TIDMACHL
RNS Number : 8852F
Asian Citrus Holdings Ltd
26 February 2015
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 2014
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
2014 together with its comparative figures for the six months ended
31 December 2013.
Results Highlights
For illustration
Six months ended only
31 December Six months ended
31 December
2014 2013 2014 2013
(RMB m) (RMB m) (GBP m**) (GBP
m**)
Reported financial information
Revenue 584.4 748.3 60.5 75.0
Gross (loss)/profit -132.9 98.8 -13.8 9.9
EBITDA -152.6 -471.0 -15.8 -47.2
Loss attributable to shareholders -236.4 -548.0 -24.5 -54.9
Basic loss per share -RMB0.19 -RMB0.45 -2.0p -4.5p
Adjusted core financial information(#)
EBITDA -109.2 118.0 -11.3 11.8
(Loss)/profit before tax -191.9 45.3 -19.9 4.5
(Loss)/profit attributable
to shareholders -193.0 41.0 -20.0 4.1
Basic (loss)/earnings per
share -RMB0.15 RMB0.03 -1.6p 0.3p
(*) For identification purpose only
** Conversion at GBP1 = RMB9.66 and RMB9.98 for the six months
ended 31 December 2014 and 2013 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 25.0% to 110,993 tonnes
due to (i) extensive damage at the Hepu Plantation from the impact
of Typhoon Rammasun and Typhoon Seagull; and (ii) the effect of
cryogenic freezing rain and frosts in Xinfeng in early 2014 on the
fruit blossom, and the effect of high temperature and drought in
Xinfeng during the period from September to December 2014 causing
water scarcity for irrigation which affected the size as well as
production volume of the winter orange crop (six months ended 31
December 2013: 147,927 tonnes).
- Revenue down by 21.9% to RMB584.4 million (six months ended 31
December 2013: RMB748.3 million).
- Adjusted core loss attributable to shareholders of RMB193.0
million (six months ended 31 December 2013: adjusted core profit
attributable to shareholders RMB41.0 million) reflecting both the
reduction in production volume and average selling price of winter
oranges, as a result of the impact by the typhoons in Hepu and
unfavourable weather in Xinfeng in 2014.
- Net operating activities cash outflow of RMB70.5 million (six
months ended 31 December 2013: net operating activities cash inflow
RMB165.1 million) and cash and cash equivalents of RMB1,528.2
million as at 31 December 2014 (31 December 2013: RMB2,108.0
million).
l The construction of Hunan Plantation was completed after
26,960 grapefruit trees were planted during the period.
l In view of the Group's net loss for the period, the Board does
not recommend the payment of any interim dividend for the six
months ended 31 December 2014 (six months ended 31 December 2013:
Nil).
For further enquiries please contact:
Asian Citrus +852 2559 0323
Mark Ng (Executive Director, Chief Financial
Officer and Company Secretary)
Cantor Fitzgerald Europe (NOMAD and Broker) +44 (0) 20 7894 7000
Rick Thompson / David Foreman (Corporate
Finance)
Richard Redmayne (Corporate Broking)
Weber Shandwick Financial +44 (0) 20 7067 0700
Nick Oborne, Stephanie Badjonat, Tom Jenkins
CHIEF EXECUTIVE OFFICER'S STATEMENT
As foreshadowed in my first annual statement six months ago, the
first half of the year has seen the Group face a number of
challenges, with unfavourable weather conditions, which contributed
to reducing harvest volumes and increasing our cost base, and a
significant drop in the average selling price.
FINANCIAL HIGHLIGHTS
For the six months ended 31 December 2014, the Group's total
revenue decreased by 21.9% to RMB584.4 million from RMB748.3
million in the same period last year. Adjusted core loss
attributable to shareholders during the period, before the change
in fair value of biological assets and share based payments, was
RMB193.0 million, representing a decrease of 570.7% as compared to
adjusted core profit attributable to shareholders of RMB41.0
million for the last corresponding period. This primarily reflected
the reduction in production volume and average selling price of
winter oranges, as well as higher direct costs, such as fertilisers
and pesticides, as we sought to mitigate the impact of adverse
weather conditions both on crops and on the leaching of nutrients
from the soil.
The Group recorded a loss of RMB40.0 million from the change in
fair value of biological assets for the six months ended 31
December 2014, compared with a loss of RMB583.0 million for the six
months ended 31 December 2013; the Board would like to highlight
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 change
in fair value of biological assets and share-based payments, the
net loss for the period was RMB236.4 million (six months ended 31
December 2013: RMB548.0 million).
OPERATIONAL REVIEW
The Group controls three plantations in mainland China occupying
a total area of approximately 103.3 square kilometres with two
currently in full operation: Hepu Plantation in Guangxi Zhuang
Autonomous Region ("Guangxi") and Xinfeng Plantation in Jiangxi
Province. As I mentioned in my first annual statement, operations
at our third plantation in Hunan Province, Hunan Plantation, are
delayed but it remains on schedule to begin production in 2016.
For the six months ended 31 December 2014, the production yield
at Hepu Plantation decreased by 71.1% to 7,146 tonnes in comparison
to 24,699 tonnes for the same period last year. This was mainly due
to the extensive damage from the impact of Typhoon Rammasun. The
gross loss margin for Hepu Plantation was 431.4% this period,
compared to a gross profit margin of 25.3% for the same period last
year, as a result of the poor appearance of oranges inflected by
citrus canker leading to a 40.2% decrease in the average selling
price 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 2014
at Xinfeng Plantation was 103,847 tonnes compared with 123,228
tonnes for the same period last year, a decrease of 15.7%. The
gross loss margin for Xinfeng Plantation was 28.8% this period,
compared to a gross profit margin of2.9% for the same period last
year. The costs of maintaining the trees and plantation are fixed
and when applied against a lower turnover this has severely
impacted the gross profit margin. This has been further affected by
the effect of cryogenic freezing rain and frosts in Xingfeng in
early 2014 on the fruit blossomand the effect of high temperature
and drought in Xinfeng area during the period from September to
December 2014 causing water scarcity for irrigation, which impacted
the size as well as production volume of the winter orange
crop.
