Share Name Share Symbol Market Type Share ISIN Share Description
Aquatic Food LSE:AFG London Ordinary Share JE00BQQG1J93 ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 12.50p 0.00p 0.00p - - - 0 06:30:09
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Food Producers 10,229.1 1,900.0 13.1 0.9 14.15

Aquatic Foods Group PLC Correction to Final Results Announcement

30/06/2016 7:45am

UK Regulatory (RNS & others)

Aquatic Food (LSE:AFG)
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RNS Number : 7536C

Aquatic Foods Group PLC

30 June 2016

   30 June 2016 

Aquatic Foods Group Plc

("Aquatic Foods" or "AFG" or the "Group")

Correction to Final Results Announcement

Further to the announcement on 29 June 2016 at 7.00 a.m. under RNS no. 5505C in respect of the Company's Final Results for the year ended 31 December 2015, the Company advises that an incorrect version of the final results had originally been uploaded.

The following amendments have been made;

   --     Correction of the 2015 EPS figure to 1.25 RMB from 1.27 RMB; 
   --     The reclassification of certain balances in the cash flow statement; 
   --     Note 2 to the accounts updated to reflect the cash balance as at 31 December 2015; and 
   --     Note 18 to the accounts update for correct Directors' remuneration figure. 

There are no other material amendments.

The fully amended announcement is shown below.

Final Results

Aquatic Foods Group Plc (AIM: AFG), a leading Chinese marine foods and seafood processor and producer, supplying to export and local markets, today announces its Final Results for the year ended 31 December 2015.

Financial Highlights

   --              Revenue increased by 14% to RMB 979 million (cGBP102.4m) (2014: RMB 856 million) 
   --              Gross profit margins across all product categories averaged 28% (2014: 32%) 

-- Profit before tax kept at RMB 182 million (cGBP19.0m) (2014: RMB 182 million, this includes one-off IPO expenses of RMB 8 million)

-- Net profit after tax increased by 2% to RMB 140 million (cGBP14.6m) (2014: RMB 137 million)

-- EPS at 12.9 pence (2014 notional EPS, based on the total number of shares at IPO of 113,226,081, was 12.6 pence)

-- Cash as at 31 December 2015 of RMB 380 million (cGBP39.8m) (2014: RMB 194 million, excludes the gross proceeds from the Placing and Admission to AIM, which occurred post period end on 3 February 2015 and totalled GBP9.3 million, equivalent to approximately RMB 89.3 million)

   --              51 regional distributors as at 31 December 2015 (2014: 50) 

-- Trading in 2016 has been challenging with declines in gross margins across all product categories

   --              Final dividend of 0.7p proposed, giving a total dividend for the year of 1.4p 

*The illustrative exchange rate as at 31 December 2015 was 1 GBP: 9.6 RMB (2014: 1 GBP: 9.6 RMB)

Li Xianzhi, Chief Executive of Aquatic Foods, commented: "The Board is satisfied with this set of results, which show an uplift in revenue and stable gross and net profit during a period of difficult market conditions. Against the challenging business environment buffeted by international financial volatility and slowing growth in emerging markets including China, Aquatic Foods has performed credibly. The Company has demonstrated its ability in keeping overheads under control and restructuring its operations and resources that will stand Aquatic Foods in good stead for the long term.

"The Directors expect the current challenging market conditions to continue in the near term, and AFG will seek to overcome this by focusing on operational efficiency, developing new sales channels including supermarkets, increasing sales to our existing distribution network, expanding our distribution network and increasing our focus on export markets.

"Aquatic Foods' successful listing on AIM has improved our corporate profile, which provides enhanced confidence to both suppliers and end customers within the Chinese market, particularly as these customers are becoming increasingly concerned about food hygiene, safety and quality. This further strengthens our ability to capitalise on the increasing demand for high quality marine foods and seafood products in China."

For further information:

 Aquatic Foods Group Plc                     Tel: +44 (0) 20 7398 
 Dr Wang Shaodong, Non-Executive Chairman 
 SP Angel Corporate Finance LLP 
  Nominated Adviser and Broker 
 Stuart Gledhill / David Facey               Tel: +44 (0) 20 3470 

Media enquiries:

 Abchurch Communications Limited 
 Julian Bosdet / Canace Wong         Tel: +44 (0) 20 7398 

Chairman's Statement

2015 was a challenging year for businesses including international financial volatility and slowing growth in emerging markets including China. Against this volatile market backdrop, Aquatic Foods performed credibly, demonstrating the Company's ability to keep close control over its overheads, operations and resources, which should stand Aquatic Foods in good stead for the future. We are pleased to announce today our results, which show an uplift in revenue and stable gross and net profit.

The Board views the future with optimism, however we remain highly mindful of the potential challenges that lie ahead in the short term. The Group is aware of the current uncertain condition of the global economy which includes the slowdown of economic growth in China, currency fluctuations, as well as concerns surrounding operating in a highly competitive market place. In order to maintain AFG's solid revenues and profitability the Group will look to capitalise on the continued increasing levels of disposable income amongst both the urban and rural population in China. The burgeoning Chinese middle class seek natural seafood products in addition to being increasingly aware of the importance of having high food safety standards. These factors present encouraging future growth opportunities for the Company.

The Group is committed to adopting the highest standards of quality, safety and sustainability and we are focused on producing high-end, pre-processed seafood products. The Group has an excellent record of food safety and has established stringent globally recognised quality control procedures. The Group has obtained and will continue to improve adherence to the following key standards: ISO 9001 Quality Management System Certification, HACCP Food Safety System Certification, BRC Certification and Marine Stewardship Council Certification.

