2014

Sino Agro Food, Inc. Reports Record Quarterly Revenue of $55.1M with EPS of $.16 -- Record Revenues Grow 245% to $55.1 Million

-- Record Net Income Grows 191% to $16.4 Million

GUANGZHOU, China, May 16, 2013 /PRNewswire/ -- Sino Agro Food, Inc. (OTC BB: SIAF.OB), an emerging integrated, diversified agriculture technology and organic food company ("the Company") with principal operations located throughout the People's Republic of China ("PRC"), is pleased to announce financial results for the quarter ended March 31, 2013:

 

Consolidated Financial Summary:


Q1 2013

Q1 2012

Change

Revenue


$55,107,751

$15,980,016

245%

Gross Profit


$21,522,817

$8,013,592

169%

Net Income (Continuing Ops)


$16,378,772

$5,632,769

191%






Basic EPS (Continuing Ops)


$0.16

$0.08

100%

Diluted EPS (Continuing Ops)


$0.14

$0.07

100%

 

Revenues of $55.1M in the first quarter continued a string of four consecutive sequential quarterly records. In the upcoming conference call, the Company will discuss 2013 guidance, anticipating continued record results.

This quarter's revenues exceeded revenues for the full year of 2011.  During the quarter, stockholders' equity increased by $24,750,595 to $241,841,337.

A primary driver of this quarter's revenue growth was the strategic and incremental layering of the Company's new businesses. This was the first quarter that included sales from the import and export operation, which sold nearly 600 tons of seafood, and contributed $5.7M to revenues.

Fishery Division Performance

Revenue from the fishery division increased by $20,772,686 or 187% to $31,867,295 for the three months ended March 31, 2013 from $11,094,609 for the three months ended March 31, 2012. The increase was primarily due to the Company's increased contract service income from fishery and prawn development contracts, and the sale of fish for the three months ended March 31, 2013 versus consulting income and sale of fish for the three months ended March 31, 2012.

The price of sleepy cod dropped sharply from $25/kg to just over $16/kg on average in the first quarter. Whereas the volume of sleepy cod sold at Jiang Men City A Power Fishery Development Co., Limited ("JFD"), which operates what the company refers to as "Fish Farm 1" averaged over 80 MT per month, the decrease in price contributed to a decrease in the Company's overall gross profit margin. The sensitivity of gross margins to sleepy cod prices, or the price of any fish or prawn species will be dramatically reduced as more varied species are sold. New fish and prawn species are expected be sold during 2013 and beyond.

The Company plans to nurture Flower Pattern Eels' fingerlings into adult eels (500 gram / eel and upward) that will be supplied to Fish Farm 1 and the open dam farm and for these farms to grow the adult eels into marketable sized eels (1.5 kg / eel and larger) which at present are selling at high prices of $27 - $28 per kg. The Company expects its first shipment of fingerlings imported from Madagascar to arrive in China during the third week of May 2013.

The price of live prawn species rose on average over 100% in the first quarter of this year versus the same period in 2012. Currently wholesale prices for Mexican White prawns average $12/kg to $32/kg, depending on size. There is a corresponding increase in grow out time.  Prices are much higher for other species including Green Prawns.  On April 22, 500,000 prawn flies were placed at Prawn Farm 1, commencing the production operation at the first indoor prawn farm in Asia. The Company expects to produce 250-300 MT of prawns in 2013.

In March of 2013, Prawn Farm 2 sold its first Green Prawn flies, and increased sales of Mexican White flies by 33% over February.

With the current work schedule planned to capacity for the fishery division, the Company does not expect to take on any new fish farm construction and development projects until the third quarter of 2013.

Beef Division Performance

Revenue from the Beef Division increased by $2,865,557 or 73% to $6,795,837 for the three months ended March 31, 2013 from $3,930,280 for the three months ended March 31, 2012. The increase was primarily due to the increase in productivity of the cattle rearing division of Qinghai Sanjiang A Power Agriculture Co. Ltd. ("SJAP") and related sales.

At SJAP, construction work is on-going targeting 17 new cattle houses and related facilities by the end of 2013. There are currently 12. The Company expects this to provide the capacity for the rearing of 6,000 head of cattle annually, based on a six-month rotation. Additional head of cattle are expected to be sold through the cooperative of local farmers. Construction of the abattoir, deboning factory and related packaging facilities commenced April 21, 2013. 

