selling price of ungraded oranges without brand.
The breakdown of types of oranges is as follows:
For the year ended 30 June
2013 2012
% of sale of oranges
Types of oranges
Graded oranges 18.2% 25.7%
Ungraded oranges 81.8% 74.3%
Total 100.0% 100.0%
============= =============
As the Xinfeng Plantation was still at the early stage, the
oranges were mainly sold to corporate and wholesale customers
without grading, thereby negatively impacting the percentage of
sale of graded oranges.
Sale of processed fruits
The table sets out the volume and revenue from the sale of
processed fruits:
For the year ended 30 June
2013 2012
Volume Revenue Volume Revenue
(Tonnes) RMB'000 (Tonnes) RMB'000
Pineapple juice concentrates 18,295 176,929 24,348 271,650
Other fruit juice concentrates 11,230 191,606 10,017 162,239
Other Fruit purees 13,354 88,962 17,472 125,555
Frozen and dried fruits
and vegetables 14,051 93,743 18,170 119,087
56,930 551,240 70,007 678,531
Fruit juice trading N/A 12,849 N/A 36,942
-------- ------- -------- -------
Total 56,930 564,089 70,007 715,473
======== ======= ======== =======
Beihai BPG processes over 22 different types of tropical fruits,
including pineapples, passion fruit, lychees, mangoes and papayas.
Only single products 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 decreased by 21.2% to
RMB564.1 million for the year ended 30 June 2013. This was mainly
due to the lower average selling price of pineapple juice
concentrates, the Group's main juice concentrate product, for the
year ended 30 June 2013 compared to the corresponding period in
2012 as a result of the destocking by Thailand and Philippine
producers. The price of pineapple juice concentrates started to
decrease in January 2012, reached a low in August 2012 and has
improved slightly through to and during the first quarter of 2013
and remained flat thereafter. Also, the unstable weather conditions
limited the supply of several types of fruit available for juice
processing.
The overall average selling price for the year ended 30 June
2013 was therefore lower than last year. The average utilisation
rate of two existing processing plants in Beihai and Hepu is
approximately 87.7% for the year ended 30 June 2013.
Beihai BPG currently generates most of its sales from the
People's Republic of China ("PRC"), with key customers being
beverage mixers supplying major beverage groups.
Sale of self-bred saplings
For the year ended 30 June 2013, RMB1.8 million was recognised
from the sale of approximately 153,000 self-bred saplings to local
farmers.
Cost of sales
The breakdown of cost of sales of the Group is as follows:
For the year ended 30 June
2013 2012
% of % of
cost of sales cost of sales
of respective of respective
RMB'000 segment RMB'000 segment
Inventories used
Fertilisers 297,510 52.2% 252,868 51.8%
Packaging materials 34,597 6.1% 40,420 8.3%
Pesticides 74,664 13.1% 54,844 11.2%
------- -------------- ------- --------------
406,771 71.4% 348,132 71.3%
Production overheads
Direct labour 55,836 9.8% 45,123 9.3%
Depreciation 67,557 11.9% 61,638 12.6%
Others 39,600 6.9% 33,250 6.8%
------- -------------- ------- --------------
Cost of sales of oranges 569,764 100.0% 488,143 100.0%
------- ============== ------- ==============
Fruits 258,550 62.0% 308,783 62.4%
Packaging materials 34,696 8.3% 34,103 6.9%
Direct labour 28,903 6.9% 26,169 5.3%
Other production overheads 95,017 22.8% 125,695 25.4%
------- -------------- ------- --------------
Cost of sales of processed
fruits 417,166 100.0% 494,750 100.0%
------- ============== ------- ==============
Cost of sales of self-bred
saplings 1,383 850
Total 988,313 983,743
======= =======
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 by 16.7% from RMB488.1 million to RMB569.8 million. The
increase in production costs was mainly due to the increase in
fertilisers and pesticides consumed as a result of the unstable
weather and citrus canker during the year and higher labour costs
incurred due to general wage inflation in the PRC during the year.
As a result, the unit cost of production in the Hepu Plantation and
Xinfeng Plantation increased to approximately RMB2.84 and RMB2.44
per kg respectively for the year ended 30 June 2013 (2012: RMB1.81
per kg and RMB2.18 per kg respectively).
Cost of sales of processed fruits mainly includes the costs of
fruits and packaging materials and other direct costs such as
direct labour and production overheads. For the year ended 30 June
2013, the cost of sales of processed fruits decreased by 15.7% from
RMB494.8 million to RMB417.2 million. The decrease was mainly due
to a decrease in the fruits cost by 16.3% from RMB308.8 million to
RMB258.6 million.
Gross profit
The Group's overall gross profit decreased by 37.2% to
approximately RMB497.6 million for the year ended 30 June 2013
(2012: RMB792.4 million).The overall gross profit margin decreased
from 44.6% to 33.5% for the year ended 30 June 2013.
The following table sets out a breakdown of the Group's gross
profit margin by plantation:
For the year ended 30 June
2013 2012
Hepu Plantation 43.0% 64.3%
Xinfeng Plantation 33.4% 40.4%
============= =============
The gross profit margin of the Hepu Plantation and Xinfeng
Planation decreased to approximately 43.0% and 33.4% respectively
(2012: 64.3% and 40.4% respectively). The decrease was mainly due
to the lower production volume, higher volume of fertilisers and
pesticides consumed as a result of the unstable weather and citrus
canker during the year and higher labour costs incurred as a result
of the general wage inflation in the PRC.
