TIDMACHL
RNS Number : 7100S
Asian Citrus Holdings Ltd
26 September 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 ANNUAL RESULTS
FoR THE YEAR ENDED 30 JUNE 2014
The board of directors (the "Board") of Asian Citrus Holdings
Limited (the "Company" or "Asian Citrus") announces the audited
consolidated results of the Company and its subsidiaries
(collectively, the "Group") for the year ended 30 June 2014
together with its comparative figures for the year ended 30 June
2013.
Results Highlights
For illustration
Year ended 30 only
June Year ended
30 June
2014 2013 2014 2013
(RMB (RMB (GBP (GBP
m) m) m**) m**)
Reported financial
information
Revenue 1,271.2 1,485.9 120.4 158.8
Gross profit 133.9 497.6 12.7 53.2
EBITDA -1,708.2 211.3 -161.8 22.6
(Loss)/profit attributable
to shareholders -1,839.2 114.4 -174.2 12.2
Basic (loss)/earnings
per share -RMB1.48 RMB0.09 -14.0p 1.0p
Interim dividend per
share - RMB0.03 - 0.3p
Interim special dividend
per share - RMB0.02 - 0.2p
Final dividend per
share - RMB0.05 - 0.5p
Total dividend per
share - RMB0.10 - 1.1p
Adjusted core financial information#
EBITDA 79.2 496.5 7.5 53.0
(Loss)/profit before
tax -49.1 409.8 -4.6 43.8
(Loss)/profit attributable
to shareholders -51.8 399.6 -4.9 42.7
Basic (loss)/earnings
per share -RMB0.04 RMB0.33 -0.4p 3.5p
** Conversion at GBP1 = RMB10.56 and RMB9.36 for the years ended
30 June 2014and 2013 respectively (for reference only).
# Adjusted core financial information refers to activities for
the year excluding change in the carrying value of goodwill, change
in fair value of biological assets and share-based payments.
RESULTS HIGHLIGHTS
l Results for the year are as anticipated:
- Total orange production yield decreased by 9.7% to 197,467
tonnes (2013: 218,600 tonnes) due to the replanting programme in
Hepu Plantation; the production yield not yet returning to volumes
reported prior to the citrus canker; the impact of frosts in Hepu
in early 2014 and the inclement weather and persistent heavy
rainfall in Xinfeng Plantation.
- Revenue down by 14.4% to RMB1,271.2million (2013: RMB1,485.9million).
- Adjusted core loss attributable to shareholders down by 113.0%
to RMB51.8 million (2013: adjusted core profit attributable to
shareholders of RMB399.6 million) reflecting the reduction in
production yield of the orange crop and higher direct costs as a
result of inclement weather; the decrease in the average selling
prices of both oranges and processed fruit; and the loss relating
to damage caused by Typhoon Rammasun.
- Net operating activities cash inflow of RMB33.4 million (2013:
RMB560.3 million) and cash and cash equivalents of RMB1,804.7
million as at 30 June2014 (2013: RMB2,141.2million).
l The construction of the third plantation in Hunan was
completed. 422,160 grapefruit trees were planted during the year
and a further 26,960grapefruit trees were planted in July 2014.
l In view of the Group's net loss for the year, the Board does
not recommend the payment of any dividend for the year ended 30
June 2014 (2013: RMB0.10 per share, which included the final
dividend of RMB0.05, interim dividend of RMB0.03 and special
dividend of RMB0.02). The Group is taking a prudent approach in
managing its capital and reserves to maintain the appropriate
financial position and ensure sufficient funds are available to
develop new products and growth opportunities, including through
R&D and restructuring projects.
For further enquiries please contact:
Asian Citrus
Mark Ng, Chief Financial Officer +852 2559 0323
Cantor Fitzgerald Europe (NOMAD +44 (0) 20 7894
and Broker) 7000
Rick Thompson / David Foreman
(Corporate Finance)
Richard Redmayne (Corporate
Broking)
+44 (0) 20 7067
Weber Shandwick Financial 0700
Nick Oborne, Stephanie Badjonat,
Tom Jenkins
CHIEF EXECUTIVE OFFICER'S STATEMENT
It is my pleasure to present the annual results of the Group.
Looking back on my first six months as the Chief Executive Officer,
it is clear that the Group faced numerous challenges in the year
ended 30 June 2014. Whilst many of the challenges are of a
temporary nature, they still take time to address. Accordingly, we
have implemented new long-term and short-term strategic plans that
we believe will restore the profitability of the Group through new
sales initiatives as well as reducing costs.
Post the financial year end, Typhoon Rammasun (the "Typhoon")
destroyed all banana trees planted in 2013, damaged certain
farmland infrastructure and equipment and caused a significant
volume of pre-mature fruit drop from existing oranges trees in Hepu
Plantation and the temporary suspension of activities at two of
BPG's plants. Approximately 220,000 banana trees are being
replanted, following clearance of the damage caused by the Typhoon,
with an expected harvest by the end of 2015. However, it will take
a number of years for Hepu Plantation and harvests to fully
recover. We nevertheless remain confident that the Group's
performance will improve under our strong management team's
leadership.
FINANCIAL HIGHLIGHTS
For the year ended 30 June 2014, the Group's total revenue
decreased by 14.4% to RMB1,271.2 million (2013: RMB1,485.9
million). Adjusted core loss attributable to shareholders for the
year (before the change in the carrying value of goodwill, change
in fair value of biological assets and share-based payments)
declined by 113% to RMB51.8 million (2013: adjusted core net profit
RMB399.6 million), primarily reflecting the reduction in production
yield and higher direct costs as a result of inclement weather; the
decrease in average selling prices of both oranges and processed
fruit; and the loss relating to damage caused by the Typhoon as
highlighted in the Company's announcement to the market on 11
August 2014.
The Group recorded impairment losses of RMB853.4 million and
RMB923.9 million from the change in the carrying value of goodwill
and change in fair value of biological assets respectively during
the year ended 30 June 2014. It is however worth noting that the
change in the carrying value of goodwill and change in fair value
of biological assets are non-operational and have no effect on the
cash flow for the Group.
After taking into account the non-cash items of the change in
the carrying value of goodwill, change in fair value of biological
assets and share-based payments, the net loss attributable to
shareholders for the year was RMB1,839.2 million (2013: net profit
attributable to shareholders of RMB114.4 million).
OPERATIONAL REVIEW
The Group's three plantations in mainland China occupy a total
area of approximately 103 square kilometres with two currently in
operation: Hepu Plantation in Guangxi Zhuang Autonomous Region
("Guangxi") and Xinfeng Plantation in Jiangxi Province. Production
at the third plantation in Hunan Province, Hunan Plantation, is
delayed due to the impact of frosts but is scheduled to begin in
2016.
For the year ended 30 June 2014, the production yield at Hepu
Plantation decreased by 17.7% to 74,239 tonnes (2013: 90,205
tonnes). The decreased production was mainly due to the replanting
programme to replace the existing winter orange trees; the
production yield not yet returning to volumes reported prior to the
citrus canker; and the impact of frosts in Hepu in early 2014. The
gross profit margin for Hepu Plantation fell from 43.0% last year
to 12.8%, as a result of a decreased average selling price of 3.2%
compared with last year, as well as increased direct costs incurred
as a result of the inclement weather.
