TIDMAFG
RNS Number : 0014L
Aquatic Foods Group PLC
28 September 2016
Press Release 28 September 2016
Aquatic Foods Group Plc
("Aquatic Foods" or "AFG" or the "Group" or the "Company")
Interim Results
Aquatic Foods Group Plc (AIM: AFG), a leading Chinese marine
foods and seafood processor and producer supplying to export and
local markets, today announces its unaudited results for the six
months ended 30 June 2016.
Financial Highlights
-- Revenue decreased by 5.6% to RMB 419 million (H1 2015: RMB
444 million) although volumes, particularly in the Company's
principal fish products, have increased albeit against lower
margins
-- Overall gross margin has stabilised at 24.5% during H1 2016
(Q2 2016 aggregate gross margin of 24.5% compared with 24.5% in Q1
2016) although still significantly lower than in the first half of
2015 (33.0%)
-- Aggregate gross profit decreased by 30.0% to RMB 103 million (H1 2015: RMB 147 million)
-- Profit before tax decreased by 51.3% to RMB 49 million (H1 2015: RMB 101 million)
-- Net profit after tax decreased by 51.6% to RMB 38 million (H1 2015: RMB 78 million)
-- Earnings per share of RMB 0.33 (H1 2015: RMB 0.70)
-- Cash as at 30 June 2016 was RMB 417 million (as at 30 June 2015: RMB 367 million)
-- Interim dividend of 0.2p a share (2015 interim dividend 0.7p)
reflecting the more challenging trading environment
-- 51 regional distributors as at 30 June 2016 (H1 2015: 51)
Li Xianzhi, Chief Executive of Aquatic Foods, commented:
"Despite the fall in profitability, AFG has performed credibly in
what remains a challenging economic environment. Gross margin has
stabilised, volumes continue to increase, and we have made
continued progress in building new sales channels. As a result,
AFG's business remains profitable and cash generative. The
Directors have resolved to pay an interim dividend of 0.2p per
share but will review the full year dividend in light of trading
and market conditions at that time.
"The Directors expect the current challenging market conditions,
reflected in cost inflation pressures combined with softening
product pricing, to continue in the near term though the Board is
pleased to note that gross margins achieved by the Company have
stabilised. AFG's strategy in a competitive market and in the face
of these pressures is to continue to focus on operational
efficiency, developing new sales channels including supermarkets,
increasing sales to our existing distribution network, expanding
our distribution network and increasing our focus on export
markets. AFG will also focus on advertising and promoting awareness
of the "Zhenhaitang" brand standards. In particular, the Company is
seeking to build on the success of its supply contract with Yihee
International Corporation, the extension of which is expected to be
considered during Q4.
"AFG adopts the highest standards for quality, safety and
sustainability and is committed to producing high-end,
pre-processed seafood products which provides confidence to both
local PRC and overseas consumers alike. The Group's current
extensive distribution network puts us in a very strong trading
position and the Board is confident that, despite the current
slowdown in the Chinese economy, the Group will continue to adapt
and to expand its share in what is still a growing Chinese seafood
and marine food market. The Group also remains committed in growing
export sales and is confident that AFG will continue to leverage on
its established position in the overseas market to further benefit
from the high growth potential of the international seafood
market.
"Whilst the Board is mindful of the potential challenges that
lie ahead in the short term, the Board believes that these
challenges also present potential growth and expansion
opportunities for the Group. AFG's strong cash position allows the
Group to take advantage of the challenging market environment to
potentially grow and increase its presence within China through
mergers and acquisitions as well as expanding through increasing
process automation."