Aquatic Foods' strong cash position is expected to be deployed to continue the Group's strategy stated at the time of IPO which aims to increase its presence within China. This will be seen through expanding production capacity both by increasing process automation and expanding to an additional site or acquiring an existing factory from a third party. Moreover AFG will add new regional distributors, provide assistance to distributors to establish more "Zhenhaitang" branded retail stores, focus on advertising, promotion and will carry out further cross-promotion in the Group's different product types and continue product development to expand and enhance our product offerings. The total output of Aquatic Foods Group in 2015 equates to approximately 21.8 million KG of fish products in total, a 21.8% increase compared to 2014 output of 17.9 million KG and the Group is currently awaiting final regulatory approval for its expansion plans from the relevant regional authority which, once implemented, will further increase the Group's production capabilities.

We believe that although the road ahead holds challenges, it also presents considerable future growth opportunities. With a sound strategy, we are confident that we will be able to navigate the current volatile climate, while capturing opportunities for future growth.

On behalf of the Board, we would like to thank our staff for their dedication and commitment. We would also like to thank our shareholders, customers and other stakeholders for their continued support and trust in Aquatic Foods Group.

The Board has adopted a dividend policy that fundamentally takes into account the Group's profitability, growth and availability of cash and distributable reserves after the requirement to finance the development and expansion of the business. We are pleased to announce that despite the challenging market conditions, the Board is proposing a final dividend of 0.7 pence per share for 2015 giving a total dividend for the year of 1.4 pence per share as anticipated in the Group's AIM Admission Document.

The full year dividend to be approved at the Company's AGM will be payable around 12 August 2016 to shareholders on the register at the close of business on 29 July 2016. The shares will go ex-dividend on 28 July 2016. This is in line with the yield indicated at IPO of a 2 per cent. annual yield based on the IPO price.

Dr. Wang Shaodong

Non-Executive Chairman

28 June 2016

Chief Executive's Review


Revenue increased by 14% to RMB 979 million (c.GBP102.4 million) (2014: RMB 856 million) but the Group's gross profit margins declined across all product categories to approximately 28% in the year (2014 32%). Pre-tax profits and EBITDA remained at RMB 182 million (c.GBP190 million) and RMB 187 million (c.19.6 million) respectively before taking into account that RMB 8 million IPO expenses were incurred in 2014. Net profit after tax was marginally higher at RMB 140 million (2014: RMB 137 million) due to lower income tax expense.

Aquatic Foods remains highly cash generative and the Group maintains its strong balance sheet with cash as at 31 December 2015 amounting to RMB 380 million (c.GBP39.8 million) (2013: RMB 194 million excludes the gross proceeds from the Placing and Admission to AIM, which occurred post period end on 3 February 2015 and totalled GBP9.3 million [c.RMB 89 million] before expenses).

As at 31 December 2015, Aquatic Foods had 51 regional distributors (2014: 50), covering 16 provinces, municipalities and autonomous regions in China, and hopes to capitalise on the increasing levels of disposable income currently seen across China which is occurring for both urban and rural residents.

Currently, approximately 60% of Aquatic Foods' fish is sourced from various overseas countries, including Norway, UK, and Ireland. The Group will continue to look for strategic alliances and partnerships to diversify the Company's supply chain.

Aquatic Foods has received increased sales enquiries from overseas customers, driven by the Group's enhanced commercial profile achieved through its admission to trading on AIM. The Group is thus currently exploring the possibility to grow its export sales, leveraging the Group's already established position in the international market. The Group is also reviewing selected opportunities to build its international footprint.

Product categories

Revenue breakdown by product category

                          2015      2015      2014      2014   GROWTH % 
 Currency:             RMB'000   GBP'000   RMB'000   GBP'000 
 Fish                  704,942    73,737   586,180    61,314       20.3 
 Sea Cucumbers         137,531    14,386   132,315    13,840        3.9 
 Cephalopods            41,753     4,367    44,003     4,603      (5.1) 
 Shrimp & Shellfish     38,688     4,047    33,935     3,550       14.0 
 Others                 55,833     5,840    59,647     6,239      (6.4) 
                      --------  --------  --------  --------  --------- 
 Total                 978,747   102,377   858,080    89,755       14.1 

Gross Margin by Product Category

 Gross margin          2015   2014 
 Fish                   27%    29% 
 Sea cucumbers          36%    44% 
 Cephalopods            29%    30% 
 Shrimp & Shellfish     30%    31% 
 Others                 27%    26% 
                      -----  ----- 
 Total                  28%    32% 


The revenue generated from fish products increased by over 20% on the previous year and has continued to represent AFG's largest product category, representing 72% of sales for the full year ended 31 December 2015 (2014: 68%).

The revenue generated from fish increased by approximately 20%, this increase was principally generated from higher sales of mackerel, cod and saury which tend to be lower priced and margin products.

The weight of processed fish during FY 2015 increased by 24% compared with that processed during FY 2014.

Sea Cucumbers

The sale value of Sea Cucumber products have increased slightly, but average prices in FY 2015 have fallen leading to a reduction in gross profit margin to 36% from 44%. Sales of Sea Cucumbers have been impacted on the Chinese Governments continued focus on tackling high value gift giving practices in business and this has led to a fall in average price per kilo and the margins achieved by the Group.


The sales of Cephalopods (principally squid and cuttlefish) for the full year ended 31 December 2015 were down approximately 5% compared to the prior year. Gross profit margins were down slightly from 30% to 29%.

Shrimp and Shellfish

Sales have increased by 14% for the full year ended 31 December 2015, whilst the Gross profit margins for the full year ended 31 December 2015 were down to approximately 30%, reflecting the general price pressure in the current market.

Other revenue

This includes gift boxes. Sales have decreased by 6.4% for the full year ended 31 December 2015, whilst the Gross profit margins for the full year ended 31 December 2015 were up slightly to approximately 27%.

Q1 trading to 31 March 2016

As previously announced on 23 May 2016, trading in the first quarter of 2016 has been subdued, reflecting the continuation of challenging market conditions in the second half of 2015. Unaudited aggregate revenues for the Group for the three months to 31 March 2016 were approximately RMB 215 million (GBP.22.5m), which is approximately 7% lower when compared to Q1 2015.

