TIDMACHL
RNS Number : 9582A
Asian Citrus Holdings Ltd
26 February 2014
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 INTERIM RESULTS
FoR THE SIX MONTHS ENDED 31 DECEMBER 2013
The board of directors (the "Board") of Asian Citrus Holdings
Limited (the "Company" or "Asian Citrus") announces the unaudited
consolidated results of the Company and its subsidiaries
(collectively, the "Group") for the six months ended 31 December
2013.
Results Highlights
For illustration
Six months ended only
31 December Six months ended
31 December
2013 2012 2013 2012
(RMB m) (RMB m) (GBP m**) (GBP
m**)
Reported financial information
Revenue 748.3 892.0 75.0 88.8
Gross profit 98.8 289.5 9.9 28.8
EBITDA -471.0 272.0 -47.2 27.1
(Loss)/profit attributable
to shareholders -548.0 212.4 -54.9 21.1
Basic (loss)/earnings per
share -RMB0.45 RMB0.17 -4.5p 1.7p
Interim dividend - RMB0.03 - 0.3p
Special dividend - RMB0.02 - 0.2p
Total dividend - RMB0.05 - 0.5p
Adjusted core financial information#
EBITDA 118.0 309.1 11.8 30.8
Profit before tax 45.3 255.1 4.5 25.4
Profit attributable to shareholders 41.0 249.5 4.1 24.8
Basic earnings per share RMB0.03 RMB0.20 0.3p 2.0p
** Conversion at GBP1 = RMB9.98 and RMB10.05 for the six months
ended 31 December 2013 and 2012 respectively for reference
only.
# Adjusted core financial information refers to activities for
the period excluding change in fair value of biological assets and
share-based payments.
RESULTS HIGHLIGHTS (Continued)
l Results for the first half year are as anticipated:
- Total orange production decreased by 8.3% to 147,927 tonnes
due to the replanting programme in Hepu Plantation and the
inclement weather (six months ended 31 December 2012: 161,233
tonnes).
- Revenue down by 16.1% to RMB748.3 million (six months ended 31
December 2012: RMB892.0 million).
- Adjusted core profit attributable to shareholders down by
83.6% to RMB41.0 million (six months ended 31 December 2012:
RMB249.5 million) reflecting both the reduction in production
volume and average selling price of winter oranges, as well as
higher direct costs, as a result of the inclement weather.
- Net operating activities cash inflow of RMB165.1 million (six
months ended 31 December 2012: RMB416.8 million) and cash and cash
equivalents of RMB2,108.0 million as at 31 December 2013 (31
December 2012: RMB2,374.4 million).
l Continued development of the third plantation in Hunan.
201,360 grapefruit trees were planted during the period and a
further 250,000 grapefruit trees are expected to be planted by
2014.
l In order to maintain production volume, a higher level of
direct costs is expected to be incurred in the short term to
alleviate the leaching of soil nutrients caused by the heavy
rainfall. Given the poor first half year results and these ongoing
costs, the Board has decided not to pay an interim dividend; the
Board will consider its recommendation for a final dividend in
light of the Group's full year performance.
For further enquires:
Asian Citrus
Tony Tong / Tommy Tong, Executive
Director +852 2559 0323
Cantor Fitzgerald Europe (NOMAD and
Broker)
Rick Thompson / David Foreman (Corporate
Finance) +44 (0) 20 7894 7000
Richard Redmayne (Corporate Broking)
Weber Shandwick Financial +44 (0) 020 7067 0000
Nick Oborne, Stephanie Badjonat
CHAIRMAN'S STATEMENT
As previously highlighted, the past year has been a challenging
one, mostly due to the unfortunate adverse weather conditions
affecting the plantations. There has been persistent heavy rainfall
and major typhoons in the plantation regions and, although there
was minimal direct damage to the plantations from the major
typhoons, this has caused nutrients to leach from the soil in
plantation areas, resulting in higher usage of fertilisers and
pesticides to minimise further damage and to maintain the output
volume. Aside from the unfavourable weather conditions, there was
also negative media coverage, unrelated to Asian Citrus,
surrounding dyed oranges being sold in the Gannan areas. These
factors impacted our production output and the average selling
price of the winter orange crop and profitability.
FINANCIAL HIGHLIGHTS
For the six months ended 31 December 2013, the Group's total
revenue decreased by 16.1% to RMB748.3 million from RMB892.0
million in the same period last year. Adjusted core profit
attributable to shareholders during the period, before the net loss
on the change in fair value of biological assets and share based
payments, dropped by 83.6% to RMB41.0 million from RMB249.5
million, primarily reflecting both the reduction in production
volume and average selling price of winter oranges, as well as
higher direct costs, as a result of inclement weather.
The Group recorded a loss of RMB583.0 million from the change in
fair value of biological assets for the six months ended 31
December 2013, compared with a loss of RMB23.0 million for the six
months ended 31 December 2012; the Board wishes to emphasise that
the change in the fair value of biological assets is
non-operational and does not have any impact on the Group's cash
flow.
After taking into account the non-cash flow items of the net
change in fair value of biological assets and share-based payments,
the net loss for the period was RMB548.0 million.
OPERATIONAL REVIEW
The Group's three plantations in mainland China occupy a total
area of approximately 103.3 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, Hunan Plantation remains on schedule
to begin production in 2014.
For the six months ended 31 December 2013, the production yield
at the Hepu Plantation decreased by 24.8% to 24,699 tonnes in
comparison to 32,838 tonnes for the same period last year. This was
mainly due to the replanting programme to replace the existing
winter orange trees which was completed when the last batch of
48,058 winter orange trees were removed and replanted with
approximately 221,769 banana trees. The gross profit margin for
Hepu Plantation decreased from 41.5% for the same period last year
to 25.3% this period, as a result of a small decrease in the
average selling price of 3.7% compared with the same period last
year, and the additional direct costs incurred resulting from the
inclement weather.
The production yield for the six months ended 31 December 2013
at the Xinfeng Plantation was 123,228 tonnes compared with 128,395
tonnes for the same period last year, a decrease of 4%. The gross
profit margin for Xinfeng Plantation decreased from 33.4% for the
same period last year to 2.9% this period. The cost of maintaining
the trees and plantations are fixed and when applied against a
lower turnover this has severely impacted the gross profit margin.
This has been further affected by i) the persistent heavy rainfall,
which not only affected the growth of the winter orange crop but
also caused some leaching of soil nutrients in the Xinfeng
Plantation, resulting in a higher volume of fertilisers and
pesticides being consumed during the period in order to maintain
output levels, and ii) dyed oranges being sold in the Gannan areas
which negatively impacted the selling prices of the Xinfeng
Plantation winter orange crop, resulting in a 17% decrease compared
to the same period last year.