For further information:
Aquatic Foods Group Plc Tel: +44 (0)7706 814 895
Po Ling Low, Finance Director pllow@kanwa.cn
SP Angel Corporate Finance LLP Tel: +44 (0) 20 3470 0470
Nominated Adviser and Broker www.spangel.co.uk
Stuart Gledhill / David Facey
Media enquiries:
Abchurch Tel: +44 (0) 20 7398 7700
Julian Bosdet / Jenny Lee / George www.abchurch-group.com
Robinson
AquaticFoods@abchurchgroup.com
Chief Executive's Review
Operations in the first half of 2016 have been subdued,
reflecting the continuation of the challenging business environment
in the second half of 2015 caused by the slowdown of economic
growth in China, the adverse impact from foreign exchange together
with operating in a highly competitive market place. Against this
volatile market backdrop, the Group experienced a decline in
average selling prices across all product categories, and this has
resulted in a decline in revenue by 5.6% to RMB 419 million (H1
2015: RMB 444 million). Cost of sales increased by 6.4%, in line
with the increase in sale volume and general cost inflation which
has also been impacted by foreign exchange.
Gross profit for H1 2016 was RMB 103 million and gross margin
was 24.5% (H1 2015: RMB 147 million and 33% respectively). The fall
in gross margin occurred in the second half of 2015 and has
stabilised over the first half of 2016 at the current 24.5% level.
Cost inflation remains an issue, especially raw materials,
accessories and packaging materials and labour costs. Provided that
the economic situation does not significantly worsen we expect that
margins will not deteriorate further by a material amount, however
we continue to monitor the situation closely.
As a result of this fall in gross profit, coupled with a modest
increase in expenses, profit before tax and profit after tax fell
to RMB 49 million (H1 2015: RMB 101 million) and RMB 38 million (H1
2015: RMB 78 million) respectively after taking into account
foreign exchange losses of RMB 5 million, of which RMB 3 million
related to an unrealized loss arising from translation of bank
balances denominated in GBP.
AFG remains highly cash generative and the Group maintains a
strong balance sheet with cash as at 30 June 2016 amounting to RMB
417 million (as at 31 Dec 2015: RMB 380 million). As the Group
seeks to expand in the difficult operating environment, it is
anticipated that the working capital requirement will increase due
to enhanced credit terms and higher inventory levels.
As at 30 June 2016, AFG had 51 regional distributors (H1 2015:
51), covering 16 provinces, municipalities and autonomous regions
in China. The Group works closely with its distributors to monitor
performance and grow sales and remains committed to identifying and
appointing new distributors to further expand its coverage in both
urban and rural areas in China.
Currently, approximately 60% of fish processed originates from
various overseas countries, including US, Canada, Norway, UK, and
Ireland. The Group will continue to look for strategic alliances
and partnerships to diversify the Company's supply chain.
Product categories
Revenue breakdown by Six months Six months Changes Year ended
product category 30 June 30 June % 31 December
2016 2015 2015
Unaudited Unaudited Audited
Currency: RMB'000
Fish 282,052 301,114 -6.3% 704,942
Sea Cucumbers 63,849 65,199 -2.1% 137,531
Cephalopods 28,449 26,923 5.7% 41,753
Shrimp & Shellfish 23,876 25,864 -7.7% 38,688
Others 20,762 24,853 -16.5% 55,833
--------------- -------------- -------- --------------
Total 418,988 443,953 -5.6% 978,747
Sale volume breakdown Six months Six months Changes Year ended
by product category 30 June 30 June % 31 December
2016 2015 2015
Thousand kilograms
Fish 8,564 8,091 5.8% 19,062
Sea Cucumbers 22 23 -4.8% 49
Cephalopods 852 774 10.1% 1,116
Shrimp & Shellfish 640 646 -1.0% 993
Others 239 246 -2.6% 558
---------------- ---------------- -------- -------------
Total 10,317 9,780 5.5% 21,778
Gross Margin by Product Six months Six months Year ended
Category 30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
Fish 23% 32% 27%
Sea Cucumbers 30% 42% 36%
Cephalopods 25% 31% 29%
Shrimp & Shellfish 26% 31% 30%
Others 25% 32% 27%
----------- ----------- -------------
Total 25% 33% 28%
Fish
Sales of fish products accounted for approximately 67% of
Group's revenue (H1 2015: 68%). The Group's top three fish products
are mackerel, saury and cod. The revenue generated from fish
products decreased by approximately 6% compared with H1 2015. This
decrease was principally due to decrease in average unit selling
price, which was in turn due to the slower consumer spending and
increase competition in China.