Unaudited revenue for Q1 2016 for each of the Group's principal product categories were as follows:

 Currency:        RMB million   GBP million 
 Fish                     136          14.2 
 Sea Cucumbers             32           3.3 
 Cephalopods               16           1.7 
 Others                    31           3.2 
                 ------------  ------------ 
 Total                    213          22.4 

Gross Profit margin by Product Category

                          Three months   Three months      Three months 
                              31 March       31 March       31 December 
                        2016 Unaudited           2015    2015 Unaudited 
 Fish                              23%            29%               23% 
 Sea Cucumbers                     30%            44%               30% 
 Cephalopods                       25%            28%               26% 
 Shrimp & Shellfish                26%            32%               26% 
 Others                            25%            31%               24% 
 Total                             24%            31%               25% 


The Board continues to evaluate options for expanding production capacity both through increasing process automation and expanding to an additional site or acquiring an existing factory from a third party. The Group is currently awaiting final regulatory approval for its expansion plans from the relevant regional authorities. Owing to the current market environment the Group has not been actively chasing this consent although it is expected that the Group will still seek to acquire additional processing and cold storage capacity.

Successful brand building remains key to Aquatic Foods' continued business success. The Group plans to continue its focus on advertising and promotion and will carry out further cross-promotion for our different product types over the next year. The Group will also continue to support its regional distributors to establish further "Zhenhaitang" branded retail stores where appropriate to do so.

As previously announced, the Group is seeking to grow new sales channels by specifically targeting sales to supermarkets in China. This will be achieved through expanding our distribution partners as well as increasing our focus on export markets due to the fall in value of the Renminbi, although the latter can potentially attract lower gross profit margins. Further expansion of the existing distribution network, especially to smaller cities in China, is also critical to expand the Group's market share.

As announced in the Q1 trading update, due to increasing popularity of British and Scottish fish products, the Company's sales of mackerel in the period in China increased by 10% on the previous year. To help satisfy this demand, the Company signed a US $850,000 purchase contract with Peterhead based supplier Northbay Pelagic in February 2016 for the supply of 615 metric tonnes of Atlantic Mackerel per annum. Since then, two further purchase contracts for mackerels, including a contract with Scottish based supplier Lunar Freezing & Cold Storage and a contract with Seychelles based supplier Flying Fish International has been signed. The former will supply 575 metric tonnes of Mackerel and the latter 162 metric tonnes of Mackerel to Aquatic Foods. As a result of these recent contracts, Aquatic Foods has become one of the leading importers of fish from the UK amongst other Chinese companies and this is expected to increase its credibility and profile in the industry in the UK.

Continuous product development and enhancement of product offerings is an important factor to hold and expand Aquatic Foods' market share. The Group plans to invest and strengthen market-oriented product development activities to continue to provide innovative and high quality products in order to stand out from competition and to meet changing consumer preferences.

While market growth in China has slowed in the past year, the Group will take the opportunity to review internal processes and strategies in preparation for a time when the market returns to full strength. This includes monitoring the success of increased advertising as well as continuing to finalise expansion plans, including additional processing and cold storage capacity given the increase in processing volumes. With this in place, the Board believes that the Company will be in the strongest position possible to take advantage of a revived trading environment.

Cash and working capital

The cash position of The Company remains solid the majority of which is held in the PRC with the remaining funds located in the UK and Hong Kong in order to more easily meet international payments.

The Group continues to actively manage its trade debtor balances and has not been required to provide for any bad debts. The full RMB 306.7 million (c.GBP32.1m) of trade receivables outstanding as at 31 December 2015 has been received since the year end.

Appointment of new Finance Director

The Company continues its search for a replacement Finance Director, following the departure of Sean Lim on 3 February 2016. AFG has been making good progress in finding a suitable candidate to replace Mr. Lim and will make a further announcement regarding this in due course.


As noted in the Company's Q1 trading update, the Group's markets remain challenging, and the Company has faced continued challenging trading into Q2, however whilst our gross margin declined during 2015 we are now seeing a stabilization in margins though with gross margins in April stable at approximately 24%. The Board expects these challenging conditions to continue in the near term.

To mitigate this, the Company has increased its marketing and advertising efforts in order to preserve its market position in China. The Group intends for this to combine with its strategy of specifically targeting increased sales to supermarkets in the PRC.

China still experiences high levels of economic growth, and achieved growth of 6.9% last year, although its slowest rate in a quarter of a century. The Government is looking to steer the economy on a more qualitative growth path by, inter alia, overseeing the closure of outdated industries and sectors and by supporting new areas of growth such as the service sector. As an established and modern marine foods supplier and retailer, Aquatic Foods Group is in a good position to continue to benefit from Chinese economic growth and Government support in the long term.

Li Xianzhi

Chief Executive Officer

28 June 2016


The Company is committed to observing good standards of corporate governance. In this report, we describe the Company's corporate governance processes and activities with reference to the principles of the Quoted Companies Alliance's Corporate Governance Guidelines. Although there is no requirement to adopt these principles as an AIM company, the directors intend to continue to comply with its main provisions as far as is practicable and appropriate having regard to the size and nature of the Company.

At the admission date, the directors have established an audit committee (the "Audit Committee") and a remuneration committee (the "Remuneration Committee") with formally delegated duties and responsibilities.

Audit Committee

The Audit Committee, which comprises Jonathan Quirk, Richard Sweet and Mircle Yap, is responsible for:

-- assessing the integrity of the Group's financial reporting and satisfying itself that any significant financial judgements made by management are sound

-- evaluating the effectiveness of the Group's internal controls, including internal financial controls and

-- scrutinising the activities and performance of the external auditors, Crowe Clark Whitehill LLP, including monitoring their independence and objectivity.

The Audit Committee receives and reviews reports from the management and Crowe Clark Whitehill LLP relating to the annual and interim financial statements and the accounting and internal control systems of the Group. Crowe Clark Whitehill is invited to a meeting of the Audit Committee to discuss their reports.

