TIDMCFC
RNS Number : 4771N
China Food Company PLC
01 September 2011
Interim Results - Correction
The following amendment has been made to the 'Interim Results'
announcement released on 1 September 2011 at 07:00 hrs under RNS No
3838N.
In the announcement released this morning the maiden interim
dividend amount was incorrectly stated. The dividend amount should
have read GBP0.0013 per share rather than 0.0013 pence per
share.
All other details remain unchanged.
The full amended text is shown below.
Press Release 1 September 2011
China Food Company Plc
("China Food" or the "Group")
Interim Results
China Food Company Plc (AIM:CFC), a leading Chinese manufacturer
of cooking and dipping sauces, announces its half year results for
the six months ended 30 June 2011.
Highlights
-- Revenue increased by 9.6% to GBP18.8 million (H1 2010:
GBP17.2 million)
-- EBITDA increased 6.9% to GBP2.6 million (H1 2010: GBP2.4
million)
-- Adjusted profit before tax and set up costs* up by 21%
to approximately GBP2.7 million (H1 2010: GBP2.2 million).
EBITDA on that basis would total GBP3.0 million (H1 2010:
GBP2.6 million), with adjusted EPS of 2.64 pence (H1 2010:
2.22 pence)
-- Profit before tax of GBP1.8 million, (H1 2010: GBP1.9 million),
stated after set up costs of GBP0.9 million (H1 2010: GBP0.3
million)*
-- Proposed maiden interim dividend of GBP0.0013 per share
payable on 30 November 2011
-- Sales of main brand Hao Tai Tai soya sauce in H1 2011 grew
23.0%
-- Launch of new premium grade soya sauce brand, "Xaka" in
August 2011 with distribution planned throughout Shandong
and across a further 16 cities in Northern China
-- ISO22000, ISO9001 and HACCP accreditations obtained from
international certification agency SGS Global for the new
factory
-- Started exports to Singapore in July 2011 as a validation
of the product's quality and taste and to generate additional
demand for the Group's increased production facilities
*Set up costs relate to preparatory expenses and depreciation of
GBP0.9m (H1 2010: GBP0.3m) on the new factory for which there has
yet to be any revenue.
John McLean, Chairman of China Food Company, commented: "During
the period the Group continued to progress on its stated strategy
to become a brand leader in Northern China for condiments. With our
increased world-class production facilities, we are now putting the
distribution channels in place to take our new brand to market, as
well as the ability to further develop our existing brands and
products.
"The management team has been significantly strengthened and
this process will continue to ensure that we have the right team in
place to take the products forward and capitalise on the
considerable market opportunity that is present in Northern
China."
For further information:
China Food Company Plc Tel: +44 (0) 207 930 8888
John McLean, Non-Executive Chairman Tel: +44 (0) 7768 031 454
Raphael Tham Wai Mun, Chief Executive
www.chinafoodcompany.com
finnCap
Geoff Nash / Ben Thompson (Corporate Tel: +44 (0) 20 7600
Finance) 1658
Simon Starr (Broking)
Media enquiries:
Abchurch Communications
Henry Harrison-Topham / Joanne Shears Tel: +44 (0) 20 7398
/ Mark Dixon 7709
henry.ht@abchurch-group.com www.abchurch-group.com
Chairman's and Chief Executive Officer's Statement
The Group achieved GBP18.8 million in revenue in H1 2011, an
increase of 9.6% (H1 2010: GBP17.2 million). EBITDA also increased
from GBP2.4 million (H1 2010) to GBP2.6 million (H1 2011) as the
core condiments business continued to grow. Profit before tax was
GBP1.8 million in H1 2011 (H1 2010: GBP1.9 million) as the Group
incurred increased overheads from China Food's new facility and
preparatory marketing expenses in anticipation for the Group's
launch in H2 2011, increased depreciation from the new factory and
higher finance costs. The impact on first half profit before tax
was approximately GBP0.9 million (H1 2010: GBP0.3 million). The net
assets of the Group increased to GBP37.8 million which included
cash and cash equivalents of GBP5.8 million as at 30 June 2011.
The Group's revenue in RMB grew by 11.9%. This growth is largely
contributable to China Food's existing condiments business which
reached RMB88.5 million in revenue for H1 2011, an increase of
18.4% compared to the same period last year as well as the feed
business which grew 7.1% to reach RMB110.6 million (H1 2010:
RMB103.2 million).
Profit after tax for the Group's existing condiments business
increased to RMB21.5 million compared to RMB17.5 million in H1
2010, a growth of 22.6%, or 57.6% of the total condiments revenue
for FYE 2010. The Group has filled up 123 silos and has opened 29
silos to date in respect of the new factory.
