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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Asian Citrus | LSE:ACHL | London | Ordinary Share | BMG0620W2019 | ORD HKD0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.375 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMACHL
RNS Number : 8244M
Asian Citrus Holdings Ltd
21 September 2012
Friday 21 September 2012 Under embargo 7.00am
ANNOUNCEMENT OF THE ANNUAL RESULTS
FoR THE YEAR ENDED 30 JUNE 2012
The board of directors (the "Board") of Asian Citrus Holdings Limited (the "Company" or "Asian Citrus") is pleased to announce the consolidated results of the Company and its subsidiaries (collectively, the "Group") for the year ended 30 June 2012.
Results Highlights
For illustration Year ended 30 June only Year ended 30 June 2012 2011 % change 2012 2011 (RMB m) (RMB m) (GBP m**) (GBP m**) (restated) (restated) Reported financial information Revenue 1,776.1 1,412.6 +25.7 178.7 136.4 Gross profit 792.4 738.6 +7.3 79.7 71.3 EBITDA 876.7 1,134.8 -22.7 88.2 109.5 Profit attributable to shareholders 750.2 1,039.0 -27.8 75.5 100.3 Basic EPS RMB0.62 RMB0.99 -37.4 6.2p 9.6p Final Dividend RMB0.13 RMB0.10 +30.0 1.3p 1.0p Special Dividend - RMB0.03 -100.0 - 0.3p Interim and Special Dividends RMB0.05 RMB0.02 +150.0 0.5p 0.2p Total Dividend RMB0.18 RMB0.15 +20.0 1.8p 1.4p Core net profit# EBITDA 755.6 674.8 +12.0 76.0 65.1 Net profit 629.1 579.0 +8.7 63.3 55.9 Basic EPS RMB0.52 RMB0.55 -5.5 5.2p 5.3p
** Conversion at GBP1 = RMB9.94 and RMB10.36 for the years ended 30 June 2012 and 2011 respectively for reference only
# Core net profits refers to profit for the year excluding net gain on change in fair value of biological assets and share-based payment. The Group's management considers this revised presentation more appropriately reflects the performance of the core operations. In order to conform to the current period's presentation, certain comparative figures for prior reporting period have been reclassified
-- Recommended final dividend of RMB0.13 (2011: RMB0.10) which together with the interim and special dividends of RMB0.05 per share, will make a total dividend of RMB0.18 (2011: RMB0.15) per share for the full year ended 30 June 2012. This equates to approximately 35.0% of the core net profit.
-- Increased core net profit by 8.7% to RMB629.1 million (2011: RMB579.0 million) despitechallenges of heavier than usual rainfall in South China and depressed prices for oranges and juice concentrate.
-- Strong free cash flow of RMB471.4 million (2011: RMB50.7 million) and cash and cash equivalent of RMB2,388.1 million as at 30 June 2012.
-- Total orange production increased by 12.2% to 243,421 tonnes due to increasing maturity of the orange trees.
-- Continued expansion of direct orange sales, now sold to 24 supermarket chains including one new international chain and a national chain based in Guangxi.
-- Invested RMB458.3 million in Hunan Plantation and planted approximately 1.0 million summer orange trees. Planting of an additional 750,000 trees is scheduled for completion before end of2013.
-- The two existing fruit processing plants are operating at close to full capacity, a third 40,000 tonnes capacity plant is expected to become operational in first quarter of 2013 with trial production in December 2012.
-- Confident in ability to deliver business growth and shareholder value.
Tony Tong, Chairman, commented:
"Although China's economy is predicted to grow at a slower pace, the market for oranges should remain generally stable as they are regarded as a consumer product rather than a luxury good. Our main challenge will be whether we can increase orange prices in a slower-growth economy. I believe this will be possible starting in the fourth quarter of 2012, due to the expected decrease in supply of winter oranges resulting from this year's unstable weather as well as the consistently high quality of our oranges.
For our fruit concentrates business, we will continue leveraging on our experience and expertise developed in our plantation business to achieve greater vertical integration and economies of scale. We see excellent potential for this market, given the growing demand for healthy food, rising household incomes and increasing awareness of health issues amongst Chinese consumers. We are always alert to expansion opportunities in the fruit processing business, if the price is reasonable, and will consider adding other fruit juice concentrates to our existing product lines in order to capitalise on this market.
Our sound foundations augur well for our long-term success. We are one of the world's very few listed plantation companies with orange plantation assets and fruit processing facilities, operating in a highly fragmented market with strong barriers to entry. Despite the challenging circumstances we faced during the year, I am as enthusiastic and confident as ever in our ability to deliver business growth and shareholder value".
Asian Citrus Eric Sung, Finance Director +852 2559 0323 Seymour Pierce Limited (NOMAD and Joint Broker) Jonathan Wright, Tom Sheldon +44 (0) 20 7107 8000 Richard Redmayne. Jackie Briscoe (Broking) Liberum Capital Limited (Joint Broker) Clayton Bush, Richard Bootle +44 (0) 20 3100 2222 Weber Shandwick Financial Nick Oborne, Stephanie Badjonat, John Moriarty +44 (0) 20 7067 0700
Chairman's Statement
I am pleased to present the annual results of Asian Citrus Holdings Limited (the "Company" or "Asian Citrus") and its subsidiaries (collectively referred to as the "Group") for the year ended 30 June 2012.
The past year was a challenging one for both our core plantation business and our juice processing business, owing to heavier than usual rainfall in South China and depressed prices for oranges and juice concentrates. Although our performance was less than optimal, I remain confident about our Company's ability to grow our business and deliver exceptional shareholder value.
Financial Highlights
For the year ended 30 June 2012, the Group's total revenues increased by approximately 25.7% from RMB1,412.6 million to RMB1,776.1 million, while core net profit for the year increased by approximately 8.7% from RMB579.0 million to RMB629.1 million.
Our two operating plantations contributed to a volume increase of 12.2% in our plantation business. This was offset by a decrease of 1.9% in the average selling prices of oranges, the first time we have experienced a drop in orange prices. Reflecting the need to apply additional fertiliser and pesticides for our summer oranges during the heavy rains this year, operating profit from the plantation business decreased by 1.9% from RMB463.4 million to RMB454.7 million.
The year was also a challenging one for our fruit juice concentrates business, Beihai Perfuming Garden Juice Co., Ltd. ("BPG"). Although BPG showed a 54.6% rise in operating profit from RMB131.8 million to RMB203.7 million over the previous year, we expected better contribution from this business as its operating results were consolidated for a full 12 months in FY2012 compared with only 7 months in FY2011. The reason for this unexpected shortfall was primarily caused by a squeeze on margins in pineapple juice concentrate, BPG's main product. During the year, average selling prices for pineapple concentrate fell as a result of destocking by Thai and Philippine producers - the world's two largest producers of pineapple concentrate - and lower demand amongst European consumers because of the financial crisis. We anticipate that prices for pineapple concentrate will rise again by the end of 2012 once the destocking has finished, although they are unlikely to bounce back quickly to the high levels that prevailed in 2011.
Operational Review
Asian Citrus currently owns three orange plantations occupying a total area of around 103 square kilometres with 3.9 million planted trees. Of these three plantations, two are in operation: the Hepu Plantation in Guangxi Zhuang Autonomous Region ("Guangxi"), which is essentially now operating at full maturity; and the Xinfeng Plantation in Jiangxi Province, which is gradually approaching full maturity and is expected to contribute towards a substantial and steady increase in our overall orange supply over the coming few years.
The Xinfeng Planation is planted with winter oranges trees, whilst the Hepu Plantation is planted with both winter and summer orange trees. We are continuing to replant certain existing winter orange trees with new species of summer orange trees at the Hepu Plantation.
The total winter orange crop yield from our operational plantations was approximately 171,607 tonnes during the year, representing an increase of approximately 19.4% over our total winter orange crop yield of approximately 143,698 tonnes the year before. As I previously mentioned, we are continuing to replace certain existing winter orange trees with new species of summer orange trees at the Hepu Plantation and thus there was less winter orange production from the Hepu Plantation compared with the previous year. The summer orange crop at our Hepu Plantation was 71,814 tonnes compared with 73,194 tonnes for the harvest at the same time last year, representing a decrease of 1.9%. This small decline was principally due to the unexpectedly heavy rainfall during the harvest season which increased the wastage of the summer crop. This is not indicative, however, of any downward trend in production. The annual production volume from our two operating plantations increased approximately 12.2% from 216,892 tonnes to about 243,421 tonnes.
The first harvest from our third plantation in Hunan province, which we started to develop in 2007, is expected to be in 2014. This plantation will specialise in summer oranges with an extended harvesting season. As at 30 June 2012, we had invested approximately RMB458.3 million in this plantation and planted 1.0 million summer orange trees. Planting of an additional 750,000 trees at the Hunan plantation is scheduled for completion before end of 2013.
In 2010, we acquired a 92.94% equity interest in BPG, which has enabled us to diversify our revenue sources and potentially achieve greater synergies through vertical integration. The existing plants in Beihai city and Hepu county in Guangxi are currently operating close to full capacity with an annual output of approximately 60,000 tonnes. To increase our overall production capacity, we are building a third plant in Baise City, Guangxi, with an annual output capacity of approximately 40,000 tonnes. Originally scheduled to begin operating in the third quarter of 2012, trial production is now planned in December 2012 and the plant is expected to become operational in the first quarter of 2013.
Building our Brand
Since 2005, we have been selling our graded oranges under our Royal Star brand directly to supermarket chains in China. These branded oranges, because of their higher quality, are able to command a premium price in the market.
I am proud to say that our Royal Star brand has been very well received by our supermarket chain customers, whose number has increased to 24 from the original 2 we began with in 2005. This is up from 20 last year. We are continuing an aggressive expansion of our distribution network in China for our Royal Star branded oranges by seeking direct contracts with different supermarket chains or, where more appropriate, gaining access to major domestic and international supermarket chains through sizeable distributors. I would like to highlight that recently we began selling our branded summer oranges to a major international supermarket chain and a national supermarket chain in Guangxi. As of this writing, we are currently in negotiations to sell our branded winter oranges to these customers' outlets in Guangdong and Zhejiang province as well as in Shanghai. If successful, this will mark a tremendous milestone in the development of Asian Citrus and the continuing growth of our orange business as well as recognition for our Royal Star brand in China.