Compared with H1 2015, sales volume of fish products, in
kilograms, increased by approximately 6% and cost of sales
increased by approximately 6%, which was in line with the increase
in sales volume during the period under review. The average unit
cost of fish products remained stable.
The lower average prices have resulted in a reduction in gross
profit margin of fish products to 23% (H1 2015: 32%).
Sea Cucumbers
Sales of sea cucumber products decreased slightly by 2% compared
with H1 2015. This has been impacted by the Chinese Government's
anti-corruption policy, which has resulted in lower spending on
corporate entertainment and banquets as well as high value gift
practices in business. This has led to a fall in sales volume of
sea cucumber products by approximately 5% compared with H1
2015.
Compared with H1 2015, average unit selling price increased
modestly by approximately 3%, pressured by the rising cost, whilst
average unit cost increased significantly by 24% mainly as a result
of higher raw material input cost. This has resulted in a fall in
gross margin to 30% (H1 2015: 42%).
Cephalopods
Sales of Cephalopods (principally squid and cuttlefish), though
only a modest proportion of total group sales, were the only
product category that has reported a revenue growth compared with
H1 2015, driven by higher sales volume.
Sales of cephalopods products increased by approximately 6% in
value and 10% in volume compared with H1 2015. Nevertheless, gross
margin declined to 25% (H1 2015: 31%) due to lower average unit
selling price and higher unit cost.
Shrimp and Shellfish
Sales value decreased by approximately 8% whilst volume
decreased by approximately 1% compared with H1 2015, reflecting the
general price pressure in the current market. As a result, gross
profit margins were down to approximately 26%.
Others
These are primarily sales of gift boxes. Sales decreased by 16%
and cost of sales decreased by 8%. Gross profit were down to 25%
(H1 2015: 30%), reflecting the general price pressure in the
market.
Strategy
The Board continues to evaluate options for expanding capacity
through outsourcing, increasing process automation and expanding to
an additional site or acquiring an existing factory from a third
party. As previously noted, the Group is currently awaiting final
regulatory approval for its expansion plans from the relevant
regional authorities. Owing to the current market environment the
Group has not been actively chasing this consent although it is
expected that the Group will still seek to acquire additional
processing and cold storage capacity.
Successful brand building remains key to AFG's continued
business success. The Group's core brand "Zhenhaitang" has, in
recent years, achieved wider recognition and awareness in the
marine foods and seafood industry in the PRC. The Group plans to
continue its focus on advertising and promotion and will carry out
further cross-promotion for different product types. The Group will
also continue to support its regional distributors to establish
further "Zhenhaitang" branded retail stores where appropriate to do
so.
Product development to expand and enhance product offerings is
an important factor to expand market share. The Group plans to
continue to invest in product development and innovation in order
to stand out from competition and to meet changing consumer
preferences.
While market growth in China has slowed, the Group is taking the
opportunity to review internal processes and strategies in
preparation for a time when the market returns to full strength.
This includes monitoring the success of increased advertising as
well as continuing to finalise expansion plans, including
additional processing and cold storage capacity given the increase
in processing volumes. With this in place, the Board believes that
the Company will be in the strongest position possible to take
advantage of a revived trading environment.
The Group believes that with its current cash resources and the
positive trading cash flow, the Group will have sufficient funds
internally to support the expected further growth of Aquatic
Foods.
Outlook
The Group's operating environment remains challenging and the
Board expects these challenging conditions to continue in the near
term. However, whilst gross margin declined in the last 12 months,
AFG is now seeing a stabilisation in gross margins at around 24%
since April 2016.
