TIDMACHL
RNS Number : 9508G
Asian Citrus Holdings Ltd
11 August 2016
For immediate release 11 August 2016
Asian Citrus Holdings Limited
("Asian Citrus" or the "Company", together with its subsidiaries
(the "Group"))
Trading Update and
Date of Board Meeting
Trading Update
The Company announces the following business update of the
Group.
Summer Orange Crop of Hepu Plantation
The Company announces that the actual summer orange crop yield
of the Group's Hepu Plantation for the current period was
approximately 16,370 tonnes (Financial Year ended 30 June 2015:
19,132 tonnes). This was in line with the tonnage indication of
16,370 tonnes provided in the Summer Orange Crop statement on 30
March 2016.
Business cooperation arrangements with independent growers in
Hepu Plantation
The Company announced on 18 May 2016 that it was in the process
of implementing certain operational changes at Hepu Plantation,
including various forms of cooperation arrangement with growers in
the region. The Company is pleased to report that, as at the date
of this announcement, the Group has successfully entered into 19
business cooperation agreements with independent farmers and an
agriculture company with various contract periods from 1 year to 25
years, pursuant to which (i) the independent farmers/agriculture
company undertake to produce certain farm products, such as
oranges, bananas, canes, lychee, etc., in specific areas of Hepu
Plantation based on the quality standards and production
requirements as stipulated in the business cooperation agreements;
and (ii) the Group agrees to support the farmers and the
agriculture company through land preparation as well as providing
technical services and production advice.
Pursuant to the business cooperation agreements, each of the
independent farmers and agriculture company is responsible for the
costs of raw materials and overheads during the contract period and
will pay the Group an annual fee based on (i) a fixed fee per mu in
respect of land occupied, (ii) a fixed fee per tonne of the crop
harvested each year and/or (iii) a profit sharing basis. The Group
will continue to be responsible for the maintenance of land,
property, plant and equipment of Hepu Plantation.
The board of directors of the Company (the "Board") believes
that the above cooperation arrangements with the independent
farmers and the agriculture company will diversify the operating
risk and enhance the operational efficiency of Hepu Plantation,
thus improving the financial performance of the plantation and
providing a more stable return to the Group in the long run.
As part of the business cooperation arrangements, the Group
removed 619,213 orange trees with relatively low production yield
for land preparation ("Tree Removal") and it is currently estimated
that the Group will report a write-off of biological assets and a
provision for impairment losses on capitalised planting costs for
Tree Removal of approximately RMB150 million for the financial year
ended 30 June 2016 ("FY2016").
Financial update of the Group
The total annual production volume of oranges for the Group
decreased from approximately 130,215 tonnes for the financial year
ended 30 June 2015 ("FY2015") to about 31,935 tonnes for FY2016,
which represents a decrease of approximately 75.5%.
The processed fruits business, which involves the manufacture
and sale of fruit juice concentrates, purees and frozen fruits and
vegetables, has recorded production tonnage volumes lower than the
first half year and suffered from continued margin pressure.
The core net loss(#) for the second half year is expected to
slightly improve compared to the core net loss(#) of approximately
RMB522 million for the first half year. The closure of Xinfeng
Plantation in December 2015 reduced the margin impact of decreasing
production yield and increasing costs resulting from the widespread
of Huanglongbing disease suffered at the plantation in the first
half year. The full year result for FY2016 is anticipated to be
significant worse off than that in FY2015 as reflected in
previously announced factors impacting the Group's financial
performance.
As announced on 29 December 2015 and 18 May 2016 respectively
("Cessation of Operation"), Xinfeng Plantation and Hunan Plantation
have ceased operations. The impairment losses and provisions
relating to Cessation of Operation reported for FY2016 were
approximately RMB2,220 million. In addition, the Group is expected
to record impairment losses and provisions for Tree Removal of
approximately RMB150 million, as disclosed above. The assessment of
the net change in fair value of biological assets for FY2016 is
still under review. The Board wishes to emphasis that the
impairment losses and provisions relating to Cessation of Operation
and Tree Removal and the net change in fair value of biological
assets are non-operational and do not have any effect on cash flow
of the Group.
The Board further announces that, pursuant to Rule 13.09(2) of
the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited and the Inside Information Provisions under
Part XIVA of the Securities and Futures Ordinance (Chapter 571 of
the Laws of Hong Kong), based on the preliminary assessment of the
unaudited financial information and management accounts of the
Group for FY2016, it is anticipated that the Group's turnover for
FY2016 will be lower and the core net loss(#) for FY2016 will be
significantly higher than the comparative figures for FY2015(&)
. This outturn reflects the impact of events highlighted in this
and previous trading updates.
The information contained in this announcement is based only on
the preliminary assessment of the unaudited financial information
and management accounts of the Group for FY2016 currently available
to the Board. The audit which is being conducted by the auditor of
the Company has not yet been completed and the management accounts
may still be subject to adjustments.
Date of Board Meeting
The Board also announces that a meeting of the Board will be
held on 28 September 2016, for the purposes of, amongst other
matters, considering and approving the final results of the Group
for FY2016 for publication. The annual results of the Group for
FY2016 are expected to be published on 28 September 2016.
Shareholders and potential investors are advised to refer to
details in the annual results announcement of the Company for
FY2016 which is expected to be published on or about 28 September
2016.
(#) Core net loss refers to loss of the Group for the year
excluding change in fair value of biological assets, impairment
loss and provisions relating to Cessation of Operation and Tree
Removal, impairment of property, plant and equipment, impairment of
intangible assets and share-based payments.
(&) During the year ended 30 June 2015, turnover was
approximately RMB962.7million.
For further enquiries please contact:
Asian Citrus +852 3951 0000
Emma Ng (Chief Financial Officer and Company
Secretary)
Cantor Fitzgerald Europe (NOMAD +44 (0) 20 7894
and Broker) 7000
Rick Thompson/David Foreman/Michael Reynolds
(Corporate Finance)
+44 (0) 20 7067
Weber Shandwick Financial 0700
Nick Oborne, Stephanie Badjonat, Tom Jenkins
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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