Cattle Farm 1 sold 450 head of cattle in the first quarter. On April 22, 2013, 180 head were being shipped to Beijing City to be sold to a wholesaler specializing in supplying top quality beef to top hotels and restaurants. The Company is currently establishing a Cattle Station and related facilities within the Central Cattle Market and Facility of Beijing City, to distribute its own aromatic beef to top hotels and restaurants. This is the first in a broader interstate wholesale distribution development plan.

Organic Fertilizer Division Performance

Revenue from the Organic Fertilizer Division increased by $8,069,001 to $8,082,062 for the three months ended March 31, 2013 from $13,061 for the three months ended March 31, 2012. The increase was primarily due to the start up at the Hunan Shenghua A Power Agriculture Co., Limited ("HSA") division of sales of pure organic mixed fertilizer ("POMF") and by additional revenues from the newly built Concentrated Livestock Feed ("CLSF") factory at SJAP. The Fertilizer Division contributed 14.7% of revenues in the quarter, versus 6.6% in the full year 2012. Gross profit of $3,990,186 accounted for 18.5% of total gross profit, versus 5.5% in the full year 2012.

The new POMF factory targets to reach 2013 sales of 30,000 MT; the new CLSF factory is designed with an annual capacity of 60,000 MT.

Cattle Farm Division Performance

Revenue from the cattle farm division increased by $7,420,491 to $8,362,557 for the three months ended March 31, 2013 from $942,066 for the three months ended March 31, 2012.  The increase was primarily due to the increase of production and sales of cattle in Cattle Farm 1 for the three months ended March 31, 2013.

At SJAP, the Xining cattle farm, an additional 1,500 acres of land will be cropped and pastured, bringing the total to 6,500 acres granted rent free to SJAP from the local government.

Shared Marketing, Distribution and Retail Services

Marketing, distribution, and retail activities were established in 2012 as services shared by the wholesale operations to enhance and facilitate sales.

In the first quarter of 2013, the Import-Export Division sold almost 600 MT of seafood from Norway and Southeast Asia, and generated revenues of $5.7M. In April 2013 the Chinese Authorities for Imported Quotas approved the application for import of Flower Pattern Eels, Mud Crabs and Lobsters via a third party entity acting for and on behalf of the Company. Arrangements have been for import from Madagascar, and the company intends to build and outfit packaging and holding facilities to receive and pack live seafood for export from Madagascar to China.

Construction is progressing well on the Seafood and Beef Wholesale Centers 1 and 2, such that each will generate its initial revenues from the Fishery and Beef Divisions and/or from other Chinese wholesalers in the second quarter.

Other development work is proceeding on schedule, including the new Trading Center and the Leonie chain's Central Kitchen and Bakery, which is scheduled to complete late in the second quarter. The third Leonie's restaurant started operation in March, and the fourth is scheduled to open in late May or early June.

Consolidated Results

Revenue

Revenue increased by $39,127,734 or 245% to $55,107,751 for the three months ended March 31, 2013 from $15,980,016 for the three months ended March 31, 2012. The increase was primarily due to the natural growth of revenue generated from the fishery, organic fertilizer, beef and cattle farm, and the maturity of on-going divisional businesses improving.

The following chart illustrates the changes by business segment from the three months ended March 31, 2013 to three months ended March 31 2013.

Category 

2013

2012

Difference  

Change 






Fishery  

$31,867,295

$11,094,609

$20,772,686

187%

Plantation   

-

-

-

-

Organic Fertilizer 

$8,082,062

$13,061

$8,069,001

61,779%

Beef  

$6,795,837

$3,930,280

$2,865,557

73%

Cattle Farm  

$8,362,557

$942,066

$7,420,491

788%

Total  

$55,107,751

$15,980,016

$39,127,735

245%

 

Cost of Goods

Cost of Goods Sold increased by $25,618,510 or 322% to $33,584,934 for the three months ended March 31, 2013 from $7,966,424 for the three months ended March 31, 2012.  The increase was primarily due to the Company increasing its scale of operation - fishery, organic fertilizer, beef and cattle farm for the three months ended March 31, 2013 as compared for the three months ended March 31, 2012.

Gross Profit

Gross profit increased by $13,509,225 or 169% to $21,522,817 for the three months ended March 31, 2013 from $8,013,592 for the three months ended March 31 2012.  The increase was primarily due to the corresponding increase in revenues from fishery organic fertilizer, and beef and cattle farm operations.