Overheads from the new facility amounted to RMB9.1 million in H1
2011, an increase of 163% over the same period last year due to
depreciation and additional factory and management staff. The Board
expects sales to increase significantly in H2 2011 with the launch
of its new products.
Inventory turnover also increased from 18 days to 54 days as the
Group moved towards producing higher grade naturally brewed soya
sauce. The average fermentation process will average out at 120-150
days for soya sauce while the vinegar and bean paste will continue
to operate below 30 days. This is significantly higher than the
Group's previous soya sauce production cycle which could only
produce low-to-medium grade soya sauce and had a fermentation cycle
of less than 30 days. Inventory also increased as China Food took
on stock in preparation for the launch of the Group's new products
in August 2011.
Following market testing in Jinan in late spring 2011 China Food
has completed its review of Hao Tai Tai's existing sales channels
to increase penetration levels, refine Hao Tai Tai's product lines,
and develop a sales and marketing strategy to rejuvenate and
strengthen the brand. The Group believes there is substantial room
for Hao Tai Tai to increase sales further and in so doing, take up
to 60% of the targeted new soya sauce production from the Group's
new plant for its first year. Sales in Hao Tai Tai soya sauce in H1
2011 grew 23.0% while gross margins remained constant.
The Group launched its new soya sauce brand, "Xaka", in August
2011 and will be distributing it throughout Shandong and across a
further 16 cities in Northern China through distributors and key
accounts to take up the remaining production output for this year.
The Group has started signing up the distributors, scheduled an
extensive advertising campaign (including slots on CCTV, China's
main TV channel), established China Food's Beijing office and has
hired a sales team. Positioned as a high to premium grade brand,
Xaka will be China Food's vehicle to penetrate into the Northern
China region and the increasingly brand conscious consumers due to
its premium branding and associated price points which will allow
the Company to achieve better gross margins. The consumers are now
more aware and demanding of taste, quality, price and food safety,
and China Food's international brand appeals to all of these
aspects. The Board is optimistic that the impact of the launch will
be reflected in the coming months. A sample sales and marketing
video is available to view on the Group's website demonstrating the
scale and world class nature of China Food's operations.
China Food has now shifted the majority of its soya sauce
production to the new factory, freeing up space in the old
condiments factory to produce more vinegar and bean paste compared
to the 10,739 tonnes of vinegar and 5,481 tonnes of bean paste the
Group produces currently. This will allow China Food to expand its
range of condiment products whilst also leveraging the new channels
opened through its soya sauce sales.
The Board is delighted to have recently obtained ISO22000,
ISO9001 and HACCP accreditations from international certification
agency SGS Global for its new factory, having recently renewed its
ISO22000 in the Group's old condiments factory. In addition, the
Group is at an advanced stage of obtaining further global food
certifications for the new factory. China Food has also started
exporting to Singapore in July 2011 as a validation of the Group's
product quality and taste and also to generate demand for the
Group's increased production facilities.
Profit after tax of the animal feed business improved by 18.8%
to RMB6.3 million for H1 2011 (H1 2010: RMB5.3 million) and the
business remains cash-flow positive. However, the Board recognises
that the business is not core to the Group's activities going
forward and with reference to earlier announcements, discussions
are taking place with several parties on potential corporate merger
or disposal. The Group will update the market on progress in due
course.
The Chinese economy continues to grow strongly, but the rise in
inflation has caused the Chinese Government to introduce tougher
financial controls designed to control growth in the economy. As a
result, credit terms are both tighter and more expensive and this
will have an impact on the Group.
Commodity and livestock prices have also increased
significantly. However, to date, the impact on soybean and wheat,
China Food's largest commodity purchases for the condiment
business, has been marginal. This is due to the strategic location
of Shandong as an agricultural hub for China. The feed business
however is likely to be more susceptible to such commodity price
inflations.
The Group has further strengthened its management team in recent
months, and in addition to the appointment of Mr. Tom Coley as a
Non-Executive Director, the Group has also appointed Mr. Zheng as
the Group's Sales Director. Since the period end, Ms Tang Lin
joined China Food as the new Chief Financial Officer replacing Mr.
Frank Chau. These appointments have been made in order to ensure
that the Group is fully able to meet the challenges ahead and to
fulfill China Food's ambitions. The Board would like to thank Frank
for his contribution to the Company over the years. Frank has been
instrumental throughout this period of significant progress for the
Company, and will work with Tang Lin to ensure an orderly handover.
To align the interests of the Group's employees with those of China
Food's shareholders, as previously announced the Company has also
issued 1.95 million employee options in May 2011 to directors and
senior management. These were issued at 53 pence per share, a
premium to the share price at the time.
The Company also successfully issued a further five million
shares at 53 pence each to new investors, raising net proceeds of
GBP2.5 million demonstrating investor appetite in China Food
Company. A further 10% convertible loan note of GBP250,000 was also
raised with a two year term and conversion price of 50 pence.