The production yield for the year ended 30 June 2014 at Xinfeng
Plantation decreased by 4% to 123,228 tonnes (2013: 128,395
tonnes). The gross profit margin for Xinfeng Plantation decreased
from 33.4% last year to 2.9%. The costs of maintaining the trees
and plantation are fixed and when applied against a lower turnover
this severely impacted the gross profit margin. This was further
affected by (i) the persistent heavy rainfall, which not only
negatively affected the growth of the winter orange crop but also
caused some leaching of soil nutrients in Xinfeng Plantation,
resulting in a higher volumes of fertilisers and pesticides being
consumed in order to maintain output levels, and (ii) dyed oranges
being sold by other individual suppliers in the Gannan areas which
negatively impacted the selling prices of Xinfeng Plantation winter
orange crop, resulting in a 16.9% decrease compared to last
year.
Through our 92.94% equity interest in Beihai 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.
The Group will start to increase the overall production capacity
with a third plant in Baise City, Guangxi, which commenced
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 coming year will
not be as high as the two existing plants.
STRATEGIC OVERVIEW
We are currently evaluating a number of accelerated strategies
to streamline and restructure multiple aspects of our supply chain,
including methods of reducing costs of pesticides and fertilisers,
exploring new export opportunities, and changing the product mix in
order to improve margins. Although the Group incurred increased
costs due to adverse weather during the year, we are developing
advanced management systems and cost reduction plans in order to
mitigate the effect of future adverse weather events.
We have also been collaborating with renowned specialists and
scientists, who visited our three plantations during the year. They
have been instrumental in providing advice on production and
product improvements as well as innovation in harvesting methods.
We are also combining our efforts in finding innovative ways to
recover our products from citrus canker. Separately, our current
R&D effort is focusing on improving quality by means of size,
i.e. larger citruses, and taste, which should lead to premium
pricing of our products in both the current market as well as new
potential export markets.
Furthermore, we have been putting a great deal of effort into
our international networks in order to assess potential new market
entries in premium growth regions. This will subsequently allow us
to charge premium prices for our products. New sales initiatives
within our current markets will also be a cornerstone of our
strategy for the upcoming years.
CORPORATE GOVERNANCE
During the year, there were a number of changes to our
management and the composition of the Company's Board. On behalf of
the Board, I would like to express my appreciation to Mr. Tong Wang
Chow, Hon Peregrine Moncreiffe and Mr. Ma Chiu Cheung, Andrew for
their valuable contributions over the years. I would also like to
welcome and congratulate Mr. Ng Hoi Yue, Mr. Tong Hung Wai, Tommy,
Mr. Chung Koon Yan, Mr. Ho Wai Leung and Mr. Ng Cheuk Lun to their
new positions in the Company.
With the changes to the Board's composition, five of the board
members (over half) are independent non-executive directors and the
roles of chairman and chief executive are now performed by separate
individuals, in accordance with the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited and reflects
our commitment to good corporate governance.
DIVIDENDS
Our existing dividend policy stipulates a dividend of not less
than 30% on our adjusted core net profit. However, in view of the
Group's net loss in the current reporting year, the Board is
recommending that no dividend is paid in respect of the year ended
30 June 2014, with the intention of recommending dividend payments
when adjusted core net profit improves.
The Group is taking a prudent approach in managing its capital
and reserves, in order to maintain the appropriate financial
position and ensure sufficient funds are available to develop new
products and growth opportunities, including through R&D and
restructuring projects.
Finally, on behalf of the Board, I would like to take this
opportunity to thank the whole team for their hard work and
enthusiasm over the last year. Although I only accepted this
position in March this year, it is already clear to me that, with
their continued drive and determination, we can continue to deliver
for our customers, our communities and our shareholders, building a
bigger and better business for the years to come.
Ng Ong Nee
Chief Executive Officer
26 September 2014
MANAGEMENT DISCUSSION AND ANALYSIS
OPERATING PERFORMANCE
Revenue
The breakdown of revenue by type is as follows:
For the year ended 30 June
2014 2013
% of % of
total
RMB'000 total revenue RMB'000 revenue
Hepu Plantation 357,534 28.1% 449,230 30.2%
Xinfeng Plantation 375,273 29.5% 470,753 31.7%
--------- ------------- --------- --------
Sales of oranges 732,807 57.6% 919,983 61.9%
Sales of processed
fruit 537,472 42.3% 564,089 38.0%
Sales of self-bred
saplings 892 0.1% 1,840 0.1%
--------- ------------- --------- --------
Total revenue 1,271,171 100.0% 1,485,912 100.0%
========= ============= ========= ========
Sales of oranges
Revenue from sales of oranges decreased by approximately 20.3%
to RMB732.8 million for the year ended 30 June 2014. This was
mainly due to a decrease of approximately 9.7% in the production
yield to 197,467tonnes (2013: 218,600 tonnes) and approximately
11.8% decrease in average selling price.
The production yield from Hepu Plantation decreased by
approximately 17.7% from 90,205 tonnes last year to 74,239 tonnes
for the year ended 30 June 2014. The decreased production was
mainly due to the replanting programme to replace the existing
winter orange trees in the last year; the production yield not yet
returning to volumes reported prior to the citrus canker; and the
impact of frosts in Hepu in early 2014.
The production yield from Xinfeng Plantation decreased by
approximately 4% from 128,395 tonnes last year to 123,228 tonnes
for the year ended 30 June 2014, due to the inclement weather and
persistent heavy rainfall, which not only negatively affected the
growth of the winter orange crop but also resulted in the leaching
of nutrients from the soil in Xinfeng Plantation. As a result of
the poor growth and leaching, higher volumes of fertilisers and
pesticides were consumed during the year in order to maintain
output levels.
The following table sets out the average selling prices of
oranges in different plantations:
Year ended 30 June
2009 2010 2011 2012 2013 2014
(RMB/tonne) (RMB/tonne) (RMB/tonne) (RMB/tonne) (RMB/tonne) (RMB/tonne)
Hepu Plantation
- Summer Oranges 5,057 5,516 6,061 5,856 5,694 5,446
- Winter Oranges 3,470 3,567 3,922 4,085 4,013 3,863
Xinfeng Plantation
- Winter Oranges 3,260 3,330 3,660 3,770 3,776 3,137
The average selling prices of the winter orange crop in both
Hepu Plantation and Xinfeng Plantation decreased by approximately
3.7% and 16.9% respectively for the year ended 30 June 2014. This
was mainly due to an increase in overall market supply of winter
oranges in the Gannan areas (where Xinfeng Plantation is located)
and an increase in the average maturity yield of orange trees
reaching the peak level across the region. Additionally, local
media reported that dyed oranges were sold in the Gannan areas, an
incident which was unrelated to Asian Citrus. This negatively
affected customer confidence in the domestic orange market as a
whole and, in particular, the oranges from Jiangxi province.