Through our 92.94% equity interest in Beihai BPG, the Group has
three fruit processing plants. Two of them are located in Beihai
City and Hepu County in Guangxi, covering a total site area of
nearly 110,000 square metres, with an annual production capacity of
around 60,000 tonnes and an average utilisation rate of 82.9% for
the six months ended 31 December 2014. The third plant in Baise
City, Guangxi remains in operation at a low level of capacity and
will do so until more fruit processing business is attracted, at
which stage further investment will be made into the business.
OUTLOOK AND STRATEGY
Over the last two years, the inclement weather and persistent
heavy rainfall has caused significant leaching of nutrients from
the soil in Xinfeng Plantation, and the impact of Typhoon Rammasun
prolonged the susceptibility of the orange trees to both citrus
canker infection and soil leaching in Hepu plantation. High levels
of direct costs are expected to be incurred in the short term. Due
to the weak condition of the orange trees it will take a number of
years for harvests at Hepu Plantation and Xinfeng Plantation to
fully recover to previous levels.
While it is still early in the financial year to fully judge the
materiality of the challenges highlighted above to the Group's
likely full year performance, we anticipate that conditions in the
second half will continue to be demanding.
Given the result of the first half year, the Board has decided
not to pay an interim dividend. Our existing dividend policy, which
stipulates a dividend of not less than 30% of our adjusted core net
profit, remains unchanged.
Since accepting the position of the Chief Executive Officer of
the Group, almost a year ago, I have sought to strengthen and
develop the Group's underlying business. In this regard we have
explored new-market opportunities regarding the diversification and
innovation of the product mix in order to improve margins. We also
continue to focus our attention on research and development in
relation to the pricing and quality of our products.
Finally, on behalf of the Board, I would like to express my
appreciation to our management team and employees for their
continued valuable contributions and support. It has been a
privilege to work with every single individual within Asian Citrus.
Although our challenges remain, I am confident of the positive
performance the Group can deliver in the medium and long term.
Ng Ong Nee
Chief Executive Officer
26 February 2015
MANAGEMENT DISCUSSION AND ANALYSIS
OPERATING PERFORMANCE
Revenue
The breakdown of revenue by type is as follows:
For the six months ended 31 December
2014 2013
% of % of
RMB'000 total revenue RMB'000 total revenue
Hepu Plantation 16,165 2.8% 93,634 12.5%
Xinfeng Plantation 324,834 55.6% 375,273 50.1%
------- ------------- ------- -------------
Sales of oranges 340,999 58.4% 468,907 62.6%
Sales of processed fruit 243,398 41.6% 279,426 37.4%
Total revenue 584,397 100.0% 748,333 100.0%
======= ============= ======= =============
Sales of oranges
Revenue from sales of oranges decreased by approximately 27.3%
to RMB341.0 million for the six months ended 31 December 2014. This
was mainly due to a decrease ofapproximately 25.0% in the
production yield to 110,993 tonnes (six months ended 31 December
2013: 147,927 tonnes) and an approximate decrease in average
selling price of 2.9%.
The production yield from Hepu Plantation decreased by
approximately 71.1% from 24,699 tonnes for the corresponding period
of last year to 7,146 tonnes for the six months ended 31 December
2014. The decrease in production was mainly due to the extensive
damage suffered from the impact of Typhoon Rammasun in July 2014,
the strongest in the region for over 40 years, and Typhoon Seagull
in September 2014 (the "Typhoons"). The Typhoons caused a
significant drop in the volume of pre-mature fruit and leaves from
the existing orange trees in Hepu Plantation. Furthermore, the
impact of the Typhoons prolonged both the susceptibility of the
orange trees to citrus canker infection and soil leaching in the
plantation areas.
The production yield from Xinfeng Plantation decreased by
approximately 15.7% from 123,228 tonnes for the corresponding
period of last year to 103,847 tonnes for the six months ended 31
December 2014. This resulted from the effect of cryogenic freezing
rain and frosts in Xinfeng in early 2014 on the fruit blossom and
the effect of high temperature and drought in Xinfeng area during
the period from September to December 2014 causing water scarcity
for irrigation, which impacted the size as well as production
volume of the winter orange crop.
The following table sets out the average selling prices of
winter oranges in different plantations:
For the six months ended
31 December
2014 2013
(RMB/tonne) (RMB/tonne)
Hepu Plantation 2,310 3,863
Xinfeng Plantation 3,221 3,137
============ ============
The average selling price of the winter orange crop in Xinfeng
Plantation increased by approximately 2.7% for the six months ended
31 December 2014. However, the average selling price at Hepu
Plantation was approximately 40.2% lower than the corresponding
period of last year; this reduction reflects both extensive typhoon
damage and the poor appearance of oranges inflected by citrus
canker.
All of the Group's oranges were sold on the domestic market. The
Group's customers can be divided into three categories, namely
supermarket chains, corporate customers and wholesale customers.
