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AGRIBUSINESS | Tony Chua, Hong Kong

Asian Citrus profit up 89.6% to RMB1.11bn

The group mulls diversification of its agricultural business into the production of tropical fruits that will ensure better utilization of the existing distribution network for fresh fruits.

Asian Citrus Holdings Limited (“Asian Citrus”), the largest orange producer and plantation owner and tropical fruit juice concentrates producer in the PRC, achieved remarkable results with profit attributable to shareholders surging by 89.6% to RMB1,110.0 million (2010: RMB585.5 million), representing a net profit margin of 78.6% for the year ended 30 June 2011. The Group’s revenue was also up by 73.9% to RMB1,412.6 million (2010: RMB812.5 million).

The significant increase in profit attributable to shareholders was mainly due to the increase in production volume of oranges, the increase in average selling price of oranges in different plantations year-on-year, the results of Beihai BPG having been consolidated into the Group after the completion of acquisition of 92.94% equity interest of Beihai BPG by the Group on 30 November 2010 and the net gain on change in fair value of the biological assets.

During the year under review, the Group’s basic earnings per share increased by 43.2% to RMB1.06 cents (2010: RMB0.74 cents). The Group continued to maintain a strong financial position with net cash balances amounting to RMB2,232.2 million (2010: RMB975.1 million) as at 30 June 2011. The Board of Directors proposed payment of a final dividend of RMB0.10 and a special dividend of RMB0.03 (2010: RMB0.10; special dividend of RMB0.02) per share. Together with an interim dividend of RMB0.02 (2010: Nil) per share already paid, the total dividend for the year amounted to RMB0.15 (2010: RMB0.12) per share, representing a payout ratio of 35.6%, according to an Asian Citrus report.

Mr Tony Tong, Chairman and Chief Executive Officer of Asian Citrus, said, “Benefitting from the expanding direct sales to supermarkets, increasing production volume of fresh oranges from our plantations, in addition to the significant revenue and profit contribution from Beihai BPG, we are pleased to achieve another highly successful year in FY2011. By developing a stronger company with more vertical integration, we are well positioned to exploit existing opportunities in the fast growing fruit and juice industry sectors in the PRC”.

Looking ahead, the Group aims to increase its production of high quality citrus fruit through organic growth in harvest from its existing plantations, the potential acquisition of high quality and sizeable citrus plantations in the PRC and the ongoing saplings programme with local farmers. This strategy would enable the Group to source high-quality oranges without major capital expenditure. Apart from fresh citrus products, the Group is considering the diversification of its agricultural business into the production of tropical fruits which will ensure better utilization of the existing distribution network for fresh fruits and, at the same time, enhance synergies with Beihai BPG. The diversity would build on the Group’s successful track record and expertise in the agricultural industry and extensive distribution network for fresh products.

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