Through our 92.94% equity interest in Behai BPG we also operate
two fruit processing plants in Beihai City and Hepu County in
Guangxi, covering a total site area of nearly 110,000 square
metres, and have an annual production capacity of around 60,000
tonnes with an average utilisation rate of 90.6% for the six months
ended 31 December 2013.
The Group will be increasing overall production capacity with a
third plant in Baise City, Guangxi, which is scheduled to commence
operations in 2014, after successfully completing trial
productions. It normally takes between three to five years for a
new plant to achieve full capacity and, therefore, it is expected
that the utilisation rate of the new plant in the first year of
full operation will not be as high as the two existing plants.
OUTLOOK AND STRATEGY
It remains too early in the financial year to judge the
materiality of the challenges highlighted above to the Group's
likely full year performance, which in the second half year will
reflect the price achieved for the Group's summer orange crop and
the impact of weather on the volume of fertilisers and pesticides
used by the Group. In this respect, in order to maintain production
volume we do expect a higher level of direct costs to be incurred
in the short term to alleviate the leaching of soil nutrients
caused by the heavy rainfall.
Given the first half year results and these costs, the Board has
decided not to pay an interim dividend; the Board will consider its
recommendation for a final dividend in light of the Group's full
year performance.
Since founding Asian Citrus in 2000, as the Chairman and Chief
Executive Officer of the Group, with the generous support of my
colleagues I have continually strengthened and developed our
business to become the single largest orange producer in the market
over the years; we have also taken steps to successfully diversify
our product portfolio through the introduction of processed fruits
and, more recently, a wider range of crops. I have decided that now
is the right time for new leadership to take the Group forward and
we are actively seeking a suitable candidate, who is well versed
and experienced in China's business environment as well as
international capital markets, to lead the Group to a new era. We
will update our shareholders on this in due course.
Last but not least, on behalf of the Board I would like to take
this opportunity to express my gratitude and appreciation to our
management team and employees for their continued valuable
contributions. It has been my utmost pleasure to have worked with
everyone involved with Asian Citrus. Although we have faced and
overcome challenges over the past years, our fundamentals continue
to be sound and I remain confident in the Group's future
performance.
TONY TONG
Chairman
26 February 2014
MANAGEMENT DISCUSSION AND ANALYSIS
OPERATING PERFORMANCE
Revenue
The breakdown of revenue by types is as follows:
For the six months ended 31 December
2013 2012
% of % of
RMB'000 total revenue RMB'000 total revenue
Hepu Plantation 93,634 12.5% 129,441 14.5%
Xinfeng Plantation 375,273 50.1% 470,753 52.8%
------- ------------- ------- -------------
Sales of oranges 468,907 62.6% 600,194 67.3%
Sales of processed fruits 279,426 37.4% 290,243 32.5%
Sales of self-bred saplings - - 1,608 0.2%
Total revenue 748,333 100.0% 892,045 100.0%
======= ============= ======= =============
The Group's revenue decreased by approximately 16.1% from
approximately RMB892.0 million for the corresponding period of last
year to approximately RMB748.3 million for the six months ended 31
December 2013.
Sales of oranges
Revenue from sales of oranges decreased by approximately 21.9%
to approximately RMB468.9 million for the six months ended 31
December 2013. This was mainly due to a decrease of approximately
8.3% in the Group's production to 147,927 tonnes, combined with an
approximately 14.8% decrease in average selling price.
The production yield from Hepu Plantation decreased by
approximately 24.8% from 32,838 tonnes for the corresponding period
of last year to 24,699 tonnesfor the six months ended 31 December
2013, due to the replanting programme to replace the existing
winter orange trees in the last year. In the previous year, 48,058
winter orange trees were removed and replanted with approximately
221,769 banana trees.
The production yield from Xinfeng Plantation decreased by
approximately 4% from 128,395 tonnes for the corresponding period
of last year to 123,228 tonnes for the six months ended 31 December
2013, due to the inclement weather and persistent heavy rainfall,
which not only affected the growth of the winter orange crop but
also resulted the leaching of nutrients from the soil in Xinfeng
Plantation. Higher volumes of fertilisers and pesticides were
consumed during the period in order to maintain output levels.
The following table sets out the average selling prices of
winter oranges in different plantations.
For the six months ended 31 December
2013 2012
(RMB/tonne) (RMB/tonne)
Hepu Plantation 3,863 4,013
Xinfeng Plantation 3,137 3,776
================== ==================
The average selling prices of winter orange crop in both Hepu
Plantation and Xinfeng Plantation decreased by approximately 3.7%
and 16.9% respectively for the six months ended 31 December 2013.
This was mainly due to a significant increase in overall market
supply of winter oranges in the Gannan areas (where Xinfeng
Plantation is located) compared to the comparable last period. This
resulted from an increase in the average maturity and yield of
orange trees reaching the peak level across the region.
Additionally, the local media reported that dyed oranges in Gannan
areas were sold in the Gannan areas. The incident, which was
unrelated to Asian Citrus, has affected customer confidence in the
domestic orange market as a whole and, in particular, the oranges
from Jiangxi province, which has had a negative impact in selling
prices of winter orange crop for Xinfeng Plantation.
All of the Group's oranges were sold domestically. The Group's
customers from the sales 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 six months ended
31 December
2013 2012
% of sales of oranges
Supermarket chains 22.1% 26.1%
Corporate customers 48.0% 49.9%
Wholesale customers 29.4% 23.6%
Other 0.5% 0.4%
------------ ------------
Total 100.0% 100.0%
============ ============
For the six months ended 31 December 2013, the volume and
revenue fromsupermarket chains represented approximately 19.3% and
22.1% respectively of the Group, compared to approximately 23.2%
and 26.1% respectively for the corresponding period of last year;
this percentage decrease reflects the inclement weather's
disproportionate impact on the yield of higher quality oranges in
the first half of the current year.
For Hepu Plantation and Xinfeng Plantation, the volume sold to
supermarkets was 7,116 tonnes and 21,434 tonnes respectively for
the six months ended 31 December 2013, down from 10,524 tonnes and
26,901 tonnes respectively for the corresponding period of last
year. The decrease in Hepu Plantationand Xinfeng Plantationwas
mainly due to the lower production yield of winter oranges for the
six months ended 31 December 2013. Also, starting from last year,
the Group has supplied several major domestic and international
supermarket chains with graded oranges through sizeable
distributors instead of direct sales to supermarkets.