The following table sets out a breakdown of the Group's gross
profit margin by business:
For the year ended 30 June
2013 2012
Sale of oranges 38.1% 53.8%
Sale of processed fruits 26.0% 30.8%
Sale of self-bred saplings 24.8% 75.0%
Overall gross profit margin 33.5% 44.6%
============= =============
Due to the higher contribution from Xinfeng Plantation with a
relatively lower margin and the decrease in the gross profit margin
in both Hepu Plantation and Xinfeng Planation, the overall gross
profit margin from sales of oranges dropped to approximately 38.1%
(2012: 53.8%) for the year ended 30 June 2013.
Beihai BPG processes over 22 different types of fruit with
different gross profit margins. The normalised gross profit margin
of Beihai BPG for the year ended 30 June 2013 decreased to 26.0%
compared to 30.8% in last year. This was mainly due to the overall
lower selling price for the year.
Loss on change in fair value of biological assets
The Group recorded a loss of RMB260.5 million from the change in
fair value of biological assets for the year ended 30 June 2013,
compared to a gain of RMB166.9 million last year. The loss was
mainly due to the combined impact from the slight decrease in yield
per tree, slight increase in orange price and the increase in
direct production costs during the year. The Board wishes to
emphasise that the loss on change on fair value of biological
assets is non-operational and does not have any effect on the cash
flow of the Group for the year ended 30 June 2013.
Other income
The increase in other income was mainly due to the higher
interest income arising from the bank balance during the year as
more money has been placed in the fixed deposits with higher
interest rate. The effective interest rate for bank deposits for
the year is approximately 2.23% (2012: 0.93%).
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 decreased from approximately RMB60.6 million
for the year ended 30 June 2012 to approximately RMB45.6 million
for the year ended 30 June 2013, mainly due to the reduction in
transportation costs in the Hepu Plantation resulting from the
reduction in graded oranges sold during the year.
Selling and distribution expenses represented 3.1% of the
Group's revenue, a decrease of 0.3 percentage points as compared to
3.4% in last year, demonstrating the Group's ability to control
costs effectively.
General and administrative expenses
General and administrative expenses comprise mainly salary,
office administration expenses, depreciation, amortization, raw
material and research costs. The general and administrative
expenses of the Group were approximately RMB120.1 million for the
year ended 30 June 2013 (2012: RMB157.6 million), representing a
decrease of 23.8%. The decrease was mainly due to the lower share
based payment in relation to the employee share options.
General and administrative expenses represented 8.1% of the
Group's revenue, a decrease of 0.8 percentage points as compared to
8.9% in last year, demonstrating the Group's ability to control
costs effectively.
Profit
The profit attributable to shareholders for the year ended 30
June 2013 decreased to approximately RMB114.4 million, compared to
approximately RMB750.2 million in last year, representing a
decrease of approximately 84.8%.
The core net profit, which refers to profit for the period
excluding net change in fair value of biological assets and
share-based payments, for the year ended 30 June 2013 was
approximately RMB399.6 million, compared to approximately RMB629.1
million in last year, representing a decrease of approximately
36.5%.
FINAL DIVIDEND
The Directors are pleased to recommend a final dividend of
RMB0.05 (2012: RMB0.13) per share. The final dividend, together
with the interim and special dividends of RMB0.03 (2012: RMB0.03)
and RMB0.02 (2012: RMB0.02) per share, will make a total of RMB0.10
(2012: RMB0.18) per share for the whole year ended 30 June
2013.
PRODUCTIVITY
For the year ended 30 June
2013 2012
% of % of
Types of produce Tonnes Total output Tonnes total output
Winter oranges 161,233 73.8% 171,607 70.5%
Summer oranges 57,367 26.2% 71,814 29.5%
------- -------
Total 218,600 243,421
======= =======
The production volume of winter oranges decreased 6.0% to
161,233 tonnes during the year ended 30 June 2013. The production
volume of winter oranges in Hepu Plantation decreased 26.9% from
approximately 44,906 tonnes last year to approximately 32,838
tonnes in the current year due to the ongoing replanting programme.
In the year to 30 June 2012, 66,449 winter orange trees were
removed and replanted with the same number of the summer orange
trees. The production volume of winter oranges from the Xinfeng
Plantation increased by 1.3% from approximately 126,701 tonnes last
year to approximately 128,395 tonnes in the current year due to
increased maturity during the year. However, the unstable weather
and persistent heavy rainfall in 2012 limited the growth of this
year's winter orange crop in the Xinfeng Plantation.
The production volume of summer oranges decreased to 57,367
tonnes for the year ended 30 June 2013 (2012: 71,814 tonnes) due to
the unstable weather conditions experienced during 2012 which led
toan extensive infection of citrus canker, a latent infection
amongst oranges and other citrus crops which is for the most part
controllable in normal weather conditions but to which such crops
are at much higher risk during periods of heavy rainfall and
typhoons, such as those experienced in 2012. The infection resulted
in a significant volume of premature fruit drop in the summer
oranges. The Board considers the effect of this citrus canker
infection may be limited to the current year's summer crop and
anticipates that production volume of summer oranges from Hepu
Plantation will return in the financial year 2014 to volumes akin
to previously reported levels, subject to normal weather
conditions.
CAPITAL STRUCTURE
As at 30 June 2013 there were 1,229,558,555 shares in issue.