The breakdown of sales revenue by type of customer is as
follows:
For the six months ended
31 December
2014 2013
% of sales of oranges
Supermarket chains 25.5% 22.1%
Corporate customers 44.9% 48.0%
Wholesale customers 29.2% 29.4%
Other 0.4% 0.5%
------------ ------------
Total 100.0% 100.0%
============ ============
For the six months ended 31 December 2014, the volume and
revenue from supermarket chains represented approximately 24.7% and
25.5% respectively of the total for the Group, compared to
approximately 19.3% and 22.1% respectively for the corresponding
period of last year; this percentage increase reflects more oranges
sold to supermarket chains by Xinfeng Plantation.
For Hepu Plantation and Xinfeng Plantation, the volume sold to
supermarkets was 2,169 tonnes and 25,218 tonnes respectively for
the six months ended 31 December 2014 (six months ended 31 December
2013: 7,116 tonnes and 21,434 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 oranges is as follows:
For the six months ended
31 December
2014 2013
% of sales of oranges
Graded oranges 3.0% 5.9%
Ungraded oranges 97.0% 94.1%
Total 100.0% 100.0%
Sales of processed fruit
The below table sets out the volume and revenue from the sales
of processed fruit:
Volume Revenue Volume Revenue
(Tonnes) RMB'000 (Tonnes) RMB'000
Pineapple juice concentrates 1,263 13,767 5,442 49,699
Lychee juice concentrates 2,054 25,901 2,282 38,984
Red dates and medlar concentrates 2,273 24,339 1,587 17,002
Other fruit juice concentrates 283 10,866 852 27,758
Mango purees 6,305 43,922 6,814 43,569
Other fruit purees 2,580 21,304 3,730 30,599
Dried fruit 568 26,106 378 14,433
Frozen mango 3,878 37,495 2,416 18,509
Frozen papaya 3,301 25,960 3,302 24,112
Other frozen fruit and vegetables 1,447 12,085 2,084 14,761
23,952 241,745 28,887 279,426
Fruit juice trading N/A 1,653 N/A -
Total 23,952 243,398 28,887 279,426
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 12.9% to approximately RMB243.4 million for the six
months ended 31 December 2014, mainly due to the decrease in sales
of pineapple juice concentrates owing to limited raw material
supplies as Typhoon Rammasun destroyed a significant volume of
fruit crop, especially pineapples.
The average utilisation rate of the BPG was approximately 82.9%
for the six months ended 31 December 2014.
BPG currently generates most of its sales from the PRC market,
with key customers being beverage mixers supplying major beverage
groups.
Cost of sales
The breakdown of the Group's cost of sales is as follows:
For the six months ended 31 December
2014 2013
% of % of
cost of sales cost of sales
of respective of respective
RMB'000 segment RMB'000 segment
Inventories used
Fertilisers 278,714 55.3% 242,849 55.9%
Packaging materials 3,752 0.7% 10,212 2.3%
Pesticides 77,681 15.4% 58,460 13.5%
360,147 71.4% 311,521 71.7%
Production overheads
Direct labour 48,606 9.6% 48,020 11.1%
Depreciation 55,457 11.0% 49,788 11.5%
Others 40,137 8.0% 24,838 5.7%
Cost of sales of oranges 504,347 100.0% 434,167 100.0%
Fruit 146,036 68.6% 142,438 66.1%
Packaging materials 13,290 6.2% 16,611 7.7%
Direct labour 17,920 8.4% 16,686 7.7%
Other production overheads 35,724 16.8% 39,676 18.5%
Cost of sales of processed
fruit 212,970 100.0% 215,411 100.0%
Total 717,317 649,578
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 16.2% from
approximately RMB434.2 million to RMB504.3 million. The increase in
cost of sales was mainly due to (i) the increase in consumption of
both fertilisers and pesticides, which minimise further damage from
the Typhoons so as to prevent citrus canker infection and soil
leaching in Hepu Plantation areas; (ii) the increase in production
overheads including weed covering, drip irrigation system
maintenance and orange trees pruning owing to unfavourable weather
in 2014. Consequently, the unit cost of production in Hepu
Plantation and Xinfeng Plantation increased to approximately
RMB12.02 and RMB4.03 per kg respectively for the six months ended
31 December 2014 (six months ended 31 December 2013: RMB2.83 per kg
and RMB2.96 per kg respectively). It is expected that the high
costs environment will continue in the short term.
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 six months
ended 31 December 2014, the cost of sales of processed fruit was
broadly flat at approximately RMB213.0 million compared to the same
period last year at approximately RMB215.4 million.
Gross loss
The Group's overall gross loss for the six months ended 31
December 2014 increased to approximately RMB132.9 million, compared
to the gross profit of approximately RMB98.8 million for the last
corresponding period. The overall gross loss margin increased to
22.7% for the six months ended 31 December 2014, compared to the
gross profit margin of 13.2% for the last corresponding period.
The following table sets out a breakdown of the Group's gross
(loss)/profit margin by plantation:
For the six months ended
31 December
2014 2013
Hepu Plantation -431.4% 25.3%
Xinfeng Plantation -28.8% 2.9%
============== ==========
The increase in gross loss margin was mainly due to (i) the
total production yield of the winter orange crop decreased by
approximately 25.0%; (ii) the average selling price of the winter
orange crop in Hepu Plantation dropped by approximately 40.2%; and
(iii) the cost of sales of oranges increased by approximately
16.2%, reflecting the increase in consumption of both fertilisers
and pesticides to minimise further damage from the Typhoons by
preventing citrus canker infection and soil leaching in the Hepu
Plantation areas.
The following table sets out a breakdown of the Group's gross
(loss)/profit margin by business:
For the six months ended
31 December
2014 2013
Sales of oranges -47.9% 7.4%
Sales of processed fruit 12.5% 22.9%
For BPG, the normalised gross profit margin for the six months
ended 31 December 2014 decreased to approximately 12.5% compared to
22.9% in the same period last year. The decrease was mainly due to
the increase in cost of raw materials owing to limited
supplies.