The Group sells two types of oranges to customers, namely
ungraded oranges and graded oranges. Ungraded oranges are packaged
andthe customers are requiredto arrange for the transportation of
the oranges at their cost. Generally, the ungraded oranges are sold
to wholesalecustomers. Graded oranges are oranges that the Group
grades, packages and delivers to the customers at our cost, usually
to supermarket customers. The graded oranges are sold under our own
brand "Royal Star" to supermarket customers at a premium price
compared to the selling price of ungraded oranges. The breakdown of
types of oranges is as follows:
For the six months ended
31 December
2013 2012
% of sales of oranges
Ungraded oranges 94.1% 88.7%
Graded oranges 5.9% 11.3%
Total 100.0% 100.0%
============ ============
Sales of processed fruits
The table sets out the volume and revenue from the sales of
processed fruits:
For the six months ended 31 December
2013 2012
Volume Revenue Volume Revenue
(Tonnes) RMB'000 (Tonnes) RMB'000
Pineapple juice concentrates 5,442 49,699 6,954 73,344
Lychee juice concentrates 2,282 38,984 2,179 30,653
Other fruit juice concentrates 2,439 44,760 2,939 51,173
Mango purees 6,814 43,569 6,401 39,127
Other fruit purees 4,108 45,032 3,125 23,114
Frozen and dried fruits and
vegetables 7,802 57,382 7,626 59,984
28,887 279,426 29,224 277,395
Fruit juice trading N/A - N/A 12,848
---------- --------- --------- --------
Total 28,887 279,426 29,224 290,243
========== ========= ========= ========
Beihai BPG processes over 22 different types of tropical fruits,
including pineapples, passion fruits, lychees, mangoes and papayas
(products that account for over 10% of the revenue from the sales
of processed fruits are shown in the table above).
Revenue from sales of processed fruits decreased by
approximately 3.7% from approximately RMB290.2 million for the
corresponding period of last year to approximately RMB279.4 million
for the six months ended 31 December 2013. Like for like sales of
processed fruits, excluding discontinued fruit juice trading, was
slightly ahead of the comparable period; lower sales of pineapple
juice concentrates, primarily reflecting the negative impact on
average prices of destocking activities by Thailand and the
Philippines producers in previous years, were offset by increased
revenues across most other fruit concentrates.
The average utilisation rate of two operating processing plants
in Beihai and Hepu was approximately 90.6% for the six months ended
31 December 2013.
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.
Cost of sales
The breakdown of cost of salesof the Groupis as follows:
For the six months ended 31 December
2013 2012
% of % of
cost of sales cost of sales
of respective of respective
RMB'000 segment RMB'000 segment
Inventories used
Fertilisers 242,849 55.9% 217,164 55.8%
Packaging materials 10,212 2.3% 13,659 3.5%
Pesticides 58,460 13.5% 37,804 9.7%
------- -------------- ------- --------------
311,521 71.7% 268,627 69.0%
Production overheads
Direct labour 48,020 11.1% 41,866 10.8%
Depreciation 49,788 11.5% 47,199 12.1%
Others 24,838 5.7% 31,722 8.1%
------- -------------- ------- --------------
Cost of sales of oranges 434,167 100.0% 389,414 100.0%
------- ============== ------- ==============
Fruits 142,438 66.1% 141,398 66.7%
Packaging materials 16,611 7.7% 17,447 8.2%
Direct labour 16,686 7.7% 13,196 6.2%
Other production overheads 39,676 18.5% 40,079 18.9%
------- -------------- ------- --------------
Cost of sales of processed
fruits 215,411 100.0% 212,120 100.0%
------- ============== ------- ==============
Cost of sales of self-bred
saplings - 1,018
Total 649,578 602,552
======= =======
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 cost of sales of oranges increased by
approximately 11.5% to approximately RMB434.2 million (six months
ended 31 December 2012: RMB389.4 million). The increase in cost of
saleswas mainly due to the increase in consumption of both
fertilisers and pesticides to minimise further damage in order to
maintain output levels, as a result of the inclement weather and
persistent heavy rainfall and the higher labour costs incurred due
to general wage inflation in the PRC. As a result, the unit cost of
production in Hepu Plantation and Xinfeng Plantation increased
toapproximately RMB2.83 per kg and RMB2.96 per kg respectively for
the six months ended 31 December 2013 (six months ended 31 December
2012: RMB2.31 per kg and RMB2.44 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 six months ended 31
December 2013, the cost of sales of processed fruits was broadly
flat at approximately RMB215.4 million compared to the same period
last year at approximately RMB212.1 million.
Gross profit
The Group's overall gross profit decreased by approximately
65.9% to approximately RMB98.8 million for the six months ended 31
December 2013 (six months ended 31 December 2012: RMB289.5
million). The overall gross profit margin decreased from
approximately 32.5% to 13.2% for the six months ended 31 December
2013.
The following table sets out a breakdown of the Group's gross
profit margin by plantation:
For the six months ended
31 December
2013 2012
Hepu Plantation 25.3% 41.5%
Xinfeng Plantation 2.9% 33.4%
============ ============
The gross profit margin of Hepu Plantation and Xinfeng
Plantation decreased to approximately 25.3% and 2.9% respectively
for the six months ended 31 December 2013 (six months ended 31
December 2012: 41.5% and 33.4% respectively). The decrease was
mainly due to (i) the average selling prices of winter orange crop
in Hepu Plantation and Xinfeng Plantation dropped by approximately
3.7% and 16.9% respectively; and (ii) the cost of sales of oranges
increased by approximately 11.5%, reflecting the increase in
consumption of both fertilisers and pesticides to minimise further
damage in order to maintain output levels, as a result of the
inclement weather and persistent heavy rainfall.
The following table sets out a breakdown of the Group's gross
profit margin by business:
For the six months ended
31 December
2013 2012
Sales of oranges 7.4% 35.1%
Sales of processed fruits 22.9% 26.9%
Overall gross profit margin 13.2% 32.5%
============ ============
Due to higher contribution from Xinfeng Plantation with a
relatively lower margin and the decrease of gross profit margin in
both Hepu Plantation and Xinfeng Plantation, theoverall gross
profit margin from sales of oranges dropped to approximately 13.2%
(six months ended 31 December 2012: 32.5%) for the six months ended
31 December 2013.
For Beihai BPG, the normalised gross profit margin for the six
months ended 31 December 2013 decreased to approximately 22.9% (six
months ended 31 December 2012: 26.9%). This was mainly due to the
overall lower selling price.