Based on the closing price of HK$2.76 as at 28 June 2013, the
market capitalisation of the Company was approximately HK$3,393.6
million (GBP287.5 million).
HUMAN RESOURCES
There were a total of 1,697 employees of the Group as at 30 June
2013 (2012: 1,692 employees). 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 2013 30 June 2012
Current ratio (x) 23.62 47.49
Quick ratio (x) 21.14 43.49
Asset turnover (x) 0.18 0.21
Core net profit per share (RMB) 0.33 0.52
Basic earnings per share (RMB) 0.09 0.62
Net debt to equity (%) Net cash Net cash
Liquidity
The current ratio and quick ratio was 23.62 and 21.14
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 decreased to 0.18 (2012: 0.21)
for the year ended 30 June 2013. The decline in the ratio was
mainly due to the reduction in the revenue for the year as
mentioned previously.
The basic earnings per share for the year ended 2013 was RMB0.09
(2012: RMB0.62). This was due tothe 84.8% decrease in profit
attributable to shareholders for the year.
The core net profit per share for the year ended 30 June 2013
was RMB0.33 (2012: RMB0.52), representing a decrease of 36.5%.
Debt ratio
The net cash positions of the Group were RMB2,141.2 million and
RMB2,388.1 million at 30 June 2013 and 2012 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 2013.
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 2013.
Capital commitments
As at 30 June 2013, the Group had capital commitments of
approximately RMB74.7 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.) 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
1.2 million orange trees of which approximately 1.0 million trees
were producing oranges. During the year, the last batch of 48,058
winter orange trees were removed according to the replanting
programme and we commenced a trial planting of banana trees in the
same area to diversify its range of produce so as to reduce the
reliance on one agricultural product. A total of approximately
220,000 banana trees were planted in August 2013. The first harvest
of banana is expected in August to September 2014.
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 1.4 million summer orange trees and grapefruit trees
as at 30 June 2013. During the year ended 30 June 2013,
approximately 300,000 grapefruit trees were planted with a further
450,000 grapefruit trees to be planted by end of 2013. By that
time, the construction of Hunan Planation is expected to be
completed.
The below table sets out the age profile as at 30 June 2013 and
the production volume of the plantations for the year ended 30 June
2013:
Summer orange trees
Hunan
Age Hepu Plantation Hepu Plantation Plantation Hunan Plantation Total Total
No. of No. of No. of
trees Yield (tonnes) trees Yield (tonnes) trees Yield (tonnes)
1 66,449 - 622,475 - 688,924 -
2 63,584 - 427,400 - 490,984 -
3 64,194 - - - 64,194 -
4 81,261 1,326 - - 81,261 1,326
5 76,135 2,831 - - 76,135 2,831
6 55,185 2,689 - - 55,185 2,689
16 29,996 2,587 - - 29,996 2,587
17 128,966 11,134 - - 128,966 11,134
18 186,003 17,436 - - 186,003 17,436
19 223,741 19,364 - - 223,741 19,364
975,514 57,367 1,049,875 - 2,025,389 57,367
Grapefruit trees
Age Hepu Plantation Hepu Plantation Hunan Plantation Hunan Plantation Total Total
No. of No. of No. of
trees Yield (tonnes) trees Yield (tonnes) trees Yield (tonnes)
0 - - 301,200 - 301,200 -
- - 301,200 - 301,200 -
Note: Grapefruit is a type of citrus fruit and is harvested
during the winter period in the PRC.
Winter orange trees
Xinfeng Xinfeng
Age Hepu Plantation Hepu Plantation Plantation Plantation Total Total
No. of No. of No. of
trees Yield (tonnes) trees Yield (tonnes) trees Yield (tonnes)
6 - - 400,000 27,860 400,000 27,860
7 - - 400,000 28,907 400,000 28,907
8 46,077 3,963 400,000 31,052 446,077 35,015
10 180,180 18,341 400,000 40,576 580,180 58,917
11 42,300 4,574 - - 42,300 4,574
16 - 3,142 - - - 3,142
-
17 - 1,246 - - - 1,246
18 - 1,572 - - - 1,572
268,557 32,838 1,600,000 128,395 1,868,557 161,233
Grand total 4,195,146 218,600
========= ==============
Note: 24,937 winter orange trees (age: 16), 10,133 winter orange
trees (age: 17) and 12,988 winter orange trees (age:18) were
removed during the year ended 30 June 2013.
The below table sets out the age profile as at 30 June 2012 and
the production volume of the plantations for the year ended 30 June
2012:
Summer orange trees
Age Hepu Plantation Hepu Plantation Hunan Plantation Hunan Plantation Total Total
No. of No. of No. of
trees Yield (tonnes) trees Yield (tonnes) trees Yield (tonnes)
0 66,449 - 622,475 - 688,924 -
1 63,584 - 427,400 - 490,984 -
2 64,194 - - - 64,194 -
3 81,261 - - - 81,261 -
4 76,135 877 - - 76,135 877
5 55,185 2,818 - - 55,185 2,818
15 29,996 2,955 - - 29,996 2,955
16 128,966 15,161 - - 128,966 15,161
17 186,003 21,133 - - 186,003 21,133
18 223,741 28,870 - - 223,741 28,870
975,514 71,814 1,049,875 - 2,025,389 71,814
Winter orange trees
Xinfeng Xinfeng
Age Hepu Plantation Hepu Plantation Plantation Plantation Total Total
No. of No. of No. of
trees Yield (tonnes) trees Yield (tonnes) trees Yield (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 24,937 13,469 - - 24,937 13,469
16 10,133 1,524 - - 10,133 1,524
17 12,988 1,978 - - 12,988 1,978
316,615 44,906 1,600,000 126,701 1,916,615 171,607
Grand total 3,942,004 243,421
========= ==============
Note: 66,449 winter orange trees (age: 15) were removed and
replanted with the same number of summer orange
trees (age: 0) during the year ended 30 June 2012.