The average selling price of the summer orange crop in Hepu
Plantation decreased by approximately 4.4% for the year ended 30
June 2014. This was mainly due to the adverse impact on the yield
of high quality oranges suffered from frosting weather early in
2014 at Hepu County, which decreased the sales volume of graded
oranges to supermarkets, thereby reducing the average selling
price.
All of the Group's oranges were sold on the domesticmarket. The
Group's customers can be divided into three categories, namely
supermarket chains, corporate customers and wholesale customers.
The breakdown of sales by type of customer is as follows:
For the year ended
30 June
2014 2013
% of sales of
oranges
Supermarket chains 24.2% 27.9%
Corporate customers 43.1% 43.6%
Wholesale customers 32.3% 28.1%
Other 0.4% 0.4%
--------- ---------
Total 100.0% 100.0%
========= =========
For the year ended 30 June 2014, the volume and revenue from
supermarket chains represented approximately 20.4% and 24.2%
respectively of the total for the Group, compared to approximately
23.7% and 27.9% respectively for the year ended 30 June 2013; this
percentage decrease reflects the inclement weather's
disproportionate impact on the yield of graded oranges in 2014.
For Hepu Plantation and Xinfeng Plantation, the volume sold to
supermarkets was 18,860 tonnes and 21,434 tonnes respectively for
the year ended 30 June 2014 (2013: 24,907 tonnes and 26,901
tonnes).
The Group sells two types of oranges to customers, namely
ungraded oranges and graded oranges. Ungraded oranges are packaged
and customers are required to arrange for the transportation at
their own expense. Generally, ungraded oranges are sold to
wholesale customers. Graded oranges are oranges that the Group
grades, packages and delivers to the customers at the Group's cost,
usually to supermarket chains and some corporate customers. The
graded oranges are branded under our label "Royal Star", at a
premium price compared to the ungraded oranges. The sales breakdown
of the types of orangesis as follows:
For the year ended
30 June
2014 2013
% of sales of oranges
Graded oranges 13.4% 18.2%
Ungraded oranges 86.6% 81.8%
Total 100.0% 100.0%
=========== ==========
Sales of processed fruit
The below table sets out the volume and revenue from the sales
of processed fruit:
For the year ended 30 June
2014 2013
Volume Revenue Volume Revenue
(Tonnes) RMB'000 (Tonnes) RMB'000
Pineapple juice concentrates 16,275 144,209 18,295 176,929
Other juice concentrates 8,585 141,741 11,230 191,606
Mango purees 8,603 55,954 8,667 54,110
Other fruit purees 4,646 33,799 4,687 34,852
Frozen and dried fruit
and vegetables 17,504 161,133 14,051 93,743
---------- ------- --------- -------
55,613 536,836 56,930 551,240
Fruit juice trading N/A 636 N/A 12,849
---------- ------- --------- -------
Total 55,613 537,472 56,930 564,089
========== ======= ========= =======
The Group has three fruit processing plants in the People's
Republic of China (the "PRC"), which are located in Beihai City,
Hepu County and Baise City, Guangxi ("BPG"). BPG processes over 22
different types of tropical fruit, including pineapples, passion
fruit, lychees, mangoes and papayas (only products that account for
over 10% of the revenue from the sales of processed fruit are shown
in the table above).
Revenue from the sales of processed fruit decreased by
approximately 4.7% to approximately RMB537.5 million for the year
ended 30 June 2014, mainly due to (i) a decrease in fruit juice
trading; (ii) a decrease in sales of pineapple juice concentrates;
and (iii) a decrease in the selling price of these products as a
result of competitive market.
The average utilisation rate of the BPG was approximately 86.2%
for the year ended 30 June 2014.
BPG currently generates most of its sales from the PRC market,
with key customers being beverage mixers supplying major beverage
groups.
Sales of self-bred saplings
For the year ended 30 June 2014, approximately RMB892,000was
generated from the sales of 74,334 self-bred saplings to local
farmers.
Cost of sales
The breakdown of the Group's cost of sales is as follows:
For the year ended 30 June
2014 2013
% of % of
cost of cost of
sales sales
of respective of respective
RMB'000 segment RMB'000 segment
Inventories used
Fertilisers 351,279 52.0% 297,510 52.2%
Packaging materials 28,982 4.3% 34,597 6.1%
Pesticides 117,356 17.4% 74,664 13.1%
--------- ------------- ------- -------------
497,617 73.7% 406,771 71.4%
Production overheads
Direct labour 66,482 9.8% 55,836 9.8%
Depreciation 73,821 10.9% 67,557 11.9%
Others 38,044 5.6% 39,600 6.9%
Cost of sales of
oranges 675,964 100.0% 569,764 100.0%
--------- ============= ------- =============
Fruit 316,476 69.0% 258,550 62.0%
Packaging materials 30,468 6.7% 34,696 8.3%
Direct labour 33,647 7.3% 28,903 6.9%
Other production
overheads 77,811 17.0% 95,017 22.8%
Cost of sales of
processed fruit 458,402 100.0% 417,166 100.0%
--------- ============= ------- =============
Cost of sales of
self-bred saplings 2,875 1,383
Total 1,137,241 988,313
========= =======
Cost of sales of oranges consists 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 18.6% from
approximately RMB569.8 million to RMB676.0 million. The increase in
cost of sales was mainly due to the increase in consumption of both
fertilisers and pesticides to minimise further damage from the
inclement weather and persistent heavy rainfall in order to
maintain output levels and higher labour costs incurred due to
general wage inflation in the PRC. Consequently, the unit cost of
production in Hepu Plantation and Xinfeng Plantation increased to
approximately RMB4.20 and RMB2.96 per kg respectively for the year
ended 30 June 2014 (2013: RMB2.84 per kg and RMB2.44 per kg
respectively).
Cost of sales of processed fruit mainly includes the costs of
raw material fruit and packaging materials and other direct costs
such as direct labour and production overheads. For the year ended
30 June 2014, the cost of sales of processed fruit increased by
approximately 9.9% from approximately RMB417.2 million to RMB458.4
million. This was mainly due to the increase in the cost of raw
material as a result of limited supplies.
Gross profit
The Group's overall gross profit decreased by approximately
73.1% to approximately RMB133.9 million for the year ended 30 June
2014 (2013: RMB497.6 million). The overall gross profit margin
decreased from approximately 33.5% to 10.5% for the year ended 30
June 2014.
The following table sets out a breakdown of the Group's gross
profit margin by plantation:
For the year ended
30 June
2014 2013
Hepu Plantation 12.8% 43.0%
Xinfeng Plantation 2.9% 33.4%
========= =========
The decrease in gross profit margin was mainly due to (i) the
average selling prices of the orange crop in Hepu Plantation and
Xinfeng Plantation dropping by approximately 3.2% and 16.9%
respectively; (ii) the cost of sales of oranges increased by
approximately 18.6%, reflecting the increase in consumption of both
fertilisers and pesticides to minimise further damage from the
inclement weather and persistent heavy rainfall in order to
maintain output levels; and (iii) higher labour costs incurred due
to 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
2014 2013
Sales of oranges 7.8% 38.1%
Sales of processed fruit 14.7% 26.0%
For BPG, the normalised gross profit margin for the year ended
30 June 2014 decreased to approximately 14.7% compared to 26.0% in
the last year. It was mainly due to (i) the decrease in selling
price; (ii) the increase in cost of raw materials due to limited
supplies; and (iii) higher labour costs incurred.
