11th Aug 2014 08:50
LONDON (Alliance News) - Shares in Asian Citrus Holdings Ltd dropped Monday after the orange plantation company said it will book around CNY36 million in impairment losses, due to damage caused by Typhoon Rammasun which hit Southern China last month, and as a result will miss profit expectations for the financial year just ended.
The Chinese citrus fruit producer said the the typhoon had caused widespread damage in Guangxi, China, where its Hepu Plantation is located.
"Whilst the board of directors expects turnover for fiscal year 2014 to be broadly in line with current market expectations... the core net profit will now be lower than current market expectations," the company said.
The company's "core net profit" refers to its profit excluding the change in the carrying value of goodwill, change in the fair value of biological assets and share-based payments.
Last month, Asian Citrus said the damage in the area was significant and it would take some time for the group to assess the physical and financial losses caused by the storm.
In a statement Monday, Asian Citrus said the typhoon destroyed 221,769 banana trees planted at its Hepu plantations, meaning there will be no harvest in September. It also said damage has been caused to certain farmland infrastructure and machinery and buildings, and its Beihai Juice Concentrates factories have had to temporarily suspend activity at two of its production plants.
The company said the typhoon also caused a significant volume of fruit to pre-mature drop from its existing oranges trees in the Hepu plantation, which will result in decreased production yield for the upcoming winter and summer crops in the financial year of 2015.
Asian Citrus said the damage to its assets is expected to be around CNY36 million, which it will book as impairment losses for the year ended June 30, 2014.
The company said it will also book a "material impairment loss" in respect of goodwill on the acquisition of Beihai Juice Concentrates, which it acquired in November 2010 for CNY1.97 billion.
"The group's insurance policy does not cover damage from natural disasters and as such there will be no reimbursement of the losses incurred from the Typhoon. The board will review its insurance cover to ensure it is appropriate going forward," the company said.
Asian Citrus shares dropped more than 10% after the company's announcement Monday morning, but have since recovered, now down 5.7% at 11.55 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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