Change in fair value of biological assets
The Group recorded a loss of RMB583.0 million from the change in
fair value of biological assets for the six months ended 31
December 2013, compared to a loss of RMB23.0 million for the
corresponding period of last year. The loss was mainly due to
higher cost of sales and a decrease in the market price of winter
oranges. The Board wishes to emphasise that the change in fair
value of biological assets is non-operational and does not have any
effect on the cash flow of the Group for the six months ended 31
December 2013.
Selling and distribution expenses
Selling and distribution expenses mainly comprise sales
commissions, advertising, salaries and welfare of sales personnel,
traveling and transportation expenses. The selling and distribution
expenses of the Group increased by 4.8% from approximately RMB20.8
million for the six months ended 31 December 2012 to approximately
RMB21.8 million for the six months ended 31 December 2013, mainly
due to an increase of transportation costs in Hepu Plantation
resulting from sales to existing supermarket chains requiring a
longer distance of transportation during the period.
General and administrative expenses
General and administrative expenses comprise mainly salary,
office administration expenses, depreciation, amortisation and
research costs. The level of general and administrative expenses of
the Group were flat at approximately RMB59.5 million for the six
months ended 31 December 2013 compared to the last corresponding
period of approximately RMB59.0 million.
General and administrative expenses represented approximately
7.9% of the Group's revenue, an increase of 1.3 percentage points
as compared to approximately 6.6% in last corresponding period,
mainly due to lower group revenue. Expenses incurred during the
period included those from the commencement of trial production of
the new fruit processing plant in Baise City, Guangxi.
Loss for the period
The loss attributable to shareholders for the six months ended
31 December 2013 increased to approximately RMB548.0 million,
compared to profit attributable to shareholders of approximately
RMB212.4 million for last corresponding period.
The adjusted core profit attributable to shareholders, which
refers to loss for the period excluding net change in fair value of
biological assets and share-based payments, for the six months
ended 31 December 2013 was approximately RMB41.0 million, compared
to approximately RMB249.5 million for the corresponding period of
last year.
DIVIDEND
In order to maintain production volume, a higher level of direct
costs is expected to be incurred in the short term toalleviate the
leaching of soil nutrients caused by the heavy rainfall. Given the
poor first half year results and these ongoing costs, the Board has
decided not to pay an interim dividend; the Board will consider its
recommendation for a final dividend in light of the Group's full
year performance.
The Board therefore does not recommend the payment of an interim
dividend for the six months ended 31 December 2013 (six months
ended 31 December 2012: interim dividend of RMB0.03 and special
dividend of RMB0.02 per ordinary share).
CAPITAL STRUCTURE
As at 31 December 2013, there were 1,249,637,884 shares in
issue. Based on the closing price of HKD2.13as at 31 December 2013,
the market capitalisation of the Company was approximately
HKD2,661.7 million (approximately GBP208.6 million).
HUMAN RESOURCES
There were a total of 1,329 employees of the Group as at 31
December 2013. 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.
FINANCIAL PERFORMANCE
31 December 2013 30 June 2013
Current ratio (x) 26.32 23.62
Quick ratio (x) 24.82 21.14
Net debt to equity (%) Net cash Net cash
31 December 2013 31 December 2012
Asset turnover (x) 0.10 0.11
Adjusted core net profit per share (RMB) 0.03 0.20
Basic (loss)/earnings per share (RMB) -0.45 0.17
Liquidity
The current ratio and quick ratio were 26.32 and 24.82
respectively. The liquidity of the Group remained healthy with
sufficient reserves for both current operation and future
development.
Profitability
The asset turnover of the Group dropped to approximately 0.10
(six months ended 31 December 2012: 0.11) for the six months ended
31 December 2013. The decline in the ratio was mainly due to
reduction in the revenue for the period as detailed previously.
The basic loss per share for the six months ended 31 December
2013 was approximately RMB0.45 (six months ended 31 December 2012:
basic earnings per share of RMB0.17). This was mainly due to a
decrease in profit attributable to shareholders for the period.
The adjusted core net profit per share for the six months ended
31 December 2013 was approximately RMB0.03 (six months ended 31
December 2012: RMB0.20), representing a decrease of approximately
85.0%.
Debt ratio
The net cash positions of the Group were approximately
RMB2,108.0 million and RMB2,141.2 million at 31 December 2013 and
30 June 2013 respectively.
Internal cash resource
The Group'sfunding is internal cash and cash equivalents. The
Group did not have any outstanding borrowings as at 31 December
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 31 December
2013.
Capital commitment
As at 31 December 2013, the Group had a capital commitment of
approximately RMB12.9 million mainly in relation to the
construction of the farmland infrastructure in the Hepu Plantation,
Hunan Plantation and the new fruit processing 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 has limitedtransactions denominated in foreign
currencies, hence exposure to exchange rate fluctuation is minimal.
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.
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, Hepu Plantation, approximately
56,000 mu (equivalent to approximately 37.3 sq.km.) in the Xinfeng
County of the Jiangxi province, Xinfeng Plantation and
approximately 53,000mu (equivalent to approximately 35.3 sq.km) in
the Dao County of the Hunan province, Hunan Plantation.
Hepu Plantation
Hepu Plantation is fully planted and comprises approximately 1.2
million orange trees. 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 for product
diversification. A total of approximately 221,769 banana trees were
planted in August 2013. The first harvest of banana is expected in
August to September 2014.
Xinfeng Plantation
Xinfeng Plantation is fully planted and comprises 1.6 million
winter orange trees.
Hunan Plantation
Hunan Plantation is under development and comprises
approximately 1.05 million summer orange trees and approximately
502,560 grapefruit trees as at 31 December 2013. A further
approximately 250,000 grapefruit trees are expected to be planted
by 2014. By that time, the construction of Hunan Plantation is
expected to be completed.
The below table sets out the age profile as at 31 December 2013
and the production volume of the plantations for the six months
ended 31 December 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)
2 66,449 622,475 688,924
3 63,584 427,400 490,984
4 64,194 64,194
5 81,261 81,261
6 76,135 76,135
7 55,185 55,185
17 29,996 29,996
18 128,966 128,966
19 186,003 186,003
20 223,741 223,741
975,514 1,049,875 2,025,389
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)
0 201,360 201,360
1 301,200 301,200
502,560 502,560
Note: Grapefruit is a type of citrus fruit and is harvested
during the winter period in the PRC.