Whilst the Board is mindful of the potential challenges that lie
ahead in the short term, the Board believes that these challenges
also present potential growth and expansion opportunities for the
Group. AFG's strong cash position allows the Group to take
advantage of this difficult time to grow and increase its presence
within China by mergers and acquisitions as well as expanding
through increasing process automation.
In the wider PRC market, demand has continued to move towards
pre-processed and ready to eat products as opposed to the
procurement of daily foods from traditional markets. These
consumers are the major consumption group of natural seafood
products as they pursue a healthier lifestyle. Such consumers are
concerned about food hygiene and safety and look to recognised
branded goods, where the brand values support enhanced food
safety.
As a leading PRC marine foods and seafood processor, with a
history in servicing demanding export markets, AFG is known for
adopting the highest standards for quality, safety and
sustainability, and the Board is optimistic that AFGs' growth will
be supported by its continued commitment to produce high-end,
pre-processed, seafood products.
As a result of increasing popularity of English and Scottish
fish products and to satisfy this increasing demand, the Group has
entered into the following new contracts with English and Scottish
based suppliers:
-- a US $850,000 purchase contract with Peterhead based supplier
Northbay Pelagic for the supply of 615 metric tonnes of Atlantic
Mackerel per annum.
-- a contract with Scottish based supplier Lunar Freezing &
Cold Storage for the supply of 575 metric tonnes of mackerel
-- a contract with Seychelles based supplier Flying Fish
International for the supply of 162 metric tonnes of mackerel
As a result of these recent contracts, AFG has become one of the
leading importers of fish from the UK amongst other Chinese
companies and this is expected to continue to increase its
credibility and profile in the industry in the UK.
The Group will continue to look for strategic alliances and
partnerships in the UK as well as other parts of the world to
diversify its supply chain.
As an established and modern marine foods supplier and retailer,
the Board is confident that, despite current slowdown of the
Chinese economy, the Group will continue to adapt and to expand its
market share in what is still a growing Chinese seafood and marine
food market. The Group also remains committed in growing export
sales and is confident that AFG will continue to leverage on its
established position in the overseas market to benefit further from
the high growth potential of the international seafood market.
Appointment and Resignation of Directors
On 9 August 2016, Aquatic Foods appointed Ms Po Ling Low as
Finance Director to fill the vacancy following the departure of Mr
Sean Lim on 3 February 2016. Ms Low is a qualified accountant with
over 18 years' experience across the UK and Asia. Ms Low has worked
in the PRC in the last 8 years and was the finance director of a
Chinese company which had previously been listed on AIM before
moving to a Hong Kong main board listing in 2010. Pursuant to her
appointment, Ms. Low has been granted a total of 500,000 warrants
over Ordinary Shares and the details of these warrants shares can
be found on AFG's RNS announcement dated 9 August 2016. The Board
is confident that Ms Low's appointment as Finance Director will be
invaluable to the Company as AFG continues to improve its
operational efficiency and expand in both the local Chinese and
international markets.
Dividends
The Board has adopted a dividend policy that fundamentally takes
into account the Group's profitability and growth after the
requirement to finance the development and expansion of
business.
Given the positive cash flow of the Group and profitability
during the first half of the year, the Board is pleased to announce
that the Group intends to retain an interim dividend however this
has been reduced to 0.2 pence per share reflecting the more
challenging trading environment in which the Company is operating.
While the Company retains a strong balance sheet and cash position,
the Board has considered future costs relating to the planned
expansion as well as the desire to retain a significant cash buffer
to provide future business flexibility.
The interim dividend will be payable around 1 November 2016 to
shareholders on the register at the close of business on Friday, 7
October 2016. The shares will go ex-dividend on 6 October 2016. The
Board intends to review the level of full year dividend in light of
the trading results for the year and market conditions at that
time.