Customers recognise the quality of our graded oranges, which since 2008 have been certified under China's Organic Food Standard. To achieve this standard, which is much more rigorous than other food certifications, we must use pesticides and fertilisers approved by the COFCC (China Organic Food Certification Center). Both of our operating plantations have had their certifications successfully renewed every year since we began receiving them four years ago.
Corporate Governance
We are strongly committed to good corporate governance and seek to be as transparent as possible with investors about our operations. In addition to regular updates on sales orders and harvest figures, we continue to provide new information on our biological assets so that investors can better understand our business.
During the year, we addressed a common concern that investors have about forestry and plantation companies - how we account accurately for our biological assets. To provide independent confirmation to the market, we commissioned an independent third party, with Nationwide Grade A Mapping and Surveying Qualification and is officially qualified to undertake mapping and surveying assignments in the PRC, to carry out an aerial survey of our plantations. Using GPS and digital photography, the surveyor took more than 50,000 digital photos of each operational plantation and processed them with a sophisticated software programme to provide a precise measurement of the land area occupied by our respective plantations and an exact count of the number of orange trees in our plantations.
I am pleased to confirm that the survey shows that the land area occupied by our plantations and the number of trees in our plantations are consistent with our records.
Enhancing Shareholder Value
We are in the fortunate position of being a cash rich company - as of June 2012 we had RMB2.3 billion on hand - with no debt. In an economic environment where credit continues to be very tight, this gives us great flexibility in terms of how we grow and add value for our shareholders.
We instituted a share repurchase programme in February of this year where the repurchased shares are for cancellation. To date, we have spent close to HK$60 million in share buybacks and have repurchased about 1% of our outstanding share capital. Consideration is being given as to how the execution of this programme can be improved. After the close period ends on the publication of the annual report, we will continue with the share repurchase programme if the valuation on our shares continues to be low. Under the Repurchasing Mandate from our Board, we may buy up to a total of HK$250 million in outstanding shares, which will be entirely funded from the internal resources of the Company.
Dividend
The Board recommends the payment of a final dividend of RMB0.13 for the financial year ended 30 June 2012. Together with the interim and special dividends of RMB0.05 paid previously, this equates to approximately 35.0% of the core net profit for the year ended 30 June 2012 (2011: 31.5%). This represents an increase of 20% over last year's RMB0.15. The Board is committed to maintaining a dividend payout ratio of at least 30% of core net profit.
The final dividend, if approved at the Annual General Meeting on 6 November 2012, will be paid in sterling or HK Dollars on or before 31 December 2012, to shareholders on the register at the close of business of 9 November 2012, with an ex-dividend date of 8 November 2012 and 7November 2012 on The Stock Exchange of Hong Kong Limited ("HKEx") and London Stock Exchange PLC, respectively. The actual translation rate for the purpose of dividend payment in sterling or HK Dollars will be determined by reference to the exchange rate on 13 November 2012.
The Company has decided to institute a Scrip Dividend Scheme whereby shareholders will be offered the opportunity to elect to receive the final dividend for the year ended 30 June 2012 in the form of shares. A document providing further details of this Scrip Dividend Scheme will be sent to shareholders in due course.
The Year Ahead
Although China's economy is predicted to grow at a slower pace, the market for oranges should remain generally stable as they are regarded as a consumer product rather than a luxury good. Our main challenge will be whether we can increase orange prices in a slower-growth economy. I believe this will be possible starting in the fourth quarter of 2012, due to the expected decrease in supply of winter oranges resulting from this year's unstable weather as well as the consistently high quality of our oranges.
Our sound foundations augur well for our long-term success. We are one of the world's very few listed plantation companies with orange plantation assets and fruit processing facilities, operating in a highly fragmented market dominated by small farmers. The barriers to growth for these farmers are prohibitively high. In addition to the cost of land and biological assets, the capital expenditures required to operate a large, profitable plantation are out of reach for most of our competitors - at our Hunan plantation alone, the total investment is expected to be RMB585 million.
Our shareholders recognise that plantations do not offer an immediate return. When trees are first planted, they do not begin producing until the fourth year. A typical orange tree in year 4 yields only 8 kilogrammes of oranges; when it reaches maturity in year 10, it will begin producing an average of 130 kilogrammes of oranges for the next 15 years and decline slightly afterwards for the remainder of its 35-year lifespan. As more orange trees come on-stream at our three plantations, we can look forward to many years of high productivity, high margins and high profitability.
For our fruit concentrates business, we will continue leveraging on our experience and expertise developed in our plantation business to achieve greater vertical integration and economies of scale. We see excellent potential for this market, given the growing demand for healthy food, rising household incomes and increasing awareness of health issues amongst Chinese consumers. We are always alert to expansion opportunities in the fruit processing business. If the price is reasonable, and will consider adding other fruit juice concentrates to our existing product lines in order to capitalise on this market.
Finally, on behalf of the Board, I would like to express my heartfelt appreciation of our management team and employees for their dedication and hard work which have contributed so much to our growth at Asian Citrus. I would also like to take this opportunity to thank all our shareholders, business partners and investors for their continuing support. Despite the challenging circumstances we faced during the year, I am as enthusiastic and confident as ever in our ability to deliver business growth and shareholder value.
Tony Tong
Chairman
21 September 2012
Management Discussion and Analysis
OPERATING PERFORMANCE
Revenue
The breakdown of revenue by types is as follows:
For the year ended 30 June 2012 2011 % of % of RMB'000 total revenue RMB'000 total revenue Hepu Plantation 593,454 33.4% 631,139 44.7% Xinfeng Plantation 463,873 26.1% 330,988 23.4% --------- ------------- --------- ------------- Sale of oranges 1,057,327 59.5% 962,127 68.1% Sale of processed fruit 715,473 40.3% 417,393 29.5% Sale of self-bred saplings 3,344 0.2% 6,903 0.5% Sale of properties - - 26,198 1.9% --------- ------------- --------- ------------- Total revenue 1,776,144 100.0% 1,412,621 100.0% ========= ============= ========= =============
The Group's revenue increased by 25.7% from RMB1,412.6 million to RMB1,776.1 million for the year ended 30 June 2012.
Sale of oranges
Revenue from sale of oranges grew by 9.9% to RMB1,057.3 million for the year ended 30 June 2012. This was achieved by an increase of approximately 12.2% in the Group's production to 243,421 tonnes but offset by 1.9% decrease in average selling price of the Group.
The production yield from Hepu Plantation decreased by 5.7% to 116,720 tonnes for the year ended 30 June 2012 mainly due to the ongoing replanting programme. During the year, 66,449 (2011: 63,584 winter orange trees were removed and replanted with the same number of the summer orange trees. As the orange trees continue to mature, the production yield from the Xinfeng Plantation increased significantly by 36.0% to 126,701 tonnes for the year ended 30 June 2012 from 93,181 tonnes in the comparable year.
The following table sets out the average selling prices of oranges in different plantations:
Year ended 30 June 2008 2009 2010 2011 2012 (RMB/tonne) (RMB/tonne) (RMB/tonne) (RMB/tonne) (RMB/tonne) Hepu Plantation - Winter Oranges 3,089 3,470 3,567 3,922 4,085 - Summer Oranges 4,868 5,057 5,516 6,061 5,856 Xinfeng Plantation - Winter Oranges 2,900 3,260 3,330 3,660 3,770
Unseasonably warm weather in winter time of 2011 resulted in an unusually strong winter orange crop in China, and consequently a short-term over supply of winter oranges to the market and direct competition to the Group's summer oranges. As a result, the average selling price of summer orange in Hepu Plantation was 3.4% lower respectively year on year.
All of the Group's oranges were sold domestically. The Group's customers from the sale of oranges can be divided into three categories, namely corporate customers, wholesale customers, and supermarket chains. The breakdown of types of customers is as follows:
For the year ended 30 June 2012 2011 % of sale of oranges Types of customers Supermarket chains 34.8% 39.0% Corporate customers 36.6% 30.5% Wholesale customers 28.0% 30.0% Other 0.6% 0.5% ------------- ------------- Total 100.0% 100.0% ============= =============
For the year ended 30 June 2012, the production volume and revenue to supermarket chains represented approximately 29.5% and 34.8% respectively of the Group, compared to approximately 31.6% and 39.0%respectively for the year ended 30 June 2011. As the Xinfeng Plantation was still at the early stage, the oranges were mainly sold to corporate and wholesale customers, thereby negatively impacting the percentage of sale to supermarket chains.
For the Hepu Plantation and Xinfeng Plantation, the production volume sold to supermarkets was 39,423 tonnes and 32,347 tonnes for the year ended 30 June 2012, compared to 46,156 tonnes and 22,324 tonnes for the year ended 30 June 2011 respectively. The decrease of the production volume sold to supermarket in Hepu Planation was mainly due to the short-term over supply of winter oranges to the market and direct competition to the Group's summer oranges in Hepu Plantation.
The Company is selling two types of oranges to customers, namely ungraded oranges and graded oranges. Ungraded oranges are neither packaged nor branded and the customers have to arrange for the transportation of the oranges at their own cost. Usually, the ungraded oranges are sold to wholesale and corporate customers. Graded oranges are oranges that the Company grades, packages and delivers to the customers at our cost, usually to supermarket customers. The graded oranges are sold under the "Royal Star" brand at a premium price compared to the selling price of ungraded oranges without brand. The breakdown of types of oranges is as follows:
For the year ended 30 June 2012 2011 % of sale of oranges Types of oranges Graded oranges 25.7% 30.7% Ungraded oranges 74.3% 69.3% Total 100.0% 100.0% ============= =============
As the Xinfeng Plantation was still at the early stage, the oranges were mainly sold to corporate and wholesale customers without grading, thereby negatively impacting the percentage of sale of graded oranges.