VALUATION OF BIOLOGICAL ASSETS
The Group has engaged an independent valuer to determine the
fair value of the orange trees less costs to sell as at 30 June
2013.
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. The independent valuer 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. The independent valuer conducted inspections of the
plantations and performed sample counts on the oranges trees in
connection with its 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 the independent
valuer 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 2013 was
18.0% (2012: 18.0%). 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, the yield
per tree increases from age 3 to 10, remains stable for about 22
years, and then decreases until age 32. The agricultural consultant
of the independent valuer 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. The independent valuer 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. The
selling prices of winter oranges and summer oranges from the Hepu
Plantation and winter oranges from the Xinfeng Plantation adopted
were RMB3,320 per tonne, RMB5,220 per tonne and RMB3,740 per tonne,
respectively, for the year ended 30 June 2013 and RMB3,310 per
tonne, RMB5,200 per tonne and RMB3,730 per tonne, respectively, for
the year ended 30 June 2012.
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.
Sensitive analysis
1) Changes in the discount rate applied result in significant
fluctuations in the 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 18.0% applied
by the independent valuer for the year ended 30 June 2013:
100 basis points 100 basis points
Decrease Base Case Increase
Discount rate 17.0% 18.0% 19.0%
Net change in fair value of
biological assets (RMB'000) (93,268) (260,468) (413,668)
2) Changes in the yield per orange tree can also result in
significant fluctuations in the 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 a
5.0% increase or decrease in the yield per tree applied for the
year ended 30 June 2013:
5.0% Decrease Base Case 5.0% Increase
Net change in fair value of
biological assets (RMB'000) (423,768) (260,468) (97,168)
3) Changes in assumed market prices of the oranges can also
result in significant fluctuations in the 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
a 5.0% increase or decrease in the assumed market prices of oranges
as at 30 June 2013 used to calculate the changes in fair value of
orange trees less estimated point-of-sale costs for the year ended
30 June 2013:
5.0% Decrease Base Case 5.0% Increase
Net change in fair value of
biological assets (RMB'000) (622,168) (260,468) 101,232
4) Changes in the assumed direct production costs can also
result in significant fluctuations in the 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
a 5.0% increase or decrease in the Group's assumed direct
production costs used to calculate thechanges in fair value of
orange trees less estimated point-of-sale costs for the year ended
30 June 2013:
5.0% Decrease Base Case 5.0% Increase
Net change in fair value of
biological assets (RMB'000) (67,568) (260,468) (453,368)
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 the independent valuer, the
aggregate value of the orange trees in the Hepu Plantation and
Xinfeng Plantation as at 30 June 2013 was estimated to be
approximately RMB1,983 million (2012: RMB2,226 million).
Consolidated Income Statement
For the year ended 30 June 2013
2013 2012
Note RMB'000 RMB'000
Turnover 4 1,485,912 1,776,144
Cost of sales (988,313) (983,743)
--------- ---------
Gross profit 497,599 792,401
Other income 53,438 24,089
Net (loss)/gain on change in fair value
of biological assets (260,468) 166,900
Selling and distribution expenses (45,640) (60,579)
General and administrative expenses (120,141) (157,607)
--------- ---------
Profit from operations 124,788 765,204
Finance costs (126) (146)
--------- ---------
Profit before income tax 6 124,662 765,058
Income tax expense 7 - -
--------- ---------
Profit for the year 124,662 765,058
========= =========
Attributable to
Equity shareholders of the Company 114,395 750,200
Non-controlling interest 10,267 14,858
--------- ---------
124,662 765,058
========= =========
RMB RMB
Earnings per share 8
- Basic 0.094 0.615
========= =========
- Diluted 0.093 0.613
========= =========
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2013
2013 2012
RMB'000 RMB'000
Profit for the year 124,662 765,058
Other comprehensive expense for the year
Item that may be reclassified subsequently
to profit or loss:
* Exchange differences on translation of financial
statements of foreign operations, net of nil tax (352) (636)
Total comprehensive income for the year 124,310 764,422
======= =======
Attributable to
Equity shareholders of the Company 114,043 749,564
Non-controlling interest 10,267 14,858
124,310 764,422
======= =======
Consolidated Statement of Financial Position
At 30 June 2013
30 June 30 June
2013 2012
RMB'000 RMB'000
Note
ASSETS
Non-current assets
Property, plant and equipment 1,989,625 1,835,518
Land use rights 72,701 68,527
Construction-in-progress 304,196 178,302
Biological assets 2,168,501 2,305,224
Intangible assets 64,463 58,506
Deposits 84,303 4,251
Goodwill 1,157,261 1,157,261
---------- ----------
5,841,050 5,607,589
---------- ----------
Current assets
Biological assets 212,098 158,636
Properties for sale 5,830 5,830
Inventories 40,277 63,094
Trade and other receivables 10 68,315 86,865
Cash and cash equivalents 2,141,224 2,388,114
---------- ----------
2,467,744 2,702,539
---------- ----------
Total assets 8,308,794 8,310,128
========== ==========
30 June 30 June
2013 2012
RMB'000 RMB'000
Note
EQUITY AND LIABILITIES
Equity
Share capital 12,159 12,083
Reserves 8,078,888 8,138,036
------------ ------------
Total equity attributable to equity
shareholders of the Company 8,091,047 8,150,119
Non-controlling interest 112,420 102,168
------------ ------------
8,203,467 8,252,287