Change in fair value of biological assets
The Group recognised a loss of approximately RMB40.0 million
from an adjustment in the fair value of biological assets for the
six months ended 31 December 2014, compared to a loss of RMB583.0
million for the corresponding period of last year. The loss was
mainly due to the decrease in production yield, higher cost of
sales and the decrease in the market prices 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
2014.
Selling and distribution expenses
Selling and distribution expenses comprise mainly advertising,
staff commission, salaries and welfare of sales personnel,
traveling and transportation expenses. The selling and distribution
expenses of the Group decreased by 9.5% from approximately RMB21.8
million for the corresponding period of last year to approximately
RMB19.7 million for the six months ended 31 December 2014, mainly
due to a decrease in transportation costs resulting from a decrease
in revenue from sales of graded oranges.
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 were broadly in line with the same period last year at
approximately RMB59.8 million for the six months ended 31 December
2014 (six months ended 31 December 2013: RMB59.5 million).
Other operating expenses
Other operating expenses were approximately RMB488,000 for the
six months ended 31 December 2014 (six months ended 31 December
2013: Nil), and mainly included raw material written off as a
result of the damage caused by Typhoon Rammasun.
Loss attributable to shareholders for the period
The loss attributable to shareholders for the six monthsended 31
December 2014was approximately RMB236.4 million, compared to a loss
of approximately RMB548.0 million for last corresponding period,
representing a decrease of approximately 56.9%.
The adjusted core loss attributable to shareholders, which
refers to the loss for the period excluding the change in fair
value of biological assets and share-based payments for the six
monthsended 31 December 2014was approximately RMB193.0 million,
compared to the adjusted core profit of approximately RMB41.0
million for the corresponding period of last year, representing a
decrease of approximately 570.7%.
DIVIDENDS
In view of the Group's net loss for the period, the Board does
not recommend the payment of any dividend for the six months ended
31 December 2014 (six months ended 31 December 2013: Nil). Our
existing dividend policy, which stipulates a dividend of not less
than 30% of our adjusted core net profit, remains unchanged.
CAPITAL STRUCTURE
As at 31 December2014 there were 1,249,637,884 shares in issue.
Based on the closing price of HK$0.88as at 31 December2014, the
market capitalisation of the Company was approximately HK$1,099.7
million (approximately GBP91.3 million).
HUMAN RESOURCES
There were a total of 1,865 employees (excluding Directors) of
the Group as at 31 December 2014 (31 December 2013: 1,329
employees) and staff costs for the six months ended 31 December
2014 were approximately RMB83.0 million (six months ended 31
December 2013: RMB83.8 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 consideration in 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
31 December 30 June
2014 2014
Current ratio (x) 16.61 21.84
Quick ratio (x) 14.70 19.18
Net debt to equity (%) Net Cash Net Cash
31 December 31 December
2014 2013
Asset turnover (x) 0.10 0.10
Adjusted core net (loss)/profit
per share (RMB) -0.15 0.03
Basic loss per share (RMB) -0.19 -0.45
Liquidity
The current ratio and quick ratio were 16.61 and 14.70
respectively. The liquidity of the Group remained healthy with
sufficient reserves for both current operational and future
development.
Profitability
The asset turnover of the Group was approximately 0.10 (six
months ended 31 December 2013: 0.10) for the six months ended 31
December 2014.
The basic loss per share for the six monthsended 31 December
2014 was approximately RMB0.19 (six months ended 31 December 2013:
basic loss per share of RMB0.45).
The adjusted core net loss per share for the six months ended 31
December 2014 was approximately RMB0.15 (six months ended 31
December 2013: adjusted core net profit per share of RMB0.03),
representing a decrease approximately 600.0%.
Debt ratio
The net cash position of the Group was approximately RMB1,528.2
million and RMB1,804.7 million at 31 December 2014 and 30 June 2014
respectively
Internal cash resource
The Group's funding resource is internal cash and cash
equivalents. The Group did not have any outstanding borrowings as
at 31 December 2014.
Charge on assets and contingent liabilities
Except for certain farmland infrastructure and machinery of
approximately RMB775,000, none of the Group's assets were pledged
as security and the Group did not have any material contingent
liabilities as at 31 December 2014.
Capital Commitments
As at 31 December 2014, the Group had capital commitments of
approximately RMB13.2 million, mainly in relation to 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 limited transactions 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 53,000 mu (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 of approximately
1.2 million orange trees. A total of 221,769 banana trees were
naturally re-seeded from the original banana treesin August 2014,
following clearance of the damage caused by Typhoon Rammasun. The
first harvest of banana trees is expected in September 2015.
Xinfeng Plantation
Xinfeng Plantation is fully planted and comprises 1.6 million
winter orange trees.
Hunan Plantation
Hunan Plantation is fully planted and comprises approximately
1.05 million summer orange trees and approximately 750,320
grapefruit trees as at 31 December 2014. The first harvest of
oranges trees is expected in 2016.
The below tables set out the age profile as at 31 December 2014
and the production yield of the plantations for the six months
ended 31 December 2014:
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)
3 66,449 622,475 688,924
4 63,584 427,400 490,984
5 64,194 64,194
6 81,261 81,261
7 76,135 76,135
8 55,185 55,185
18 29,996 29,996
19 128,966 128,966
20 186,003 186,003
21 223,741 223,741
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 26,960 26,960
1 422,160 422,160
2 301,200 301,200
750,320 750,320
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
Note: The first harvest of banana trees is expected in September
2015.