Sale of processed fruits
The table sets out the volume and revenue from the sale of processed fruits:
For the year ended 30 June 2012 2011 Volume Revenue Volume Revenue (Tonnes) RMB'000 (Tonnes) RMB'000 Pineapple juice concentrates 24,348 271,650 16,636 222,283 Other fruit juice concentrates 10,017 162,239 4,017 87,340 Other Fruit purees 17,472 125,555 3,616 25,783 Frozen and dried fruits and vegetables 18,170 119,087 9,634 81,987 70,007 678,531 33,903 417,393 Fruit juice trading N/A 36,942 - - -------- ------- -------- ------- Total 70,007 715,473 33,903 417,393 ======== ======= ======== =======
Beihai BPG processes over 22 different types of tropical fruits, including pineapples, passion fruit, lychees, mangoes and papayas. Only single products accounting for over 10% of the revenue from the sale of processed fruits are shown separately in the table above.
Revenue from the sale of processed fruits increased by 71.4% to RMB715.5 million for the year ended 30 June 2012. It is mainly attributable by the full year results of Beihai BPG which are consolidated into the Group for the year ended 30 June 2012 compared to seven month results being consolidated into the Group in last year follow by the completion of acquisition as of 30 November 2010.
The utilisation rate of two existing processing plants in Beihai and Hepu is approximately 91.8% and 93.6% for the year ended 30 June 2012.
Beihai BPG currently generates most of its sales from the People's Republic of China ("PRC") market, with key customers being beverage mixers supplying major beverage groups.
Sale of self-bred saplings
For the year ended 30 June 2012, RMB3.3 million was recognised from the sale of approximately 284,000 self-bred saplings to local farmers.
Cost of sales
The breakdown of cost of sales of the Group is as follows:
For the year ended 30 June 2012 2011 % of % of cost of sales cost of sales of respective of respective RMB'000 segment RMB'000 segment Inventories used Fertilisers 252,868 51.8% 193,713 50.8% Packaging materials 40,420 8.3% 42,907 11.2% Pesticides 54,844 11.2% 32,010 8.4% ------- -------------- ------- -------------- 348,132 71.3% 268,630 70.4% Production overheads Direct labour 45,123 9.3% 37,140 9.7% Depreciation 61,638 12.6% 50,498 13.2% Others 33,250 6.8% 25,481 6.7% ------- -------------- ------- -------------- Cost of sales of oranges 488,143 100.0% 381,749 100.0% ------- ============== ------- ============== Fruit 308,783 62.4% 205,920 74.8% Packaging materials 34,103 6.9% 18,136 6.6% Direct labour 26,169 5.3% 15,041 5.5% Other production overheads 125,695 25.4% 36,196 13.1% ------- -------------- ------- -------------- Cost of sales of processed fruits 494,750 100.0% 275,293 100.0% ------- ============== ------- ============== Cost of sales of self-bred saplings 850 3,235 Cost of sales of properties - 13,742 ------- ------- Total 983,743 674,019 ======= =======
The cost of sales of oranges principally consists of the costs of raw materials such as fertilisers, packaging materials, pesticides and other direct costs such as direct labour, depreciation and production overheads. The production cost of sale of oranges increased by 27.9% from RMB381.7 million to RMB488.1 million. The increase in production costs was mainly due to the increase in raw materials utilised for 12.2% increase in the production volume, slight increase in the average price of fertiliser and higher consumption of pesticides and fertilisers due to adverse weather conditions during the year.
The unit cost of production in the Hepu Plantation increased by 21.5% to approximately RMB1.81 per kg for the year ended 30 June 2012 (2011: RMB1.49 per kg) as a result of the decrease in production volume of winter oranges due to ongoing replanting programme and higher amount of fertilisers used as a result of the heavy rainfall in the second quarter of 2012.
The unit cost of production in the Xinfeng Plantation slightly increased by 2.8% to RMB2.18 per kg for the year ended 30 June 2012 (2011: RMB2.12 per kg) as a result of higher amount of pesticides used andrelated expenses due to generally warmer weather in winter time of 2011.
The combined unit cost of production increased by 14.2% to RMB2.01 per kg from RMB1.76 per kg in the comparable period due to higher contribution from Xinfeng Plantation with relatively higher unit cost and increase in unit cost in Hepu Plantation.
Cost of sales of processed fruit mainly includes the costs of fruit and packaging materials and other direct costs such as direct labour and production overheads. For the six months ended 30 June 2012, the cost of processed fruits increased by 79.7% from RMB275.3 million to RMB494.8 million. The increase was mainly due to full year results of Beihai BPG which are consolidated into the Group for the year ended 30 June 2012 compared to seven month results of Beihai BPG being consolidated into the Group in last year following the completion of the acquisition as of 30 November 2010.
Gross profit
The Group's overall gross profit increased by 7.3% to approximately RMB792.4 million for the year ended 30 June 2012 (2011: RMB738.6 million). The improvement in gross profit was due to an increase in the production yield of the orange trees of 12.2% and inclusion of the full year gross profit of Beihai BPG of RMB220.7 million.
The overall gross profit margin decreased from 52.3% to 44.6% for the year ended 30 June 2012 due to higher contribution from processed fruits segment and Xinfeng Plantation which has a relatively lower margin, decrease of gross profit margin of the Hepu Plantation and decrease of gross profit margin of the processed fruits segment.
The following table sets out a breakdown of the Group's gross profit margin by plantation:
For the year ended 30 June 2012 2011 Hepu Plantation 64.3% 70.1% Xinfeng Plantation 40.4% 40.2% ============= =============
The following table sets out a breakdown of the Group's gross profit margin by business:
For the year ended 30 June 2012 2011 Sale of oranges 53.8% 60.3% Sale of processed fruits 30.8% 34.0% Sale of self-bred saplings 75.0% 53.1% Sale of properties - 47.5% ------------- ------------- Overall gross profit margin 44.6% 52.3% ============= =============
The gross profit margin of the Hepu Plantation decreased to approximately 64.3% (2011: 70.1%) due to the decrease of the production volume of winter oranges from the ongoing replanting programme, lower average selling price of summer oranges and higher amount of fertilisers used as a result of the heavy rainfall in the second quarter of 2012.
Despite better economies of scale being achieved, the gross profit margin of Xinfeng Plantation only grew to 40.4% (2011: 40.2%) due to a higher amount of pesticides used and related expenses as a result of generally warmer weather in winter time of 2011. Over the medium term, as the continuous growth in production volume and better economies of scale, we expect the margin of the Xinefeng Plantation to continue to improve.
Due to higher contribution from Xinfeng Plantation with a relatively lower margin and the decrease in gross profit margin of the Hepu Plantation, the overall gross profit margin from sales of oranges dropped to approximately 53.8% (2011: 60.3%) for the year ended 30 June 2012.
Beihai BPG processes over 22 different types of fruit with different gross profit margins. The normalised gross profit margin of Beihai BPG for the year ended 30 June 2012 decreased to 30.8% compared to 34.0% in last year. This was mainly due to the inclusion of the trading of fruit juice with minimal gross margin at special request by customers during the year and lower selling price of the pineapple juice concentrates as a result of the decrease in prices in the international market.
Gain on change in fair value of biological assets
The Group recorded a gain of RMB166.9 million from net gain on change in fair value of biological assets for the year ended 30 June 2012, compared to a gain of RMB507.7 million in last year. The lower increase was mainly due to the fact that all the orange trees in the Xinfeng Plantation became fruit bearing in the previous year and there was substantially less infant trees becoming fruit bearingin current year.
The net gain on change in fair value of biological assets does not have any effect on the cash flow of the Group for the year ended 30 June 2012.
Selling and distribution expenses
Selling and distribution expenses mainly comprise sales commissions, advertising, salaries and welfare of sales personnel, travelling and transportation expenses. The selling and distribution expenses of the Group decreased from approximately RMB63.3 million for the year ended 30 June 2011 to approximately RMB60.6 million for the year ended 30 June 2012, representing an decrease of 4.3%, mainly resulting from the decrease of the production volume sold to supermarket from Hepu Plantation.
As a result, selling and distribution expenses represented 3.4% of the Group's revenue, a decrease of 1.1 percentage points as compared to 4.5% in last year.
General and administrative expenses
General and administrative expenses comprise mainly salary, office administration expenses, depreciation, amortization, raw material utilised for infant trees and research costs. The general and administrative expenses of the Group were approximately RMB157.6 million for the year ended 30 June 2012 (2011: RMB142.4 million), representing an increase of 10.7%. The increase was mainly due to more expenses for the continued development of Hunan Plantation and inclusion of the administrative expenses amounting to RMB11.6 million of Beihai BPG.
General and administrative expenses represented 8.9% of the Group's revenue, a decrease of 1.2 percentage points as compared to 10.1% in last year, demonstrating the Group's ability to control the costs effectively during rapid business expansion.
Profit
The profit attributable to shareholders for the year ended 30 June 2012 decreased to approximately RMB750.2 million, compared to approximately RMB1,039.0 million in last year, representing a decrease of approximately 27.8%. The decrease in profit is mainly due to lower increase in the net gain on change in fair value of biological assets as all the orange trees in the Xinfeng Plantation becoming fruit bearing in the previous year and there was substantially less infant trees becoming fruit bearing in current year.
The core net profit, which refers to profit for the year excluding net gain on change in fair value of biological assets and share-based payments, for the year ended 30 June 2012 was approximately RMB629.1 million, compared to approximately RMB579.0 million in last year, representing an increase of approximately 8.7%. The increase was mainly attributable to the increase in production volume of oranges and a full year results of Beihai BPG consolidated into the Group during the year compared to seven month results in corresponding period last year.
CHANGE IN ACCOUNTING POLICY
In the year ended 30 June 2012, the Group changed its accounting policy with respect to the costing of infant trees. Cost of fertilisers and pesticides, the principal directly attributable costs incurred during the period of biological growth to the stage the trees start bearing fruits (i.e. from age 0 to 3), are now capitalised as additions to the relevant biological assets. In prior years, these costs were expensed as incurred and included in general and administrative expenses in profit or loss. The management believes the new policy is preferable as it will provide relevant and reliable information and more fairly reflects the financial results of the Group's agricultural activities.