------------ ------------
Non-current liability
Obligation under finance lease 832 937
------------ ------------
Current liabilities
Trade and other payables 11 104,390 56,807
Obligation under finance lease 105 97
104,495 56,904
------------ ------------
Total liabilities 105,327 57,841
------------ ------------
Total equity and liabilities 8,308,794 8,310,128
============ ============
Net current assets 2,363,249 2,645,635
============ ============
Total assets less current liabilities 8,204,299 8,253,224
============ ============
Consolidated Cash Flow Statement
For the year ended 30 June 2013
2013 2012
RMB'000 RMB'000
Cash flows from operating activities
Profit before income tax 124,662 765,058
Adjustments for:
Interest income (50,509) (21,559)
Finance costs 126 146
Share-based payments 24,698 45,812
Amortisation of land use rights 1,360 1,362
Amortisation of intangible assets 12,723 9,781
Depreciation 144,603 126,044
Loss on disposals of property, plant and equipment 2,172 4,828
Loss on disposal of land use right 4,902 -
Loss on deregistration of subsidiaries 192 -
Net loss/(gain) on change in fair value of
biological assets 260,468 (166,900)
-------- --------
Operating profit before working capital changes 525,397 764,572
Movements in working capital elements:
Biological assets (53,462) (13,075)
Inventories 22,817 (16,687)
Trade and other receivables 18,342 25,150
Trade and other payables 47,232 (2,290)
Due to a related party - (3,000)
-------- --------
Net cash generated from operating activities 560,326 754,670
-------- --------
Cash flows from investing activities
Proceeds from disposals of property, plant
and equipment 1,853 6,258
Proceed from disposal of land use right 3,565 -
Purchases of property, plant and equipment (32,823) (38,098)
Purchase of land use right (14,001) -
Additions to construction-in-progress (391,561) (305,115)
Deposits paid for acquisition of property,
plant and equipment (84,297) (4,050)
Net additions to biological assets (123,745) (51,827)
Additions to intangible assets (18,680) (15,000)
Decrease in time deposits with terms over three
months 62,960 103,040
Interest received 50,509 21,559
Net cash used in investing activities (546,220) (283,233)
2013 2012
RMB'000 RMB'000
Cash flows from financing activities
Proceeds from issue of new shares upon exercise
of share options 2,746 12,457
Repurchase of shares (34,548) (46,859)
Repayments of obligation under finance lease (97) (90)
Dividends paid (166,011) (177,848)
Finance costs paid (126) (146)
--------- ---------
Net cash used in financing activities (198,036) (212,486)
--------- ---------
Net (decrease)/increase in cash and cash equivalents (183,930) 258,951
Cash and cash equivalents at beginning of year 2,325,154 2,066,203
--------- ---------
Cash and cash equivalents at end of year 2,141,224 2,325,154
========= =========
Major non-cash transactions
During the year, purchases of property, plant and equipment
included an amount of RMB4,245,000 (2012:RMB98,787,000) transferred
from 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 HKEx, AIM of the London Stock Exchange
and PLUS Markets plc.
The address of the Company's registered office is Clarendon
House, 2 Church Street, Hamilton, HM11, Bermuda. The principal
place of business of the Company is located at Rooms 1109-1111,
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.
2 SIGNIFICANT ACCOUNTING POLICIES
a) Statement of compliance
These consolidated financial statements have been prepared in
accordance with all applicable International Financial Reporting
Standards ("IFRS..), which comprise International Financial
Reporting Standards, International Accounting Standards ("IASs..)
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"), the functional currency of the Group, rounded to
the nearest thousand, unless otherwise stated. They have been
prepared under the historical cost convention, except that certain
biological assets 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 revisionaffects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
3 APPLICATIONs OF NEW AND REVISED IFRSs
The IASB has issued a number of amendments to IFRSs that are
first effective for the current accounting period of the Group and
the Company. Of these, IAS 1 (Amendments), Presentation of
financial statements - Presentation of items of other comprehensive
income is relevant to the Group's consolidated financial
statement.
The amendments to IAS 1 require entities to present the items of
other comprehensive income that would be reclassified to profit or
loss in the future if certain conditions are met separately from
those that would never be reclassified to profit or loss. The
Group's presentation of other comprehensive income in these
consolidated financial statements has been modified
accordingly.
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 2013 and which have not been adopted in the
consolidated financial statements. Of these developments, the
following relates to matters that may be relevant to the Group's
operations and consolidated financial statements:
Improvements to Annual improvements to IFRSs 2009 - 2011
IFRSs cycle(1)
Amendments to IFRS Mandatory effective date of IFRS 9 and
9 and IFRS 7 transition disclosures(3)
Amendments to IFRS Consolidated financial statements, joint
10, IFRS 11 and arrangements and disclosure of interests
IFRS 12 in other entities: transition guidance(1)
Amendments to IFRS Disclosures - Offsetting financial assets
7 and financial liabilities(1)
Amendments to IAS Offsetting financial assets and financial
32 liabilities(2)
Amendments to IAS Recoverable amount disclosures for non-financial
36 assets(2)
IFRS 9 Financial instruments(3)
IFRS 10 Consolidated financial statements(1)
IFRS 12 Disclosure of interests in other entities(1)
IFRS 13 Fair value measurement(1)
IAS 27 (2011) Separate financial statements(1)
(1) Effective for annual periods beginning on or after 1January
2013.