In addition, the Audit Committee considers the financial performance, position and prospects of the Group and ensures that they are properly monitored and reported on.

The Audit Committee met two times in 2015. The principal activities and significant issues considered include:

 Key area                 Action taken 
-----------------------  -------------------------------------------------- 
 Relationships with       The Audit Committee requested that the 
  suppliers                auditor visit a sample of the group's suppliers 
                           of their choosing as part of their audit 
                           procedures. This additional step was taken 
                           to understand and gain assurance over the 
                           integrity of the supply chain. 
-----------------------  -------------------------------------------------- 
 Operation of financial   The Audit Committee considered the Group's 
  controls                 application of its financial policies and 
                           procedures which were established following 
                           the Group's AIM listing in 2015. The Audit 
                           Committee requested that management report 
                           to them on compliance with these policies 
                           and procedures as well as asking the auditor 
                           to additionally review compliance, particularly 
                           in respect of the approval of significant 
-----------------------  -------------------------------------------------- 
 Cash balances            The Audit Committee reviews the appropriateness 
                           of the Group's banking arrangements. It 
                           noted that the majority of the Group's 
                           funds were held with HuaXia Bank in China. 
                           Additionally, as part of this review, the 
                           Audit Committee requested that the auditor 
                           perform additional procedures around the 
                           verification of cash balances, including 
                           physically visiting the various bank branches 
                           to obtain direct confirmations. 
-----------------------  -------------------------------------------------- 
 Revenue, trade           The Audit Committee considered the group's 
  receivables and          application of the accounting policies 
  inventory                specifically in relation to revenue recognition, 
                           trade receivables and inventory. The Audit 
                           Committee requested that the auditor provide 
                           additional focus on these areas in reporting 
                           their findings to the Audit Committee. 
-----------------------  -------------------------------------------------- 
 External audit           In considering the quality of the external 
                           audit, the Audit Committee assessed the 
                           reports from Crowe Clark Whitehill LLP 
                           during the 2015 audit. The actions included 
                           approving the audit plan and discussing 
                           and challenging the significant findings 
                           of the audit. 
-----------------------  -------------------------------------------------- 

Remuneration Committee

The Remuneration Committee, which comprises Richard Sweet, Dr. Wang Shaodong, Jonathan Quirk and Mircle Yap, is responsible for making recommendations to the Board on remuneration policy for directors, including the setting of directors' salaries and incentive payments. The Committee reviews the performance of the executive Directors and senior management and sets and reviews their remuneration and the terms of the service contracts, determines the payment of bonuses to the Executive Directors and considers the Group's bonus and other incentive schemes.

Nomination Committee

The Remuneration Committee, which comprises Dr. Wang Shaodong, Jonathan Quirk, Richard Sweet, and Mircle Yap, is responsible for the selection and appointment of Directors and the regular review of the structure, size and composition of the Board in relations to the requisite skills, knowledge and experience of the Board.

AIM Rules Compliance Committee

The Compliance Committee which comprises Jonathan Quirk, Dr. Wang Shaodong, Li Xianzhi and Mircle Yap, has the primary responsibility to ensure compliance with the AIM Rules in particular concerning disclosure of information required under the AIM Rules. The Committee will function closely with the Board to ensure that the Company's Nominated Adviser (NOMAD) is provided with the information required by the NOMAD to carry out their responsibilities under the AIM Rules.

The meetings of Compliance Committee are carried out in conjunction with the proceedings in the Board meetings wherein compliance with the AIM Rules and the release of information and communications with the Company's NOMAD and the market are highlighted and informed to the Board.

Internal Controls

The Board is ultimately responsible for the Group's system of internal controls, including financial, operational, compliance control and risk management, and for reviewing and monitoring its effectiveness. The system of internal controls is designed to manage and minimise risk, rather than eliminate it. In pursuing these objectives, internal controls can only provide a reasonable and not absolute assurance against material misstatements or loss.

The key elements of the control systems in operation are:

   --     the Board meets regularly with a formal schedule of matters reserved to it for decision 

-- the Board has put in place an organisational structure with clear and defined lines of responsibility and with appropriate dilatation of authority

-- procedures have been established for the planning, approval and monitoring of capital expenditure and information systems for monitoring the Group's financial performance against approved budgets and forecasts

-- significant risks and associated controls and monitoring procedures are reported regularly to the Board to enable the Directors to review the effectiveness of the systems of internal control

Investors Relations

The Company meets with its institutional shareholders and analysts as appropriate and encourages communication with private shareholders via the AGM. In addition, the Company uses the annual report and accounts, interim statement and website ( to provide further information to shareholders.


In accordance with Section 113 of the Companies (Jersey) Law 1991, a resolution for the reappointment of Crowe Clark Whitehill LLP will be proposed at the next Annual General Meeting.

Signed by order of the directors

Li Xianzhi


28 June 2016

Consolidated Statements of Comprehensive Income

For the year ended 31 December 2015

                                                      2015        2014 
                                          Note     RMB'000     RMB'000 
 Revenue                                   5       978,747     856,080 
 Cost of sales                                   (700,646)   (586,317) 
                                                ----------  ---------- 
 Gross profit                                      278,101     269,763 
 Other income                                       11,955       9,000 
 Selling and distribution expenses                (85,592)    (69,484) 
 Administrative expenses                          (21,247)    (17,409) 
 IPO expenses                                            -     (7,838) 
 Other operating expenses                              (2)        (49) 
                                                ----------  ---------- 
 Operating profit                                  183,215     183,983 
 Finance income                                      1,037         739 
 Finance costs                                     (2,458)     (2,777) 
                                                ----------  ---------- 
 Profit on ordinary activities before 
  taxation                                         181,794     181,945 
 Income tax expense                        6      (41,390)    (44,939) 
                                                ----------  ---------- 
 Profit after taxation                             140,404     137,006 
 Profit after taxation brought forward             140,404     137,006 
 Other comprehensive income                            103         546 
                                                ----------  ---------- 
 Total comprehensive income attributable to 
  owners of the parent                             140,507     137,552 
                                                ==========  ========== 
 Earnings per share (EPS): 
 Basic and diluted                         7          1.25        1.37 
                                                ==========  ========== 