Change in fair value of biological assets
The Group recognised a loss of RMB923.9 million from an
adjustment in the fair value of biological assets for the year
ended 30 June 2014, compared to a loss of RMB260.5 million in last
year. The loss was mainly due to the decrease in production yield,
higher cost of sales, the decrease in the market prices of both
winter and summer oranges and the post year-end effect of Typhoon
Rammasun (the "Typhoon"). 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 year
ended 30 June 2014.
Selling and distribution expenses
Selling and distribution expenses comprise mainly of
advertising, staff commission, salaries and welfare of sales
personnel, traveling and transportation expenses. The selling and
distribution expenses of the Group were broadly in line with last
year at approximately RMB45.3 million for the year ended 30 June
2014 (2013: RMB45.6 million).
General and administrative expenses
General and administrative expenses comprise mainly of salaries,
office administration expenses, depreciation, amortisation, and
research costs. The general and administrative expenses of the
Group increased by 19.5% from approximately RMB120.1 million last
year to approximately RMB143.5 million for the year ended 30 June
2014. The increase included the loss on disposal of plant and
machinery and written off of inventories for the year.
Other operating expenses
The Group recorded impairment losses of approximately RMB895.2
million on certain assets for the year ended 30 June 2014 (2013:
Nil), which included:
Impairment losses relating to damage caused by the Typhoon
Impairment losses of approximately RMB36 million were provided
relating to damage caused by the Typhoon, which was the largest
typhoon to hit South China in 41 years. The Typhoon landed in
Guangxi, where Hepu Plantation is located, in July 2014. The
Typhoon (i) destroyed all banana trees, and as a result there was
no harvest in September 2014; (ii) damaged certain farmland
infrastructure, machinery and buildings such as windbreaks,
greenhouse facilities, high and low voltage wires at Hepu
Plantation and BPG; and (iii) caused BPG to temporarily suspend the
activities of its two production plants, as a result of the
suspension of electricity supply. Consequently, some inventories
such as raw material were not used for the purposes for which they
were originally acquired.
Change in the carrying value of goodwill
An impairment loss of approximately RMB853.4 million was
provided for the change in the carrying value of goodwill (arising
initially from the acquisition of Beihai BPG in November 2010 for a
consideration of approximately HK$2.31 billion (equivalent to
approximately RMB1.97 billion)), according to a comparison of the
carrying value of goodwill as at 30 June 2014 and the recoverable
amount assessed based on the current business and operating
environment of Beihai BPG. The Board wishes to emphasise that the
change in carrying value of goodwill is non-operational and does
not have any effect on the cash flow of the Group for the year
ended 30 June 2014.
Impairment loss on a project related to properties for sale
An impairment loss of approximately RMB5.8 million was provided
on a project related to properties for sale in relation to the
second phase of the agricultural wholesalers' market and orange
processing centre, which is located in the Xinfeng County Zhongduan
Industrial Park.
Loss for the year
The loss for the yearended 30 June 2014 was approximately
RMB1,836.4million, compared to a profit of approximately RMB124.7
million in last year, representing a decrease of approximately 15.7
times.
The adjusted core loss, which refers to the loss for the
yearexcluding the change in carrying value of goodwill, change in
fair value of biological assetsand share-based payments for the
year ended 30 June 2014 was approximately RMB49.1 million, compared
to the adjusted core profit of approximately RMB409.8 million in
last year, representing a decrease of approximately 112.0%.
DIVIDENDS
In view of the Group's net loss for the year, the Board does not
recommend the payment of any dividend for the year ended 30 June
2014 (2013: RMB0.10 per ordinary share, which included the final
dividend of RMB0.05, interim dividend of RMB0.03 and special
dividend of RMB0.02).
The Group is taking a prudent approach in managing its capital
and reserves, in order to maintain the appropriate financial
position and ensure sufficient funds are available to develop new
products and growth opportunities, including through R&D and
restructuring projects.
PRODUCTIVITY For the year ended 30 June
2014 2013
% of % of
Types of total
product Tonnes total output Tonnes output
Winter oranges 147,927 74.9% 161,233 73.8%
Summer oranges 49,540 25.1% 57,367 26.2%
Total 197,467 218,600
======= =======
The production yield of winter oranges decreased by 8.3% to
147,927 tonnes for the year ended 30 June 2014. The production
yield of winter oranges in Hepu Plantation decreased by 24.8% from
32,838 tonnes last year to 24,699 tonnes this year, due to the
replanting programme to replace the existing winter orange trees.
In the previous year, 48,058 winter orange trees were removed and
replanted with approximately 221,769 banana trees. The production
yield of winter oranges in Xinfeng Plantation decreased by 4% from
128,395 tonnes last year to 123,228 tonnes this year, due to the
inclement weather and persistent heavy rainfall, which not only
affected the growth of the winter orange crop but also resulted in
the leaching of nutrients from the soil in Xinfeng Plantation.
Higher volumes of fertilisers and pesticides were consumed during
the year in order to maintain output levels.
The production yield of summer oranges in Hepu Plantation
decreased by 13.6% from 57,367 tonnes last year to 49,540 tonnes
this year, due to the fact that production yield has not yet
returned to volumes reported prior to the citrus canker, and
production was also negatively impacted by frosts in Hepu in early
2014.
Unfortunately, the Typhoon destroyed all banana trees, and as a
result there was no harvest in September 2014. The Typhoon also
caused a significant volume of pre-mature fruit drop from existing
oranges trees in Hepu Plantation, which will result in decreased
production yield in particular for the upcoming winter and summer
oranges in the financial year of 2015.
CAPITAL STRUCTURE
As at 30 June 2014there were 1,249,637,884 shares in issue.
Based on the closing price of HK$1.74 as at 28 June2014, the market
capitalisation of the Company was approximately HK$2,174.4 million
(GBP165.0million).
HUMAN RESOURCES
There were a total of 1,746employees (excluding directors) of
the Group as at 30 June 2014 (2013: 1,697 employees), staff costs
for the year ended 30 June 2014 were approximately RMB143.0 million
(2013: RMB131.4 million). The Group aims to attract, retain and
motivate high calibre individuals with competitive remuneration
packages. Remuneration packages are performance-linked and business
performance, market practices and competitive market conditions are
all taken into considerationin calculating remuneration.
Remuneration packages, which are reviewed annually, include
salaries/wages and other employee benefits, such as discretionary
bonuses, mandatory provident fund contributions and share
options.
FINANCIAL PERFORMANCE
30 June 30 June
2014 2013
Current ratio (x) 21.84 23.62
Quick ratio (x) 19.18 21.14
Asset turnover (x) 0.20 0.18
Adjusted core net (loss)/profit
per share (RMB) -0.04 0.33
Basic (loss)/earnings per
share (RMB) -1.48 0.09
Net debt to equity (%) Net cash Net cash
Liquidity
The current ratio and quick ratio were 21.84 and
19.18respectively. The liquidity of the Group hasremained healthy
with sufficient reserves for both current operational and future
development.