(2) Effective for annual periods beginning on or after 1 January
2014.
(3) Effective for annual periods beginning on or after 1 January
2015.
The Group is in the process of making an assessment of what the
potential 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 of operations or financial position.
4 TURNOVER
Turnover represented the total invoiced value of goods supplied
to customers. The amount of each significant category of revenue
recognised in turnover is as follows:
2013 2012
RMB'000 RMB'000
Sales of oranges 919,983 1,057,327
Sales of self-bred saplings 1,840 3,344
Sales of processed fruits 564,089 715,473
1,485,912 1,776,144
========= =========
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 two
(2012: 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 Group's reportable segments in the year
ended 30 June 2013:
Agricultural produce - planting, cultivation and sale of
agricultural produce
Processed fruits - manufacture and sale of fruit juice
concentrates, fruit purees, frozen fruits and vegetables
Developing and sale of property units in an agricultural
wholesale market and orange processing centre was no longer a
reportable segment in the year ended 30 June 2013. Because of this
change in the composition of the reportable segments, the
corresponding segmental information for the year ended 30 June 2012
has been restated to conform with the current year's
presentation.
No inter-segment transactions incurred between the companies in
the Group.
No customer accounted for 10% or more of the total revenue for
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 Total
2013 2012 2013 2012 2013 2012
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment
revenue and revenue
from external customers 921,823 1,060,671 564,089 715,473 1,485,912 1,776,144
Reportable segment
results 31,912 621,600 138,711 203,714 170,623 825,314
--------- --------- --------- ---------
Unallocated corporate
expenses (50,557) (67,518)
Unallocated corporate
other revenue 4,596 7,262
Profit before income
tax 124,662 765,058
Income tax expense !V !V
Profit for the year 124,662 765,058
========= =========
ASSETS
Segment assets 5,253,592 5,173,015 1,689,669 1,544,498 6,943,261 6,717,513
Unallocated corporate
assets 1,365,533 1,592,615
Total assets 8,308,794 8,310,128
--------- ---------
LIABILITIES
Segment liabilities (76,016) (34,047) (24,483) (17,655) (100,499) (51,702)
Unallocated corporate
liabilities (4,828) (6,139)
Total liabilities (105,327) (57,841)
========= =========
OTHER INFORMATION
Additions to segment
non-current assets 225,539 216,946 321,737 247,376 547,276 464,322
Amortisation of land
use rights - - 306 120 306 120
Amortisation of intangible
assets 7,360 7,760 5,363 2,021 12,723 9,781
Depreciation 71,225 78,252 50,764 42,683 121,989 120,935
Loss on disposal of
property, plant and
equipment - 7 2,168 4,819 2,168 4,826
Construction-in-progress
written off 1,480 - 189 3,351 1,669 3,351
Interest income 32,799 8,618 13,114 5,714 45,913 14,332
Finance charges on
obligation under finance
lease 83 90 - - 83 90
Net (loss)/gain on
change in fair value
of biological assets (260,468) 166,900 - - (260,468) 166,900
Share-based payments 4,980 9,952 16,086 27,400 21,066 37,352
========= ========= ========= ========= ========= =========
6 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting)
the following:
2013 2012
RMB'000 RMB'000
(a) Finance costs
Bank charges 43 56
Finance charges on obligation under
finance lease 83 90
------- -------
126 146
======= =======
(b) Staff costs (including directors'
emoluments)
- salaries, wages and other benefits 114,510 97,880
- share-based payments 24,698 45,812
- contributions to defined contribution
retirement plans 2,775 2,635
------- -------
141,983 146,327
======= =======
(c) Other items
Amortisation of land use rights 1,360 1,362
Amortisation of intangible assets 12,723 9,781
Auditor's remuneration 2,432 2,390
Cost of agricultural produce sold(#) 571,147 488,993
Cost of inventories of processed
fruits
recognised as expenses(##) 417,166 494,750
Depreciation of property, plant and
equipment 144,603 126,044
Add: Realisation of depreciation
previously capitalised as biological
assets 23,423 21,822
Less: Amount capitalised as biological
assets (45,059) (25,955)
------- -------
122,967 121,911
Construction-in-progress written
off 1,669 3,351
Exchange (gains)/losses, net (989) 6,435
Operating lease expenses
- plantation base 9,470 9,394
- properties 1,020 1,115
Research and development costs 4,963 9,255
Loss on disposals of property, plant
and equipment 2,172 4,828
Loss on disposal of land use right 4,902 !V
Loss on deregistration of subsidiaries 192 !V
======= =======
(#) Cost of agricultural produce sold includes RMB133,321,000
(2012: RMB113,974,000) 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 RMB82,422,000 (2012: RMB67,667,000) 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
On the basis stated below, no income tax has been provided by
the Group:
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 the respective tax jurisdictions.
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) No PRC enterprise income tax has been provided as the Group
did not have assessable profit in the PRC during the year. The
provision for PRC enterprise income tax for 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%.