Banana 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)
0 221,769 221,769
221,769 221,769
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)
7 400,000 27,757 400,000 27,757
8 400,000 27,503 400,000 27,503
9 46,077 4,061 400,000 29,644 446,077 33,705
11 180,180 16,462 400,000 38,324 580,180 54,786
12 42,300 4,176 42,300 4,176
268,557 24,699 1,600,000 123,228 1,868,557 147,927
Total 4,618,275 147,927
========= ==============
The below table sets out the age profile as at 31 December 2012
and the production volume of the plantations for the six months
ended 31 December 2012:
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)
0 129,177 129,177
1 66,449 622,475 688,924
2 63,584 427,400 490,984
3 64,194 64,194
4 81,261 81,261
5 76,135 76,135
6 55,185 55,185
16 29,996 29,996
17 128,966 128,966
18 186,003 186,003
19 223,741 223,741
975,514 1,179,052 2,154,566
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 24,937 3,142 24,937 3,142
17 10,133 1,246 10,133 1,246
18 12,988 1,572 12,988 1,572
316,615 32,838 1,600,000 128,395 1,916,615 161,233
Total 4,071,181 161,233
========= ==============
VALUATION OF BIOLOGICAL ASSETS
The Group has engaged an independent valuer to perform a
valuation on the fair value of the orange trees less costs to sell
as at 31 December 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.
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 six months ended 31
December 2013 was 18.0% (31 December 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, yield per
tree increases from age 3 to 10, remains stable for about 12 years,
and then starts to decline from age 22 to 32.
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 Hepu
Plantation and winter oranges from Xinfeng Plantation adopted were
RMB3,270 per tonne, RMB5,210 per tonne and RMB3,110 per tonne,
respectively, for the six months ended 31 December 2013 (six months
ended 31 December 2012: RMB3,320 per tonne, RMB5,200 per tonne and
RMB3,740 per tonne respectively).
4) The cost of sales 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 cost of
sales 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.
Sensitivity analysis
1) Changes in the discount rate applied result in significant
fluctuations in the changes in fair value of orange trees less
costs to sell. The following table illustrates the sensitivity of
the Group's net change in fair value of orange trees less costs to
sell to an increase or decrease of 1.0% in the discount rate of
18.0% applied by the independent valuer for the six months ended 31
December 2013:
1.0% Decrease Base Case 1.0% Increase
Discount rate 17.0% 18.0% 19.0%
Net change in fair value of
biological assets (RMB'000) (443,000) (583,000) (713,000)
2) Changes in the yield per orange tree can also result in
significant fluctuations in the changes in fair value of orange
trees less costs to sell. The following table illustrates the
sensitivity of the Group's net change in fair value of orange trees
less costs to sell to a 5.0% increase or decrease in the yield per
tree applied for the six months ended 31 December 2013:
5.0% Decrease Base Case 5.0% Increase
Net change in fair value of
biological
assets (RMB'000) (663,000) (583,000) (503,000)
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 costs to sell. The following table illustrates
the sensitivity of the Group's net change in fair value of orange
trees less costs to sell to a 5.0% increase or decrease in the
assumed market prices of oranges as at 31 December 2013 used to
calculate the changes in fair value of orange trees less costs to
sell for the six months ended 31 December 2013:
5.0% Decrease Base Case 5.0% Increase
Net change in fair value of
biological assets (RMB'000) (913,000) (583,000) (253,000)
4) Changes in the assumed cost of sales can also result in
significant fluctuations in the changes in fair value of orange
trees less costs to sell. The following table illustrates the
sensitivity of the Group's net change in fair value of orange trees
less costs to sell to a 5.0% increase or decrease in the Group's
assumed cost of sales used to calculate the changes in fair value
of orange trees less costs to sell for the six months ended 31
December 2013:
5.0% Decrease Base Case 5.0% Increase
Net change in fair value of
biological assets (RMB'000) (493,000) (583,000) (683,000)
The above sensitivity analyses are intended for illustrative
purposes only, and any variation could exceed the amounts shown
above.
Valuation
According to the valuation report of the independent valuer, the
aggregate value of the orange trees in Hepu Plantation and Xinfeng
Plantation as at 31 December 2013 was estimated to be approximately
RMB1,400 million.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the six months ended 31 December 2013
Six months ended Year ended
-----------------------------------------
31 December 30 June
-----------------------------------------
2013 2012 2013
-----------------------------------------
(unaudited) (unaudited) (audited )
-----------------------------------------
Note RMB'000 RMB'000 RMB'000
Turnover 5 748,333 892,045 1,485,912
Cost of sales (649,578) (602,552) (988,313)
----------- ----------- -----------
Gross profit 98,755 289,493 497,599
Other income 6 21,862 31,368 53,438
Net loss on change in fair value
of
biological assets (583,000) (23,000) (260,468 )
Selling and distribution expenses (21,777) (20,804) (45,640)
General and administrative expenses (59,463) (58,981) (120,141)
(Loss)/profit from operations (543,623) 218,076 124,788
Finance costs 7(a) (91) (24) (126)
(Loss)/profit before income tax 7 (543,714) 218,052 124,662
Income tax expense 8 - - -
----------- ----------- -----------
(Loss)/profit for the period/year (543,714) 218,052 124,662
=========== =========== ===========
Attributable to
Equity shareholders of the Company (547,971) 212,380 114,395
Non-controlling interests 4,257 5,672 10,267
----------- ----------- -----------
(543,714) 218,052 124,662
RMB RMB RMB
(Loss)/earnings per share 9
- Basic (0.445) 0.174 0.094
=========== =========== ===========
- Diluted (0.445) 0.173 0.093
=========== =========== ===========
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the six months ended 31 December 2013
Six months ended Year ended
--------------------------------------------------------
31 December 30 June
--------------------------------------------------------
2013 2012 2013
--------------------------------------------------------
(unaudited) (unaudited) (audited)
--------------------------------------------------------
RMB'000 RMB'000 RMB'000
(Loss)/profit for the period/year (543,714) 218,052 124,662
Other comprehensive expense for
the period/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 (4) - (352)
----------- ----------- ----------
Total comprehensive (loss)/income for
the period/year (543,718) 218,052 124,310
=========== =========== ==========
Attributable to
Equity shareholders of the Company (547,975) 212,380 114,043
Non-controlling interests 4,257 5,672 10,267
----------- ----------- ----------
(543,718) 218,052 124,310
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2013
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
ASSETS Note RMB'000 RMB'000 RMB'000
Non-current assets
Property, plant and equipment 2,346,121 1,909,966 1,989,625
Land use rights 76,955 73,474 72,701
Construction-in-progress 62,795 251,750 304,196