Consolidated Statements of Financial Position

As at 31 December 2015

                                            Year ended     Year ended 
                                           31 December    31 December 
                                                  2015           2014 
                                   Note        RMB'000        RMB'000 
 Non-current assets 
 Property, plant and equipment      9           29,321         22,314 
 Land use rights                    10           1,876          1,920 
                                                31,197         24,234 
                                         -------------  ------------- 
 Current assets 
 Inventories                        11          55,627         47,510 
 Trade receivables                             306,694        277,066 
 Other receivables, deposit and 
  prepayment                        12           4,620          2,871 
 Cash and bank balances             13         380,419        193,903 
                                         -------------  ------------- 
                                               747,360        521,350 
                                         -------------  ------------- 
 Total Assets                                  778,557        545,584 
                                         =============  ============= 
 Current liabilities 
 Trade payables                                131,885        102,934 
 Other payables and accruals        14          35,847         44,393 
 Short term borrowings              17          42,040         41,470 
 Income tax payable                              9,274         15,294 
                                         -------------  ------------- 
                                               219,046        204,091 
                                         -------------  ------------- 
 Stated capital                     15          85,238              - 
 Reserves                           16         474,273        341,493 
                                         -------------  ------------- 
                                               559,511        341,493 
                                         -------------  ------------- 
 Total Equity and Liabilities                  778,557        545,584 
                                         =============  ============= 

Consolidated Statements of Changes in Equity

For the year ended 31 December 2015

                    Stated            Capital           Statutory    Merger    Translation       Retained      Total 
                   Capital            reserve             reserve   reserve        reserve        profits     equity 
                   RMB'000            RMB'000             RMB'000   RMB'000        RMB'000        RMB'000    RMB'000 
Balance at 1 
 2014                    -                 31              11,193    22,394              -        185,323    218,941 
  Profit for the 
  year                   -                  -                   -         -              -        137,006    137,006 
Foreign currency 
 differences for 
 operations              -                  -                   -         -            546              -        546 
                  --------  -----------------  ------------------  --------  -------------  -------------  --------- 
 for the year            -                  -                   -         -            546        137,006    137,552 
                  --------  -----------------  ------------------  --------  -------------  -------------  --------- 
  arising from 
  exercise               -                  -                   -  (15,000)              -              -   (15,000) 
  Balance at 31 
  2014                   -                 31              11,193     7,394            546        322,329    341,493 
                  ========  =================  ==================  ========  =============  =============  ========= 
Profit for the 
 year                    -                  -                   -         -              -        140,404    140,404 
 differences for 
 operations              -                  -                   -         -            103              -        103 
                  --------  -----------------  ------------------  --------  -------------  -------------  --------- 
 for the year            -                  -                   -         -            103        140,404    140,507 
                  --------  -----------------  ------------------  --------  -------------  -------------  --------- 
  Issuance of 
  share capital     87,167                  -                   -         -              -              -     87,167 
Share issuance 
 costs             (1,929)                  -                   -         -              -              -    (1,929) 
Dividend paid            -                  -                   -         -              -        (7,727)    (7,727) 
Transferred to 
 reserve                 -                  -               3,524         -              -        (3,524)          - 
  Balance at 31 
  2015              85,238                 31              14,717     7,394            649        451,482    559,511 
                  ========  =================  ==================  ========  =============  =============  ========= 

Consolidated Statements of Cash Flows

For the year ended 31 December 2015

                                                              2015        2014 
                                                           RMB'000     RMB'000 
 Cash flow from operating activities 
 Profit before taxation                                    181,794     181,945 
 Adjustment for: 
 Amortisation of land use rights                                44          44 
 Depreciation of property, plant and 
  equipment                                                  2,185       2,214 
 Interest expense                                            2,458       2,777 
 Loss on disposal of plant and equipment                        14          11 
 Interest income                                           (1,037)       (739) 
 Operating cash flows before movements 
  in working capital                                       185,458     186,252 
 Increase in inventories                                   (8,117)     (7,375) 
 Increase in trade and other receivables                  (31,708)   (137,235) 
 Increase in trade and other payables                       18,588      57,692 
 (Increase)/decrease in bank balance 
  restricted in use                                          1,895     (1,361) 
                                                         ---------  ---------- 
 Cash generated from operating activities                  166,116      97,973 
 Interest paid                                             (2,458)     (2,777) 
 Income tax paid                                          (47,410)    (41,524) 
 Net cash generated from operating activities              116,248      53,672 
                                                         ---------  ---------- 
 Cash flows (for)/from investing activities 
 Acquisition of property, plant and equipment              (9,205)     (3,389) 
 Proceeds from disposal of property, 
  plant and equipment                                            -          10 
 Interest received                                           1,037         739 
 Cash outflow on group construction                              -    (15,000) 
                                                         ---------  ---------- 
 Net cash used in/ generated from investing 
  activities                                               (8,168)    (17,640) 
                                                         ---------  ---------- 
 Cash flows from/(for) financing activities 
 Dividends paid                                     8      (7,602)           - 
 Proceeds from issue of share capital                       86,279           - 
 Net drawdown of interest-bearing bank 
  borrowings                                                   570       3,500 
 Net cash generated from financing activities               79,247       3,500 
                                                         ---------  ---------- 
 Net increase in cash & cash equivalents                   187,327      39,532 
 Effects of foreign exchange translation                     1,084        (47) 
 Cash and equivalent at beginning of 
  year                                                     187,576     148,091 
 Cash and equivalent at end 
 of year                                            13     375,987     187,576 
                                                         =========  ========== 


   1.            GENERAL INFORMATION 

The Company was incorporated in Jersey as a public limited company with company number 116402. The registered office of the Company is Queensway House, Hilgrove Street, St Helier, Jersey, JE1 1ES.