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 2013, 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:
2013 2012
RMB'|000 RMB'000
Earnings
Profit attributable to equity shareholders
of the Company used in basic and diluted earnings
per share calculation 114,395 750,200
========= =========
Weighted average number of shares '000 '000
Issued ordinary shares at beginning of year 1,221,097 1,215,157
Effect of shares issued to shareholders participating
in the scrip dividend 8,811 4,741
Effect of shares issued upon exercise of share
options 55 4,182
Effect of shares repurchased and cancelled (7,236) (3,640)
Weighted average number of ordinary shares
used in basic earnings per share calculation 1,222,727 1,220,440
Effect of dilutive potential shares in respect
of share options 10,035 4,188
Weighted average number of ordinary shares
used in diluted earnings per share calculation 1,232,762 1,224,628
========= =========
9 Dividends
(i) Dividends payable to equity shareholders of the Company attributable to the year
2013 2012
RMB'000 RMB'000
Interim dividend of RMB0.03 and special
dividend of RMB0.02 per ordinary share
declared and paid during the year (2012:
interim dividend of RMB0.03 and special
dividend of RMB0.02 per ordinary share) 61,386 61,330
Final dividend of RMB0.05 per ordinary
share proposed after the end of the reporting
period (2012: final dividend of RMB0.13
per ordinary share) 61,478 158,531
122,864 219,861
======= =======
The final dividend proposed after the end of the reporting
period has not been recognised as a liability 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
2013 2012
RMB'000 RMB'000
Interim dividend of RMB0.03 and special
dividend of RMB0.02 per ordinary share
for the year, approved and paid during
the year (2012: interim dividend of RMB0.03
and special dividend of RMB0.02 per ordinary
share) 61,386 61,330
Final dividend of RMB0.13 per ordinary
share in respect of the previous financial
year, approved and paid during the year
(2012: final dividend of RMB0.10 and special
dividend of RMB0.03 per ordinary share) 158,531 157,710
219,917 219,040
======= =======
10 TRADE AND OTHER RECEIVABLES
Included in trade and other receivables are trade receivables
with the ageing analysis of trade receivables based on invoice date
is as follows:
2013 2012
RMB'000 RMB'000
Less than 1 month 38,576 28,352
1 to 3 months 4,047 84
3 to 6 months - 291
6 to 12 months - -
Over 1 year 113 104
------- -------
42,736 28,831
======= =======
Trade receivables from sales of goods are normally due for
settlement within 30 to 60 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.
The ageing analysis of trade receivables that are neither
individually nor collectively considered to be impaired is as
follows:
2013 2012
RMB'000 RMB'000
Neither past due nor impaired 41,492 27,529
------- -------
Less than 1 month past due 1,174 944
1 to 3 months past due - 6
3 to 6 months past due - 291
6 to 12 months past due - -
Over 1 year past due 70 61
------- -------
Amounts past due but not impaired 1,244 1,302
------- -------
42,736 28,831
======= =======
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 by invoice date is as
follows:
2013 2012
RMB'000 RMB'000
Less than 3 months 62,881 21,246
3 to 6 months 68 93
6 to 12 months 304 543
Over 1 year 299 95
------- -------
63,552 21,977
======= =======
12 Financial Information
The results announcement was approved by the board on 27
September 2013. 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 2012, except for the accounting policies changes
as detailed in Note 3.
The consolidated financial statements for the year ended 30 June
2013 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 2013
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 the payment of a final
dividend of RMB0.05 (2012: RMB0.13) per share on or before 31
December 2013, subject to the approval of the forthcoming annual
general meeting on 12 November 2013. The final dividend, together
with the interim and special dividends of RMB0.03 (2012: RMB0.03)
and RMB0.02 (2012: RMB0.02) per share, will make a total of RMB0.10
(2012: RMB0.18) per share for the whole year ended 30 June 2013.
The actual exchange rate for the purpose of dividend payment in
Sterling and HK Dollar will be referenced to exchange rate on 19
November 2013.
Only shareholders that appear on the Company's register of
members at the close of business on the record date of 15 November
2013 will be qualified for the proposed dividend, with an
ex-dividend date of 14 November 2013 and 13 November 2012 on HKEx
and London Stock Exchange PLC respectively.
In order to qualify for receiving the final 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 4:30 p.m. on 15
November 2013.
The shareholders will receive their cash dividend in Sterling or
HK Dollar. It is also intended that the scrip dividend alternative
to the cash dividend will be offered during 2013. A document
providing further details of the Scrip Dividend Scheme will be sent
to shareholders in due course.
PURCHASE, SALE OR REDEMPTIONS OF THE COMPANY'S LISTED
SECURITIES
During the year ended 30 June 2013, the Company repurchased
10,649,000 ordinary shares of HK$0.01 on the HKEx at an aggregate
consideration of HK$38,387,280 before expenses. The repurchased
shares were subsequently cancelled. The repurchases were effected
by the Board for the enhancement of shareholder value in the long
term. Details of the repurchases are as follows:
Details of the repurchases are as follows:
Purchase consideration
No. of per share Aggregate
shares Highest Lowest Consideration
Month of purchase purchased price paid price paid paid
HK$ HK$ HK$
July 2012 1,131,000 4.40 3.99 4,741,450
November 2012 9,518,000 3.67 3.21 33,645,830
Total 10,649,000 38,387,280
========== =============
On 31 December 2012, 17,768,373 ordinary shares of HK$0.01 were
issued at the price of HK$3.774 per share to shareholder
participating in the scrip dividend.
