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| Business Transformaation Nearly Completed to Benefit from Rapid Growth of Domestic Consumption and Dairy Market in China |
HONG KONG, Nov 2, 2010 - (ACN Newswire) - Natural Dairy (NZ) Holdings Limited and its subsidiaries ("Natural Dairy" or the "Group", Stock Code: 0462), have announced its annual results for the 14 months ended 31 May 2010.
For the 14 months ended 31 May 2010, revenue of the Group amounted to HK$59,576,000, 989% higher compared with the 12-month FY 2009 period, mainly attributable to the introduction of the food and beverage trading. However, the Group recorded an annual operating loss of HK$203,244,000 under the Hong Kong Accounting Standard due to the revaluation and reconsolidation of its wholly-owned subsidiary's iron mining assets which were transferred illegally. Basic and diluted loss per share was HK cents 37.95. As at 31 May 2010, net assets were HK$508 million and net cash inflow from capital fundraising activities reached HK$808 million, indicating a very strong financial position.
Within just one year, the Group has turned around from liabilities of approximately HK$90 million to total assets of approximately HK$1,400 million. The Group's market capitalisation has also surged from HK$92.69 million to HK$4,000 million (as at the suspension of trading on 6 September). Through the reconsolidation, the Group has transformed from an electronic engineering trading and mining company to a dairy product enterprise and organic beverage manufacturer, to tap the huge potential created by the enormous market in China and growing consumer demand for quality and reliable diary products.
Of the convertible bonds for 963,000,000 shares issued by the Group, 913,000,000 shares were converted into ordinary shares (excluding the 50 million shares remaining as convertible bonds). To date, the total number of issued share capital in the Group is 1,862,563,199 shares. With strong confidence in the Group's high-end dairy business and the dairy product industry chain concept and its management capability, bond investors have agreed to convert their convertible bonds into share capital and become shareholders of the Group. This has substantially strengthened the Group's balance sheet and created a more solid financial structure for the Group.
Mr Wu Neng Kun, Chairman of the Group, said, "In the past year, our experienced management team has led the Group's transformation into an enterprise focusing on the production, processing and sales of higher margin dairy products. Our business is heading in the right direction. Our strategic repositioning is based on two considerations. First, the melamine contamination issue in China's dairy industry in 2008 revealed the huge market and growth potential for imported quality dairy products in China. Second, as dairy products are daily food products, demand is less affected by macroeconomic cycles compared to our previous core businesses. Therefore, we believe that the shift to dairy products will turn us back to profitability and better development."
From 2009 to 2010, the Group has embarked on three substantial acquisitions to establish a vertically-integrated business structure. The target company of the first acquisition owns 22 dairy properties with an aggregate area of approximately 8,674 hectares covering quality grassland in New Zealand with approximately 35,000 dairy cattle ensuring a high quality milk supply suitable for dairy farm operation. The target company of the second acquisition is Global Food Holdings Limited ("Global Food"), which owns production lines and the license of the trademark. The beverage and sweet rice congee under Global Food's brand have been prominent in China for a long time, enjoying nationwide popularity which can reinforce the sales and distribution network of the Group. The Group plans for its integrated industry chain to span farmland, dairy cattle and milk powder production plants in New Zealand ("the third acquisition"). The Group has decided to terminate the application of the third acquisition to obtain the permit of early resumption of trading in its stock.
In the meantime, the management has also set its development strategy and business objectives, with an aim to become a leading enterprise in China's dairy industry. The Group intends to produce 150 million packets (250ml) of pasteurized ultra-high temperature (UHT) processed fresh farm milk from its farms in New Zealand next year. It will also expand its product mix by adding new flavours of UHT milk such as blueberry, strawberry and chocolate, as well as new products including colostrums, and good night milk and milk powder for babies. In the next few years, the Group will open stores in 24 provinces throughout China via partnership or direct investment. Besides, it will use its own business resources in New Zealand and the beverage production and processing techniques to develop Noni juice and Noni wine, which have natural healing and health-care qualities. This business line, combined with its dairy business, will create synergies and represents a promising income stream.
Looking ahead, Mr. Eric Yee, senior management of the Group, said, "The Chinese Government has strived to boost domestic consumption and implemented policies to increase the income of people living in cities. These initiatives, together with accelerated urbanisation, should lead to increased consumer spending on dairy products. In the past four years, the sales amount of dairy products in China surged at a CAGR of more than 30%, exceeding RMB200 billion in 2009, creating a good operational environment for the dairy industry. By locating our main production base in New Zealand and our major markets in Mainland China, the appreciation in RMB will enhance our cost advantage and promote our profitability. We believe that the quality milk from New Zealand married with our well-established extensive sales network in China should boost us to a leadership position in China's high-end dairy industry, and generate solid and reasonable returns for our shareholders."
News Summary:
The Group has appointed Ms Gaile Lok, a world renowned model, as the spokesperson of Natural Dairy's products, as her healthy image reflects the Group's pursuit for natural healthy dairy products. The advertisement was filmed in New Zealand.
New Zealand is recognised for its high quality milk, cattle breeds and grassland, advanced processing technology of dairy products and one of the world's most stringent quality control and supervision systems, inspiring the trust of Chinese consumers
The Group's existing food and beverage trading business provides a well-established extensive sales network for the sales of dairy products in the future, to increase its market share and enhance its competitiveness
The appreciation of the RMB and the operational cost advantage, i.e. overseas processing complementing a domestic sales network, will boost the profitability of the Group
With increasing domestic demand set as a top priority in China's Twelfth Five-year Plan, Government determination to increase the income of urban residents will substantially increase consumer spending power and consumption of high-end imported dairy products
About Natural Dairy (NZ) Holdings Limited:
Natural Dairy (NZ) Holdings Limited and its subsidiaries mainly engaged in food processing, manufacturing and distribution. The Group is undergoing a business transformation. The production and sale of dairy products will be as the main business. Relying on its quality milk from New Zealand and a strong distribution network in Mainland China, the Group aims to become a leading high-end dairy enterprise.
Contact:
Strategic Financial Relations (China) Limited
Ms. Nan Dong
Tel: +852 2864 4811
nan.dong@sprg.com.hk
Ms. Winnie Lau
Tel: +852 2864 4876
winnie.lau@sprg.com.hk
Ms. Candy Chan
Tel: +852 2114 4968
candyyc.chan @sprg.com.hk
Fax no.: +852 2527 1271
Topic: Press release summary
Source: Natural Dairy (NZ) Holdings Limited
Sectors: Daily Finance, Food & Beverage
https://www.acnnewswire.com
From the Asia Corporate News Network
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