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)
8 400,000 25,525 400,000 25,525
9 400,000 25,571 400,000 25,571
10 46,077 1,680 400,000 25,308 446,077 26,988
12 180,180 4,383 400,000 27,443 580,180 31,826
13 42,300 1,083 42,300 1,083
268,557 7,146 1,600,000 103,847 1,868,557 110,993
Total 4,866,035 110,993
========= ==============
The below tables set 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
========= ==============
VALUATION OF BIOLOGICAL ASSETS
The Group engaged an independent valuer to perform a valuation
of the fair value of the orange trees less costs to sell as at 31
December 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 value of machinery and equipment and
other 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 six months ended 31
December 2014 was 18.0% (31 December 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
six months ended 31 December 2014, the wholesale prices per tonne
of winter and summer oranges from Hepu Plantation and winter
oranges from Xinfeng Plantation adopted were RMB2,310, RMB5,150 and
RMB3,180, 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
RMB5,320, respectively. For the six months ended 31 December 2013,
the selling prices per tonne of winter and summer oranges from Hepu
Plantation and winter oranges from Xinfeng Plantation adopted were
RMB3,270, RMB5,210 and RMB3,110, respectively.
4) The direct production cost variables represent the direct
costs necessary to bring the oranges to their sales form, which
mainly include raw material costs and direct labour costs. The
direct production cost variables are determined by reference to
actual costs incurred for areas that have been previously
harvested, and have taken into account the projected long-term
inflation rate of 3.0% per annum.
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 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 2014:
1.0% Decrease Base Case 1.0% Increase
Discount rate 17.0% 18.0% 19.0%
Change in fair value of biological
assets (RMB'000) 110,000 (40,000) (170,000)
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 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 2014:
5.0% Decrease Base Case 5.0% Increase
Change in fair value of biological
assets (RMB'000) (180,000) (40,000) 100,000
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 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 2014 used to calculate
the changes in fair value of orange trees less costs to sell for
the six months ended 31 December 2014:
5.0% Decrease Base Case 5.0% Increase
Change in fair value of biological
assets (RMB'000) (270,000) (40,000) 200,000
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 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
31December2014:
5.0% Decrease Base Case 5.0% Increase
Change in fair value of biological
assets (RMB'000) 70,000 (40,000) (150,000)
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 2014 was estimated to be approximately
RMB1,040 million (30 June 2014: RMB1,080 million).
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the six months ended 31 December 2014
Six months ended Year ended
-------------------------------------
31 December 30 June
-------------------------------------
2014 2013 2014
-------------------------------------
(unaudited) (unaudited) (audited)
-------------------------------------
Note RMB'000 RMB'000 RMB'000
Turnover 5 584,397 748,333 1,271,171
Cost of sales (717,317) (649,578) (1,137,241)
----------- ----------- -----------
Gross (loss)/profit (132,920) 98,755 133,930
Other income 6 17,601 21,862 37,604
Change in fair value of
biological assets (40,000) (583,000) (923,857)
Selling and distribution expenses (19,717) (21,777) (45,339)
General and administrative expenses (59,771) (59,463) (143,481)
Other operating expenses 7 (488) - (895,159)
Loss from operations (235,295) (543,623) (1,836,302)
Finance costs 8(a) (33) (91) (144)
Loss before income tax 8 (235,328) (543,714) (1,836,446)
Income tax expense 9 - - -
----------- ----------- -----------
Loss for the period/year (235,328) (543,714) (1,836,446)
=========== =========== ===========
Attributable to
Equity shareholders of the Company (236,413) (547,971) (1,839,179)
Non-controlling interests 1,085 4,257 2,733
----------- ----------- -----------
(235,328) (543,714) (1,836,446)
RMB RMB RMB
Loss per share 10
- Basic (0.189) (0.445) (1.483)
=========== =========== ===========
- Diluted (0.189) (0.445) (1.483)
=========== =========== ===========
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the six months ended 31 December 2014
Six months ended Year ended
--------------------------------------------------------
31 December 30 June
--------------------------------------------------------
2014 2013 2014
--------------------------------------------------------
(unaudited) (unaudited) (audited)
--------------------------------------------------------
RMB'000 RMB'000 RMB'000
Loss for the period/year (235,328) (543,714) (1,836,446)
Other comprehensive loss 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) (4) (7)
Total comprehensive loss for the period/year (235,332) (543,718) (1,836,453)
Attributable to
Equity shareholders of the Company (236,417) (547,975) (1,839,186)
Non-controlling interests 1,085 4,257 2,733
(235,332) (543,718) (1,836,453)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2014
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
ASSETS Note RMB'000 RMB'000 RMB'000
Non-current assets
Property, plant and equipment 2,294,497 2,346,121 2,305,246
Land use rights 75,401 76,955 76,178
Construction-in-progress 43,610 62,795 76,039
Biological assets 1,527,411 1,654,779 1,406,801
Intangible assets 48,341 59,089 53,715
Deposits 7,302 2,393 1,443
Goodwill 303,883 1,157,261 303,883
4,300,445 5,359,393 4,223,305
----------- ----------- ---------
Current assets
Biological assets 152,623 73,906 214,971
Properties for sale - 5,830 -
Inventories 70,004 55,001 57,387
Trade and other receivables 12 186,730 130,062 155,172
Cash and cash equivalents 1,528,208 2,108,021 1,804,742
----------- ----------- ---------
1,937,565 2,372,820 2,232,272
----------- ----------- ---------