Li Xianzhi
Chief Executive Officer
27 September 2016
Condensed Consolidated Statements of Comprehensive Income
Six months Six months
30 June 30 June
2016 2015
Unaudited Unaudited
Note RMB'000 RMB'000
Revenue 418,988 443,953
Cost of sales (316,363) (297,264)
----------- -----------
Gross profit 102,625 146,689
Other income 4,755 5,086
Selling and distribution expenses (43,592) (40,290)
Administrative expenses (7,969) (9,186)
Other operating expenses (5,338) (81)
----------- -----------
Operating profit 50,481 102,218
Finance income 505 477
Finance costs (1,574) (1,219)
----------- -----------
Profit on ordinary activities before
taxation 49,412 101,476
Income tax expense 4 (11,756) (23,728)
----------- -----------
Profit after taxation 37,656 77,748
Other comprehensive income
Items that will or may be reclassified to profit
or loss:
----------- -----------
Exchange differences arising on translation
of foreign operation 594 2,778
----------- -----------
Total comprehensive income attributable to
owners of the parent 38,250 80,526
=========== ===========
Earnings per share (EPS):
Basic and diluted 5 0.33 0.70
=========== ===========
Condensed Consolidated Statements of Financial Position
As at 30 June 2016
As at As at As at
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
Note RMB'000 RMB'000 RMB'000
Non-current assets
Property, plant and equipment 6 27,925 21,238 29,321
Land use rights 7 1,853 1,898 1,876
----------- ----------- -------------
29,778 23,136 31,197
----------- ----------- -------------
Current assets
Inventories 8 46,939 36,827 55,627
Trade receivables 247,372 226,053 306,694
Other receivables, deposit
and prepayment 9 228 186 4,620
Cash and bank balances 417,083 366,630 380,419
----------- ----------- -------------
711,622 629,696 747,360
----------- ----------- -------------
Total Assets 741,400 652,832 778,557
=========== =========== =============
Current liabilities
Trade payables 76,770 71,917 131,885
Other payables and accruals 24,020 26,085 35,847
Short term borrowings 36,511 37,042 42,040
Income tax payable 6,338 10,531 9,274
----------- ----------- -------------
143,639 145,575 219,046
----------- ----------- -------------
Equity
Stated capital 10 85,238 85,238 85,238
Reserves 512,523 422,019 474,273
----------- ----------- -------------
597,761 507,257 559,511
----------- ----------- -------------
Total Equity and Liabilities 741,400 652,832 778,557
=========== =========== =============
Condensed Consolidated Statements of Changes in Equity
For the six month period ended 30 June 2016 (Unaudited)
Stated Capital Statutory Merger Translation Retained Total
Capital reserve reserve reserve reserve profits equity
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1
January
2015 - 31 11,193 7,394 546 322,329 341,493
Profit for the
period - - - - - 77,748 77,748
Other
comprehensive
income:
Foreign
currency
translation
differences
for foreign
operations - - - - 2,778 - 2,778
------------ --------------- --------- ------------ ------------- ---------- -------------
Total
comprehensive
income
for the period - - - - 2,778 77,748 80,526
------------ --------------- --------- ------------ ------------- ---------- -------------
Issuance of
share capital 87,167 - - - - - 87,167
Share issue costs (1,929) - - - - - (1,929)
------------ --------------- --------- ------------ ------------- ---------- -------------
Balance at 30 June
2015 85,238 31 11,193 7,394 3,324 400,077 507,257
============ =============== ========= ============ ============= ========== =============
Profit for the
period - - - - - 62,656 62,656
Other
comprehensive
income:
Foreign
currency
translation
differences
for foreign
operations - - - - (2,675) - (2,675)
------------ --------------- --------- ------------ ------------- ---------- -------------
Total
comprehensive
income
for the period - - - - (2,675) 62,656 59,981
------------ --------------- --------- ------------ ------------- ---------- -------------
Dividend paid - - - - - (7,727) (7,727)
Transfer to
statutory
reserve - - 3,524 - - (3,524) -
------------ --------------- --------- ------------ ------------- ---------- -------------
Balance at 31
December