On 19 June 2013, 415,000 and 1,422,000 ordinary shares of
HK$0.01 were issued at the exercise price of GBP0.112 and GBP0.139
respectively upon exercise of a total of 1,837,000 share options
under the Share Option Scheme.
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 year ended 30 June 2013.
Code on corporate governance practices
The Company is committed to the principles of corporate
governance and corporate responsibility consistent with prudent
management. It is the belief of the Board that such commitment will
in the long term serve to enhance shareholders' value.
During the year ended 30 June 2013, 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) Leadership; (ii) Effectiveness; (iii)
Accountability; (iv) Remuneration; and (v) Relations with
shareholders.
On 23 February 2012, the Company also adopted the code
provisions set out in Corporate Governance Code and Corporate
Governance Report ("Code Provisions") contained in amended Appendix
14 to the Hong Kong Listing Rules which took effect on 1 April 2012
as its code on corporate governance practices.
The Company has complied with the Code Provisions for the year
ended 30 June 2013 except the deviations set out 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 Provision A.5.1
The Companies does not have the Nomination Committee. The
Directors does not consider that, given the size of the Group and
stage of its development, it is necessary to have a Nomination
Committee, however, this will be kept under regular review by the
Board. The Board as a whole regularly reviews the plans for orderly
succession for appointments to the Board and its structure, size
and composition. If the Board considers that it is necessary to
appoint new Director(s), it will set down the relevant appointment
criteria which may include, where applicable, the background,
experience, professional skills, personal qualities, availability
to commit to the affairs of the Company and, in case of Independent
Non-Executive Director, the independence requirements set out in
the Hong Kong Listing Rules from time to time. Nomination of new
Director(s) will normally be made by the Executive Directors and
subject to the Board's approval.
External consultants may be engaged, if necessary, to access a
wider range of potential candidate(s).
Code Provision E.1.2
The chairman of the Board should attend the annual general
meeting. He should also invite the chairman of the Audit Committee
and Remuneration Committee to attend. However, Mr. Tong Wang Chow,
Executive Chairman, was unable to attend the 2012 AGM due to other
business engagements. In the absence of the Executive Chairman, Mr.
Tong Hung Wai, Tommy, Executive Director, took the chair and,
together with the other directors, made themselves available to
answer questions at the 2012 AGM. Mr. Nicholas Smith, the chairman
of the Remuneration Committee, was also unable to attend the 2012
AGM due to other business engagements and has appointed the Company
Secretary of the Company to attend the 2012 AGM and to answer
questions at the 2012 AGM.
DIRECTORS SECURITIES TRANSACTIONS
In connection with the listing of the Company on the HKEx in
November 2009, the Company adopted the Model Code as set out in
Appendix 10 to 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.
RETIREMENT OF InDEPENDENT NON-EXECUTIVE DIRECTORS
This year, in accordance with the Company's Bye-laws, Mr. Ma
Chiu Cheung, Andrew and Hon Peregrine Moncreiffe will retire at the
AGM on 12 November 2013. Due to personal time constraint and other
commitments, Mr. Ma Chiu Cheung, Andrew, and Hon Peregrine
Moncreiffe being eligible, will not offer themselves for
re-election. Accordingly, Mr. Ma Chiu Cheung, Andrew and Hon
Peregrine Moncreiffe will retire as Independent Non-Executive
Directors with effect from the conclusion of the AGM.
Mr. Ma Chiu Cheung, Andrew will also cease to be the chairman of
the Audit Committee and a member of the Remuneration Committee upon
his retirement as Independent Non-Executive Director. Mr. Ma Chiu
Cheung, Andrew confirmed that there is no disagreement between him
and the Board and there is no matter relating to his retirement
that needs to be brought to the attention of the shareholders.
Hon Peregrine Moncreiffe, will also cease to be a member of the
Remuneration Committee upon his retirement as Independent
Non-Executive Director. Hon Peregrine Moncreiffe confirmed that
there is no disagreement between him and the Board and there is no
matter relating to his retirement that needs to be brought to the
attention of the shareholders.
The Board would like to express its gratitude to Mr. Ma Chiu
Cheung, Andrew and Hon Peregrine Moncreiffe for their contributions
over the years.
The Board is currently identifying suitable candidate(s) to be
appointed as the chairman of the Audit Remuneration Committee and
the member of the Remuneration Committee to replace Ma Chiu Cheung,
Andrew and Hon Peregrine Moncreiffe. Further announcement will be
published by the Company.
AUDIT COMMITTEE
The Audit Committee comprises three Independent Non-Executive
Directors. Mr. Ma Chiu Cheung Andrew acts as chairman of the
committee with Mr. Yang Zhen Han and Mr. Ng Hoi Yue 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 2013.
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, 27 September 2013
As at the date of this announcement, the Board comprises four
Executive Directors, namely Mr. Tong Wang Chow, Mr. Tong Hung Wai,
Tommy, Mr. Cheung Wai Sun and Mr. Pang Yi and five Independent
Non-Executive Directors, namely Hon Peregrine Moncreiffe, Mr. Ma
Chiu Cheung, Andrew, Mr. Yang Zhen Han, Dr. Lui Ming Wah, SBS JP
and Mr. Ng Hoi Yue.
* For identification purpose only
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBAVROBAKURR
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