Total assets 6,238,010 7,732,213 6,455,577
=========== =========== =========
EQUITY AND LIABILITIES
Equity
Share capital 12,340 12,340 12,340
Reserves 5,992,119 7,512,259 6,225,165
----------- ----------- ---------
Total equity attributable to equity
shareholders
of the Company 6,004,459 7,524,599 6,237,505
Non-controlling interests 116,238 116,677 115,153
----------- ----------- ---------
6,120,697 7,641,276 6,352,658
----------- ----------- ---------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION(Continued)
At 31 December 2014
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
Note RMB'000 RMB'000 RMB'000
Non-current liabilities
Obligations under finance
leases 657 775 719
----------- ----------- -------------
Current liabilities
Trade and other payables 13 116,538 90,053 102,087
Obligations under finance
leases 118 109 113
116,656 90,162 102,200
----------- ----------- -------------
Total liabilities 117,313 90,937 102,919
----------- ----------- -------------
Total equity and liabilities 6,238,010 7,732,213 6,455,577
=========== =========== =============
Net current assets 1,820,909 2,282,658 2,130,072
=========== =========== =============
Total assets less current
liabilities 6,121,354 7,642,051 6,353,377
=========== =========== =============
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 December 2014
Six months ended Year ended
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
Note RMB'000 RMB'000 RMB'000
Cash flows from operating activities
Loss before income tax (235,328) (543,714) (1,836,446)
Adjustments for:
Interest income 6 (17,552) (20,416) (35,855)
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 8(a) 33 91 144
Share-based payments 8(b) 3,371 6,014 10,131
Amortisation of land use rights 8(c) 777 744 1,521
Amortisation of intangible assets 8(c) 5,374 5,374 10,748
Depreciation of property, plant and
equipment 8(c) 98,955 84,383 181,378
Written off of inventories 8(c) 595 - 22,577
Loss on disposal of property, plant
and equipment 8(c) 1,245 2,251 12,192
Change in fair value of biological
assets 40,000 583,000 923,857
Operating (loss)/profit before working
capital changes (102,530) 117,727 176,947
Movements in working capital elements:
Biological assets 62,348 138,192 (14,675)
Inventories (13,212) (14,724) (39,687)
Trade and other receivables (31,558) (61,747) (86,857)
Trade and other payables 14,447 (14,341) (2,310)
Net cash (used in)/generated from
operating activities (70,505) 165,107 33,418
Cash flows from investing activities
Net additions to biological assets (160,610) (69,278) (162,157)
Additions to construction-in-progress (31,501) (114,410) (200,888)
Purchase of property, plant and equipment (24,078) (4,813) (18,967)
Deposits paid for acquisition of property, ) )
plant and equipment (7,302 (2,393 (1,443 )
Interest received 17,552 20,416 35,855
Purchase of land use right - (4,998) (4,998)
Proceeds from disposal of property,
plant and equipment - 1,797 7,434
Net cash used in investing activities (205,939) (173,679) (345,164)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
For the six months ended 31 December 2014
Six months ended Year ended
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Cash flows from financing activities
Repayments of obligations under finance
leases (57) (53) (105)
Finance costs paid (33) (91) (144)
Dividends paid - (38,849) (38,849)
Proceeds from issue of new shares upon
exercises
of share options - 14,362 14,362
Net cash used in financing activities (90) (24,631) (24,736)
Net decrease in cash and cash equivalents (276,534) (33,203) (336,482)
Cash and cash equivalents at beginning
of
period/year 1,804,742 2,141,224 2,141,224
Cash and cash equivalents at end of
period/year 1,528,208 2,108,021 1,804,742
=========== =========== ==========
Major non-cash transactions
During the six months ended 31 December 2014, purchases of
property, plant and equipment included an amount of RMB1,443,000
(six months ended 31 December 2013: RMB84,303,000, year ended 30
June 2014: RMB84,303,000) transferred from non-current
deposits.
NOTES TO THE INTERIM FINANCIAL INFORMATION
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 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 Group are planting, cultivation
and sale of agricultural produce, manufacture and sale of fruit
juice concentrates, fruit purees, frozen fruit 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 2014, 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
2015. 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 2014 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 2010-2012
cycle
Improvements to IFRSs Annual improvements to IFRSs 2011-2013
cycle
Amendments to IFRS 10, Investment entities
IFRS 12 and IAS 27
Amendments to IAS 32 Offsetting financial assets and financial
liabilities
Amendments to IAS 36 Recoverable amount disclosure for non-financial
assets
IFRIC 21 Levies
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 2015 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
and IFRS 7 transition disclosures(3)
Amendments to IAS 16 The Classification of acceptable methods
and of depreciation and amortisation(1)
IAS 38
Amendments to IAS 16 Bringing bearer plants into the scope
and of IAS16(1)
IAS 41
IFRS 9 Financial instruments(3)
IFRS 15 Revenue from contracts with customers(2)
(1) Effective for annual periods beginning on or after 1 January
2016.
(2) Effective for annual periods beginning on or after 1 January
2017.
(3) 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 will have a
significant impact on the Group's financial statements.
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 fruit - manufacture and sale of fruit juice
concentrates, fruit purees, frozen fruit and vegetables
The directors assess the performance of the operating segments
based on a measure of reportable segment results. This measurement
basis excludes the central other income, expenses and finance
costs.
Segment assets mainly exclude goodwill, certain property, plant
and equipment, land use rights and other assets that are managed on
a central basis. Segment liabilities mainly exclude liabilities
that are managed on a central basis.
