TIDMCFC
RNS Number : 2147A
China Food Company PLC
28 March 2012
Press Release 28 March 2012
China Food Company Plc
("China Food" the "Company" or the "Group")
Trading Update
China Food Company plc (AIM: CFC), a leading Chinese
manufacturer of cooking and dipping sauces, is pleased to provide
an update on trading following its year end of 31 December
2011.
Revenue is expected to increase by 12% to over GBP40 million
with approximately GBP16.9 million contributed from the condiments
business and approximately GBP23.3 million from the animal feed
business. The Group's soya sauce business grew by 27% during the
year, largely driven by "Xaka", the Group's premium-grade soya
sauce which was launched in October 2011. The Board anticipates
that profit before interest and tax will be as previously announced
at approximately GBP1 million. EBITDA is expected to be GBP1.9
million, after accounting for the exceptional launch costs of Xaka,
which were approximately GBP2.6 million, which when excluded, would
give an EBITDA of GBP4.5 million. The Group's cash position remains
strong with GBP6.58 million and net assets of approximately GBP39
million as at 31 December 2011.
Since the period end, trading has been in line with
expectations. The Board remains positive about its "Xaka" product
line as part of its broader strategy to become a notable north
China condiments player, and the Company participated in the
National Summer Food Fair in Chengdu, Sichuan Province in China
from 23 March 2012 in order to maintain the momentum that has been
built, increase brand awareness and seek more distribution
partners.
To date, the Company has signed up 118 tier-one distributors and
has rolled out "Xaka" across over 2500 retail outlets in northern
China with a strong emphasis in Shandong. The Company is working
with these distributors to build local brand awareness through
localised promotion strategies to publicise China Food's products.
In particular, the Company invested significantly in Q4 2011 in
heightening consumer awareness of the "Xaka" branding and
canvassing tier 1 distributors. This investment significantly
impacted the profitability of the Company in 2011, and the Board
anticipates that this will continue into 2012 whilst the Group
continues to build its network and consumer awareness. The Board
expects the benefits of this investment to become visible in terms
of revenues in H2 2012 and beyond.
In line with China Food's stated strategy, the Company is
developing its product range to be a market leader in northern
China. Given the growth profile of this market, the Board is
currently exploring the possibility of partnering with an
international food brand in order to expedite the Company's market
penetration for condiments. To date, the Company has been
approached by a number of international corporations and as a
consequence, is now looking to broaden such discussions.
Further to the announcement made on 15 February 2012 regarding
the Company's animal feed business, the proposed disposal of Fuss
Feed continues to progress as planned with due diligence in
progress. The Company will provide a further update as
appropriate.
Amidst the global economic uncertainty China is still forecast
to grow at 7.5%, albeit at a slightly slower rate than previously
due to reduced export levels. New initiatives to boost domestic
expenditure, including reducing interest rates and releasing
capital into the banking system, may positively impact consumers'
purchasing power. In 2011, urban and rural disposable income per
capita increased 8.4% and 11.4% respectively, continuing the
growing affluence and affirming the Company's strategy to produce
higher quality products.
John Mclean, Non-Executive Chairman of China Food, said: "The
Board is pleased with the progress that has been made during the
period, and is excited about the opportunities that exist in the
market. With the Group's recently increased capacity, the
opportunity for international expansion is significant, and our
domestic market penetration continues to progress to plan. We look
forward to giving shareholders a full update at the Preliminary
Results which we anticipate releasing by mid May."
- Ends -
For further information:
China Food Company Plc
John McLean, Non-Executive Chairman Tel: +44 (0) 7768 031
454
Raphael Tham Wai Mun, Chief Executive
www.chinafoodcompany.com
Numis
David Poutney - Head of Corporate Tel: +44 (0) 20 7260
Broking 1000
finnCap (Nomad)
Geoff Nash / Ben Thompson (Corporate Tel: +44 (0) 20 7220
Finance) 0500
Simon Starr (Broking)
Media enquiries:
Abchurch Communications
Henry Harrison-Topham / Joanne Shears Tel: +44 (0) 20 7398
/ Mark Dixon 7709
mark.dixon@abchurch-group.com www.abchurch-group.com
Notes to Editors:
China Food is a well-established food manufacturing business
based in Shandong province in the People's Republic of China, a
region with a population of circa 94 million. A recent report
identified Shandong province as one of the five most attractive
'city clusters' in China, due to the high number of large cities in
the province*. The Group manufactures numerous different product
lines including soya sauce and bean paste, all targeting the
Chinese domestic market, and sold through a network of distributors
and outlets of supermarket chains in the north-eastern region of
the PRC, such as Tesco, Walmart, Carrefour and Jialejia.
The Chinese sauces, dressings and condiments market is expected
to be worth CNY115 billion (US$15 billion) by 2013**, driven by
Chinese population growth and economic prosperity. The Chinese
domestic market is rapidly expanding, and the Group is well
positioned to benefit from China's demographic growth and increased
urbanisation.
The first phase of expansion is now complete at the Group's new
factory, which was officially opened on 12 May 2010, and this
doubles China Food's current capacity. It is proposed that in due
course there will be a further two phases, adding capacity of
100,000 tonnes through the building of 230 additional silos. The
Group plans to expand into the neighbouring provinces such as Henan
and Hebei.
The Group also operates an animal feed business, Fuss Feed. This
business produces premix, concentrate and compound feedstuffs, and
is the third largest animal feed business in Shandong, an important
province for the production of livestock in China.
The Group's operations are highly scalable and able to support
further growth, and with net assets of GBP39 million (as at 31
December 2011), the prospects for China Food are strong. Further
information on China Food Company can be found at
www.chinafoodcompany.com.
*McKinsey Quarterly Report: Is your emerging market strategy
local enough?, April 2011
** Source: Datamonitor report: Sauces, Dressings and Condiments
in China to 2013, April 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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