2015 85,238 31 14,717 7,394 649 451,482 559,511
============ =============== ========= ============ ============= ========== =============
Profit for the
period - - - - - 37,656 37,656
Other
comprehensive
income:
Foreign currency
translation
differences for
foreign
operations - - - - 594 - 594
------------ --------------- --------- ------------ ------------- ---------- -------------
Total
comprehensive
income
for the period - - - - 594 37,656 38,250
------------ --------------- --------- ------------ ------------- ---------- -------------
Balance at 30
June
2016 85,238 31 14,717 7,394 1,243 489,138 597,761
============ =============== ========= ============ ============= ========== =============
Condensed Consolidated Statements of Cash Flows
For the six month period ended 30 June 2016
Six months Six months
30 June 30 June
2015
2016 Unaudited Unaudited
RMB'000 RMB'000
Cash flow from operating activities
Profit before taxation 49,412 101,476
Adjustment for:
Amortisation of land use rights 23 22
Depreciation of property, plant and
equipment 1,494 1,096
Interest expense 1,574 1,219
Unrealised loss on foreign exchange 2,944 -
Interest income (505) (477)
Operating cash flows before movements
in working capital 54,942 103,336
Decrease / (increase) in inventories 8,688 10,683
Decrease / (increase) in trade and
other receivables 63,714 53,697
(Decrease) / increase in trade and
other payables (66,942) (49,325)
Cash generated from operating activities 60,402 118,391
Interest paid (1,574) (1,219)
Income tax paid (14,692) (28,491)
--------------- -----------
Net cash generated from operating
activities 44,136 88,681
--------------- -----------
Cash flows (for)/from investing activities
Acquisition of property, plant and
equipment (98) (20)
Interest received 505 477
Net cash used in/ generated from investing
activities 407 457
--------------- -----------
Cash flows from/(for) financing activities
Proceeds from issue of share capital - 87,167
Share issue costs - (1,929)
Net drawdown of interest-bearing bank
borrowings (5,529) (4,428)
--------------- -----------
Net cash generated from/ (use in)
financing activities (5,529) 80,810
--------------- -----------
Net increase in cash & cash equivalents 39,014 169,948
Effects of foreign exchange translation (2,350) 2,779
Cash and equivalent at beginning of
year 380,419 187,576
--------------- -----------
Cash and equivalent at end of year 417,083 360,303
=============== ===========
NOTES TO THE FINANCIAL INFORMATION
1. GENERAL INFORMATION AND PRINCIPAL ACTIVITIES
The Company was incorporated in Jersey as a public limited
company with company number 116402. The registered office of the
Company is Queensway House, Hilgrove Street, St Helier, Jersey, JE1
1ES.
This financial information is for the Company and its
subsidiaries undertakings (together, the "Group").
The principal activities of the entities of the Group are as
follows:-
Country
of
Name of Company Incorporation Principal Activities
i) Aquatic Foods Group Jersey Investment holding
Plc
ii) Hong Kong Hanhe Holding Hong Kong Investment holding
Company Limited
iii) Yantai Kanwa Food PRC Processing and trading of aquatic
Co., Limited products
agricultural and meat products.
iv) Yantai Zhenhaitang PRC Trading and distributing of
Foodstuff Co., Limited processed frozen
aquatic products and pre-packaged
food.
The principal place of business of the Group is in the People's
Republic of China ("PRC").
The interim consolidated financial statements are presented in
the nearest thousands of Renminbi (RMB'000), which is the
presentation currency of the group. The functional currency of each
of the individual entity is the local currency of each individual
entity. For reference the period end exchange rate from Pounds
Sterling to RMB was 8.9212 (30 June 2015: 9.748 and 31 December
2015: 9.5923).
2. BASIS OF PREPARATION
The interim consolidated financial statements for the six months
ended 30 June 2016 have been prepared in accordance with IAS 34,
Interim Financial Reporting.
The principal accounting policies used in preparing the interim
results are the same as those applied in the Group's Financial
Statements as at and for the year ended 31 December 2015.