4 SEGMENT INFORMATION(continued)
Segment results, assets and liabilities
Six months ended 31 December 2014:
Agricultural Processed
produce fruit Total
(unaudited) (unaudited) (unaudited)
RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and
revenue from external customers 340,999 243,398 584,397
------------ ----------- -----------
Reportable segment results (227,204) 4,531 (222,673)
------------ -----------
Unallocated corporate expenses (13,908)
Unallocated corporate other
income 1,253
Loss before income tax (235,328)
Income tax expense -
-----------
Loss for the period (235,328)
===========
ASSETS
Segment assets 4,090,087 1,695,885 5,785,972
Unallocated corporate assets 452,038
-----------
Total assets 6,238,010
===========
LIABILITIES
Segment liabilities (99,556) (13,276) (112,832)
Unallocated corporate liabilities (4,481)
-----------
Total liabilities (117,313)
===========
OTHER INFORMATION
Additions to segment
non-current assets 33,313 30,994 64,307
============ =========== ===========
4 SEGMENT INFORMATION(continued)
Segment results, assets and liabilities(continued)
Six months ended 31 December 2013:
Agricultural Processed
produce fruit 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
============ =========== ===========
4 SEGMENT INFORMATION(continued)
Segment results, assets and liabilities(continued)
Year ended 30 June 2014:
Agricultural Processed
produce fruit Total
(audited) (audited) (audited)
RMB'000 RMB'000 RMB'000
RESULTS
Reportable segment revenue
and
revenue from external customers 733,699 537,472 1,271,171
------------ --------- ----------
Reportable segment results (960,043) 12,900 (947,143)
------------ ---------
Unallocated corporate expenses (892,115)
Unallocated corporate other
income 2,812
Loss before income tax (1,836,446)
Income tax expense -
----------
Loss for the year (1,836,446)
==========
ASSETS
Segment assets 4,294,283 1,700,650 5,994,933
Unallocated corporate assets 460,644
----------
Total assets 6,455,577
==========
LIABILITIES
Segment liabilities (75,748) (22,566) (98,314)
Unallocated corporate liabilities (4,605)
----------
Total liabilities (102,919)
==========
OTHER INFORMATION
Additions to segment
non-current assets 159,390 149,493 308,883
============ ========= ==========
5 TURNOVER
Turnover represented the total invoiced value of goods supplied
to customers. The amount of each significant category of revenue
recognised as turnover is as follows:
Six months ended Year ended
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Sales of oranges 340,999 468,907 732,807
Sales of self-bred saplings - - 892
Sales of processed fruit 243,398 279,426 537,472
584,397 748,333 1,271,171
=========== =========== ==========
6 OTHER INCOME
Six months ended Year ended
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Interest income 17,552 20,416 35,855
Government grants 30 1,414 1,744
Sundry income 19 32 5
----------- ----------- ----------
17,601 21,862 37,604
=========== =========== ==========
7 OTHER OPERATING EXPENSES
Six months ended Year ended
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Impairment of goodwill - - 853,378
Written off of inventories(#) 488 - 8,459
Impairment of property, plant and equipment(#) - - 15,690
Impairment of biological
assets(#) - - 11,802
Impairment of properties
for sale - - 5,830
488 - 895,159
=========== =========== ==========
(#) These expenses resulted from the wide spread damage caused by Typhoon
Rammasun
in July 2014.
8 LOSS BEFORE INCOME TAX
Loss before income tax is stated after charging/(crediting) the
following:
Six months ended Year ended
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
(a) Finance costs
Bank charges - 54 69
Finance charges on obligations
under finance leases 33 37 75
----------- ----------- ----------
33 91 144
----------- ----------- ----------
(b) Staff costs (including directors'
emoluments)
- salaries, wages and other benefits 80,402 79,437 135,369
- share-based payments 3,371 6,014 10,131
* contributions to defined
contribution retirement plans 1,848 1,178 3,322
----------- ----------- ------------
85,621 86,629 148,822
----------- ----------- ------------
(c) Other items
Amortisation of land use rights 777 744 1,521
Amortisation of intangible assets 5,374 5,374 10,748
Auditor's remuneration 1,113 1,397 2,522
Cost of agricultural produce
sold (#) 504,347 434,167 678,839
Cost of inventories of processed
fruit recognised as expenses
(##) 212,970 215,411 458,402
Depreciation of property, plant
and
equipment 98,955 84,383 181,378
Add: Realisation of depreciation
previously capitalised as
biological assets 26,745 25,022 25,346
Less: Amount capitalised as biological
assets (31,575) (22,425) (54,974)
----------- ----------- ------------
94,125 86,980 151,750
Exchange gain, net (1,202) (67) (14)
Operating lease expenses
- plantation bases 5,420 6,394 9,163
- properties 540 580 1,184
Research and development costs 2,441 6,631 13,556
Written off of inventories(###) 595 - 22,577
Loss on disposals of property,
plant
and equipment 1,245 2,251 12,192
=========== =========== ============
8 LOSS BEFORE INCOME TAX (continued)
(#) Cost of agricultural produce sold includes RMB108,490,000
(six months ended 31 December 2013: RMB104,989,000, year ended 30
June 2014: RMB151,422,000) relating to staff costs, depreciation
and operating lease expenses, which amount was also included in the
respective total amount disclosed separately above for each of
these types of expenses.
(##) Cost of inventories of processed fruit recognised as
expenses includes RMB45,147,000 (six months ended 31 December 2013:
RMB45,105,000, year ended 30 June 2014: RMB94,190,000) relating to
staff costs, amortisation of land use rights, amortisation of
intangible assets and depreciation, which amount was also included
in the respective total amount disclosed separately above for each
of these types of expenses.
(###) The written off of inventories for the period of
RMB107,000 (six months ended 31 December 2013: RMBNil, year ended
30 June 2014: RMB14,118,000) and RMB488,000 (six months ended 31
December 2013: RMBNil, year ended 30 June 2014: RMB8,459,000) was
included in general and administrative expenses and other operating
expenses, respectively, in the condensed consolidated statement of
profit and loss.