This change in accounting policy has been applied retrospectively. The effects of the change in the consolidated income statement for the year ended 30 June 2011 and in the consolidated statements of financial position at 30 June 2011 and 1 July 2010 are set out in Note 4 to the Consolidated Financial Statements.
FINAL AND SPECIAL DIVIDENDS
The Directors are pleased to recommend a final dividend of RMB0.13 (2011: final dividend of RMB0.10 and special dividend of RMB0.03) per share. The final dividend, together with the interim and special dividend of RMB0.03 (2011:RMB0.02) and RMB0.02 (2011: RMBNil) per share respectively, will make a total of RMB0.18 (2011: RMB0.15) per share for the whole year ended 30 June 2012.
PRODUCTIVITY
The increasing maturity of the oranges trees together with effective managerial planning and production supervision, have led to productivity gains.
For the year ended 30 June 2012 2011 % of % of Types of produce Tonnes Total output Tonnes total output Winter oranges 171,607 70.5% 143,698 66.3% Summer oranges 71,814 29.5% 73,194 33.7% ------- ------- Total 243,421 216,892 ======= =======
The production volume of winter oranges increased to 171,607 tonnes for the year ended 30 June 2012, representing an increase of 19.4%. The production volume of winter oranges in Hepu Plantation dropped from approximately 50,517 tonnes last year to approximately 44,906 tonnes in the current year, representing a decrease of approximately 11.1%, which was due to the ongoing replanting programme. In the year to 30 June 2011, 63,584 winter orange trees were removed and replanted with the same number of the summer orange trees.
In addition, the production volume of winter orange from the Xinfeng Plantation increased from approximately 93,181 tonnes last year to approximately 126,701 tonnes in the current year, representing an increase of approximately 36.0% due to increased maturity during the year.
The production volume of summer oranges decreased slightly to 71,814 tonnes for the year ended 30 June 2012 (2011: 73,194 tonnes) due to the unusual heavy rainfall at the time of the harvesting season.
CAPITAL STRUCTURE
As at 30 June 2012 there were 1,221,097,182 shares in issue. Based on the closing price of HK$4.35 as at 30 June 2012, the market capitalisation of the Company was approximately HK$5,311.8 million (GBP437.6 million).
HUMAN RESOURCES
There were a total of 1,692 employees of the Group as at 30 June 2012. The Group aims to attract, retain and motivate high calibre individuals with a competitive remuneration package. Remuneration packages are performance-linked and business performance, market practices and competitive market conditions are all taken into consideration. The Group reviews the employees' remuneration packages on an annual basis. The Group also places heavy emphasis on staff training and development so that employees can reach their maximum potential.
FINANCIAL PERFORMANCE
30 June 2012 30 June 2011 (restated) Current ratio (x) 47.49 41.05 Quick ratio (x) 43.49 37.83 Asset turnover (x) 0.21 0.18 Core net profit per share (RMB) 0.52 0.55 Basic earnings per share (RMB) 0.62 0.99 Net debt to equity (%) Net cash Net cash
Liquidity
The current ratio and quick ratio was 47.49 and 43.49 respectively. The liquidity of the Group continues to be healthy with sufficient reserves for both current operation and future development.
Profitability
The asset turnover of the Group improved to 0.21 (2011: 0.18) for the year ended 30 June 2012. The higher asset turnover was mainly due to full year results of Beihai BPG being consolidated into Group in current period compared to seven month results in last corresponding period.
The basic earnings per share for the year ended 30 June 2012 was RMB0.62 (2011: RMB0.99). This was because of the 35.5% decrease in profit attributable to shareholders for the year and the dilution effect from the issuance of new ordinary shares in FY2011. However, the decrease in profit attributable to shareholders is mainly due to a substantial decrease in the net gain on change in fair value of biological assets as all the orange trees in the Xinfeng Plantation became fruit bearing in the previous year and there was substantially less infant trees becoming fruit bearing in current year.
The core net profit per share for the six months ended 30 June 2012 was RMB0.52 (2011: RMB0.55).
Debt ratio
The net cash positions of the Group were RMB2,388.1 million and RMB2,232.2 million at 30 June 2012 and 2011 respectively.
Internal cash resource
The Group's major internal cash resource is its cash and cash equivalents. The effective interest rate for bank deposits during the year ended 30 June 2012 is approximately 0.93% (2011: 0.35%) per annum.
The Group did not have any outstanding bank borrowings as at 30 June 2012.
Charge on assets and contingent liabilities
None of the Group's assets were pledged and the Group did not have any material contingent liabilities as at 30 June 2012.
Capital commitments
As at 30 June 2012, the Group had capital commitments of approximately RMB87.7 million mainly in relation to the construction of the farmland infrastructure in the Hunan Plantation and the new juicing plant in Baise city.
Foreign exchange risk
The Group is exposed to currency risk primarily through its cash and cash equivalents that are denominated in a currency other than the functional currency of the operation to which they related. The currencies giving rise to this risk are primarily Hong Kong dollars, United States dollars and British pounds.
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuation arise. The Group currently does not use any derivative contracts to hedge against its exposure to currency risk. Management manages its currency risk by closely monitoring the movement of the foreign currency rate and considers hedging significant foreign currency exposure should the need arise.
PLANTATIONS
The Group has three orange plantations in the PRC occupying in total approximately 155,000 mu (equivalent to approximately 103.3 sq.km.) of land, with approximately 46,000 mu (equivalent to approximately 30.7 sq.km.) at the Hepu Plantation in the Hepu county of the Guangxi Zhuang Autonomous Region, approximately 56,000 mu (equivalent to approximately 37.3 sq.km.) at the Xinfeng Plantation in the Xinfeng county of the Jiangxi province and approximately 53,000 mu (equivalent to approximately 35.3 sq.km) at the Hunan Plantation in the Dao county of the Hunan province.
Hepu Plantation
The Hepu Plantation is fully planted and comprises approximately 1.3 million orange trees of which approximately 1.1 million trees were producing oranges during the current year. During the year, 66,449 winter orange trees were removed and the same number of summer orange trees were replanted as part of the ongoing replanting programme.
Xinfeng Plantation
The Xinfeng Plantation is fully planted and comprises 1.6 million winter orange trees and all of which are producing oranges during the current year.
Hunan Plantation
The Hunan Plantation is still under development and comprises approximately 1.0 million summer orange trees planted as at 30 June 2012. During the year ended 30 June 2012, approximately 622,000 summer orange trees were planted with approximately 750,000 summer orange trees to be planted in the financial year ending 30 June 2013. By that time, the construction of Hunan Plantation is expected to be completed.
The first batch of the 427,400 summer orange trees is expected to begin trial production in the summer of 2014.
The below table sets out the age profile as at 30 June 2012 and the production volume of the plantations for the year ended 30 June 2012:
Summer orange trees
Hepu Plantation Hunan Plantation Age Hepu Plantation Yield Hunan Plantation Yield Total Total Yield No. of No. of No. of trees (tonnes) trees (tonnes) trees (tonnes) 0 66,449 - 622,475 - 688,924 - 1 63,584 - 427,400 - 490,984 - 2 64,194 - - - 64,194 - 3 81,261 - - - 81,261 - 4 76,135 877 - - 76,135 877 5 55,185 2,818 - - 55,185 2,818 15 29,996 2,955 - - 29,996 2,955 16 128,966 15,161 - - 128,966 15,161 17 186,003 21,133 - - 186,003 21,133 18 223,741 28,870 - - 223,741 28,870 975,514 71,814 1,049,875 - 2,025,389 71,814
Winner orange trees
Xinfeng Hepu Plantation Xinfeng Plantation Age Hepu Plantation Yield Plantation Yield Total Total Yield No. of No. of No. of trees (tonnes) trees (tonnes) trees (tonnes) 5 - - 400,000 23,243 400,000 23,243 6 - - 400,000 28,023 400,000 28,023 7 46,077 3,364 400,000 33,604 446,077 36,968 9 180,180 19,597 400,000 41,831 580,180 61,428 10 42,300 4,974 - - 42,300 4,974 15(*) 24,937 13,469 - - 24,937 13,469 16 10,133 1,524 - - 10,133 1,524 17 12,988 1,978 - - 12,988 1,978 316,615 44,906 1,600,000 126,701 1,916,615 171,607 Grand total 3,942,004 243,421 ========= ===========
(*) Note: 66,449 winter orange trees (age: 15) were removed and replanted with the same number of summer orange trees (age: 0) during the year ended 30 June 2012.
The below table sets out the age profile as at 30 June 2011 and the production volume of the plantations for the year ended 30 June 2011:
Summer orange trees
Hepu Plantation Hunan Plantation Age Hepu Plantation Yield Hunan Plantation Yield Total Total Yield No. of No. of No. of trees (tonnes) trees (tonnes) trees (tonnes) 0 63,584 - 427,400 - 490,984 - 1 64,194 - - - 64,194 - 2 81,261 - - - 81,261 - 3 76,135 - - - 76,135 - 4 55,185 646 - - 55,185 646 14 29,996 2,775 - - 29,996 2,775 15 128,966 15,552 - - 128,966 15,552 16 186,003 23,676 - - 186,003 23,676 17 223,741 30,545 - - 223,741 30,545 909,065 73,194 427,400 - 1,336,465 73,194
Winner orange trees
Xinfeng Hepu Plantation Xinfeng Plantation Age Hepu Plantation Yield Plantation Yield Total Total Yield No. of No. of No. of trees (tonnes) trees (tonnes) trees (tonnes) 4 - - 400,000 3,600 400,000 3,600 5 - - 400,000 23,200 400,000 23,200 6 46,077 1,935 400,000 28,800 446,077 30,735 8 180,180 17,742 400,000 37,581 580,180 55,323 9 42,300 4,221 - - 42,300 4,221 14(*) 91,386 23,107 - - 91,386 23,107 15 10,133 1,536 - - 10,133 1,536 16 12,988 1,976 - - 12,988 1,976 383,064 50,517 1,600,000 93,181 1,983,064 143,698 Grand total 3,319,529 216,892 ========= ===========
(*) Note: 63,584 winter orange trees (age: 14) were removed and replanted with the same number of summer orange trees (age: 0) during the year ended 30 June 2011.