The interim financial information has not been reviewed nor
audited by the Company's auditors. A copy of the audited
consolidated financial statements for the period ended 31 December
2015, which was prepared under IFRS, is available on the Company's
website.
The interim report for the six months ended 30 June 2016 was
approved by the Directors on 27 September 2016.
3. OPERATING SEGMENTS
Operating segments are prepared in a manner consistent with the
internal reporting provided to the management as its chief
operating decision maker in order to allocate resources to segments
and to assess their performance.
Information on business segments is not presented as the Group
operates mainly in processing and trading of aquatic products
agricultural and meat products and all its assets, capital
expenditure and operations are in the PRC.
Geographical Segments
The analysis of the Group's revenue by geographical segments
based on customers' locations is as follows:-
30 June 30 June
2016 2015
RMB'000 RMB'000
PRC 387,036 414,041
Outside PRC 31,952 29,912
418,988 443,953
Non-current assets 29,778 23,136
-------- --------
The segment assets are based on geographical locations of the
assets, the entire non-current assets are based in the PRC at the
end of reporting period.
There was no customer which contributed more than 10% of the
revenue for the Group.
4. Income Tax Expense
30 June 30 June
2016 2015
RMB'000 RMB'000
Current tax expenses 11,756 23,728
According to the China Income Tax Law, income derived from
preliminary processing of fishery or aquiculture products are tax
exempted.
The Group's activities in the PRC are subject to corporation tax
of 25% during the financial year on profit before taxation in
accordance with the relevant laws and regulations in the PRC.
No deferred tax has been provided, as the Group did not have any
significant temporary differences which gave rise to a deferred tax
asset or liability at the reporting dates.
5. EARNINGS PER SHARE
On 3 February 2015, Aquatic Foods Group PLC's shares were
admitted to trading on the AIM market of the London Stock Exchange.
The Company issued 5,792,081 Placing Shares and 7,434,000
Subscription Shares at 70 pence per Share. The earnings per share
information based upon the 113,226,081 ordinary shares are as
follows:
30 June 30 June
2016 2015
Profit after taxation (RMB) 37,656,000 77,748,000
Weighted average number of ordinary
shares 113,226,081 110,741,624
Basic earnings per share 0.33 0.70
------------ ------------
At 30 June 2016, there were 50,000 potentially dilutive ordinary
shares. Potentially dilutive ordinary shares relates to warrants
issued to third parties. The potential ordinary shares are
anti-dilutive and therefore the diluted earnings per share is the
same as basic earnings per share.
6. PROPERTY, PLANT AND Equipment
Leasehold Research Plant and
buildings Office equipment equipment machinery Motor vehicles Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Cost
Pro forma as at 1
January 2015 25,804 675 48 12,792 741 40,060
Additions 14 - - 6 - 20
Disposals - - - - - -
---------- ---------------- ---------- ---------- -------------- -------
At 30 June 2015 25,818 675 48 12,798 741 40,080
---------- ---------------- ---------- ---------- -------------- -------
Additions 14 - - 9,042 129 9,185
Disposals - - - - (142) (142)
---------- ---------------- ---------- ---------- -------------- -------
At 31 December 2015 25,832 675 48 21,840 728 49,123
---------- ---------------- ---------- ---------- -------------- -------
Additions 8 46 - 44 - 98
Disposals - - - - - -
---------- ---------------- ---------- ---------- -------------- -------
At 30 June 2016 25,840 721 48 21,884 728 49,221
---------- ---------------- ---------- ---------- -------------- -------
Accumulated depreciation
Pro forma as at 1
January 2015 10,008 508 34 6,796 400 17,746
Charge for the period 586 24 3 428 55 1,096
Disposals - - - - - -
---------------- ---------- ---------- --------------