With the completion of the capital restructuring exercise
earlier in the year and the Board past disclosure to pay a dividend
to shareholders, it is now pleased to announce the commencement of
China Food's dividend policy with a maiden interim dividend of
GBP0.0013 per share payable on 30 November 2011 to shareholders on
the register on 25 November 2011.
China Food's strategy is to become a brand leader in Northern
China for condiments. To achieve this vision, the Group has
increased production facilities, and is now investing in building
up the Xaka brand and the Northern China distribution channels.
Building this brand and the distribution channels requires
significant investment and the Board remains confident of China
Food's long-term prospects.
The Chinese sauces, dressings and condiments market is expected
to be worth CNY115 billion (US$15 billion) by 2013 (Source:
Datamonitor report: Sauces, Dressings and Condiments in China to
2013, April 2010) with a compounded annual growth rate of over
6.0%. The Directors believe China Food's rising market share and
investment in creating a world-class production facility that can
be tailored to suit consumer demand puts the Group in an excellent
position going forward.
The initial launch of the Xaka brand has been promising and
China Food's market research indicates that a combination of the
food safety scares in the recent past as well as the growing
affluence and demands of the Chinese population should mean that
the introduction of a top grade soya sauce will be well received by
consumers. China Food has invested heavily in this process and new
brand and is committed to its success. The second half of the year
has started well and the Board expects a significant uplift in
sales in Q4 2011 and a satisfactory result for the year as a
whole.
John McLean Raphael Tham
Chairman Chief Executive Officer
1 September 2011 1 September 2011
Condensed Consolidated Income Statement
For the period ended 30 June 2011
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
Notes 2011 2010 2010
GBP'000 GBP'000 GBP'000
Revenue 18,823 17,175 35,891
Cost of sales (14,349) (13,225) (28,060)
Gross profit 4,474 3,950 7,831
Other operating income 6 5 9
Selling and marketing costs (894) (697) (1,517)
Administrative costs (1,396) (1,136) (2,359)
Operating result 2,190 2,122 3,964
Finance costs (558) (345) (726)
Finance income 176 98 515
Profit before tax 1,808 1,875 3,753
Taxation (766) (735) (1,434)
Profit for the period 1,042 1,140 2,319
========== ========== ============
Earnings per share
- Basic (pence) 11 1.53 1.72 3.49
- Fully diluted (pence) 11 1.52 1.72 3.48
There are no discontinued operations.
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June 2011
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Profit for the period 1,042 1,140 2,319
Other comprehensive income
Exchange differences
on translating foreign
operations (356) 2,887 2,053
---------- ---------- ------------
Other comprehensive income,
net of tax (356) 2,887 2,053
Total comprehensive income
for the period attributable
to equity holders of the
parent 686 4,027 4,372
========== ========== ============
Condensed Consolidated Statement of Financial Position
As at 30 June 2011
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
Notes 2011 2010 2010
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 8 38,751 37,278 39,448
Land use rights lease
prepayments 8,203 8,592 8,368
----------
Total non-current assets 46,954 45,870 47,816
---------- ---------- ------------
Current assets
Inventories 5,590 1,333 3,002
Land use rights lease
prepayments 188 193 190
Trade and other receivables 1,439 723 750
Deferred tax assets 10 110 - -
Cash and cash equivalents 5,816 8,671 2,918
----------
Total current assets 13,143 10,920 6,860
---------- ---------- ------------
Total assets 60,097 56,790 54,676
LIABILITIES
Current liabilities
Trade and other payables 6,699 6,300 7,583
Bank loans 6,939 3,039 1,166
Current portion of
shareholders' loans 507 2,255 501
Current tax payable 413 355 415
----------
Total current liabilities 14,558 11,949 9,665
---------- ---------- ------------
Net current liabilities (1,415) (1,029) (2,805)
---------- ---------- ------------
Total assets less current
liabilities 45,539 44,841 45,011
---------- ---------- ------------
Non-current liabilities
Bank loan - 2,961 2,916
Convertible loan notes 9 4,128 3,840 3,858
Shareholder's loan 3,638 3,907 3,748
----------
7,766 10,708 10,522
---------- ---------- ------------
Net assets 37,773 34,133 34,489
========== ========== ============
EQUITY
Share capital 5 2,858 2,656 2,656
Share premium 6 24,972 25,678 25,678
PRC statutory reserves 3,098 2,671 3,098
Reverse acquisition reserve (23,992) (23,992) (23,992)
Shares to be issued reserve 242 139 148
Convertible loan notes -
equity 9 160 150 152
Foreign exchange translation
reserve 7,996 9,186 8,352
Merger reserve 2,216 2,216 2,216
Retained profits 20,223 15,429 16,181
----------
37,773 34,133 34,489
========== ========== ============
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June 2011