Profitability
The asset turnover of the Group was approximately 0.20 (2013:
0.18) for the year ended 30 June 2014. The ratio has remained
stable when compared to last year due to a decrease in revenue
offset by a decrease in total assets as detailed previously.
The basic loss per share for the year ended 30 June 2014 was
approximately RMB1.48(2013: basic earnings per share of RMB0.09).
This was mainly due to an increase in loss attributable to
shareholders for the year.
The adjusted core net lossper share for the year ended 30 June
2014 was approximately RMB0.04 (2013: adjusted core net profit per
share of RMB0.33), representing a decrease of approximately
112.1%.
Debt ratio
The net cash position of the Group was approximately
RMB1,804.7million at 30 June 2014 (2013: RMB2,141.2 million).
Internal cash resource
The Group's funding resource is internal cash and cash
equivalents. The Group did not have any outstanding borrowings as
at 30 June 2014.
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 2014.
Capital Commitments
As at 30 June 2014, the Group had capital commitments of
approximately RMB9.7million, mainly in relation to the construction
of the farmland infrastructure in Hepu Plantation, Hunan
Plantationand the acquisition of plant and machinery in BPG.
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 has limitedtransactions denominated in foreign
currencies, hence exposures 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
approximately 155,000 mu (equivalent to approximately 103.3 sq.km.)
of land in total, 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
was 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 221,769 banana trees were planted in
August 2013. There was no harvest in September 2014 as all banana
trees were destroyed by the Typhoon in July 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
723,360 grapefruit trees as at 30 June 2014. A further 26,960
grapefruit trees were planted in July 2014. At that time, the
construction of Hunan Planation was completed. The first harvest of
oranges is expected in 2016.
The below tables set out the age profile as at 30 June 2014 and
the production yield of the plantations for the year ended 30 June
2014:
Summer orange trees
Hepu Hepu Hunan Hunan
Age Plantation Plantation Plantation Plantation Total Total
No. of Yield No. of Yield No. of Yield
trees (tonnes) trees (tonnes) trees (tonnes)
2 66,449 622,475 688,924
3 63,584 427,400 490,984
4 64,194 666 64,194 666
5 81,261 2,844 81,261 2,844
6 76,135 4,087 76,135 4,087
7 55,185 3,656 55,185 3,656
17 29,996 1,860 29,996 1,860
18 128,966 8,824 128,966 8,824
19 186,003 12,540 186,003 12,540
20 223,741 15,063 223,741 15,063
975,514 49,540 1,049,875 2,025,389 49,540
Grapefruit trees
Hepu Hepu Hunan Hunan
Age Plantation Plantation Plantation Plantation Total Total
No. of Yield No. of Yield No. of Yield
trees (tonnes) trees (tonnes) trees (tonnes)
0 422,160 422,160
1 301,200 301,200
723,360 723,360
Note: Grapefruit is a type of citrus fruit and is harvested
during the winter period in the PRC.
Winter orange trees
Hepu Hepu Xinfeng Xinfeng
Age Plantation Plantation Plantation Plantation Total Total
No. of Yield No. of Yield No. of Yield
trees (tonnes) trees (tonnes) trees (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 4,617,306 197,467
========= =========
The below tables set 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
Hepu Hepu Hunan Hunan
Age Plantation Plantation Plantation Plantation Total Total
No. of Yield No. of Yield No. of Yield
trees (tonnes) trees (tonnes) trees (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
Hepu Hepu Hunan Hunan
Age Plantation Plantation Plantation Plantation Total Total
No. of Yield No. of Yield No. of Yield
trees (tonnes) trees (tonnes) trees (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
Hepu Hepu Xinfeng Xinfeng
Age Plantation Plantation Plantation Plantation Total Total
No. of Yield No. of Yield No. of Yield
trees (tonnes) trees (tonnes) trees (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
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.
VALUATION OF BIOLOGICAL ASSETS
The Group engaged an independent valuer to perform a valuation
on the fair value of the orange trees less costs to sell as at 30
June 2014.
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 began 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 then deducted 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 to arrive at a fair value of the biological assets.
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 2014 was
18.0% (2013: 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 15, remains stable for about 10 years,
and then starts to decline from age 25 to 35.
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 at the relevant reporting date for each type of
orange produced by the Group as the sales price estimate. For the
year ended 30 June 2014, the wholesale prices per tonne of winter
and summer oranges from Hepu Plantation and winter oranges from
Xinfeng Plantation adopted were RMB3,270, RMB5,150 and RMB3,110,
respectively; the supermarket selling prices per tonne of winter
and summer oranges from Hepu Plantation and winter oranges from
Xinfeng Plantation adopted were RMB5,320, RMB7,030 and RMB5,180,
respectively. For the year ended 30 June 2013, the selling prices
per tonne of winter and summer oranges from Hepu Plantation and
winter oranges from Xinfeng Plantation adopted were RMB3,320,
RMB5,220 and RMB3,740, 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 year ended 30 June
2014:
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) (793,857) (923,857) (1,043,857)
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 year ended 30 June 2014:
5.0% Decrease Base Case 5.0% Increase
Net change in fair
value of biological
assets (RMB'000) (1,063,857) (923,857) (783,857)
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 30 June 2014 used to
calculate the changes in fair value of orange trees less costs to
sell for the year ended 30 June 2014:
5.0% Decrease Base Case 5.0% Increase
Net change in fair
value of biological
assets (RMB'000) (1,243,857) (923,857) (603,857)
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 year ended 30 June
2014:
5.0% Decrease Base Case 5.0% Increase
Net change in fair
value of biological
assets (RMB'000) (723,857) (923,857) (1,113,857)
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 30 June 2014 was estimated to be approximately
RMB1,080 million (2013: RMB1,983 million).