9 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 British Virgin Islands, 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%.
9 INCOME TAX EXPENSE (Continued)
(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 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.
10 LOSS PER SHARE
The calculation of basic and diluted loss per share is based on
the following:
Six months ended Year ended
31 December 30 June
2014 2013 2013
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Loss
Loss attributable to equity shareholders
of the Company used in basic and diluted
loss per share calculation (236,413) (547,971) (1,839,179 )
Weighted average number of shares '000 '000 '000
Issued ordinary shares at beginning of
period/year 1,249,638 1,229,559 1,229,559
Effect of shares issued to shareholders
participating in the scrip dividend - - 5,238
Effect of shares issued upon exercises
of
share options - 1,293 5,371
Weighted average number of ordinary shares
used in basic loss per share calculation 1,249,638 1,230,852 1,240,168
Effect of dilutive potential shares in
respect of
share options (Note) - - -
----------- ----------- ----------
Weighted average number of ordinary shares
used in diluted loss per share calculation 1,249,638 1,230,852 1,240,168
=========== =========== ==========
Note:
The potential ordinary shares arising from the conversion of
share options had an anti-dilutive effect on the basic loss per
share hence they were ignored in the calculation of diluted loss
per share.
11 DIVIDENDS
The directors do not declare the payment of any interim dividend
in respect of the six-month period ended 31 December 2014 and
2013.
12 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
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Less than 1 month 68,243 72,248 42,302
1 to 3 months 33,970 14,496 11,366
3 to 6 months 7 - -
6 to 12 months - - -
Over 1 year 49 49 49
----------- ----------- ---------
102,269 86,793 53,717
=========== =========== =========
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:
31 December 30 June
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Neither past due nor impaired 73,067 72,519 53,253
----------- ----------- ---------
Less than 1 month past due 22,414 12,516 -
1 to 3 months past due 6,762 1,732 438
3 to 6 months past due - - -
6 to 12 months past due - - -
Over 1 year past due 26 26 26
----------- ----------- ---------
Amounts past due but not impaired 29,202 14,274 464
----------- ----------- ---------
102,269 86,793 53,717
=========== =========== =========
Receivables that were neither past due nor impaired relate to a
wide range of customers for whom there was no recent history of
default.
12 TRADE AND OTHER RECEIVABLES(Continued)
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.
13 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
2014 2013 2014
(unaudited) (unaudited) (audited)
RMB'000 RMB'000 RMB'000
Less than 3 months 68,410 24,050 62,783
3 to 6 months 260 89 46
6 to 12 months 658 111 516
Over 1 year 9 294 3
----------- ----------- ---------
69,337 24,544 63,348
=========== =========== =========
14 FINANCIAL INFORMATION
The results announcement was approved by the Board on 26
February 2015. 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 2014.
OTHER INFORMATION
DIVIDENDS
The Board does not recommend the payment of an interim dividend
for the six months ended 31 December 2014 (six months ended 31
December 2013: Nil).
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED
SECURITIES
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 six months ended 31 December 2014.
CORPORATE GOVERNANCE CODE
During the six months ended 31 December 2014, 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 ofgood governance covering the following
areas: (i) Leadership; (ii) Effectiveness; (iii) Accountability;
(iv)Remuneration; and (v) Relations with shareholders; and
2. the Corporate GovernanceCode (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.
The Company has complied with all the code provisions as set out
in the Code during the six months ended 31 December 2014 except the
deviations set out below:
Code Provision A.5.1
The Companydoes not have a nomination committee. The Directors
do not consider that, given the size of the Group and the 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 fororderly succession
for appointments to the Board and its structure, size and
composition. If the Boardconsiders that it is necessary to appoint
new Director(s), it will set down the relevant appointment
criteriawhich 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 ("INEDs"),the independence requirements set
out in the Hong Kong Listing Rules from time to time. Nominationof
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).
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 Rulesas its own code of
conduct for dealings in the securities. Following a specific
enquiry made of all Directors 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 six months ended 31
December 2014.
CHANGES IN DIRECTORSHIP
Changes in directorship during the six months ended 31 December
2014 are as follows:
Mr. Ng Cheuk Lun, the Company Secretary, Chief Financial Officer
and an Authorised Representative of the Company, was appointed as
an Executive Director of the Company with effect from 24 November
2014.
REVIEW OF FINANCIAL STATEMENTS
The audit committee of the Board (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 acting as
members. The establishment of Audit Committee is in compliance with
Rule 3.21 of the Hong Kong Listing Rules.
The Audit Committee has reviewed with the management the
accounting principles and practices adopted by the Group and has
discussed auditing, internal control and financial reporting
matters, including the review of the Company's unaudited
consolidated financial statements and the interim report for the
six months ended 31 December 2014.
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
sectionand the HKEx (www.hkex.com.hk).
By Order of the Board
Asian Citrus Holdings Limited
Ng Hoi Yue
Non-executive Chairman
Hong Kong, 26 February 2015
As at the date of this announcement, the Board comprises five
Executive Directors, namely Mr. Ng Ong Nee (Chief Executive
Officer), Mr. Tong Hung Wai, Tommy (Vice Chairman), Mr. Cheung Wai
Sun, Mr. Pang Yi and Mr. Ng Cheuk Lun (Chief Financial Officer and
Company Secretary) and five Independent Non-executive Directors,
namely Dr. Lui Ming Wah, SBS JP, Mr. Yang Zhen Han, Mr. Ng Hoi Yue
(Non-executive Chairman), Mr. Chung Koon Yan and Mr. Ho Wai
Leung.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDDLGDBGUU
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