HONG KONG, Feb. 26, 2013 /PRNewswire/ --
Financial Highlights
| For the six months ended 31 Dec | |||
| RMB ('million) | 2012 | 2011 | Change (%) |
| Revenue | 892.0 | 1,043.4 | -14.5 |
| Gross Profit | 289.5 | 406.3 | -28.7 |
| Gross Profit Margin | 32.5% | 38.9% | |
| Net Profit | 212.4 | 397.5 | -46.6 |
| Core Net Profit* | 249.5 | 332.7 | -22.7 |
| Core net profit per share (RMB) | 0.20 | 0.27 | -25.9 |
| Total dividends per share (RMB) | 0.05 | 0.05 | - |
*Core net profit refers to profit for the period excluding net change in fair value of biological assets and share-based payment.
Asian Citrus Holdings Limited (HKEx stock code: 73, the "Group" or "Asian Citrus") announces its Interim Results for the six months ended 31 December 2012. The Group's revenue in the reporting period decreases 14.5% to RMB892.0 million (2011: RMB1,043.4 million).
In the reporting period, the Group's core net profit amounted to RMB249.5 million (2011: RMB322.7 million), representing a decrease of 22.7% mainly due to a higher production cost. The unstable weather and persistent heavy rainfall from April to August in 2012 contributed notably to the production cost. Fertilizers and pesticides were washed away and had to be applied in greater quantities to ensure healthy growth of the orange trees. The trend of general wage in China also factored in the higher cost. At both plantations, labour costs rose from RMB32.5 million to RMB41.9 million in the reporting period, a rise of 28.9%.
For the six months ended 31 December 2012, the Group recorded a loss of RMB23.0 million from a net change in fair value of biological assets, compared with a gain of RMB 100.6 million for the last six months of 2011. The loss on change in fair value of biological assets does not reflect the quality of the Group's biological assets, and has no effect on the cash flow. As of 31 December 2012, the Group has a cash and cash equivalents of RMB2,374.4 million.
The Board of Directors declares an interim dividend of RMB0.03 (2011: RMB0.03) and a special dividend of RMB0.02 (2011: RMB0.02) per share.
The Board continued the share repurchase programme to enhance its shareholder value. During the reporting period, the Group repurchased and cancelled 10,649,000 ordinary shares of HK$0.01 at an aggregate consideration of HK$38,387,280 before expenses.
Plantation Business
During the reporting period, the Group's two operating plantations -- Hepu Plantation in Guangxi Zhuang Autonomous Region and Xinfeng Plantation in Jiangxi Province -- experienced a decrease in total production volume of approximately 6.0% to 161,233 tonnes. Turnover from the sale of oranges also decreased by 6.8% to RMB600.2 million. Among which, the decline in production volume was most pronounced at Hepu Plantation, where production dropped by 26.9% to 32,838 tonnes, as compared with 44,906 tonnes for the same period in the previous year. This was due to the on-going replanting programme that commenced in 2007, with the removal and replacement of 66,449 winter orange trees with the same number of summer orange trees in last year. There are currently about 48,000 winter trees at the Hepu Plantation to be replaced and replanted and the programme will be completed by June 2013. The first and second batch of 55,185 and 76,135 orange trees replanted in 2007 and 2008 respectively have begun to produce oranges. The third batch of 81,261 orange trees replanted in 2009 is expected to commence its first crop in summer 2013. The later batches of replanted trees are expected to commence production in the coming few years and thus increase the production volume of summer orange trees in Hepu Plantation.
The drop in production volume at the Hepu Plantation was offset slightly by the rise in production volume of winter oranges at the Xinfeng Plantation, which increased by 1.3% to 128,395 tonnes (2011: 126,702 tonnes). The orange trees in this plantation continue to mature and are anticipated to further increase the production volume as these trees approach their full yield potential. The Group developed its third plantation in Hunan province in 2007. During the period, it has undergone planting of more than 129,000 summer oranges, which adds up to a total of nearly 1.2 million planted trees in the new plantation. Another approximately 600,000 summer orange trees are expected to be planted before December 2013. It is expected that the first harvest from this plantation will take place in 2014.
Asian Citrus has been selling its graded oranges under the Royal Star brand directly to supermarket chains in China. The Group's contract with an international supermarket chain and a national supermarket chain has been proceeding as anticipated. Asian Citrus started by selling its summer oranges to these chains in Guangxi only, and is now also expanding its network to their outlets in Guangdong, Zhejiang and Shanghai with its branded winter oranges. This is a tremendous vote of confidence for its Royal Star brand.
Juice Processing Business
Turnover from the sale of processed fruits by Beihai BPG decreased by 26.9% to RMB290.2 million in the reporting period. The decrease was driven by de-stocking of pineapple juice concentrate among producers in Thailand and the Philippines, the world's two largest producer. Also, the unstable weather and persistent heavy rainfall in 2012 limited the supply of several types of fruit for juice processing during the period. The de-stocking ended in August and price has been picking up slightly from September 2012. While the overall selling price for 2012 was therefore lower than the corresponding period in 2011, the Group has seen the price recovery continue into 2013.
To increase its overall production capacity, Asian Citrus is building a third plant in Baise City, Guangxi, with an annual output capacity of approximately 40,000 tonnes. The construction has now been substantially completed and trial production began in December 2012 as expected. Formal production will commence by April 2013 as scheduled.
Asian Citrus is also considering to diversify into processing other agriculture produces such as corn and red beans to maximise the utilisation of its plants at times when fruit supply is limited or adversely affected by weather.
Business Outlook
The Group's second half performance will reflect the price achieved for the Group's summer orange crop, the selling price of pineapple juice concentrates and the impact of weather on the volume of fertilisers and pesticides used by the Group. In this respect, the Group expects that orange prices will rise, albeit slightly, responding to the inflationary environment and the forecasts for China's economy, which the World Bank has predicted to expand by 8.4% in 2013 and the Group is also optimistic that juice prices will continue to increase throughout the balance of the year. While the Group cannot predict the weather, a repeat of the unhelpful conditions in 2012 would be both highly unusual and unexpected.
Looking forward, Mr. Tony Tong Wang Chow, Chairman and CEO of Asian citrus, commented, "Although our performance during the reporting period was disappointing, our fundamentals remain strong. Our oranges continue to be well received by customers, and our plans for a third juice processing plant in Guangxi and a third plantation in Hunan are still on track to commence operation in 2013 and 2014 respectively. Looking forward, I am confident that our results will improve and bring return to our shareholders."
About Asian Citrus
Asian Citrus Holdings Limited was founded in 2000 and has been trading on the AIM market of London Stock Exchange since 2005. The Group was dual-listed on the Main Board of the Stock Exchange of Hong Kong in November 2009. As the single largest orange producer and plantation owner in the PRC, the Group owns and operates three orange plantations with a total area of approximately 103 sq.km., including Hepu, Xinfeng and Hunan Plantations located in the Guangxi Zhuang Autonomous Region, and Jiangxi and Hunan Provinces respectively. The Group cultivates two types of high quality organic oranges, namely Winter Oranges and Summer Oranges, the species of which mostly originated from the US and the Group sells to supermarket chains, corporate customers, wholesalers and sole proprietors covering major cities and provinces within the PRC. The Group use premium brand "Royal Star" for its products which has been accredited as an Organic Products by China Organic Food Certification Centre. The Group's Beihai Perfuming Garden Juice Company Limited is a leading producer and wholesaler of tropical fruit juice concentrate in the PRC, with key customers being beverage mixers supplying major beverage groups.
