TIDMACHL

RNS Number : 2838Q

Asian Citrus Holdings Ltd

26 February 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

ASIAN CITRUS HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: HKSE: 73; AIM: ACHL)

ANNOUNCEMENT OF THE INTERIM RESULTS

FoR THE SIX MONTHS ENDED 31 DECEMBER 2015

The board of directors (the "Board") of Asian Citrus Holdings Limited (the "Company" or "Asian Citrus") announces the unaudited consolidated results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 31 December 2015 together with its comparative figures for the six months ended 31 December 2014.

Results Highlights

 
                                                                      For illustration 
                                          Six months ended                  only 
                                            31 December               Six months ended 
                                                                         31 December 
                                            2015       2014            2015           2014 
                                         (RMB m)    (RMB m)            (GBP      (GBP m**) 
                                                                       m**) 
 
Reported financial information 
Revenue                                    387.2      584.4            39.9           60.5 
Gross loss                                -440.7     -132.9           -45.4          -13.8 
EBITDA                                  -1,515.8     -152.6          -156.1          -15.8 
Loss attributable to shareholders       -1,616.3     -236.4          -166.5          -24.5 
Basic loss per share                    -RMB1.29   -RMB0.19          -13.3p          -2.0p 
 
Adjusted core financial information# 
EBITDA                                    -421.7     -109.2           -43.4          -11.3 
Loss before tax                           -527.8     -191.9           -54.4          -19.9 
Loss attributable to shareholders         -522.1     -193.0           -53.8          -20.0 
Basic loss per share                    -RMB0.42   -RMB0.15           -4.3p          -1.6p 
 
 

(*) For identification purpose only

** Conversion at GBP1 = RMB9.71 and RMB9.66 for the six months ended 31 December 2015 and 2014 respectively for reference only.

# Adjusted core financial information refers to activities for the period excluding change in fair value of biological assets, impairment of biological assets, impairment of property, plant and equipment, impairment of intangible assets and share-based payments.

RESULTS HIGHLIGHTS (Continued)

l Results of operations for the first half year are as follows:

- Total orange production decreased by 86.0% to 15,565 tonnes due to (i) the dramatic impact of the Huanglongbing disease infection at Xinfeng Plantation; and (ii) the impact of poor weather in Hepu area (six months ended 31 December 2014: 110,993 tonnes).

- Revenue down by 33.7% to RMB387.2 million (six months ended 31 December 2014: RMB584.4 million).

- Adjusted core loss attributable to shareholders of RMB522.1 million (six months ended 31 December 2014: RMB193.0 million) reflecting (i) the reduction in production volume and average selling price of winter oranges; (ii) the additional cost of pesticides to prevent the spread of the Huanglongbing disease and protect the unaffected orange trees; and (iii) the reduction in profit margin of the processed fruit business.

- Net operating activities cash outflow of RMB223.8 million (six months ended 31 December 2014: RMB70.5 million) and cash and cash equivalents of RMB521.4 million as at 31 December 2015 (31 December 2014: RMB1,528.2 million).

l Xinfeng Plantation is no longer economically productive due to the massive infection of Huanglongbing disease and the present uncertainties over the effectiveness of the control measures to prevent the spread of Huanglongbing disease. It ceased operations permanently after completion of the winter orange harvest in December 2015.

l In view of the Group's net loss for the period, the Board does not recommend the payment of any interim dividend for the six months ended 31 December 2015 (six months ended 31 December 2014: Nil).

 
 For further enquiries please contact: 
 
  Asian Citrus                                      +852 3951 0000 
 Emma Ng (Chief Financial Officer and Company 
  Secretary) 
 
                                                 +44 (0) 20 7894 
 Cantor Fitzgerald Europe (NOMAD and Broker)      7000 
 Rick Thompson / David Foreman / Michael 
  Reynolds (Corporate Finance) 
 
                                                 +44 (0) 20 7067 
 Weber Shandwick Financial                        0700 
 Nick Oborne, Tom Jenkins 
 

CHAIRMAN'S STATEMENT

On behalf of the Board, I wish to report to you the developments of the Group for the six months ended 31 December 2015, as well as our plan and outlook for the year ending 30 June 2016 and beyond.

The operating environment of the Group has been difficult in the past few years with adverse weather conditions and the devastating effects of Huanglongbing disease posing significant challenges to the business and financial operations of the Group. We suffered significant losses resulting from decreasing production yields and increasing margin pressures in our Hepu Plantation and Xinfeng Plantation during the six months ended 31 December 2015. Xinfeng Plantation was shut down after the winter harvest in December 2015 as a consequence of the widespread Huanglongbing disease suffered at the plantation leading to substantial impairment losses and provisions relating to the cessation of operation.

The processed fruit business, which involves the manufacture and sale of fruit juice concentrates, purees and frozen fruit and vegetables also reported a loss for the first half year as a result of lower utilisation rates and the increased cost of materials.

While it is still early in the financial year to fully judge the full impact of the challenges highlighted above on the Group's likely full year performance, we anticipate that conditions in the second half will continue to be demanding.

With that in view, we have promptly adjusted our business strategies and will actively consolidate our business. We shall focus on improving efficiency and utilisation of all our assets as well as the implementation of the cost control program to reduce the operating costs of the Group. All these measures will enable the Group to reallocate its resources to strengthen its core operations and improve its operational efficiency and profitability.

Moving forward, the Group will seek to identify attractive investment and acquisition opportunities, so as to enhance profitability and maximise our shareholders' value. We keep an open mind when exploring new opportunities, but will only invest in high potential projects on a selective and prudent basis, without compromising the financial stability of the Group.

Given the result of the first half year, the Board has decided not to pay an interim dividend. Our existing dividend policy, which stipulates a dividend of not less than 30% of our adjusted core net profit, remains unchanged.

Finally, I would like to take this opportunity to express my heartfelt gratitude to my fellow directors, management and all staff for the hard work and dedication in supporting the development of the Group, and the shareholders for their continuing support and confidence in the Group.

Ng Ong Nee

Chairman

26 February 2016

MANAGEMENT DISCUSSION AND ANALYSIS

OPERATING PERFORMANCE

Revenue

The breakdown of revenue by type is as follows:

 
                                              For the six months ended 31 December 
                                             2015                                2014 
                                              % of                            % of 
                                   RMB'000    total revenue      RMB'000        total revenue 
 
Hepu Plantation                    10,783     2.8%               16,165       2.8% 
Xinfeng Plantation                 25,996     6.7%               324,834       55.6% 
                                   --------   -------------      -------      --------------- 
 
  Sales of oranges                 36,779     9.5%               340,999      58.4% 
 
Sales of processed fruit           331,160    85.5%              243,398      41.6% 
 
 Sales of bananas                  18,656     4.8%               -            - 
 
 Sales of self-bred 
  saplings                         564        0.2%               -            - 
 
Total revenue                      387,159    100.0%             584,397      100.0% 
                                   --------   -------------      -------      --------------- 
 
 
 

Sales of oranges

Revenue from the sale of oranges decreased by approximately 89.2% to RMB36.8 million for the six months ended 31 December 2015. This was mainly due to a decrease of approximately 86.0% in the production yield to 15,565 tonnes (six months ended 31 December 2014: 110,993 tonnes) and an approximate decrease in average selling price of 23.0%.

The production yield from Hepu Plantation decreased by approximately 34.6% from 7,146 tonnes for the corresponding period of last year to 4,671 tonnes for the six months ended 31 December 2015. The decrease in production was mainly due to the impact of poor weather.

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