Hong Kong Hanhe was incorporated in Hong Kong on 25 September 2012 and acquired a wholly owned subsidiary, Yantai Kanwa Food Co., Ltd ("Yantai Kanwa") on 25 May 2013. Yantai Kanwa is a company established as a wholly foreign owned enterprise ("WFOE") in the PRC, and was incorporated on 15 November 1999.

Yantai Zhenhaitang was incorporated in the PRC on 1 November 2007. On 16 September 2014, Yantai Kanwa acquired the entire issued share capital of Yantai Zhenhaitang Foodstuff Co., Ltd ("Yantai Zhenhaitang").

The principal activities of the entities of the Group are as follows:-

        Name of Company      Incorporation   Principal Activities 
 i)     AFG                     Jersey       Investment holding 
 ii)    Hong Kong Hanhe        Hong Kong     Investment holding. 
 iii)   Yantai Kanwa              PRC        Processing and trading of aquatic 
                                              agricultural and meat products. 
 iv)    Yantai Zhenhaitang        PRC        Trading and distributing of 
                                              processed frozen 
                                              aquatic products and pre-packaged 
   2.            Basis Of Preparation 

The consolidated financial information of the Group has been prepared using accounting policies which are consistent with those adopted in Part 3 of the AIM Admission Document of the Company dated 28 January 2015, as well as applying the following accounting policy in respect of the basis of consolidation as extracted from the financial statements.

The consolidated financial information has been prepared on a historical cost basis. The consolidated financial information is presented in RMB, except when otherwise indicated.

The financial information does not constitute the Company's statutory financial statements for the year ended 31 December 2015 but is derived from those financial statements. The statutory financial statements will be delivered following the Company's Annual General Meeting. The Auditors have reported on those financial statements; their reports were unqualified.

The Directors considered IFRS 3 "Business Combinations" (Revised 2008) as the appropriate accounting treatment. However, they concluded that the Group fell outside of the scope of IFRS 3 (revised 2008) since the Group represents a combination of entities under common control.

In accordance with IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, in developing an appropriate accounting policy, the Directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 102) which does not conflict with IFRS and reflects the economic substance of the transaction.

   2.            Basis Of Preparation (CONT'D) 

Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value. Intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS, no goodwill is recognised, any expenses of the combination are written off immediately to the income statement and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting period presented.

Therefore, although the Group reconstruction did not become unconditional until 23 October 2014, these consolidated financial statements are presented as if the Group structure has always been in place, including the activity from incorporation of the Group's principal subsidiary. All entities had the same management as well as majority shareholders.

On this basis, the Directors have decided that it is appropriate to reflect the combination using merger accounting principles as a group reconstruction under FRS 102 in order to give a true and fair view. No fair value adjustments have been made as a result of the combination.

Functional and presentation currency

The financial statements are measured and presented in the currency of the primary economic environment in which the key trading entities operates (its functional currency). The consolidated financial statements of the Group are presented in Renminbi ("RMB"), which is the presentation currency for the consolidated financial statements. The functional currency of each of the individual entity is the local currency of each individual entity. For reference the year end exchange rate from Pounds Sterling to RMB was 9.5923 (2014: 9.5467).

All financial information presented in RMB has been recorded to the nearest thousand ("RMB'000"). They have been prepared under the historical cost convention, except for financial instruments that have been measured at fair value through profit and loss.

Going concern

After the assessment of the available financial information and reviews, and also taking into account the nature of the business that has continuing recurring revenue with high cash conversion that generates significant cash resources as reflected in the current financial position of the Group with cash position of RMB380 million as at 31 December 2015, the Directors believe that the Group has adequate resources to continue to operate for the foreseeable future. Therefore it is appropriate to continue to adopt the going concern basis of accounting in the preparation of the consolidated financial statements.

New Standards, amendments and interpretations to published standards not yet effective

The Directors have considered those Standards and Interpretations, which have not been applied in the Financial Statements but are relevant to the Group's operations, that are in issue but not yet effective and do not consider that any will have a material impact on the future results of the Group.

   3.            Basis Of CONSOLIDATION 

The consolidated financial statements include the financial statements of all subsidiaries. The financial year ends of all entities in the Group are coterminous.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control over the operating and financial decisions is obtained and cease to be consolidated from the date on which control is transferred out of the Group. Control is achieved where the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

All intercompany balances and transactions, including recognised gains arising from inter--group transactions, have been eliminated in full. Unrealised losses are eliminated in the same manner as recognised gains except to the extent that they provide evidence of impairment.

The financial information of the subsidiary is prepared for the same reporting period as that of Group, using consistent accounting policies.

   4.            Significant Accounting Policies 

Critical accounting estimates and assumptions

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Directors of the Company to exercise their judgement in the process of applying the accounting policies which are detailed below. These judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The key estimates and underlying assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period 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, are discussed below:

   a)     Allowance for trade and other receivables 

Management reviews its loans and receivables for objective evidence of impairment at least quarterly. Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and default or significant delay in payments are considered objective evidence that a receivable is impaired. In determining this, management makes judgment as to whether there is observable data indicating that there has been a significant change in the payment ability of the debtor, or whether there have been significant changes with adverse effect in the technological, market, economic or legal environment in which the debtor operates in.

The allowance policy for doubtful debts of the Group is based on the ageing analysis and management's ongoing evaluation of the recoverability of the outstanding receivables. Once a debtor has been identified as having evidence of impairment, it is regularly reviewed and an appropriate impairment provision applied.

   b)    Income Taxes 

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made.

   c)     Write-down of Inventories 

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

   5.            revenue 

Revenue represents the net invoiced value of goods sold, after allowances for returns and trade discounts.

