China Green releases profit warning

5 reasons cited for impending loss.

China Green (Holdings) Limited's board of directors informed company shareholders and potential investors that, based on the unaudited financial information currently available to management, Group is expected to record a loss attributable to owners of the Company for the six months ended 31 October 2013 as compared with the profit attributable to owners of the Company for the corresponding period in 2012.

The company's anticipated loss was mainly attributed to five factors.

First, the increase in revenue from the Group’s branded beverage products segment was partly offset by an increase in raw materials costs and labour costs, resulting in a lower increase of operational profit from the Group’s branded beverage products segment.

Second, revenue decreased and there will be an expected loss from the Group’s fresh produce and processed products for the six months ended 31 October 2013 compared to the profit for the corresponding period in 2012.

"Such decline in operational performance of the Group’s fresh produce and processed products is mainly due to weakened demand from Japan, one of our key markets for the Group’s fresh produce and processed products, as a result of the continuous diplomatic tension between China and Japan as well as the continuous appreciation of Renminbi against Japanese Yen making exports to Japan comparatively more expensive," the board of directors said.

Third, there was an increase in amortisation of prepaid rentals and corresponding expenditures of the Baicheng Base in Jinlin Province which comprises 200,000 mu of farmland for the six months ended 31 October 2013 compared to 50,000 mu of farmland for the corresponding period in 2012.

Fourth, finance expenses also rose due to the fact that the Company’s convertible bond was in default since 12 April 2013 attracting default interest payment. The convertible bond was subsequently restructured on 13 November 2013.

Fifth and last, the firm posted an accounting provision for loss of approximately RMB31 million due to the disposal of a subsidiary announced in 20 October 2013.

The company said it is still in the process of finalising the interim results for the six months ended 31 October 2013, so the information it revealed is only based on the preliminary assessment by the management of the Group with reference to financial information currently available. The actual results for the Group may be different from what is disclosed in this announcement.

Further details of the Group’s performance will be disclosed in the interim results announcement of the Company for the six months ended 31 October 2013 which is scheduled to be published in late December 2013.