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2014
2014 2013
-------------------------------------
Note RMB'000 RMB'000
Turnover 4 1,271,171 1,485,912
Cost of sales (1,137,241) (988,313)
----------- ---------
Gross profit 133,930 497,599
Other income 37,604 53,438
Net loss on change in fair value
of biological assets (923,857) (260,468)
Selling and distribution expenses (45,339) (45,640)
General and administrative expenses (143,481) (120,141)
Other operating expenses 5 (895,159) -
(Loss)/profit from operations (1,836,302) 124,788
Finance costs (144) (126)
(Loss)/profit before income
tax 7 (1,836,446) 124,662
Income tax expense 8 - -
----------- ---------
(Loss)/profit for the year (1,836,446) 124,662
=========== =========
Attributable to
Equity shareholders of the Company (1,839,179) 114,395
Non-controlling interests 2,733 10,267
----------- ---------
(1,836,446) 124,662
RMB RMB
(Loss)/earnings per share 9
- Basic (1.483) 0.094
=========== =========
- Diluted (1.483) 0.093
=========== =========
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
For the year ended 30 June 2014
2014 2013
-------------------------------------------
RMB'000 RMB'000
(Loss)/profit for the year (1,836,446) 124,662
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 (7) (352)
----------- -------
Total comprehensive (loss)/income
for the year (1,836,453) 124,310
=========== =======
Attributable to
Equity shareholders of the Company (1,839,186) 114,043
Non-controlling interests 2,733 10,267
----------- -------
(1,836,453) 124,310
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2014
2014 2013
Note RMB'000 RMB'000
ASSETS
Non-current assets
Property, plant and equipment 2,305,246 1,989,625
Land use rights 76,178 72,701
Construction-in-progress 76,039 304,196
Biological assets 1,406,801 2,168,501
Intangible assets 53,715 64,463
Deposits 1,443 84,303
Goodwill 303,883 1,157,261
---------
4,223,305 5,841,050
--------- ---------
Current assets
Biological assets 214,971 212,098
Properties for sale - 5,830
Inventories 57,387 40,277
Trade and other receivables 11 155,172 68,315
Cash and cash equivalents 1,804,742 2,141,224
--------- ---------
2,232,272 2,467,744
--------- ---------
Total assets 6,455,577 8,308,794
========= =========
EQUITY AND LIABILITIES
Equity
Share capital 12,340 12,159
Reserves 6,225,165 8,078,888
--------- ---------
Total equity attributable
to equity
shareholders of the Company 6,237,505 8,091,047
Non-controlling interests 115,153 112,420
--------- ---------
6,352,658 8,203,467
--------- ---------
2014 2013
Note RMB'000 RMB'000
Non-current liabilities
Obligations under finance
leases 719 832
--------- ---------
Current liabilities
Trade and other payables 12 102,087 104,390
Obligations under finance
leases 113 105
102,200 104,495
--------- ---------
Total liabilities 102,919 105,327
--------- ---------
Total equity and liabilities 6,455,577 8,308,794
========= =========
Net current assets 2,130,072 2,363,249
========= =========
Total assets less current
liabilities 6,353,377 8,204,299
========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2014
2014 2013
RMB'000 RMB'000
Cash flows from operating activities
(Loss)/profit before income tax (1,836,446) 124,662
Adjustments for:
Interest income (35,855) (50,509)
Impairment of goodwill 853,378 -
Impairment of property, plant
and equipment 15,690 -
Impairment of biological assets 11,802 -
Impairment of properties for
sale 5,830 -
Finance costs 144 126
Share-based payments 10,131 24,698
Amortisation of land use rights 1,521 1,360
Amortisation of intangible assets 10,748 12,723
Depreciation of property, plant
and equipment 181,378 144,603
Written off of inventories 22,577 -
Loss on disposals of property,
plant and equipment 12,192 2,172
Loss on disposal of land use
right - 4,902
Loss on deregistration of subsidiaries - 192
Net loss on change in fair value
of biological assets 923,857 260,468
Operating profit before working
capital changes 176,947 525,397
Movements in working capital elements:
Biological assets (14,675) (53,462)
Inventories (39,687) 22,817
Trade and other receivables (86,857) 18,342
Trade and other payables (2,310) 47,232
Net cash generated from operating
activities 33,418 560,326
----------- ---------
Cash flows from investing activities
Proceeds from disposals of property,
plant and equipment 7,434 1,853
Proceed from disposal of land
use right - 3,565
Purchases of property, plant and
equipment (18,967) (32,823)
Purchase of land use right (4,998) (14,001)
Additions to construction-in-progress (200,888) (391,561)
Deposits paid for acquisition
of property, plant and equipment (1,443) (84,297)
Net additions to biological assets (162,157) (123,745)
Additions to intangible assets - (18,680)
Decrease in time deposits with
terms over three months - 62,960
Interest received 35,855 50,509
Net cash used in investing activities (345,164) (546,220)
----------- ---------
2014 2013
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)
Repayments of obligations under
finance leases (105) (97)
Dividends paid (38,849) (166,011)
Finance costs paid (144) (126)
--------- ---------
Net cash used in financing activities (24,736) (198,036)
--------- ---------
Net decrease in cash and cash equivalents (336,482) (183,930)
Cash and cash equivalents at beginning
of year 2,141,224 2,325,154
--------- ---------
Cash and cash equivalents at end
of year 1,804,742 2,141,224
========= =========
Major non-cash transactions
During the year, purchases of property, plant and equipment
included an amount of RMB84,303,000 (2013: RMB4,245,000)
transferred from non-current deposits.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 GENERAL INFORMATION
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") and AIM of the London
Stock Exchange.
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 Group are planting, cultivation
and sale of agricultural produce and 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 ("IFRSs"), 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 revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
3 APPLICATIONS OF NEW AND REVISED IFRSs
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 2014 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 Annual improvements to IFRSs 2010-2012
to IFRSs cycles(2)
Improvements Annual improvements to IFRSs 2011-2013
to IFRSs cycle(2)
Amendments Mandatory effective date of IFRS
to IFRS 9 9 and transition disclosures(5)
and IFRS 7
Amendments Investing entities(1)
to IFRS 10,
IFRS 12 and
IFRS 27
Amendments The Classification of acceptable
to IAS 16 methods of depreciation and
and IAS 38 amortisation(3)
Amendments Bringing bearer plants into the
to IAS 16 scope of IAS 16(3)
and IAS 41
Amendments Offsetting financial assets and
to IAS 32 financial liabilities(1)
Amendments Recoverable amount disclosures
to IAS 36 for non-financial assets(1)
IFRS 9 Financial instruments(5)
IFRS 15 Revenue from contracts with customers(4)
(1) Effective for annual periods beginning on or after 1 January
2014.
(2) Effective for annual periods beginning on or after 1 July
2014.
(3) Effective for annual periods beginning on or after 1 January
2016.
(4) Effective for annual periods beginning on or after 1 January
2017.
(5) Effective for annual periods beginning on or after 1 January
2018.
The Group is in the process of making an assessment of what the
impact of these amendments and new standards is expected to be in
the period of initial application, but is not yet in a position to
state whether these amendments and new standards would have a
significant impact on the Group's financial statements.
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:
2014 2013
RMB'000 RMB'000
Sales of oranges 732,807 919,983
Sales of self-bred saplings 892 1,840
Sales of processed fruits 537,472 564,089
1,271,171 1,485,912
========= =========
5 OTHER OPERATING EXPENSES
2014 2013
RMB'000 RMB'000
Impairment of goodwill 853,378 -
Written off of inventories(#) 8,459 -
Impairment of property, plant and equipment(#) 15,690 -
Impairment of biological assets(#) 11,802 -
Impairment of properties for sale 5,830 -
895,159 -
======= =======
(#) These expenses were resulted from the widespread damage
caused by Typhoon Rammasun in July 2014, accounted for as adjusting
events after the reporting period.