Analysis of revenue from the sales of goods is as follow:

                             2015      2014 
                          RMB'000   RMB'000 
 Fish                     704,942   586,180 
 Holothurian              137,531   132,315 
 Cephalopods               41,753    44,003 
 Shrimps and shellfish     38,688    33,935 
 Others                    55,833    59,647 
                          978,747   856,080 
   6.            Income Tax Expense 
                            2015      2014 
                         RMB'000   RMB'000 
 Current tax expense      41,390    44,939 

A reconciliation of income tax expense applicable to the profit before taxation at the statutory tax rate to income tax expense at the effective tax rate is as follows:-

                                              2015       2014 
                                           RMB'000    RMB'000 
 Profit before taxation                    181,794    181,945 
 Tax at the applicable tax rate of 25%      45,448     45,486 
 Tax effects of:- 
 Non-deductible expenses                         -          9 
 Under provision in prior year                 448        381 
 Tax exempt                                (5,560)    (3,321) 
 Tax rate differential                       1,054      2,384 
                                         ---------  --------- 
                                            41,390     44,939 

According to the China Income Tax Law, income derived from preliminary processing of fishery or aquiculture products are tax exempted.

The Group's activities in the PRC are subject to corporation tax of 25% during the financial year on profit before taxation in accordance with the relevant laws and regulations in the PRC.

No deferred tax has been provided, as the Group did not have any significant temporary differences which gave rise to a deferred tax asset or liability at the reporting dates.

   7.            EARNINGS PER SHARE 

On 3 February 2015, the company's shares had been admitted to trading on the AIM market of the London Stock Exchange. The Company had further issued 5,792,081 Placing Shares and 7,434,000 Subscriber Shares. The total issued ordinary shares of the company were 113,226,081. The earnings per share information is as follow:

                                               2015          2014 
 Profit after taxation (RMB)            140,404,000   137,006,000 
 Weighted average number of ordinary 
  shares                                111,994,062   100,000,000 
 Basic earnings per share                      1.25          1.37 

The diluted loss per share was not applicable as there were no dilutive potential ordinary shares outstanding at the end of the reporting period.

   8.            Dividends 
                            2015        2014 
                         RMB'000     RMB'000 
  Dividends declared       7,727           - 
   and paid 
                           7,727           - 

The dividend declared and paid was subjected to 10% withholding tax in accordance with the relevant laws and regulations in the PRC.

   9.         PROPERTY, PLANT AND Equipment 
                             Leasehold                      Research   Plant and 
                             buildings  Office equipment   equipment   machinery  Motor vehicles    Total 
                               RMB'000           RMB'000     RMB'000     RMB'000         RMB'000  RMB'000 
As at 1 January 2014            25,781               675          45       9,612             678   36,791 
Additions                           23                28           3       3,234             101    3,389 
Disposals                            -              (28)           -        (54)            (38)    (120) 
                            ----------  ----------------  ----------  ----------  --------------  ------- 
As at 1 January 2015            25,804               675          48      12,792             741   40,060 
Additions                           28                 -           -       9,048             129    9,205 
Disposals                            -                 -           -           -           (142)    (142) 
                                        ----------------  ----------  ----------  --------------  ------- 
At 31 December 2015             25,832               675          48      21,840             728   49,123 
                                        ----------------  ----------  ----------  --------------  ------- 
Accumulated depreciation 
As at 1 January 2014             8,839               475          28       5,960             329   15,631 
Charge for the year              1,169                57           6         879             103    2,214 
Disposals                            -              (24)           -        (43)            (32)     (99) 
                            ----------  ----------------  ----------  ----------  --------------  ------- 
As at 1 January 2015            10,008               508          34       6,796             400   17,746 
Charge for the year              1,173                45           4         857             105    2,184 
Disposals                            -                 -           -           -           (128)    (128) 
                                        ----------------  ----------  ----------  -------------- 
At 31 December 2015             11,181               553          38       7,653             377   19,802 
                                        ----------------  ----------  ----------  -------------- 
Net carrying amount 
As at 31 December 
 2015                           14,651               122          10      14,187             351   29,321 
                            ==========  ================  ==========  ==========  ==============  ======= 
As at 31 December 
 2014                           15,796               167          14       5,996             341   22,314 
   (a)       All property, plant and equipment held by the Group are located in the PRC. 

(b) The following property, plant and equipment have been pledged to licensed banks as security for banking facilities granted to the Group as disclosed in Note 20 to the financial information:-

                             2015      2014 
                          RMB'000   RMB'000 
  At carrying 
  Leasehold buildings      13,377    14,423 
   10.          Land Use Rights 
                                    2015              2014 
                                 RMB'000           RMB'000 
 At cost:- 
 At 1 January/At 31 December       2,228             2,228 
                                --------      ------------ 
 Accumulated amortisation:- 
 At 1 January                  308   264 
 Amortisation charge            44    44 
                              ----  ---- 
 At 31 December                352   308 
                              ----  ---- 
 Carrying amounts:- 
 Amortisation due: 
 - not later than one year       44      44 
 - later than one year        1,832   1,876 
                             ------  ------ 
 At 31 December               1,876   1,920 
                   m2       m2 
 Land areas    20,416   20,416 
              -------  ------- 

The carrying amounts of the land use rights that have been pledged to licensed banks as security for banking facilities granted to the Group as disclosed in Note 15 to the financial information are as follows:

                          2015          2014 
                       RMB'000       RMB'000 
 Land use rights         1,876         1,920 

Amortisation is provided to write off the cost of the land use rights over the leasehold periods of 50 years.

   11.          Inventories 
                                 2015      2014 
                              RMB'000   RMB'000 
 At cost:- 
 Raw materials                 29,610    27,599 
 Finished goods                26,017    19,911 
                               55,627    47,510 
 Recognised in profit 
  or loss 
 Inventories recognised 
  as cost of sales            647,772         543,877 
   12.          Other Receivables, Deposit And Prepayment 
                                    2015      2014 
                                 RMB'000   RMB'000 
 Other receivables                    48        50 
 Advances to suppliers                 -     1,909 
 Prepayments                       4,572       912 
                                   4,620     2,871 
   13.          Cash And Bank Balances 
                                                  2015          2014 
                                               RMB'000       RMB'000 
  Cash in hand                                      11           119 
  Cash at banks                                380,408       193,784 
  Cash and bank balances                       380,419       193,903 
  Less: Bank balances restricted in 
   use                                         (4,432)       (6,327) 
  Cash and cash equivalents                    375,987       187,576 
                                             ---------      -------- 
  Effective interest rate (per annum)            0.35%         0.39% 

The Chinese Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange Chinese Renminbi for foreign currencies through banks that are authorised to conduct foreign exchange business.