At 30 June 2015 10,594 532 37 7,224 455 18,842
---------------- ---------- ---------- --------------
Charge for the period 587 21 1 429 50 1,088
Disposals - - - - (128) (128)
---------- ---------------- ---------- ---------- -------------- -------
At 31 December 2015 11,181 553 38 7,653 377 19,802
---------- ---------------- ---------- ---------- -------------- -------
Charge for the period 589 17 2 829 57 1,494
Disposals - - - - - -
At 30 June 2016 11,770 570 40 8,482 434 21,296
Net carrying amount
As at 30 June 2016 14,070 151 8 13,402 294 27,925
========== ================ ========== ========== ============== =======
As at 31 December
2015 14,651 122 10 14,187 351 29,321
==============
As at 30 June 2015 15,224 143 11 5,574 286 21,238
==============
7. Land Use Rights
30 June 30 June 31 December
2016 2015 2015
RMB'000 RMB'000 RMB'000
At cost:-
Opening at 1 Jan 2,228 2,228 2,228
-------- -------- ------------
Accumulated amortisation:-
Opening balance 352 308 308
Amortisation charge 23 22 44
---- ---- ----
Closing balance 375 330 352
---- ---- ----
Carrying amounts:-
At 30 June / 31 December 1,853 1,898 1,876
====== ====== ======
8. Inventories
30 June 30 June 31 December
2016 2015 2015
RMB'000 RMB'000 RMB'000
At cost:-
Raw materials 28,461 23,332 29,610
Finished goods 18,478 13,495 26,017
46,939 36,827 55,627
9. Other Receivables, Deposit And Prepayment
30 June 30 June 31 December
2016 2015 2015
RMB'000 RMB'000 RMB'000
Other receivables 123 115 48
Prepayments 105 71 4,572
228 186 4,620
10. Stated Capital
Number
of shares RMB'000
Issued:
As at 1 Jan 2015 50,000,000 -
Subdivision of existing shares as 50,000,000 -
at 28 January 2015
Placing Shares and Subscriber Shares
as at
3 February 2015 13,226,081 87,167
Less: Issuance costs - (1,929)
As at 30 June 2015, 31 December
2015 and 30 June 2016 113,226,081 85,238
On incorporation, the Company issued two ordinary shares at no
par value with an unlimited share capital.
On 23 October 2014, the company allotted and issued 49,999,998
Ordinary Shares of no par value pursuant to the Framework
Agreement.
On 28 January 2015, the company had been subdivided its existing
50,000,000 ordinary shares into 100,000,000 of ordinary shares. On
3 February 2015, the company's shares had been admitted to trading
on the AIM market of the London Stock Exchange. The Company had
further issued 5,792,081 Placing Shares and 7,434,000 Subscriber
Shares. The total issued ordinary shares of the company were
113,226,081.
11. SEASONALITY OF THE GROUP BUSINESS
The Group businesses are subject to seasonal fluctuations as
result of the festive periods observed in the local market. In
particular, the Chinese New Year always falls in January or
February of the year, the demand for the products packed in gift
box or high value gifts are likely to be strong in this period. The
Group will collaborate with the regional distributors to drive the
revenue growth through the products promotion and marketing
campaigns in other festive periods throughout the year.
12. BORROWING
The borrowings consist of trade finance and secured
interest-bearing bank borrowings.
Trade finance was secured by cross guarantees of the
subsidiaries between Yantai Kanwa and Yantai Zhenhaitang.
Interest-bearing bank borrowings were secured by:
a) land use rights of the Group
b) property of the Group
c) personal guarantees by a director of the Group
13. WARRANTS
On 28 January 2015, the company granted 50,000 warrants to S.P.
Angel Corporate Finance LLP, the company's nominated adviser, at
the exercise price of 70 pence each with expiring date of 5 years.
The directors have used Black Scholes model as recommended under
IFRS 2 in valuing the share based payment charge. The directors are
of the opinion that the estimated fair value is immaterial, hence
no charge has been made in the accounts.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFVRAVIDFIR
(END) Dow Jones Newswires
September 28, 2016 02:00 ET (06:00 GMT)
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