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit before
tax 1,808 1,875 3,753
Adjustments for:
Deprecation 281 183 368
Deprecation included in
inventories 407 - -
Amortisation of land use
rights lease prepayments 93 94 187
Loss on disposal of property,
plant and equipment 7 6 6
Employee share options 94 23 32
Interest expenses 558 345 726
Other income (176) (98) (515)
----------
Operating profit before working
capital changes 3,072 2,428 4,557
Changes in working capital:
Inventories (2,588) (2) (1,671)
Trade and other receivables (689) (303) (330)
Trade and other payables (1,061) 1,836 645
----------
Cash (used in)/generated from
operations (1,266) 3,959 3,201
Interest received 8 6 22
Income taxes paid (873) (751) (1,385)
----------
Net cash (used in)/generated from
operating activities (2,131) 3,214 1,838
---------- ---------- ------------
Cash flows from investing
activities
Payment for acquisition of
property, plant and
equipment (345) (3,945) (4,400)
Proceeds from disposal of
property, plant and
equipment 5 10 11
Net cash used in investing
activities (340) (3,935) (4,389)
---------- ---------- ------------
Cash flows from financing
activities
Proceeds from bank loan 2,837 3,475 3,442
Repayment of bank loan - - (1,797)
Net proceeds from issued of
ordinary shares 2,496 - -
Proceeds from shareholder's
loan - 1,737 -
Net proceeds from convertible
loan notes 240 902 995
Interest paid (343) (76) (436)
----------
Net cash generated from/(used in)
financing activities 5,230 6,038 2,204
---------- ---------- ------------
Net increase/(decrease) in cash
and cash equivalents 2,759 5,317 (347)
Effect of foreign exchange rate
changes 139 106 17
Cash and cash equivalents at
beginning of period 2,918 3,248 3,248
----------
Cash and cash equivalents at end
of period 5,816 8,671 2,918
========== ========== ============
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June 2011
Shares Foreign Total equity
to be Reverse PRC Convertible exchange attributable
Share Share issued acquisition Merger statutory loan notes translation Retained to owners of
capital premium reserve reserve reserve reserves - equity reserve profits the parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1
January 2011 2,656 25,678 148 (23,992) 2,216 3,098 152 8,352 16,181 34,489
Employee share
options
granted - - 94 - - - - - - 94
Issue of
ordinary
shares 202 2,294 - - - - - - - 2,496
Capital
reduction - (3,000) - - - - - - 3,000 -
Convertible
loan notes -
equity - - - - - - 8 - - 8
Transactions
with owners 202 (706) 94 - - - 8 - 3,000 2,598
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
Profit for the
period - - - - - - - - 1,042 1,042
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - - - - (356) - (356)
Total
comprehensive
income for
the period - - - - - - - (356) 1,042 686
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
As at 30 June
2011 2,858 24,972 242 (23,992) 2,216 3,098 160 7,996 20,223 37,773
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
As at 1
January 2010 2,656 25,678 116 (23,992) 2,216 2,671 121 6,299 14,289 30,054
Employee share
options
granted - - 23 - - - - - - 23
Convertible
loan notes -
equity - - - - - - 29 - - 29
Transactions
with owners - - 23 - - - 29 - - 52
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
Profit for the
period - - - - - - - - 1,140 1,140
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - - - - 2,887 - 2,887
Total
comprehensive
income for
the period - - - - - - - 2,887 1,140 4,027
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
As at 30 June
2010 2,656 25,678 139 (23,992) 2,216 2,671 150 9,186 15,429 34,133
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
As at 1
January 2010 2,656 25,678 116 (23,992) 2,216 2,671 121 6,299 14,289 30,054
Employee share
options
granted - - 32 - - - - - - 32
Transfer to
PRC statutory
reserves - - - - - 427 - - (427) -
Convertible
loan notes -
equity - - - - - - 31 - - 31
Transactions
with owners - - 32 - - 427 31 - (427) 63
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
Profit for the
period - - - - - - - - 2,319 2,319
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - - - - 2,053 - 2,053
Total
comprehensive
income for
the period - - - - - - - 2,053 2,319 4,372
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
As at 31
December
2010 2,656 25,678 148 (23,992) 2,216 3,098 152 8,352 16,181 34,489
-------- -------- -------- ------------ -------- ---------- ------------ ------------ --------- -------------
1. General Information
Principal activities of China Food Company Plc ("China Food" or
the "Company") and its subsidiaries (the "Group") include the
development, manufacture and distribution of cooking and dipping
sauces and animal feed products. The Group's main operations are in
the People's Republic of China (the "PRC").
China Food, a public limited company, is the Group's ultimate
parent company. It is incorporated and domiciled in the United
Kingdom. The address of China Food's registered office is 49
Whitehall, London SW1A 2BX. China Food's shares are listed on the
AIM market of the London Stock Exchange.