VALUATION OF BIOLOGICAL ASSETS
The Group has engaged an independent valuer to determine the fair value of the orange trees less costs to sell as at 30 June 2012.
The valuations of the Group's orange trees were conducted on the basis of discounted cash flow. The discount rate being applied to the discounted cash flow model is based on Capital Asset Pricing Model. The independent valuer begins with the appraised value of the Group's orange trees by discounting the future income streams attributable to the Group's orange trees to arrive at a present value and deducts the assets (including plantation related machinery and equipment and land improvements) from theappraised value which are employed in the operation of the Group's plantations. The independent valuer conducted inspections of the plantations in connection with the valuation exercise of the Group's orange trees.
Major assumptions
The discounted cash flow method adopted a number of key assumptions, which include the discount rate, market prices of oranges, production yield per tree, related production costs, etc. The values of such variables are determined by the independent valuer using information supplied by the Group, as well as proprietary and third-party data, as follows:
1) The discount rate applied for the year ended 30 June 2012 was 18.0% (2011: 20.0%). The discount rate reflected the expected market return on the asset and can be affected by the interest rate, market sentiments and risk of the asset versus the general market risk.
2) The yield per tree variables represent the harvest level of the orange trees. The yield of orange trees is affected by the age, species and health of the orange trees, the climate, location, soil conditions, topography and infrastructure. In general, the yield per tree increases from age 3 to 10, remains stable for about 22 years, and then decreases until age 32. An agricultural consultant of the independent valuer estimates that the yield per tree based on field inspection of general growth conditions of orange trees and average yield data of typical orange plantations in the PRC.
3) The market prices variables represent the assumed market price for the Summer Oranges and Winter Oranges produced by the Group. The independent valuer adopted the market sales prices prevailing as of the relevant balance sheet date for each type of orange produced by the Group as the sales price estimate. The selling prices of winter oranges and summer oranges from the Hepu Plantation and winter oranges from the Xinfeng Plantation adopted were RMB3,310 per tonne, RMB5,200 per tonne and RMB3,730 per tonne, respectively, for the year ended 30 June 2012 and RMB3,230 per tonne, RMB5,300 per tonne and RMB3,660 per tonne, respectively, for the year ended 30 June 2011.
4) The direct production cost variables represent the direct costs necessary to bring the oranges to their sales form, which mainly include raw material costs and direct labour costs. The direct production cost variables are determined by reference to actual costs incurred for areas that have been previously harvested and cost information for comparable areas with regards to areas that have not been harvested previously.
Sensitive analysis
1) Changes in the discount rate applied result in significant fluctuations in the Group's gain from changes in fair value of orange trees less estimated point-of-sale costs. The following table illustrates the sensitivity of the Group's gain from changes in fair value of orange tree less estimated point-of-sale costs to increases or decreases by 100 basis points in the discount rate of 18.0% applied by the independent valuer for the year ended 30 June 2012:
100 basis points 100 basis points Decrease Base Case Increase Discount rate 17.0% 18.0% 19.0% Net gain on change in fair value of biological assets (RMB'000) 339,900 166,900 7,900
2) Changes in the yield per orange tree can also result in significant fluctuations in gain from changes in fair value of orange trees less estimated point-of-sale costs. The following table illustrates the sensitivity of the Group's gain from changes in fair value of orange trees less estimated point-of-sale costs to a 5.0% increase or decrease in the yield per tree applied for the year ended 30 June 2012:
5.0% Decrease Base Case 5.0% Increase Net (loss)/gain on change in fair value of biological assets (RMB'000) (10,100) 166,900 344,900
3) Changes in assumed market prices of the oranges can also result in significant fluctuations in gain from changes in fair value of orange trees less estimated point-of-sale costs. The following table illustrates the sensitivity of the Group's gain from changes in fair value of orange trees less estimated point-of-sale costs to a 5.0% increase or decrease in the assumed market prices of oranges as at 30 June 2012 used to calculate gain from changes in fair value of orange trees less estimated point-of-sale costs for the year ended 30 June 2012:
5.0% Decrease Base Case 5.0% Increase Net (loss)/gain on change in fair value of biological assets (RMB'000) (188,100) 166,900 522,900
4) Changes in the assumed direct production costs can also result in significant fluctuations in gain from changes in fair value of orange trees less estimated point-of-sale costs. The following table illustrates the sensitivity of the Group's gain from changes in fair value of orange trees less estimated point-of-sale costs to a 5.0% increase or decrease in the Group's assumed direct production costs used to calculate gain from changes in fair value of orange trees less estimated point-of-sale costs for the year ended 30 June 2012:
5.0% Decrease Base Case 5.0% Increase Net gain/(loss) on change in fair value of biological assets (RMB'000) 355,900 166,900 (34,100)
The above sensitivity analyses are intended for illustrative purposes only, and any variation could exceed the amounts shown above.
Valuation
According to the valuation report of the independent valuer, the aggregate value of the orange trees in the Hepu Plantation and Xinfeng Plantation as at 30 June 2012 was estimated to be approximately RMB2,226 million (2011: RMB2,045 million).
Consolidated Income Statement
For the year ended 30 June 2012
2012 2011 Note RMB'000 RMB'000 (restated) Turnover 5 1,776,144 1,412,621 Cost of sales (983,743) (674,019) --------- ---------- Gross profit 792,401 738,602 Other income 24,089 9,787 Net gain on change in fair value of biological assets 166,900 507,712 Selling and distribution expenses (60,579) (63,314) General and administrative expenses (157,607) (142,372) --------- ---------- Profit from operations 765,204 1,050,415 Finance costs (146) (177) --------- ---------- Profit before income tax 7 765,058 1,050,238 Income tax expense 8 - (1,785) --------- ---------- Profit for the year 765,058 1,048,453 ========= ========== Attributable to Equity shareholders of the Company 750,200 1,038,953 Non-controlling interest 14,858 9,500 --------- ---------- 765,058 1,048,453 ========= ========== RMB RMB (restated) Earnings per share 9 - Basic 0.615 0.988 ========= ========== - Diluted 0.613 0.983 ========= ==========
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2012
2012 2011 RMB'000 RMB'000 (restated) Profit for the year 765,058 1,048,453 Other comprehensive (expense)/income for the year Exchange differences on translation of financial statements of foreign operations, net of nil tax (636) 901 Total comprehensive income for the year 764,422 1,049,354 ======= ========== Attributable to Equity shareholders of the Company 749,564 1,039,854 Non-controlling interest 14,858 9,500 764,422 1,049,354 ======= ==========
Consolidated Statement of Financial Position
At 30 June 2012
30 June 30 June 1 July 2012 2011 2010 RMB'000 RMB'000 RMB'000 Note (restated) (restated) ASSETS Non-current assets Property, plant and equipment 1,835,518 1,638,339 1,161,437 Land use rights 68,527 69,889 54,841 Construction-in-progress 178,302 70,611 64,328 Biological assets 2,305,224 2,086,497 1,551,803 Intangible assets 58,506 53,287 36,800 Deposits 4,251 114,500 - Goodwill 1,157,261 1,157,261 - ---------- ----------- ----------- 5,607,589 5,190,384 2,869,209 ---------- ----------- ----------- Current assets Biological assets 158,636 145,561 90,221 Properties for sale 5,830 5,830 18,497 Inventories 63,094 46,407 841 Trade and other receivables 11 86,865 96,503 19,629 Cash and cash equivalents 2,388,114 2,232,203 975,074 ---------- ----------- ----------- 2,702,539 2,526,504 1,104,262 ---------- ----------- ----------- Total assets 8,310,128 7,716,888 3,973,471 ========== =========== =========== 30 June 30 June 1 July 2012 2011 2010 RMB'000 RMB'000 RMB'000 Note (restated) (restated) EQUITY AND LIABILITIES Equity Share capital 12,083 12,030 8,767 Reserves 8,138,036 7,554,963 3,912,925 ------------ ------------ ------------ Total equity attributable to equity shareholders of the Company 8,150,119 7,566,993 3,921,692 Non-controlling interest 102,168 87,310 - ------------ ------------ ------------ 8,252,287 7,654,303 3,921,692 ------------ ------------ ------------ Non-current liabilities Obligation under finance lease 937 1,034 - ------------ ------------ ------------ Current liabilities Trade and other payables 12 56,807 58,461 44,391 Due to a related party - 3,000 7,110 Obligation under finance lease 97 90 - Income tax payable - - 278 ------------ ------------ ------------ 56,904 61,551 51,779 ------------ ------------ ------------ Total liabilities 57,841 62,585 51,779 ------------ ------------ ------------ Total equity and liabilities 8,310,128 7,716,888 3,973,471 ============ ============ ============ Net current assets 2,645,635 2,464,953 1,052,483 ============ ============ ============ Total assets less current liabilities 8,253,224 7,655,337 3,921,692 ============ ============ ============
Consolidated Cash Flow Statement
For the year ended 30 June 2012
2012 2011 RMB'000 RMB'000 (restated) Cash flows from operating activities Profit before income tax 765,058 1,050,238 Adjustments for: Interest income (21,559) (7,308) Finance costs 146 177 Depreciation 126,044 94,830 Share-based payments 45,812 47,715 Amortisation of land use rights 1,362 1,312 Amortisation of intangible assets 9,781 5,562 Loss on disposal of property, plant and equipment 4,828 148 Net gain on change in fair value of biological assets (166,900) (507,712) -------- ---------- Operating profit before working capital changes 764,572 684,962 Movements in working capital elements: Properties for sale - 12,667 Inventories (16,687) (23,979) Biological assets (13,075) (55,340) Trade and other receivables 25,150 34,885 Trade and other payables (2,290) (10,623) Due to a related party (3,000) (4,110) -------- ---------- Cash generated from operations 754,670 638,462 Income tax paid - (2,063) -------- ---------- Net cash generated from operating activities 754,670 636,399 -------- ---------- Cash flows from investing activities Proceeds from disposal of property, plant and equipment 6,258 46 Purchase of property, plant and equipment (38,098) (8,832) Additions to construction-in-progress (305,115) (201,976) Deposits paid for acquisition of property, plant and equipment (4,050) (21,538) Net addition to biological assets (51,827) (26,982) Additions to intangible assets (15,000) (6,600) Decrease/(increase) in time deposits with terms over three months 103,040 (166,000) Interest received 21,559 7,308 Acquisition of subsidiaries - (161,083) -------- ---------- Net cash used in investing activities (283,233) (585,657) 2012 2011 RMB'000 RMB'000 (restated) Cash flows from financing activities Proceeds from issue of new shares from placement, net of shares issuance costs - 1,284,621 Proceeds from issue of new shares upon exercise of share options 12,457 30,893 Obligation under finance lease (90) 1,124 Repayment of amount due to a shareholder - (213,788) Dividends paid (177,848) (62,286) Repurchase of shares (46,859) - Finance costs paid (146) (177) --------- ---------- Net cash (used in)/generated from financing activities (212,486) 1,040,387 --------- ---------- Net increase in cash and cash equivalents 258,951 1,091,129 Cash and cash equivalents at beginning of year 2,066,203 975,074 --------- ---------- Cash and cash equivalents at end of year 2,325,154 2,066,203 ========= ==========
Major non-cash transactions
During the year, purchase of property, plant and equipment included an amount of RMB98,787,000 (2011: RMBNil) transferred from non-current deposits, and additions to construction-in-progress included an amount of RMBNil (2011: RMB47,388,000) transferred from non-current deposits.
