12th Mar 2008 12:22
Asian Citrus Holdings Ltd12 March 2008 12 March 2008 Asian Citrus Holdings Limited ("Asian Citrus" or "the Group") Trading Update Asian Citrus, the largest orange plantation owner and operator in China,announces the following Trading Update for the current year to 30 June 2008. Theinterim results to 31 December 2007 are due to be published on Tuesday 18 March2008, but the Board believes a number of factors since January 2008 will meanthat pre-tax profits for the full year is likely to be below the level achievedfor the year ended June 2007. The impact of this will be mitigated at theearnings level by government changes to tax law which, the Board believes, willmean that from 1 January 2008, Asian Citrus will be exempt from enterpriseincome tax. The most significant factor behind the reduced expectations is that managementhas accelerated the replanting programme at the established Hepu Plantation.Following successful trial replanting of around 55,000 winter orange trees (4%of the Hepu plantation) in the year to June 2007, the Group initiated a widerreplanting programme in the current year. Since January 2008, around 76,000summer orange trees (6% of the Hepu plantation) were removed and the landreplanted with a similar number of new species. The ongoing replanting strategyis currently under review but is expected to equate to approximately 5% of totaltrees in the Hepu plantation per annum and it will be principally focused aroundreplanting the winter orange trees. The replanting programme will bring longterm benefits as the new trees will have stronger resistance to disease and willproduce a higher yield, but in the short term the replanting will produce loweryields and thus reduce output in the current year. In addition, the exceptional cold weather in China during January and February2008 has affected the Group's current sales by slightly impacting the quality ofthe Group's harvest and causing short term oversupply as local farmers, whocould not get their produce to customers, stored crops which have now beenreleased to the market. As a result the Group has not been able to increase theproportion of sales to supermarkets, or increase prices, as much as originallyexpected. At the Xinfeng plantation, costs have been above expectations due to higherfertiliser usage and earlier than expected completion of the plantation. Finally, Phase 1 of the agricultural wholesalers' market and orange processingcentre at the Xinfeng Development has been substantially completed and asignificant number of units have already been sold. However, tighter creditconditions in China and the exceptional cold weather have slowed completionrates and sales. This is likely to impact and delay the remaining sales from andthe profitability of this development. While pre-tax profits for the full year will be adversely affected by thefactors outlined above, changes to the Enterprise Income Tax ("EIT") Law of thePeople's Republic of China will, with effect from 1 January 2008, mean thatincome derived by an enterprise engaging in the growing of fruits shall beexempt from EIT. As the Group's core business is the growing of oranges, it isexpected that the Group's income from growing and selling oranges will be exemptfrom EIT from 1 January 2008 onwards subject to confirmation with the local taxbureau. This will have a positive impact on the Group's overall earningsperformance for the current year and future years. About Asian Citrus Asian Citrus is the largest orange plantation owner and operator in China andhas two plantations in the Hepu county of the Guangxi Zhuang Autonomous Regionand the Xinfeng county of the Jiangxi province of China. Its primary goal is tosell quality oranges at an affordable price and in so doing, strengthen itsposition as a leading, mechanised and industrialised orange grower anddistributor in China. For Further Information Contact: Terry Garrett/ John Moriarty/ Charlie HooperWeber Shandwick Financial 0207 067 0700 James MitfordJPMorgan Cazenove 0207 588 2828 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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