China Food's condensed consolidated interim financial statements
are presented in Pounds Sterling (GBP), which is also the
functional currency of the parent company. These condensed
consolidated interim financial statements have been approved for
issue by the Board of Directors on 1 September2011.
The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2010 have been delivered to the
Registrar of Companies. The auditor's report on those financial
statements was unqualified and did not contain statements under
Section 498(2) or Section 498(3) of the Companies Act 2006.
2. Basis of preparation
These condensed consolidated interim financial statements (the
interim financial statements) are for the six months ended 30 June
2011 and have been prepared in accordance with IAS 34 "Interim
Financial Reporting". They do not include all of the information
required for full annual financial statements, and should be read
in conjunction with the consolidated financial statements of the
Group for the year ended 31 December 2010.
The interim financial statements comprise the financial
statements of all the entities within the Group. The financial
statements of the subsidiaries are prepared for the same reporting
date as the parent company. Consistent accounting policies are
applied for like transactions and events in similar
circumstances.
The interim financial statements have been prepared under the
historical cost convention, except for revaluation of certain
financial instruments.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
3. Accounting policies and changes thereto
The interim financial statements have been prepared in
accordance with the accounting policies adopted in the Group's last
annual financial statements for the year ended 31 December 2010,
except for the adoption of Improvements to IFRSs 2010 (2010
Improvements) as of 1 January 2011. The 2010 Improvements made
several minor amendments to IFRSs. The relevant amendments and
their effects on the current period or prior periods are described
below.
The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these
interim financial statements.
Amendment to IAS 1 Presentation of Financial Statements
The amendment provides a choice of presenting the
reconciliations for each component of other comprehensive income
either in the statement of changes in equity or in the notes to the
financial statements. The Group chose to present such
reconciliations in the Consolidated Statement of Changes in Equity,
same as last year.
Amendments to IAS 34 Interim Financial Reporting
The amendments clarified certain disclosures relating to events
and transactions that are significant to an understanding of
changes in the Group's circumstances since the last annual
financial statements. The Group's interim financial statements as
of 30 June 2011 reflect these amended disclosure requirements,
where applicable.
4. Seasonal fluctuations
The sale of condiments and animal feed products is subject to
seasonal fluctuations. Historically, peak demand is in the second
half of each year. For the six months ended 30 June 2011, revenue
of the condiments and animal feed products represented
approximately 57.0% and 49.3% of their annual levels in the year
ended 31 December 2010. For the six months ended 30 June 2010, the
levels of condiments and animal feed products represented
approximately 49.1% and 47.0% of their annual sales in the year
ended 31 December 2010.
5. Share capital
On 28 April 2011, the Company issued 5,046,981 new shares at
GBP0.53 each. The movement on the share capital account was as
follows:-
No. of shares GBP'000
Authorised
As at 31 December 2010, 30 June
2010 and 30 June 2011
- Ordinary shares of 4p each 100,000,000 4,000
-------------- --------
Issued, called up and fully paid
As at 31 December 2010 and 30 June
2010
- Ordinary shares of 4p each 66,399,991 2,656
Shares issued on 28 April 2011 5,046,981 202
As at 30 June 2011 71,446,972 2,858
-------------- --------
6. Share premium
As at As at As at
30 Jun 30 Jun 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
As at 1 January 25,678 25,678 25,678
Premium on shares issued
on 28 April 2011 2,473 - -
Share issue expenses (179) - -
Capital reduction (3,000) - -
24,972 25,678 25,678
-------- ----------- --------------
The Capital reduction was approved by the court on 22 June 2011
and resulted in GBP3 million of share premium being converted into
distributable reserves.
7. Employee share option
The Group established a share option scheme in 2007 (the "Share
Option Scheme"). On 10 June 2009, the Group granted 4,648,000
options to its Directors and employees with an exercise price of
GBP0.355 per ordinary share (2009 Options). On 25 May 2011, the
Group granted additional 1,950,000 options to its Directors and
employees with an exercise price of GBP0.53 per ordinary share
(2011 Options). The purpose of granting options under the Share
Option Scheme was to incentivise and reward the Group's
employees.
Details of the grant of share options to the Directors and
employees are as follows:
Date at
Number of options granted which
Exercise Expiry
Directors Employees Total exercisable price date
2009 Options
9 June
Lot 1 464,800 1,084,533 1,549,333 10 June 2009 GBP0.355 2019
9 June
Lot 2 464,800 1,084,533 1,549,333 10 June 2010 GBP0.355 2019
9 June
Lot 3 464,800 1,084,534 1,549,334 10 June 2011 GBP0.355 2019
1,394,400 3,253,600 4,648,000
--------- --------- ---------
2011 Options
24 May
Lot 1 583,334 66,666 650,000 25 May 2011 GBP0.53 2014
24 May
Lot 2 583,333 66,667 650,000 25 May 2012 GBP0.53 2014
24 May
Lot 3 583,333 66,667 650,000 25 May 2013 GBP0.53 2014
1,750,000 200,000 1,950,000
--------- --------- ---------
As at 30 June 2011, all options remained unexercised.