6 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
(2013: two) 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 2014:
-- Agricultural produce - planting, cultivation and sale of agricultural produce
-- Processed fruits - manufacture and sale of fruit juice
concentrates, fruit purees, frozen fruits and vegetables
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 Processed Total
produce fruits
2014 2013 2014 2013 2014 2013
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment
revenue and
revenue from external
customers 733,699 921,823 537,472 564,089 1,271,171 1,485,912
--------- --------- --------- --------- ----------- ---------
Reportable segment
results (960,043) 31,912 12,900 138,711 (947,143) 170,623
--------- --------- --------- ---------
Unallocated corporate
expenses (892,115) (50,557)
Unallocated corporate
other income 2,812 4,596
----------- ---------
(Loss)/profit before
income tax (1,836,446) 124,662
Income tax expense - -
----------- ---------
(Loss)/profit for
the year (1,836,446) 124,662
=========== =========
ASSETS
Segment assets 4,294,283 5,253,592 1,700,650 1,689,669 5,994,933 6,943,261
Unallocated corporate
assets 460,644 1,365,533
----------- ---------
Total assets 6,455,577 8,308,794
=========== =========
LIABILITIES
Segment liabilities (75,748) (76,016) (22,566) (24,483) (98,314) (100,499)
Unallocated corporate
liabilities (4,605) (4,828)
----------- ---------
Total liabilities (102,919) (105,327)
=========== =========
OTHER INFORMATION
Additions to segment
non-current assets 159,390 225,539 149,493 321,737 308,883 547,276
Amortisation of
land use rights - - 466 306 466 306
Amortisation of
intangible assets 5,360 7,360 5,388 5,363 10,748 12,723
Depreciation 78,229 71,225 72,560 50,764 150,789 121,989
Loss on disposals
of property,
plant and equipment 1,010 - 10,814 2,168 11,824 2,168
Construction-in-progress
written off - 1,480 - 189 - 1,669
Interest income 20,258 32,799 12,786 13,114 33,044 45,913
Finance charges
on obligations
under finance leases 75 83 - - 75 83
Net loss on change
in fair value of
biological assets 923,857 260,468 - - 923,857 260,468
Impairment of biological
assets 11,802 - - - 11,802 -
Impairment of property,
plant
and equipment 13,079 - 2,611 - 15,690 -
Written off of
inventories - - 22,577 - 22,577 -
Share-based payments 246 4,980 9,750 16,086 9,996 21,066
========= ========= ========= ========= ========= =========
7 (LOSS)/PROFIT BEFORE INCOME TAX
(Loss)/profit before income tax is stated after
charging/(crediting) the following:
2014 2013
RMB'000 RMB'000
(a) Finance costs
Bank charges 69 43
Finance charges on obligations under
finance leases 75 83
144 126
======== ========
(b) Staff costs (including directors'
emoluments)
- salaries, wages and other benefits 135,369 114,510
- share-based payments 10,131 24,698
- contribution to defined contribution
retirement plans 3,322 2,775
-------- --------
148,822 141,983
======== ========
(c) Other items
Amortisation of land use
rights 1,521 1,360
Amortisation of intangible
assets 10,748 12,723
Auditor's remuneration 2,522 2,432
Cost of agricultural produce
sold(#) 678,839 571,147
Cost of inventories of processed
fruits
recognised as expenses(##) 458,402 417,166
Depreciation of property,
plant and equipment 181,378 144,603
Add: Realisation of depreciation
previously
capitalised as biological
assets 25,346 23,423
Less: Amount capitalised
as biological assets (54,974) (45,059)
-------- --------
151,750 122,967
Construction-in-progress
written off - 1,669
Exchange gains, net 14 989
Operating lease expenses
- plantation bases 9,163 9,470
- properties 1,184 1,020
Research and development costs 13,556 4,963
Written off of inventories(###) 22,577 -
Loss on disposals of property,
plant and equipment 12,192 2,172
Loss on disposal of land use
right - 4,902
Loss on deregistration of subsidiaries - 192
======== ========
(#) Cost of agricultural produce sold includes RMB151,422,000
(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 RMB94,190,000 (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.
(###) The written off of inventories for the year of
RMB14,118,000 (2013: RMBNil) and RMB8,459,000 (2013: RMBNil) is
included in general and administrative expenses and other operating
expenses, respectively, in the consolidated statement of profit or
loss.
8 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%.
(iv) 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 2014, 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 the basic and diluted (loss)/earnings per
share is based on the following:
2014 2013
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 (1,839,179) 114,395
=========== =========
Weighted average number of shares '000 '000
Issued ordinary shares at beginning
of year 1,229,559 1,221,097
Effect of shares issued to shareholders
participating
in the scrip dividend 5,238 8,811
Effect of shares issued upon
exercises of share options 5,371 55
Effect of shares repurchased
and cancelled - (7,236)
Weighted average number of ordinary
shares
used in basic (loss)/earnings
per share calculation 1,240,168 1,222,727
Effect of dilutive potential
shares in respect of
share options (Note) - 10,035
----------- ---------
Weighted average number of ordinary
shares
used in diluted (loss)/earnings
per share calculation 1,240,168 1,232,762
=========== =========
Note:
The potential ordinary shares arising from the conversion of
share options had an anti-dilutive effect on the basic loss per
share for the year ended 30 June 2014, hence they were ignored in
the calculation of diluted loss per share.
10 DIVIDENDS
(i) Dividends payable to equity shareholders of the Company attributable to the year:
2014 2013
RMB'000 RMB'000
Interim dividend declared and paid
during the year:
RMBNil per ordinary share (2013: interim
dividend
of RMB0.03and special dividend of RMB0.02
per
ordinary share) - 61,386
Final dividend proposed after the end
of the reporting period:
RMBNil per ordinary share (2013: RMB0.05
per
ordinary share) - 61,478
- 122,864
======= =======
The final dividend proposed after the end of the reporting
period has not been recognised as a liability at the end of the
reporting period.
(ii) Dividends payable to equity shareholders of the Company
attributable to the previous financial year, approved and paid
during the year:
2014 2013
RMB'000 RMB'000
Interim dividend for the year, approved
and paid during the
year: RMBNil per ordinary share (2013:
interim dividend
of RMB0.03 and special dividend of
RMB0.02 per ordinary
share) - 61,386
Final dividend of RMB0.05 per ordinary
share in respect of
the previous financial year, approved
and paid during the
year (2013: final dividend of RMB0.13
per ordinary share) 61,478 158,531
61,478 219,917
======= =======
11 TRADE AND OTHER RECEIVABLES
2014 2013
RMB'000 RMB'000
Trade receivables 53,717 42,736
Other receivables, deposits and prepayments 101,455 25,579
------- -------
155,172 68,315
======= =======
Trade receivables from sales of goods are normally due for
settlement within 30 to 90 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:
2014 2013
RMB'000 RMB'000
Neither past due nor impaired 53,253 41,492
------- --------
Less than 1 month past due - 1,174
1 to 3 months past due 438 -
3 to 6 months past due - -
6 to 12 months past due - -
Over 1 year past due 26 70
------- --------
Amounts past due but not impaired 464 1,244
53,717 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:
2014 2013
RMB'000 RMB'000
Less than 3 months 62,783 62,881
3 to 6 months 46 68
6 to 12 months 516 304
Over 1 year 3 299
------- -------
63,348 63,552
======= =======
13 Financial Information
The results announcement was approved by the Board on 26
September 2014. 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 2013, except for the accounting policies changes
as detailed in Note 3.
The consolidated financial statements for the year ended 30 June
2014 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 2014
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 Board does not recommend the payment of any dividend for the
year ended 30 June 2014 (2013: RMB0.10 per ordinary share,
including the final dividend of RMB0.05, interim dividend of
RMB0.03 and special dividend of RMB0.02).