Biological assets 1,654,779 2,333,193 2,168,501
Intangible assets 59,089 70,677 64,463
Deposits 2,393 28,161 84,303
Goodwill 1,157,261 1,157,261 1,157,261
5,359,393 5,824,482 5,841,050
----------- ----------- ---------
Current assets
Biological assets 73,906 52,532 212,098
Properties for sale 5,830 5,830 5,830
Inventories 55,001 50,688 40,277
Trade and other receivables 11 130,062 124,365 68,315
Cash and cash equivalents 2,108,021 2,374,441 2,141,224
----------- ----------- ---------
2,372,820 2,607,856 2,467,744
----------- ----------- ---------
Total assets 7,732,213 8,432,338 8,308,794
=========== =========== =========
EQUITY AND LIABILITIES
Equity
Share capital 12,340 12,142 12,159
Reserves 7,512,259 8,225,256 8,078,888
----------- ----------- ---------
Total equity attributable to equity
shareholders
of the Company 7,524,599 8,237,398 8,091,047
Non-controlling interests 116,677 107,840 112,420
----------- ----------- ---------
7,641,276 8,345,238 8,203,467
----------- ----------- ---------
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
Note RMB'000 RMB'000 RMB'000
Non-current liability
Obligation under finance lease 775 937 832
----------- ----------- -------------
Current liabilities
Trade and other payables 12 90,053 86,066 104,390
Obligation under finance lease 109 97 105
90,162 86,163 104,495
----------- ----------- -------------
Total liabilities 90,937 87,100 105,327
----------- ----------- -------------
Total equity and liabilities 7,732,213 8,432,338 8,308,794
=========== =========== =============
Net current assets 2,282,658 2,521,693 2,363,249
=========== =========== =============
Total assets less current
liabilities 7,642,051 8,346,175 8,204,299
=========== =========== =============
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2013
Six months ended Year ended
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
Note RMB'000 RMB'000 RMB'000
Cash flows from operating activities
(Loss)/profit before income tax (543,714) 218,052 124,662
Adjustments for:
Interest income 6 (20,416) (30,152) (50,509)
Finance costs 7(a) 91 24 126
Share-based payments 7(b) 6,014 14,072 24,698
Amortisation of land use rights 7(c) 744 587 1,360
Amortisation of intangible assets 7(c) 5,374 6,509 12,723
Depreciation 7(c) 84,383 69,426 144,603
Loss on disposal of property, plant
and equipment 7(c) 2,251 85 2,172
Loss on disposal of land use right 7(c) - 4,902 4,902
Loss on deregistration of subsidiaries 7(c) - - 192
Net loss on change in fair value of
biological assets 583,000 23,000 260,468
Operating profit before working capital
changes 117,727 306,505 525,397
Movements in working capital elements:
Biological assets 138,192 106,104 (53,462)
Inventories (14,724) 12,406 22,817
Trade and other receivables (61,747) (37,500) 18,342
Trade and other payables (14,341) 29,259 47,232
Net cash generated from operating activities 165,107 416,774 560,326
----------- ----------- ----------
Cash flows from investing activities
Proceeds from disposal of property,
plant and equipment 1,797 - 1,853
Proceed from disposal of land use right - 3,565 3,565
Purchase of property, plant and equipment (4,813) (16,379) (32,823)
Purchase of land use right (4,998) (14,001) (14,001)
Additions to construction-in-progress (114,410) (196,783) (391,561)
Deposits paid for acquisition of property, ) )
plant and equipment (2,393 (28,155 (84,297 )
Net additions to biological assets (69,278) (50,969) (123,745)
Additions to intangible assets - (18,680) (18,680)
Decrease in time deposits with terms
over three months - 19,341 62,960
Interest received 20,416 30,152 50,509
----------- ----------- ----------
Net cash used in investing activities (173,679) (271,909) (546,220)
----------- ----------- ----------
Six months ended Year ended
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Cash flows from financing activities
Proceeds from issue of new shares upon
exercises
of share options 14,362 - 2,746
Repurchase of shares - (34,548) (34,548)
Obligation under finance lease (53) - (97)
Dividends paid (38,849) (104,625) (166,011)
Finance costs paid (91) (24) (126)
Net cash used in financing activities (24,631) (139,197) (198,036)
Net (decrease)/increase in cash and cash
equivalents (33,203) 5,668 (183,930)
Cash and cash equivalents at beginning
of
period/year 2,141,224 2,325,154 2,325,154
Cash and cash equivalents at end of
period/year 2,108,021 2,330,822 2,141,224
=========== =========== ==========
Major non-cash transactions
During the six months ended 31 December 2013, purchasesof
property, plant and equipment included an amount of RMB84,303,000
(six months ended 31 December 2012: RMB4,245,000, year ended 30
June 2013: RMB4,245,000) transferred from non-current deposits.
NOTES TO THE INTERIM FINANCIAL INFORMATION
1 GENERAL INFORMATION
Asian Citrus Holdings Limited (the "Company") was incorporated
in Bermuda on 4 June 2003 as an exempted company with limited
liability under the Companies Act of Bermuda and its shares are
listed on the Main Board of The Stock Exchange 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 1109-1111,
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 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, except that certain biological assets
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 2013, 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
2014. Details of the applications of new and revised IFRSs are set
out in note 3.
The preparation of interim financial information in conformity
with IAS 34 requires management to make judgments, 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 the 2013 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 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, the following developments are relevant to
the Group's financial statements:
Improvements to IFRSs Annual improvements to IFRSs 2009
-2011 cycle
Amendments to IFRS 10, Consolidated financial statements,
IFRS 11 and IFRS 12 joint arrangements and disclosure
of interests in other entities: transition
guidance
Amendments to IFRS 7 Disclosures - Offsetting financial
assets and financial
Liabilities
IFRS 10 Consolidated financial statements
IFRS 12 Disclosure of interests in other entities
IFRS 13 Fair value measurement
IAS 27 (2011) Separate financial statements
The above amendments to IFRSs have had no material impact on the
Group's results of operations and financial position.
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 2014 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:
Amendments to IFRS 9 Mandatory effective date of IFRS 9
and IFRS 7 and transition disclosures(1)
Amendments to IFRS 10, Investing entities(1)
IFRS 12 and IAS 27
Amendments to IAS 32 Offsetting financial assets and financial
liabilities(1)
Amendments to IAS 36 Recoverable amount disclosures for
non-financial assets(1)
IFRS 9 Financial instruments(2)
(1) Effective for annual periods beginning on or after 1 January
2014.
(2) 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 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 two 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
Developing and sale of property units in an agricultural
wholesale market and orange processing centre has 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 six months ended 31
December 2012 has been restated to conform with the current
period's presentation.
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.