Notes To The Consolidated Financial Statements
1 GENERAL INFORMATION
Asian Citrus Holdings Limited (the "Company") was incorporated in Bermuda on 4 June 2003 as an exempted company with limited liability under the Companies Act of Bermuda and its shares are listed on the Main Board of HKEx, AIM of the London Stock Exchange and PLUS Markets plc.
The address of the Company's registered office is Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. The principal place of business of the Company is located at Rooms 1109-1112, Wayson Commercial Building, 28 Connaught Road West, Hong Kong.
The principal activities of the Company and its subsidiaries (together the "Group") are planting, cultivation and sale of agricultural produce, manufacture and sale of fruit juice concentrates, fruit purees, frozen fruits and vegetables, and developing and sale of property units in an agricultural wholesale market and orange processing centre.
2 SIGNIFICANT ACCOUNTING POLICIES a) Statement of compliance
These consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards ("IFRSs"), which comprise International Financial Reporting Standards, International Accounting Standards ("IAS") and Interpretations, issued by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee, and the disclosure requirements of the Hong Kong Companies Ordinance. The consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the HKEx and the AIM Rules.
The IASB has issued certain new and revised IFRSs that are first effective or available for early adoption for the current accounting period of the Group. Note 3 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these consolidated financial statements.
b) Basis of preparation of the consolidated financial statements
These consolidated financial statements are presented in Renminbi ("RMB"), the functional currency of the Group, rounded to the nearest thousand, unless otherwise stated. They have been prepared under the historical cost convention, as modified by the revaluation of certain biological assets which are carried at their fair values.
The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
3 APPLICATIONs OF NEW AND REVISED IFRSs
The IASB has issued one new IFRS, a number of amendments to IFRSs and new Interpretations 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 consolidated financial statements:
-- Amendments to IFRSs contained in improvements to IFRS (2010)
-- Amendments to IFRS 7, Disclosures - Transfers of financial assets
-- IAS 24 (Revised 2009), Related party disclosures
The above amendments to IFRSs have had no material impact on the Group's results of operations and financial position, or do not contain any additional disclosure requirements specifically applicable to the consolidated financial statements.
Up to the date of issue of the consolidated financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 30 June 2012 and which have not been adopted in the consolidated financial statements. Of these developments, the following relate to matters that may be relevant to the Group's operations and consolidated financial statements:
Improvements to Annual improvements to IFRSs 2009 - 2011 IFRSs cycle(3) IFRS 7 (Amendments) Disclosures - Offsetting financial assets and financial liabilities(3) Disclosures - Mandatory effective date of IFRS 9 and transition disclosures(5) IFRS 9 Financial instruments(5) IFRS 10 Consolidated financial statements(3) IFRS 12 Disclosure of interests in other entities(3) IFRS 13 Fair value measurement(3) IAS 1 (Amendments) Presentation of financial statements - Presentation of items of other comprehensive income(2) IAS 12 (Amendments) Income taxes - Deferred tax: Recovery of underlying assets(1) IAS 27 (2011) Separate financial statements(3) IAS 32 (Amendments) Presentation offsetting financial assets and financial liabilities(4)
(1) Effective for annual periods beginning on or after 1 January 2012.
(2) Effective for annual periods beginning on or after 1 July 2012.
(3) Effective for annual periods beginning on or after 1 January 2013.
(4) Effective for annual periods beginning on or after 1 January 2014.
(5) Effective for annual periods beginning on or after 1 January 2015.
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. So far it has concluded that their adoption is unlikely to have a significant impact on the Group's results or financial position.
4 CHANGE IN ACCOUNTING POLICY
In the year ended 30 June 2012, the Group changed its accounting policy with respect to the costing of infant trees. Cost of fertilisers and pesticides, the principal directly attributable costs incurred during the period of biological growth to the stage the trees start bearing fruits (i.e. from age 0 to 3), are now capitalised as additions to the relevant biological assets. In prior years, these costs were expensed as incurred and included in general and administrative expenses in profit or loss. The management believes the new policy is preferable as it more fairly reflects the financial results of the Group's agricultural activities.
This change in accounting policy has been applied retrospectively. The effects of the change in the consolidated income statement for the year ended 30 June 2011 and in the consolidated statements of financial position at 30 June 2011 and 1 July 2010 are set out below.
Consolidated income statement for the year ended 30 June 2011
Effect of 2011 change in accounting policy (as previously 2011 reported) (as restated) RMB'000 RMB'000 RMB'000 Turnover 1,412,621 - 1,412,621 Cost of sales (674,019) - (674,019) ---------------- ------------ --------------- Gross profit 738,602 - 738,602 Other income 9,787 - 9,787 Net gain on change in fair value of biological assets 598,000 (90,288) 507,712 Selling and distribution expenses (63,314) - (63,314) General and administrative expenses (161,621) 19,249 (142,372) ---------------- ------------ --------------- Profit from operations 1,121,454 (71,039) 1,050,415 Finance costs (177) - (177) ---------------- ------------ --------------- Profit before income tax 1,121,277 (71,039) 1,050,238 Income tax expense (1,785) - (1,785) ---------------- ------------ --------------- Profit for the year 1,119,492 (71,039) 1,048,453 ================ ============ =============== Attributable to Equity shareholders of the Company 1,109,992 (71,039) 1,038,953 Non-controlling interest 9,500 - 9,500 ---------------- ------------ --------------- 1,119,492 (71,039) 1,048,453 ================ ============ =============== Earnings per share RMB RMB RMB - Basic 1.056 (0.068) 0.988 ================ ============ =============== - Diluted 1.050 (0.067) 0.983 ================ ============ =============== Consolidated statement of financial position as at 30 June 2011 Effect of 30 June change in 2011 accounting policy (as previously 30 June reported) 2011 (as restated) RMB'000 RMB'000 RMB'000 ASSETS Non-current assets Property, plant and equipment 1,638,339 - 1,638,339 Land use rights 69,889 - 69,889 Construction-in-progress 70,611 - 70,611 Biological assets 2,055,298 31,199 2,086,497 Intangible assets 53,287 - 53,287 Deposits 114,500 - 114,500 Goodwill 1,157,261 - 1,157,261 ------------------ ------------ --------------- 5,159,185 31,199 5,190,384 ------------------ ------------ --------------- Current assets Biological assets 145,561 - 145,561 Properties for sale 5,830 - 5,830 Inventories 46,407 - 46,407 Trade and other receivables 96,503 - 96,503 Cash and cash equivalents 2,232,203 - 2,232,203 ------------------ ------------ --------------- 2,526,504 - 2,526,504 ------------------ ------------ --------------- Total assets 7,685,689 31,199 7,716,888 ================== ============ =============== EQUITY AND LIABILITIES Equity Share capital 12,030 - 12,030 Reserves 7,523,764 31,199 7,554,963 ------------------ ------------ --------------- Total equity attributable to equity shareholders of the Company 7,535,794 31,199 7,566,993 Non-controlling interest 87,310 - 87,310 ------------------ ------------ --------------- 7,623,104 31,199 7,654,303 ------------------ ------------ --------------- Non-current liability Obligation under finance lease 1,034 - 1,034 ------------------ ------------ --------------- Current liabilities Trade and other payables 58,461 - 58,461 Due to a related party 3,000 - 3,000 Obligation under finance lease 90 - 90 ------------------ ------------ --------------- 61,551 - 61,551 ------------------ ------------ --------------- Total liabilities 62,585 - 62,585 ================== ============ =============== Total equity and liabilities 7,685,689 31,199 7,716,888 ================== ============ =============== Net current assets 2,464,953 - 2,464,953 ================== ============ =============== Total assets less current liabilities 7,624,138 31,199 7,655,337 ================== ============ =============== Consolidated statement of financial position as at 1 July 2010 Effect of 1 July 2010 change in accounting policy (as previously 1 July 2010 reported) (as restated) RMB'000 RMB'000 RMB'000 ASSETS Non-current assets Property, plant and equipment 1,161,437 - 1,161,437 Land use rights 54,841 - 54,841 Construction-in-progress 64,328 - 64,328 Biological assets 1,449,565 102,238 1,551,803 Intangible assets 36,800 - 36,800 ------------------ ------------ --------------- 2,766,971 102,238 2,869,209 ------------------ ------------ --------------- Current assets Biological assets 90,221 - 90,221 Properties for sale 18,497 - 18,497 Inventories 841 - 841 Trade and other receivables 19,629 - 19,629 Cash and cash equivalents 975,074 - 975,074 ------------------ ------------ --------------- 1,104,262 - 1,104,262 ------------------ ------------ --------------- Total assets 3,871,233 102,238 3,973,471 ================== ============ =============== EQUITY AND LIABILITIES Equity Share capital 8,767 - 8,767 Reserves 3,810,687 102,238 3,912,925 ------------------ ------------ --------------- Total equity attributable to equity shareholders of the Company 3,819,454 102,238 3,921,692 ------------------ ------------ --------------- Current liabilities Trade and other payables 44,391 - 44,391 Due to a related party 7,110 - 7,110 Income tax payable 278 - 278 ------------------ ------------ --------------- 51,779 - 51,779 ------------------ ------------ --------------- Total equity and liabilities 3,871,233 102,238 3,973,471 ================== ============ =============== Net current assets 1,052,483 - 1,052,483 ================== ============ =============== Total assets less current liabilities 3,819,454 102,238 3,921,692 ================== ============ =============== 5 TURNOVER
Turnover represented the total invoiced value of goods supplied to customers and completed property units delivered to buyers. The amount of each significant category of revenue recognised in turnover is as follows:
2012 2011 RMB'000 RMB'000 Sales of oranges 1,057,327 962,127 Sales of self-bred saplings 3,344 6,903 Sales of processed fruits 715,473 417,393 Sales of property units - 26,198 1,776,144 1,412,621 ========= ========= 6 SEGMENT INFORMATION
The Group manages its business by lines of business. In a manner consistent with the way in which information is reported internally to the Group's most senior executive management for the purposes of resources allocation and performance assessment. The Group has three reportable segments. The segments are managed separately as each business offers different products and requires different business strategies. The following summary describes the operations in each of the Group's reportable segment:
Agricultural produce - planting, cultivation and sale of agricultural produce
Processed fruits - manufacture and sale of fruit juice concentrates, fruit purees, frozen fruits and vegetables
Others - developing and sale of property units in an agricultural wholesale market and orange processing centre
No inter-segment transactions incurred within the Group companies.