The fair values of the options granted were determined using the
Black Scholes model. The following principal assumptions were used
in the valuation of 2011 Options:
Exercise price (GBP) 0.53
Share price at date
of grant (GBP) 0.485
Option life 3 years
Volatility 40%
Risk free interest
rate 0.50%
Dividend yield -
Fair value at date
of grant (GBP) 0.119
In accordance with the requirements of IFRS2, a total charge of
GBP94,000 (1H2010: GBP23,000) has been recognised in the income
statement for the share options granted to the directors and
certain employees. Charges for 2009 options and 2011 options
amounted to GBP7,000 (1H2010: GBP23,000) and GBP87,000 (1H2010:
nil) respectively.
8. Additions and disposals of property, plant and equipment
Construction Plant and Motor
Buildings in progress machineries Equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Carrying
amount at 1
January
2011 22,219 5 16,945 82 197 39,448
Additions - - 267 25 53 345
Transfer - - - - - -
Disposals - (5) (7) - - (12)
Depreciation (361) - (289) (10) (28) (688)
Net exchange
differences (196) - (144) (1) (1) (342)
Carrying
amount at 30
June 2011 21,662 - 16,772 96 221 38,751
---------- ------------- ------------ ---------- --------- --------
Construction Plant and Motor
Buildings in progress machineries Equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Carrying
amount at 1
January
2010 3,103 26,904 537 48 110 30,702
Additions - 3,809 27 23 87 3,946
Transfer - (13) 13 - - -
Disposals - - (14) (1) (1) (16)
Depreciation (109) - (46) (11) (17) (183)
Net exchange
differences 275 2,490 48 5 11 2,829
Carrying
amount at 30
June 2010 3,269 33,190 565 64 190 37,278
---------- ------------- ------------ ---------- --------- --------
Construction Plant and Motor
Buildings in progress machineries Equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Carrying
amount at 1
January
2010 3,103 26,904 537 48 110 30,702
Additions - 5 6,606 50 120 6,781
Transfer 18,794 (28,394) 9,600 - - -
Disposals - - (15) (1) (1) (17)
Depreciation (216) - (92) (19) (41) (368)
Net exchange
differences 538 1,490 309 4 9 2,350
Carrying
amount at 31
December
2010 22,219 5 16,945 82 197 39,448
---------- ------------- ------------ ---------- --------- --------
9. Convertible loan notes
The convertible loan notes A&B (Notes A&B) were issued
between 3 November 2009 and 15 December 2009. The Notes A&B are
convertible into ordinary shares of the Company at any time between
the date of issue of the notes and their maturity date, i.e. three
years after the date of issue. The loan notes are convertible at
GBP0.32 per share. The effective interest rate used to calculate
the interest charged to the income statement was 12%. If the Notes
A&B have not been converted, they will be redeemed on their
maturity date at par. Interest of 10% per annum will be paid
biannually up until that date.
The convertible loan notes C (Notes C) were first issued on 23
June 2010. Additional Notes C with a nominal amount of GBP250,000
were issued on 11 March 2011. The Notes C are convertible into
ordinary shares of the Company at any time between the date of
issue of the notes and their maturity date, i.e. two years after
the date of issue. The loan notes are convertible at GBP0.50 per
share. The effective interest rate used to calculate the interest
charged to the income statement was 10%. If the Notes C have not
been converted, they will be redeemed on their maturity date at
par. Interest of 8% per annum will be paid biannually up until that
date.