Segment results, assets and liabilities
Six months ended 31 December 2013:
Agricultural Processed
produce fruits Total
(unaudited) (unaudited) (unaudited)
RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and
revenue from external customers 468,907 279,426 748,333
------------ ----------- -----------
Reportable segment results (576,032) 47,771 (528,261)
------------ -----------
Unallocated corporate expenses (17,057)
Unallocated corporate other
income 1,604
Loss before income tax (543,714)
Income tax expense -
-----------
Loss for the period (543,714)
===========
ASSETS
Segment assets 4,654,751 1,746,155 6,400,906
Unallocated corporate assets 1,331,307
-----------
Total assets 7,732,213
===========
LIABILITIES
Segment liabilities (53,208) (33,200) (86,408)
Unallocated corporate liabilities (4,529)
-----------
Total liabilities (90,937)
===========
OTHER INFORMATION
Additions to segment
non-current assets 77,941 135,856 213,797
============ =========== ===========
Six months ended 31 December 2012:
Agricultural Processed
produce fruits Total
(unaudited) (unaudited) (unaudited)
RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and
revenue from external customers 601,802 290,243 892,045
------------ ----------- -----------
Reportable segment results 167,969 76,582 244,551
------------ -----------
Unallocated corporate expenses (29,373)
Unallocated corporate other
income 2,874
Profit before income tax 218,052
Income tax expense -
-----------
Profit for the period 218,052
===========
ASSETS
Segment assets 5,361,299 1,631,016 6,992,315
Unallocated corporate assets 1,440,023
-----------
Total assets 8,432,338
===========
LIABILITIES
Segment liabilities (55,084) (27,592) (82,676)
Unallocated corporate liabilities (4,424)
-----------
Total liabilities (87,100)
===========
OTHER INFORMATION
Additions to segment
non-current assets 130,095 149,714 279,809
============ =========== ===========
Year ended 30 June 2013:
Agricultural Processed
produce fruits Total
(audited) (audited) (audited)
RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and
revenue from external customers 921,823 564,089 1,485,912
------------ --------- ---------
Reportable segment results 31,912 138,711 170,623
------------ ---------
Unallocated corporate expenses (50,557)
Unallocated corporate other
income 4,596
Profit before income tax 124,662
Income tax expense -
---------
Profit for the year 124,662
=========
ASSETS
Segment assets 5,253,592 1,689,669 6,943,261
Unallocated corporate assets 1,365,533
---------
Total assets 8,308,794
=========
LIABILITIES
Segment liabilities (76,016) (24,483) (100,499)
Unallocated corporate liabilities (4,828)
---------
Total liabilities (105,327)
=========
OTHER INFORMATION
Additions to segment
non-current assets 225,539 321,737 547,276
============ ========= =========
5 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:
Six months ended Year ended
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Sales of oranges 468,907 600,194 919,983
Sales of self-bred saplings - 1,608 1,840
Sales of processed fruits 279,426 290,243 564,089
748,333 892,045 1,485,912
=========== =========== ==========
6 OTHER INCOME
Six months ended Year ended
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Interest income 20,416 30,152 50,509
Government grants 1,414 1,209 2,912
Sundry income 32 7 17
----------- ----------- ----------
21,862 31,368 53,438
=========== =========== ==========
7 (LOSS)/PROFIT BEFORE INCOME TAX
(Loss)/profit before income tax is stated after
charging/(crediting) the following:
Six months ended Year ended
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
(a) Finance costs
Bank charges 54 24 43
Finance charges on obligation
under finance lease 37 - 83
----------- ----------- ----------
91 24 126
----------- ----------- ----------
(b) Staff costs (including directors'
emoluments)
- salaries, wages and other benefits 79,437 69,433 114,510
- share-based payments 6,014 14,072 24,698
* contributions to defined
contribution retirement plans 1,178 1,214 2,775
----------- ----------- ----------
86,629 84,719 141,983
----------- ----------- ----------
(c) Other items
Amortisation of land use rights 744 587 1,360
Amortisation of intangible assets 5,374 6,509 12,723
Auditor's remuneration 1,397 1,217 2,432
Cost of agricultural produce
sold (#) 434,167 390,432 571,147
Cost of inventories of processed
fruits recognised as expenses
(##) 215,411 212,120 417,166
Depreciation of property, plant
and
equipment 84,383 69,426 144,603
Add: Realisation of depreciation
previously capitalised as
biological assets 25,022 23,423 23,423
Less: Amount capitalised as biological
assets (22,425) (15,865) (45,059)
----------- ----------- ----------
86,980 76,984 122,967
Construction-in-progress written
off 2,880 1,560 1,669
Exchange gain, net (67) (3,548) (989)
Operating lease expenses
- plantation bases 6,394 6,416 9,470
- properties 580 610 1,020
Research and development costs 6,631 2,344 4,963
Loss on disposals of property,
plant
and equipment 2,251 85 2,172
Loss on disposal of land use
right - 4,902 4,902
Loss on deregistration of subsidiaries - - 192
=========== =========== ==========
(#) Cost of agricultural produce sold includes RMB104,989,000
(six months ended 31 December 2012: RMB96,189,000, year ended 30
June 2013: RMB133,321,000) 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 RMB45,105,000 (six months ended 31 December 2012:
RMB40,170,000, year ended 30 June 2013: RMB82,422,000) 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
On the basis stated below, no income tax has been provided by
the Group:
(a) Pursuant to the rules and regulations of Bermuda, Cayman
Islands and the BVI, the Group is not subject to any income tax in
the respective tax jurisdictions.
(b) No Hong Kong profits tax has been provided as the Group did
not have assessable profits arising in or derived from Hong
Kong.
(c) No PRC enterprise income tax has been provided as the Group
did not have assessable profit in the PRC during the period. The
provision for PRC enterprise income tax is based on the respective
applicable rates on the estimated assessable income of the Group's
subsidiaries in the PRC as determined in accordance with the
relevant income tax laws, rules and regulations of the PRC.
According to the PRC tax law, its rules and regulations,
enterprises that engage in certain qualifying agricultural business
are eligible for certain tax benefits, including full enterprise
income tax exemption on profits derived from such business. Certain
operating subsidiaries of the Group in the PRC engaged in
qualifying agricultural business are entitled to full exemption of
enterprise income tax.
The applicable enterprise income tax rate of the Group's other
operating subsidiaries in the PRC is 25%.
(d) 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 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.