No customer accounted for 10% or more of the total revenue for the both years.
As majority of the Group's non-current assets and revenue are located in/derived from the PRC, geographical information is not presented.
The directors assess the performance of the operating segments based on a measure of reportable segment results. This measurement basis excludes the central other income, expenses and finance costs.
Segment assets mainly exclude goodwill, certain property, plant and equipment, land use rights and other assets that are managed on a central basis. Segment liabilities mainly exclude liabilities that are managed on a central basis.
Agricultural produce Processed fruits Others Total 2012 2011 2012 2011 2012 2011 2012 2011 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 (restated) (restated) RESULTS Reportable segment revenue and revenue from external customers 1,060,671 969,030 715,473 417,393 - 26,198 1,776,144 1,412,621 Reportable segment results 621,600 971,153 203,714 131,845 (3,125) 6,035 822,189 1,109,033 --------- ---------- --------- --------- ------- ------- Unallocated corporate expenses (64,065) (63,073) Unallocated corporate other revenue 6,934 4,278 Profit before income tax 765,058 1,050,238 Income tax expense - (1,785) Profit for the year 765,058 1,048,453 ========= ========== ASSETS Segment assets 5,173,015 4,339,682 1,544,498 1,341,034 79,164 158,962 6,796,677 5,839,678 Unallocated corporate assets 1,513,451 1,877,210 Total assets 8,310,128 7,716,888 --------- ---------- LIABILITIES Segment liabilities (34,047) (40,244) (17,655) (17,268) (2,217) (2,687) (53,919) (60,199) Unallocated corporate liabilities (3,922) (2,386) Total liabilities (57,841) (62,585) ========= ========== OTHER INFORMATION Additions to segment non-current assets 213,099 236,521 149,881 28,197 - - 362,980 264,718 Amortisation of land use rights - - 120 70 1,054 1,054 1,174 1,124 Amortisation of intangible assets 7,760 4,383 2,021 1,179 - - 9,781 5,562 Depreciation 78,252 62,468 42,683 21,320 701 702 121,636 84,490 Loss/(gain) on disposal of property, plant and equipment 7 (46) 4,819 152 - - 4,826 106 Construction-in-progress written off - - 3,351 - - - 3.351 - Interest income 8,618 2,740 - 1,694 329 300 8,947 4,734 Finance charges on obligation under finance lease 90 96 - - - - 90 96 Net gain on change in fair value of biological assets 166,900 507,712 - - - - 166,900 507,712 Share-based payments 9,952 19,569 27,400 11,172 - - 37,352 30,741 ========= ========== ========= ========= ======= ======= ========= ========== 7 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting) the following:
2012 2011 RMB'000 RMB'000 (a) Finance costs Bank charges 56 81 Finance charges on obligation under finance lease 90 96 ------- ------- 146 177 ======= ======= (b) Staff costs (including directors' emoluments) - salaries, wages and other benefits 97,880 73,498 - share-based payments 45,812 47,715 - contributions to defined contribution retirement plans 2,635 1,561 ------- ------- 146,327 122,774 ======= ======= (c) Other items Amortisation of land use rights 1,362 1,312 Amortisation of intangible assets 9,781 5,562 Auditor's remuneration 2,390 1,755 Cost of agricultural produce sold(#) 488,993 384,984 Cost of property units sold - 13,742 Cost of inventories of processed fruits recognised as expenses(##) 494,750 275,293 Depreciation of property, plant and equipment 126,044 94,830 Add: Realisation of depreciation previously capitalised as biological assets 21,822 12,746 Less: Amount capitalised as biological assets (25,955) (22,796) ------- ------- 121,911 84,780 Construction-in-progress written off 3,351 - Exchange losses, net 6,435 10,475 Operating lease expenses - plantation base 9,394 8,641 - properties 1,115 941 Research and development costs 9,255 8,164 Loss on disposal of property, plant and equipment 4,828 148 ======= =======
(#) Cost of agricultural produce sold includes RMB113,974,000 (2011: RMB96,330,000) relating to staff costs, depreciation and operating lease expenses, which amount is also included in the respective total amount disclosed separately above for each of these types of expenses.
(##) Cost of inventories of processed fruits recognised as expenses includes RMB67,667,000 (2011: RMB35,615,000) relating to staff costs, amortisation of land use rights, amortisation of intangible assets and depreciation, which amount is also included in the respective total amount disclosed separately above for each of these types of expenses.
8 INCOME TAX EXPENSE
Income tax expense in the consolidated income statement represents:
2012 2011 RMB'000 RMB'000 Current tax PRC enterprise income tax - Provision for the year - 983 PRC land appreciation tax - Provision for the year - 802 ------- ------- - 1,785 ======= =======
i) Pursuant to the rules and regulations of Bermuda, Cayman Islands and the British Virgin Islands ("BVI"), the Group is not subject to any income tax in Bermuda, Cayman Islands and the BVI.
ii) No Hong Kong profits tax has been provided as the Group did not have assessable profits arising in or derived from Hong Kong.
iii) No PRC enterprise income tax has been provided for 2012 as the Group did not have assessable profit in the PRC during the year. The provision for PRC enterprise income tax for 2011 was based on the respective applicable rates on the estimated assessable income of the Group's subsidiaries in the PRC as determined in accordance with the relevant income tax laws, rules and regulations of the PRC.
According to the PRC tax law, its rules and regulations, enterprises that engage in certain qualifying agricultural business are eligible for certain tax benefits, including full enterprise income tax exemption on profits derived from such business. Certain operating subsidiaries of the Group in the PRC engaged in qualifying agricultural business are entitled to full exemption of enterprise income tax.
The applicable enterprise income tax rate of the Group's other operating subsidiaries in the PRC is 25%.
iv) PRC land appreciation tax is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds of sales of properties less deductible expenses including costs for land use rights and all property development expenses.
v) PRC withholding income tax
Under the PRC tax law, profits of the Group's subsidiaries in the PRC derived since 1 January 2008 is subject to withholding income tax at rates of 5% or 10% upon the distribution of such profits to foreign investors or companies incorporated in Hong Kong, or for other foreign investors, respectively. Pursuant to the grandfathering arrangements of the PRC tax law, dividends receivable by the Group from its PRC subsidiaries in respect of the undistributed profits derived prior to 31 December 2007 are exempt from the withholding income tax. At 30 June 2012, no deferred tax liabilities have been recognised in respect of the tax that would be payable on the unremitted profits of the PRC subsidiaries derived since 1 January 2008 as the Company is in a position to control the dividend policies of the PRC subsidiaries and no distribution of such profits is expected to be declared from the PRC subsidiaries in the foreseeable future.
9 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the following:
2012 2011 RMB'000 RMB'000 Earnings Profit attributable to equity shareholders of the Company used in basic and diluted earnings per share calculation 750,200 1,038,953 ========= ========= Weighted average number of shares '000 '000 Issued ordinary shares at beginning of year 1,215,157 852,650 Effect of shares issued to shareholders participating in the scrip dividend 4,741 3,650 Effect of shares issued upon exercise of share options 4,182 11,352 Effect of shares issued as part of the consideration for acquisition of subsidiaries - 95,344 Effect of shares issued upon placement - 88,219 Effect of shares repurchased and cancelled (3,640) - Weighted average number of ordinary shares used in basic earnings per share calculation 1,220,440 1,051,215 Effect of dilutive potential shares in respect of share options 4,188 6,044 Weighted average number of ordinary shares used in diluted earnings per share calculation 1,224,628 1,057,259 ========= ========= 10 Dividends (i) Dividends payable to equity shareholders of the Company attributable to the year 2012 2011 RMB'000 RMB'000 Interim dividend of RMB0.03 and special dividend of RMB0.02 per ordinary share declared and paid during the year (2011: interim dividend of RMB0.02 per ordinary share) 61,330 24,267 Final dividend of RMB0.13 per ordinary share proposed after the end of the reporting period (2011: final dividend of RMB0.10 and special dividend of RMB0.03 per ordinary share) 158,531 157,970 219,861 182,237 ======= =======
The final and special dividends proposed after the end of the reporting period have not been recognised as liabilities at the end of reporting period.