   14.          Other Payables And Accruals 
                              2015          2014 
                           RMB'000       RMB'000 
 Other payable               8,125        12,912 
 Accrued salary              7,257         6,544 
 Accruals                   20,433        24,928 
 Amount owing to 
 a director                     32             9 
                            35,847        44,393 

The amount owing to a director is unsecured, interest-free and repayable on demand.

   15.          Stated Capital 
                                           of shares          RMB'000 
  On incorporation as at 11 August                  2               - 
  Issued in pursuant to the Framework 
   Agreement as at 
   23 October 2014                         49,999,998 
  Subdivision of existing shares as        50,000,000               - 
   at 28 January 2015 
  Placing Shares and Subscriber Shares 
   as at 
   3 February 2015                         13,226,081          87,167 
  Less: Issuance costs                              -         (1,929) 
  At the end of the year                  113,226,081          85,238 

On incorporation, the Company issued two ordinary shares at no par value with an unlimited share capital.

On 23 October 2014, the company allotted and issued 49,999,998 Ordinary Shares of no par value pursuant to the Framework Agreement.

On 28 January 2015, the company had been subdivided its existing 50,000,000 ordinary shares into 100,000,000 of ordinary shares. On 3 February 2015, the company's shares had been admitted to trading on the AIM market of the London Stock Exchange. The Company had further issued 5,792,081 Placing Shares and 7,434,000 Subscriber Shares. The total issued ordinary shares of the company were 113,226,081.

   16.          Reserves 
                                     2015            2014 
                       Note       RMB'000         RMB'000 
 Capital reserve         (a)            31              31 
  reserves               (b)        14,717          11,193 
 Merger reserves         (c)         7,394           7,394 
  reserve                             649             546 
  retained profits                451,482         322,329 
                                  474,273         341,493 
   (a)   Capital Reserve 

Capital reserve is premium received on the issue of share capital.

   (b)   Statutory Reserve 

According to the relevant PRC regulations and the Articles of Association of the subsidiaries, it is required to transfer 10% of each subsidiary's respective profit after income tax to its statutory surplus reserve until its reserve balance reaches 50% of its registered capital. The transfer to this reserve must be made before the distribution of dividends to equity owners. Statutory surplus reserve can be used to make good previous years' losses, if any, and be converted into paid-in capital in proportion to the existing interests of equity owners, provided that the balance after such conversion is not less than 25% of the registered capital.

   (c)    Merger Reserve 

The accounting treatment for Group reorganisations is scoped out of IFRS 3. Accordingly, as required under IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors the Group has referred to current UK GAAP to assist its judgement in identifying a suitable accounting policy. The introduction of the new holding company has been accounted for as a capital reorganisation using the merger accounting principles prescribed under current UK GAAP. Therefore the consolidated financial statement of Aquatic Foods Group PLC is presented as if Aquatic Foods Group PLC has always been the holding company for the Group.

The use of merger accounting principles has resulted in a balance on Group capital and reserves that have been classified as a merger reserve and included in the Group's shareholders' funds. The consolidated financial statements include the results of the Company and all its subsidiary undertakings made up to the same accounting date.

   17.          BorroWINGS 
                                              2015              2014 
                                            RMB'000      RMB'000 
 Trade finance                               14,040           13,470 
 Interest-bearing bank borrowings 
 - secured                                   28,000           28,000 
                                           --------  --------------- 
 Total amount reclassified 
  as current liabilities                     42,040           41,470 

Trade finance was secured by cross guarantees of the subsidiaries between Yantai Kanwa and Yantai Zhenhaitang.

Interest-bearing bank borrowings were secured by:

   (a)   land use rights of the Group (Note 10) 
   (b)   property of the Group (Note 9) 
   (c)   personal guarantees by a director of the Group 

Interest-bearing bank borrowings bear effective interest rates of 6.33% (2014: 5.75%) per annum is repayable within one year.

   18.          Related Party Disclosure 
   (a)       Identities of related parties 

The company has related party relationships with its subsidiaries as disclosed in note 1, its directors, key management personnel and entities of which the director and/or by management have significant financial interests.

(b) Other than those disclosed elsewhere in the financial information, the Group also carried out the following significant transactions with the related parties as disclosed below:-

                                          2015        2014 
                                        RMB'000    RMB'000 
 Director's remuneration: 
   *    short-term employee benefits      3,124        666 
   *    defined contribution plans            8          8 
                                          3,132        674 
 Other key management personnel: 
   *    short-term employee benefits      1,310      1,636 
   *    defined contribution plans           27         35 
                                          1,337      1,671 
 Total key management personnel 
  remuneration                            4,469      2,345 
                                       ========  ========= 
   19.          WARRANT ISSUED 

On 28 January 2015, the company granted 50,000 warrants to S.P. Angel Corporate Finance LLP, the company's nominated adviser, at the exercise price of 70 pence each with expiring date of 5 years. The directors have used Black Scholes model as recommended under IFRS 2 in valuing the share based payment charge. The fair value of the services received in consideration for the issue of the warrants was measured at the date of grant was approximately RMB 48,000. A charge of RMB 48,000 has been recognised in equity for the year within stated capital with an equivalent increase in stated capital.

   20.          Subsequent events 

There were no material events subsequent to the end of the financial year under review that have not been reflected in this report as at the date of this report.

- ENDS -

This information is provided by RNS

The company news service from the London Stock Exchange



(END) Dow Jones Newswires

June 30, 2016 02:45 ET (06:45 GMT)

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