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED
SECURITIES
On 6 December 2013, 1,715,000 and 7,802,000 new ordinary shares
of HK$0.01 each were issued at the exercise prices of GBP0.112 and
GBP0.139 respectively upon the exercise of a total of 9,517,000
share options under the share option scheme.
On 19 December 2013, 10,562,329 new ordinary shares of HK$0.01
each were issued at the price of HK$2.74 per share to shareholders
participating in the scrip dividend.
The Company did not redeem any of its listed securities nor did
the Company or any of its subsidiaries purchase or sell any of such
securities during the year ended 30 June 2014.
CODE ON CORPORATE GOVERNACE 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.
The Directors, where practicable, for an organisation of the
Group's size and nature sought to adopt two corporate governance
codes set out below:
1. The UK Corporate Governance Code which is the key source of
corporate governance recommendations for listed companies in the
United Kingdom and consists of principles of good governance. It
consists of principles of good governance covering the following
areas: (i) Leadership; (ii) Effectiveness; (iii) Accountability;
(iv) Remuneration; and (v) Relations with shareholders.
2. On 23 February 2012, the Company also adopted the Corporate
Governance Code (the "Code") 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 has complied with all the code provisions as set out
in the Code for the year ended 30 June 2014 except the deviations
set out below:
Code Provision A.2.1
Chairman and Chief Executive
During the period from 1 July 2013 to 2 March 2014, the roles of
Chairman and Chief Executive Officer were performed by the same
individual, Mr. Tong Wang Chow, and were not separated. The Board
meets regularly to consider issues related to corporate matters
affecting the operations of the Group. The Board considers that the
structure will not impair the balance of power and authority of the
Board and the Company's management and, thus, believes that this
structure will enable effective planning and implementation of
corporate strategies and decisions.
With effect from 3 March 2014, Mr. Tong Wang Chow resigned as an
Executive Director of the Company and ceased all his other offices
of the Company (including the Executive Chairman). On the same
date, Mr. Ng Hoi Yue was appointed as the Non-executive Chairman.
Also with effect from the same date, Mr. Ng Ong Nee was appointed
as the Chief Executive Officer of the Company. Since then, the
roles of chairman and chief executive have been performed by
separate individuals, in compliance with provision A.2.1 of the
Code.
Mr. Ng Hoi Yue, the Non-executive Chairman, is responsible for
overseeing the functions of the Board, ensuring that the Board
works effectively and performs its responsibilities, and that all
key and appropriate issues are discussed by it in a timely manner.
These are all in compliance with the provision set forward in
paragraph A.2 of the Code.
Mr. Ng Ong Nee, the Chief Executive Officer, is responsible for
leadership of the Group's business, the development and
implementation of strategies and managing the overall operations.
Within the authorities delegated by the Board he is responsible for
developing strategy proposals, ensuring that the financial results,
business strategies and, where appropriate, targets and milestones
are communicated to the investment community, shareholders and
other relevant stakeholders.
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 "INEDs"), 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 the Remuneration Committee to attend. However, Mr. Tong Wang
Chow, the former Executive Chairman, was unable to attend the
annual general meeting of the Company held on 12 November 2013 (the
"2013 AGM") due to other business engagements. In the absence of
the former Executive Chairman, Mr. Tong Hung Wai, Tommy, an
Executive Director, took the chair of the 2013 AGM pursuant to the
provisions of the Company's Bye-Laws to ensure an effective
communication with the shareholders thereat.
DIRECTORS' SECURITIES TRANSACTIONS
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 for Securities Transactions by
Directors of Listed Issuers (the "Model Code") as set out in
Appendix 10 to the Hong Kong Listing Rules as its own code of
conduct for dealings in the securities. Following a specific
enquiry of all Directors made by the Company, each of them has
confirmed that he had fully complied with the required standard as
set out in the Model Code throughout the year ended 30 June
2014.
CHANGE IN THE INFORMATION OF DIRECTORS
Hon Peregrine Moncreiffe retired as an INED and ceased to be a
member of the remuneration committee of the Board (the
"Remuneration Committee") with effect from the conclusion of the
2013 AGM.
Mr. Ma Chiu Cheung, Andrew retired as an INED and ceased to be
the chairman of the audit committee of the Board (the "Audit
Committee") and a member of the Remuneration Committee with effect
from the conclusion of the 2013 AGM.
Mr. Chung Koon Yan was appointed as an INED and a member of both
the Audit Committee and the Remuneration Committee with effect from
12 November 2013.
Mr. Ho Wai Leung was appointed as an INED and a member of the
Remuneration Committee with effect
from 12 November 2013.
Mr. Tong Wang Chow resigned as an Executive Director and ceased
all his other offices of the Company (including the Executive
Chairman and an authorised representative under the Hong Kong
Listing Rules (the "Authorised Representative)) but was appointed
as the Honorary Chairman of the Company and Group Consultant of the
Company, all with effect from 3 March 2014.
Mr. Ng Hoi Yue was appointed as the chairman of the Audit
Committee and the Non-executive Chairman of the Company with effect
from 12 November 2013 and 3 March 2014, respectively.
Mr. Tong Hung Wai, Tommy was appointed as the Vice Chairman and
an Authorised Representative of the Company with effect from 3
March 2014.
Mr. Ng Ong Nee was appointed as an Executive Director and the
Chief Executive Officer of the Company with effect from 3 March
2014. With effect from the same date, he was also appointed as a
member of the Remuneration Committee.
The Board would like to express its gratitude to Mr. Tong Wang
Chow, Hon Peregrine Moncreiffe and Mr. Ma Chiu Cheung, Andrew for
their valuable contributions over the years, and welcome and
congratulate Mr. Ng Hoi Yue, Mr. Ng Ong Nee, Mr. Tong Hung Wai,
Tommy, Mr. Chung Koon Yan and Mr. Ho Wai Leung to their new
positions in the Company.
REVIEW OF THE FINAL RESULTS BY AUDIT COMMITTEE
The Audit Committee comprises three INEDs. Mr. Ng Hoi Yue acts
as chairman of the committee with Mr. Yang Zhen Han and Mr. Chung
Koon Yan 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 the management and the
Company's independent auditor the accounting principles and
practices adopted by the Group and has discussed auditing, internal
control and financial reporting matters, including the review of
the audited consolidated financial statements of the Group for the
year ended 30 June 2014.
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
Ng Hoi Yue
Non-executive Chairman
Hong Kong, 26 September 2014
As at the date of this announcement, the board of directors of
the Company comprises four Executive Directors, namely Mr. Ng Ong
Nee (Chief Executive Officer), Mr. Tong Hung Wai, Tommy (Vice
Chairman), Mr. Cheung Wai Sun and Mr. Pang Yi; and five Independent
Non-executive Directors, namely Mr. Ng Hoi Yue (Non-executive
Chairman), Dr. Lui Ming Wah, SBS JP, Mr. Yang Zhen Han, Mr. Chung
Koon Yan and Mr. Ho Wai Leung.
* For identification purposes only
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNVBRSSAKURR
Asian Citrus (LSE:ACHL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Asian Citrus (LSE:ACHL)
Historical Stock Chart
From Jul 2023 to Jul 2024