The net proceeds received from the issue of the convertible loan
notes have been split between the liability element and an equity
component, representing the fair value of the embedded option to
convert the liability into equity of the Group, as follows:
Notes A&B Notes C Total
------------------------------ ----------------------------- -------
Gross Transaction Net Gross Transaction Net Net
amount costs amount amount costs amount amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Convertible loan
notes issued 3,004 188 2,816 1,380 96 1,284 4,100
Equity component (127) (8) (119) (44) (3) (41) (160)
-------- ----------- ------- ------- ----------- ------- -------
Liability component
at date of issue 2,877 180 2,697 1,336 93 1,243 3,940
Interest charged 566 119 685
Interest paid (405) (92) (497)
Liability component
at 30 June 2011 2,858 1,270 4,128
------- ------- -------
Notes A&B Notes C Total
------------------------------ ----------------------------- -------
Gross Transaction Net Gross Transaction Net Net
amount costs amount amount costs amount amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Convertible
loan notes
issued 3,004 188 2,816 1,025 74 951 3,767
Equity
component (127) (8) (119) (33) (2) (31) (150)
-------- ----------- ------- ------- ----------- ------- -------
Liability
component
at date of
issue 2,877 180 2,697 992 72 920 3,617
Interest
charged 221 2 223
Interest
paid - - -
Liability
component at
30 June 2010 2,918 923 3,840
------- ------- -------
Notes A&B Notes C Total
------------------------------ ----------------------------- -------
Gross Transaction Net Gross Transaction Net Net
amount costs amount amount costs amount amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Convertible
loan notes
issued 3,004 188 2,816 1,130 86 1,044 3,860
Equity
component (127) (8) (119) (36) (3) (33) (152)
-------- ----------- ------- ------- ----------- ------- -------
Liability
component
at date of
issue 2,877 180 2,697 1,094 83 1,011 3,708
Interest
charged 395 57 452
Interest
paid (255) (47) (302)
Liability
component at
31 December
2010 2,837 1,021 3,858
------- ------- -------
Interest charged for the six months ended 30 June 2010 is
reclassified from other payables to the liability component of the
convertible loan notes at 30 June 2010.
The directors estimate the fair value of the liability component
of the convertible loan notes at 30 June 2011 to be approximately
GBP4,128,000 (31 December 2010: GBP3,858,000).
10. Deferred tax
The group incurred tax losses of GBP864,000 (RMB9.1 million) in
the six months to 30 June 2011 which will be utilised resulting in
a deferred tax asset of GBP110,000 (effective tax rate of
12.5%).
The group also has unutilised tax losses of GBP1,559,000
resulting in an unprovided deferred tax asset of GBP312,000 at
current effective tax rate of 20%. Management is presently
reviewing the group's tax position and expects to crystalise this
asset going forward.
11. Earnings per share and dividends
6 months 6 months
to to Year to
30 June 30 June 31 December
2011 2010 2010
Profit after tax and
earnings attributable
to ordinary
shareholders - GBP'000 1,042 1,140 2,319
----------- ----------- ---------------
Profit after tax and
earnings attributable
to ordinary
shareholders for
calculation of diluted
earnings - GBP'000 1,042 1,140 2,665
----------- ----------- ---------------
Weighted average number
of shares (used for
basic earnings per
share) 68,184,559 66,399,991 66,399,991
Dilutive effect 523,772 70,098 10,148,880
----------- ----------- ---------------
Dilutive weighted
average number of
shares (used for
diluted earnings per
share) 68,708,331 66,470,089 76,548,871
----------- ----------- ---------------
Basic earnings per share
(pence) 1.53 1.72 3,49
----------- ----------- ---------------
Diluted earnings per
share (pence) 1.52 1.72 3.48
----------- ----------- ---------------
Basic earnings per share has been calculated on 68,184,559
shares (1H2010: 66,399,991 shares) and on attributable earnings of
GBP1,042,000 (1H2010: GBP1,140,000).
Diluted earnings per share has been calculated on 68,708,331
shares (1H2010: 66,470,089 shares) and on attributable earnings of
GBP1,042,000 (1H2010: GBP1,140,000).
In 1H2011, the 2009 Options granted to the Directors and
employees to subscribe 4,648,000 shares (1H2010: 4,648,000 shares)
at GBP0.355 per share have dilution effect on the calculation of
the diluted earnings per share as the market price of the Company's
shares was higher than the exercise price at 30 June 2011.
In 1H2011, the warrant granted to Strand Partners to subscribe
1,328,000 shares (1H2010: 1,328,000 shares) at GBP0.50 per share,
the convertible loan notes A&B (see note 8) issued, the
convertible loan notes C (see note 8) issued and the 2011 Options
granted to the Directors and employees (see note 7) to subscribe
1,950,000 shares (1H2010: nil) had no dilution effect on the
calculation of the earnings per share.
In 1H2010, the share options granted to the employees have
dilution effect on the calculation of the diluted earnings per
share as the market price of the Company's shares was higher than
the exercise price at 30 June 2010.
In 1H2010, the warrant granted to Strand Partners, the
convertible loan notes A&B issued and the convertible loan
notes C issued had no dilution effect on the calculation of the
earnings per share.
A maiden interim dividend of GBP0.0013 per share is proposed for
the period ended 30 June 2011 (1H 2010: nil).
12. Earnings Before Interest, Taxes, Depreciation and
Amortisation ("EBITDA")
The reconciliation of EBITDA to income statement is as
follows:
6 months 6 months
to to Year to
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Profit before
tax 1,808 1,875 3,753
Less:
Finance income (176) (98) (515)
Add:
Finance costs 558 345 726
Depreciation 281* 183 368
Amortisation 93 94 187
EBITDA 2,564 2,399 4,519
-------- -------- -----------
*Depreciation amount represents those expensed
off during the period. It is different from
the total depreciation charge for the period
of GBP688,000 as GBP407,000 of the charges were
capitalised in the inventory of the new soya
sauce products.