9 (LOSS)/EARNINGS PER SHARE
The calculation of basic and diluted (loss)/earnings per share
is based on the following:
Six months ended Year ended
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
(Loss)/earnings
(Loss)/profit attributable to equity
shareholders
of the Company used in basic and diluted
(loss)/earnings per share calculation (547,971) 212,380 114,395
Weighted average number of shares '000 '000 '000
Issued ordinary shares at beginning of
period/year 1,229,559 1,221,097 1,221,097
Effect of shares issued to shareholders
participating in the scrip dividend - - 8,811
Effect of shares issued upon exercises
of
share options 1,293 - 55
Effect of shares repurchased and cancelled - (3,393) (7,236)
Weighted average number of ordinary shares
used in basic (loss)/earnings per share
calculation 1,230,852 1,217,704 1,222,727
Effect of dilutive potential shares in
respect of
share options (Note) - 11,490 10,035
----------- ----------- ----------
Weighted average number of ordinary shares
used in diluted (loss)/earnings per
share
calculation 1,230,852 1,229,194 1,232,762
=========== =========== ==========
Note:
The potential ordinary shares arising from the conversion of
share options had an anti-dilutive effect on the basis loss per
share for the six months ended 31 December 2013, hence they were
ignored in the calculation of diluted loss per share.
10 DIVIDENDS
The directors do not declare any dividend in respect of the
six-month period ended 31 December 2013. Interim dividend of
RMB0.03 and special dividend of RMB0.02 per ordinary share was
declared in respect of six-month period ended 31 December 2012.
Final dividend of RMB0.05 per ordinary share in respect of the
year ended 30 June 2013 was approved on 12 November 2013 and paid
on 31 December 2013.
11 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:
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Less than 1 month 72,248 92,883 38,576
1 to 3 months 14,496 6,798 4,047
3 to 6 months - - -
6 to 12 months - 9 -
Over 1 year 49 104 113
----------- ----------- ---------
86,793 99,794 42,736
=========== =========== =========
Trade receivables from sales of goods are normally due for
settlement within 30 to 60 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
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Neither past due nor impaired 72,519 97,457 41,492
----------- ----------- ---------
Less than 1 month past due 12,516 2,267 1,174
1 to 3 months past due 1,732 - -
3 to 6 months past due - 9 -
6 to 12 months past due - - -
Over 1 year past due 26 61 70
----------- ----------- ---------
Amounts past due but not impaired 14,274 2,337 1,244
----------- ----------- ---------
86,793 99,794 42,736
=========== =========== =========
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 with the
ageing analysis of trade payables by invoice date is as
follows:
31 December 30 June
2013 2012 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Less than 3 months 24,050 32,904 62,881
3 to 6 months 89 286 68
6 to 12 months 111 314 304
Over 1 year 294 95 299
----------- ----------- ---------
24,544 33,599 63,552
=========== =========== =========
13 FINANCIAL INFORMATION
The results announcement was approved by the Board on 26
February 2014. 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 2013.
OTHER INFORMATION
DIVIDENDS
The Board does not recommend the payment of an interim dividend
for the six months ended 31 December 2013 (six months ended 31
December 2012: interim dividend of RMB0.03 and special dividend of
RMB0.02 per ordinary share).
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED
SECURITIES
During the six months ended 31 December 2013, the Company did
not redeem any of its listed securities, nor did the Company or any
of its subsidiaries purchase or sell such securities.
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 six months ended 31 December 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
companies listed in the United Kingdom. It consists of principles
of good governance covering the following areas: (i) Leadership;
(ii) Effectiveness; (iii) Accountability; (iv) Remuneration; and
(v) Relations with Shareholders.
Since 23 February 2012, the Company has also adopted the code
provisions set out in the Corporate Governance Code and Corporate
Governance Report (the "Code Provisions") contained in the amended
Appendix 14 to the Rules Governing the Listing of Securities on the
HKEx (the "Hong Kong Listing Rules"), which took effect on 1 April
2012 as its code on corporate governance practices.
The Company complied with the Code Provisions during the six
months ended 31 December 2013 except the deviations set out
below:
Code Provision A.2.1
The roles of the Chairman and the 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 the operations of the Group. The Board
considers that the current structure will not impair the balance of
power and authority of the Board and the Company's management and
thus, the Board believes that this structure will enable effective
planning and implementation of corporate strategies and
decisions.
Code Provision A.5.1
The Company does not have a Nomination Committee. The Directors
do 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 Directors, 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 chairmen of the Audit Committee
and Remuneration Committee to attend. However, Mr. Tong Wang Chow,
the Executive Chairman, was unable to attend the annual general
meeting held on 12 November 2013 (the "2013 AGM") due to other
business engagements. In the absence of the Executive Chairman, Mr.
Tong Hung Wai, Tommy, an Executive Director, took the chair and,
together with the other Directors, made themselves available to
answer questions at the 2013 AGM.
COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY
DIRECTORS OF LISTED ISSUERS (THE "MODEL CODE")
The Company has adopted a code for Directors' dealings
appropriate for a company whose shares are admitted to trading on
AIM of the London Stock Exchange and takes all reasonable steps to
ensure compliance by the Directors and any relevant employees. The
Company also adopted the Model Code as set out in Appendix 10 to
the Hong Kong Listing Rules. Following a specific enquiry by the
Company, the Directors have confirmed that they had fully complied
with the required standard as set out in the Model Code throughout
the six months ended 31 December 2013.
CHANGES IN DIRECTORSHIP/COMMITTEE MEMBERSHIP
Changes in directorship during the six months ended 31 December
2013 are as follows:
Hon. Peregrine Moncreiffe and Mr. Ma Chiu Cheung, Andrew retired
as Independent Non-executive Directors of the Company with effect
from the conclusion of the 2013 AGM.
Mr. Chung Koon Yan and Mr. Ho Wai Leung were appointed as
Independent Non-executive Directors of the Company with effect from
12 November2013. With effect from the same date, while the former
was appointed as a member of the Audit Committee and Remuneration
Committee and the latter was appointed as a member of the
Remuneration Committee, Mr. Ng Hoi Yue was appointed as the
Chairman of Audit Committee.
The Board would like to express its gratitude to Hon. Peregrine
Moncreiffe and Mr. Ma Chiu Cheung, Andrewfor their contributions
over the years.
REVIEW OF FINANCIAL STATEMENTS
The Audit Committee comprises three Independent Non-executive
Directors. Mr. Ng Hoi Yue acts as Chairman of the committee with
Mr. Yang Zhen Han and Mr. Chung Koon Yan acting 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 unaudited consolidated
financial statements for the six monthsended 31 December 2013.
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 the HKEx (www.hkex.com.hk).
BY ORDER OF THE BOARD
Asian Citrus Holdings Limited
Tong Wang Chow
Chairman
Hong Kong, 26 February 2014
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 Dr. Lui Ming Wah, SBS JP, Mr. Yang
Zhen Han, Mr. Ng Hoi Yue, Mr. Chung Koon Yan and Mr. Ho Wai
Leung.
* For identification purpose only
This information is provided by RNS
The company news service from the London Stock Exchange
END
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