(ii) Dividends payable to equity shareholders of the Company attributable to the previous financial year, approved and paid during the year
2012 2011 RMB'000 RMB'000 Interim dividend of RMB0.03 and special dividend of RMB0.02 per ordinary share for the year, approved and paid during the year (2011: RMB interim dividend of RMB0.02 per ordinary share) 61,330 24,267 Final dividend of RMB0.10 and special dividend of RMB0.03 per ordinary share in respect of the previous financial year, approved and paid during the year (2011: final dividend of RMB0.10 and special dividend of RMB0.02 per ordinary share) 157,710 104,055 219,040 128,322 ======= ======= 11 TRADE AND OTHER RECEIVABLES
Included in trade and other receivables are trade receivables with the ageing analysis of trade receivables based on invoice date is as follows:
2012 2011 RMB'000 RMB'000 Less than 1 month 28,352 22,262 1 to 3 months 84 4,894 3 to 6 months 291 79 6 to 12 months - 1,240 Over 1 year 104 186 ------- ------- 28,831 28,661 ======= =======
Trade receivables from sales of goods are normally due for settlement within 30 to 45 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:
2012 2011 RMB'000 RMB'000 Neither past due nor impaired 27,529 22,191 ------- ------- Less than 1 month past due 944 5,064 1 to 3 months past due 6 220 3 to 6 months past due 291 87 6 to 12 months past due - 1,024 Over 1 year past due 61 75 ------- ------- Amounts past due but not impaired 1,302 6,470 ------- ------- 28,831 28,661 ======= =======
Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.
Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are considered fully recoverable.
12 TRADE AND OTHER PAYABLES
Included in trade and other payables are trade payables with the ageing analysis of trade payables including amount due to a related party, by invoice date is as follows:
2012 2011 RMB'000 RMB'000 Due within 3 months or on demand 21,246 28,456 Due after 3 months but within 6 months 93 93 Due after 6 months but within 1 year 543 126 Due over 1 year 95 136 ------- ------- 21,977 28,811 ======= ======= Represented by: Trade payables 21,977 25,811 Amount due to a related party - 3,000 ------- ------- 21,977 28,811 ======= ======= 13 Financial Information
The results announcement was approved by the board on 21 September 2012. The financial information has been prepared on a going concern basis in accordance with International Financial Reporting Standards. The accounting policies applied in preparing the financial information are consistent with those adopted and disclosed in the Group's consolidated financial statements for the year ended 30 June 2011, except for the accounting policies changes as detailed in Notes 3 and 4.
The consolidated financial statements for the year ended 30 June 2012will be delivered to the Registrar of Companies following the Company's annual general meeting. The auditors have reported on the consolidated financial statements for the year ended 30 June 2012 and their report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
Other information
DIVIDENDS
The Directors are pleased to recommend the payment of a final dividend of RMB0.13 (2011: final dividend of RMB0.10 and special dividend of RMB0.03) per share on or before 31 December 2012, subject to the approval of the forthcoming annual general meeting ("AGM") on 6 November 2012. The final dividend, together with the interim and special dividends of RMB0.03 (2011: RMB0.02) and RMB0.02 (2011: Nil) per share, will make a total of RMB0.18 (2011: RMB0.15) per share for the whole year ended 30 June 2012. The actual translation rate for the purpose of dividend payment in sterling and HK Dollar will be referenced to exchange rate on 13 November 2012.
Only shareholders thatappear on the Company's register of members at the close of business on the record date of 9 November 2012 will be qualified for the proposed dividend, with an ex-dividend date of 8 November 2012 and 7November 2012 on HKEx and London Stock Exchange PLC respectively.
In order to qualify for receiving the final dividend, shareholders registered on the Hong Kong branch register of the Company are reminded to ensure that all transfers of shares, accompanied by the relevant share certificates and transfer forms, must be lodged with the Company's branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong for registration not later than 4:30p.m. on 9 November 2012.
The shareholders will receive their cash dividends in sterling or HK Dollar. It is also intended that the scrip dividend alternative to the cash dividend will be offered during 2012. A document providing further details of the Scrip Dividend Scheme will be sent to shareholders in due course.
PURCHASE, SALE OR REDEMPTIONS OF THE COMPANY'S LISTED SECURITIES
During the year ended 30 June 2012, the Company repurchased 10,950,000 ordinary shares of HK$0.01 on the HKEx at an aggregate consideration of HK$52,065,380 before expenses. Out of the 10,950,000 repurchased shares, 10,455,000 repurchased shares were cancelled during the year, and the remaining 495,000 repurchased shares were cancelled subsequent to the year end date. The repurchases were effected by the Board for the enhancement of shareholder value in the long term. Details of the repurchases are as follows:
Purchase consideration No. of per share Aggregate shares Highest Lowest Consideration Month of purchase purchased price paid price paid paid HK$ HK$ HK$ October 2011 2,000,000 5.20 5.09 10,362,420 November 2011 1,500,000 5.00 4.69 7,271,270 February 2012 1,161,000 4.60 4.43 5,272,830 March 2012 1,452,000 5.65 4.65 7,768,190 April 2012 1,301,000 5.49 4.64 6,488,420 May 2012 1,963,000 4.76 3.82 8,294,330 June 2012 1,573,000 4.38 3.91 6,607,920 ---------- ------------- Total 10,950,000 52,065,380 ========== =============
On 23 November 2011, 885,000, 1,502,000, 660,000 and 3,892,000 ordinary shares of HK$0.01 were issued at the exercise price of GBP0.112, GBP0.2045, GBP0.2425 and GBP0.139 respectively upon exercise of a total of 6,939,000 share options under the Share Option Scheme.
On 30 December 2011, 9,456,219 ordinary shares of HK$0.01 were issued at the price of HK$5.358 per share to shareholder participating in the scrip dividend.
Saved as disclosed above, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the year ended 30 June 2012.
Code on corporate governance practices
The Company is committed to the principles of corporate governance and corporate responsibility consistent with prudent management. It is the belief of the Board that such commitment will in the long term serve to enhance shareholders' value.
During the year ended 30 June 2012, the Directors, where practicable, for an organisation of the Group's size and nature sought to comply with the Combined Code. The Combined Code is the key source of corporate governance recommendations for UK listed companies. It consists of principles of good governance covering the following areas: (i) Leadership; (ii) Effectiveness; (iii) Accountability; (iv) Remuneration; and (v) Relations with shareholders.
In connection with the listing of the Company on the HKEx in November 2009, the Company adopted the code provisions set out in the Code on Corporate Governance Practices ("Old Code") contained in Appendix 14 to the Rules Governing the Listing of Securities on the HKEx ("Hong Kong Listing Rules") as its code on corporate governance practices on 17 November 2009. On 23 February 2012, the Company also adopted the code provisions set out in Corporate Governance Code and Corporate Governance Report ("New Code") contained in amended Appendix 14 to the Hong Kong Listing Rules which took effect on 1 April 2012 as its additional code on corporate governance practices. The Company has complied with the applicable Code Provisions as set out in the Old Code (for the period from 1 July 2011 to 31 March 2012) and the New Code (for the period from 1 April 2012 to 30 June 2012) except the deviations set out below:
Code Provision A.2.1
The roles of Chairman and Chief Executive Officer are performed by the same individual, Mr. Tong Wang Chow, and are not separated. The Board meets regularly to consider issues related to corporate matters affecting operations of the Group. The Board considers the structure will not impair the balance of power and authority of the Board and the Company's management and thus, the Board believes this structure will enable effective planning and implementation of corporate strategies and decisions.
Code Provision A.5.1
The Companies does not have the Nomination Committee. The Directors does not consider that, given the size of the Group and stage of its development, it is necessary to have a Nomination Committee, however, this will be kept under regular review by the Board. The Board as a whole regularly reviews the plans for orderly succession for appointments to the Board and its structure, size and composition. If the Board considers that it is necessary to appoint new Director(s), it will set down the relevant appointment criteria which may include, where applicable, the background, experience, professional skills, personal qualities, availability to commit to the affairs of the Company and, in case of Independent Non-Executive Director, the independence requirements set out in the Hong Kong Listing Rules from time to time. Nomination of new Director(s) will normally be made by the Executive Directors and subject to the Board's approval. External consultants may be engaged, if necessary, to access a wider range of potential candidate(s).
DIRECTORS' SECURITIES TRANSACTIONS
In connection with the listing of the Company on the HKEx in November 2009, the Company adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 of the Hong Kong Listing Rules as its own code of conduct regarding securities transactions by the Directors on 17 November 2009. Having made specific enquiry, the Company confirmed that all Directors have complied with the required standard set out in the Model Code for the year under review.
AUDIT COMMITTEE
The Audit Committee comprises three Independent Non-Executive Directors. Mr. Ma Chiu Cheung Andrew acts as Chairman of the committee with Mr. Nicholas Smith and Mr. Yang Zhen Han act as members. The arrangement of Audit Committee is in compliance with Rule 3.21 of the Hong Kong Listing Rules.
The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group, and discussed auditing, internal control and financial reporting matters including the review of the Company's audited consolidated financial statements for the year ended 30 June 2012.
PUBLICATION OF ANNUAL REPORT
The annual report will be published on the respective websites of the Company (www.asian-citrus.com) under the investor relations section and the HKEx (www.hkex.com.hk) in due course.
BY ORDER OF THE BOARD
Asian Citrus Holdings Limited
Tong Wang Chow
Chairman
Hong Kong, 21 September 2012
As at the date of this announcement, the Board comprises five Executive Directors, namely Mr. Tong Wang Chow, Mr. Tong Hung Wai, Tommy, Mr. Cheung Wai Sun, Mr. Pang Yi and Mr. Sung Chi Keung; two Non-Executive Directors, namely Mr. Ip Chi Ming and Hon Peregrine Moncreiffe and four Independent Non-Executive Directors, namely Mr. Ma Chiu Cheung, Andrew, Mr. Nicholas Smith, Mr. Yang Zhenhan and Dr. Lui Ming Wah, SBS JP.
* For identification purpose only
This information is provided by RNS
The company news service from the London Stock Exchange
END
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