13. Segmental reporting
In identifying its operating segments, management generally
follows the Group's service lines, which represent the main
products and services provided by the Group. Management currently
identifies the Group's two service lines as operating segments.
The activities undertaken by the condiments segment include the
sale of cooking and dipping sauces. The activities undertaken by
the animal feed segment include the sale of animal feed. Each of
these operating segments is managed separately as each of these
service lines requires different technologies and other resources
as well as marketing approaches.
There were no inter-segment sales and transfers during the
period under review.
The measurement policies the Group used for segment reporting
under IFRS8 are the same as those used in its financial statements,
except that:
Expenses relating to share-based payments are not included in
arriving at the operating profit of the operating segments. In
addition, corporate assets which are not directly attributable to
the business activities of any operating segment are not allocated
to a segment. In the financial period under review, this primarily
applies to the Group's headquarters.
No geographical segment information is presented as the Group
mainly operates in the PRC.
Business segments
6 months to 30 June 2011 6 months to 30 June 2010 Year to 31 December 2010
Animal Animal Animal
feed Condiments Total feed Condiments Total feed Condiments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue from
external
customers 10,458 8,365 18,823 9,964 7,211 17,175 21,214 14,677 35,891
-------- --------------- ------------ -------- --------------- --------- --------- ------------- ----------------
Cost of sales (9,457) (4,892) (14,349) (9,036) (4,189) (13,225) (19,281) (8,779) (28,060)
Finance income 2 5 7 1 3 4 2 6 8
Finance costs - - - - (76) (76) - (134) (134)
Other expenses (211) (769) (980) (247) (693) (940) (449) (1,553) (2,002)
-------- --------------- ------------ -------- --------------- --------- --------- ------------- ----------------
Segment
operating
profit 792 2,709 3,501 682 2,256 2,938 1,486 4,217 5,703
Taxation (198) (677) (875) (171) (564) (735) (376) (1,058) (1,434)
-------- --------------- ------------ -------- --------------- --------- --------- ------------- ----------------
Segment profit
for the
period 594 2,032 2,626 511 1,692 2,203 1,110 3,159 4,269
-------- --------------- ------------ -------- --------------- --------- --------- ------------- ----------------
Segment assets 3,160 56,643 59,803 2,772 52,974 55,746 2,938 51,554 54,492
-------- --------------- ------------ -------- --------------- --------- --------- ------------- ----------------
Depreciation
and
amortisation 48 732 780 47 228 275 93 460 553
Unallocated
depreciation
and
amortization 1 2 2
------------ --------- ----------------
Total
depreciation
and
amortization 781 277 555
------------ --------- ----------------
The totals presented for the Group's operating segments reconcile to the entity's key financial
figures as presented in its financial statements as follows:
As at As at As at
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Revenues
Total segment
revenue 18,823 17,175 35,891
-------- -------------- --------------------------
Group revenues 18,823 17,175 35,891
-------- -------------- --------------------------
Profit or loss
Segment
operating
profit 3,501 2,938 5,703
Finance income
not
allocated 169 94 507
Finance costs
not
allocated (558) (269) (592)
Other expenses
not
allocated (1,304) (888) (1,865)
-------- -------------- --------------------------
Group profit
before tax 1,808 1,875 3,753
-------- -------------- --------------------------
As at As at As at
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Assets
Total segment
assets 59,803 55,746 54,492
Group
headquarters 294 1,044 184
-------- -------------- --------------------------
Total assets 60,097 56,790 54,676
-------- -------------- --------------------------
14. Interim Financial Statements
A copy of China Food's interim financial statements is available
from the Company's registered office at 49 Whitehall, London SW1A
2BX, registered company no: 06077223 and is also available for
download from the Company's website at www.chinafoodcompany.com
15. Independent review report to China Food Company PLC
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2011 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of cash
flows, the condensed consolidated statement of changes in equity,
and notes 1 to 14. We have read the other information contained in
the half yearly financial report which comprises only the
Chairman's Statement and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with
guidance contained in ISRE (UK and Ireland) 2410, 'Review of
Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we
might state to the company those matters we are required to state
to them in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors.
As disclosed in Note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting,' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2011 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union.
GRANT THORNTON UK LLP
AUDITOR
LONDON
1 September 2011
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BSGDCSXGBGBB
China Food Co. (LSE:CFC)
Historical Stock Chart
From Aug 2024 to Sep 2024
China Food Co. (LSE:CFC)
Historical Stock Chart
From Sep 2023 to Sep 2024