General and Administrative Expenses

General and Administrative expenses (including depreciation and amortization) in continuing operations decreased by $16,934 0r 0.76% to $2,205,388 for the three months ended March 31 2013 from $2,222,322 for the three months ended March 31 2012. The decrease was primarily due to a decrease in general office and corporate expenses, and wages and salaries amounting to $103,274 and $358,358 respectively, offset by increases in depreciation and amortization and miscellaneous expenses of  $231,304 and $190,738 respectively.

Earnings Call Information

The Company will host an earnings call and web conference on May 20, 2013 at 11:00 AM EDT to discuss financial results for the first quarter of 2013, with questions and answers. To participate in the conference call please use the following information:

SIAF 2013 First Quarter Earnings Call Information

Date: May 20, 2013

Time: 11 :00 AM, U.S. Eastern Daylight Time

Participant Dialing Instructions:

Toll Free Number:

(1-800) 766-1337

Direct Dial Number:

(1-404) 920-6210

Conference Code:  2423733#

An audio replay of the conference call will be made available in the Investor Relations section of the Company's web site.

 

SINO AGRO FOOD, INC.

CONSOLIDATED BALANCE SHEETS




March 31, 2013



December 31, 2012



(Unaudited)



(Audited)

ASSETS






Current assets








Cash and cash equivalents


$

10,817,922



$

8,424,265

Accounts receivable, net of allowance for doubtful accounts



71,460,325




52,948,350

Inventories



17,052,765




17,114,755

Costs and estimated earnings in excess of billings on uncompleted contracts



2,899,438




2,336,880

Deposits and prepaid expenses



51,836,098




47,308,857

Other receivables



6,222,208




5,954,248

Total current assets



160,288,756




134,087,355

Property and equipment








Property and equipment, net of accumulated depreciation



19,765,409




19,946,302

Construction in progress



25,004,520




24,492,510

Land use rights, net of accumulated amortization



55,504,586




55,733,246

Total property and equipment



100,274,515




100,172,058

Other assets








Goodwill



724,940




724,940

Proprietary technologies, net of accumulated amortization



8,005,417




8,114,624

License rights



1




1

Total other assets



8,730,358




8,839,565

Total assets


$

269,293,629



$

243,098,978

LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities








Accounts payable and accrued expenses


$

7,325,322



$

5,762,643

Billings in excess of costs and estimated earnings on uncompleted contracts



2,099,026




2,790,084

Due to a director



2,007,278




3,345,803

Dividends payable



-




951,308

Other payables



9,507,858




6,654,478

Short term bank loan



3,190,352




3,181,927




24,129,836




22,686,243

Non-current liabilities








Deferred dividends payable



3,146,987




3,146,987

Long term debts



175,469




175,006




3,322,456




3,321,993

Commitments and contingencies



-




-

Stockholders' equity








Preferred stock: $0.001 par value








(10,000,000 shares authorized, 0 share issued and outstanding as of  

  March 31, 2013 and December 31, 2012, respectively)








Series A preferred stock:  $0.001 par value



-




-

(100 shares designated, 100 shares issued and outstanding as of  

  March 31, 2013 and December 31, 2012, respectively)








Series B convertible preferred stock:  $0.001 par value)



7,000




10,000

(10,000,000 shares designated, 7,000,000 and 10,000,000 shares issued  and

  outstanding) as of  March 31, 2013 and December 31, 2012, respectively)








Series F Non-convertible preferred stock:  $0.001 par value)








(1,000,000 shares designated, 0 shares issued  and outstanding) as of  

  March 31, 2013 and December 31, 2012, respectively)








Common stock:  $0.001 par value



110,349




100,005

(130,000,000 shares authorized, 110,349,588 and 100,004,850 shares issued

  and outstanding as of  March 31, 2013 and December 31, 2012, respectively)








Additional paid - in capital



96,341,234




91,216,428

Retained earnings



120,243,080




103,864,308

Accumulated other comprehensive income



3,628,188




3,868,274

Treasury stock



(1,250,000)




(1,250,000)

Total Sino Agro Food, Inc. and subsidiaries stockholders' equity



219,079,851




197,809,015

Non - controlling interest



22,762,486




19,281,727

Total stockholders' equity



241,841,337




217,090,742

Total liabilities and stockholders' equity


$

269,293,629



$

243,098,978


The accompanying notes are an integral part of these consolidated financial statements.

 

SINO AGRO FOOD, INC.

CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME




Three months ended



Three months ended



March 31, 2013



March 31, 2012



(Unaudited)



(Unaudited)







Revenue


$

55,107,751



$

15,980,016

Cost of goods sold



33,584,934




7,966,424

Gross profit



21,522,817




8,013,592

General and administrative expenses



(2,205,388)




(2,222,322)

Net income from operations



19,317,429




5,791,270

Other income








Government grant



79,759




79,365

Other income



18,189




415,888

Gain on extinguishment of debts



552,988




255,151

Interest expense



(57,052)




-

Net income



593,884




750,404

Net income  before income taxes



19,911,313




6,541,674

Provision for income taxes



-




-

Net income



19,911,313




6,541,674

Less: Net (income) attributable to the non - controlling interest



(3,532,541)




(908,905)

Net income from continuing operations attributable to the Sino Agro Food, Inc. and subsidiaries



16,378,772




5,632,769

Other comprehensive income








Foreign currency translation (loss) gain



(291,868)




620,357

Comprehensive income



16,086,904




6,253,126

Less: other comprehensive (income)  attributable to the non - controlling interest



51,782




(155,089)

Comprehensive income attributable to the Sino Agro Food, Inc. and subsidiaries


$

16,138,686



$

6,098,037

Earnings per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:








Basic


$

0.16



$

0.08

Diluted


$

0.14



$

0.07

Weighted average number of shares outstanding:








Basic



105,385,902




68,747,617

Diluted



115,252,569




75,747,617


The accompanying notes are an integral part of these consolidated financial statements.

 

SINO AGRO FOOD, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS




Three months ended



Three months ended



March 31, 2013



March 31, 2012



(Unaudited)



(Unaudited)






(Restated)







Cash flows from operating activities








Net income


$

19,911,313



$

6,541,674

Adjustments to reconcile net income to net cash from operations:








Depreciation



307,075




57,624

Amortization



337,867




374,729

Common stock issued for services



90,600




1,069,528

Gain on extinguishment of debts



(552,988)




(255,151)

Changes in operating assets and liabilities:








Decrease (increase) in inventories



61,990




(115,181)

(Increase) decrease in costs and estimated earnings in

  excess of billings on uncompleted contacts



(562,558)




456,104

Increase in deposits and prepaid expenses



(4,617,840)




(12,474,802)

(Decrease) increase in due to a director



(1,341,525)




2,263,024

Increase (decrease) in  accounts payable and accrued expenses



1,562,679




(281,085)

Increase in  other payables



8,531,754




12,273,088

(Increase) decrease in accounts  receivable



(18,511,975)




2,387,345

(Decrease) increase in billings in excess of costs and

  estimated earnings on uncompleted contracts



(691,058)




78,333

Decrease in amount due to related parties



-




(17,474)

(Increase) in other receivables



(267,960)




(7,361,132)

Net cash provided by operating activities



4,257,374




4,996,624

Cash flows from investing activities








Purchases of property and equipment



(126,182)




(7,223)

Acquisition of proprietary technologies



-




(1,500,000)

Business combination of a subsidiary



-




(1,288,865)

Investment in unconsolidated equity investee



-




(1,076,489)

Payment for construction in progress



(512,010)




(669,461)

Net cash used in investing activities



(638,192)




(4,542,038)

Cash flows from financing activities








Non - controlling interest contribution



-




3,324,729

Dividends paid



(951,308)




(134,631)

Net cash (used in) provided by  financing activities



(951,308)




3,190,098

Effects on exchange rate changes on cash



(274,217)




(915,866)

Increase in cash and cash equivalents



2,393,657




540,355

Cash and cash equivalents, beginning of period



8,424,265




1,387,908

Cash and cash equivalents, end of period



10,817,922




1,928,263

Supplementary disclosures of cash flow information:








Cash paid for interest


$

57,052




-

Cash paid for income taxes



-




-

Non - cash transactions








Common stock issued for settlement of debts


$

5,115,041



$

2,118,841

Series B Convertible preferred shares cancelled


$

(3,000)



$

-

 

About Sino Agro Food, Inc.

Sino Agro Food, Inc. ("SIAF") (http://www.sinoagrofood.com) is an integrated, diversified agricultural technology and organic food company focused on developing, producing and distributing agricultural products in the People's Republic of China. The Company intends to focus on meeting the increasing demand of China's rising middle class for gourmet and high-quality food items. Current lines of business include the manufacture and distribution of beef and lamb products, fish products, bioorganic fertilizer, stock feed and cash crops.

Not a Broker/Dealer or Financial Advisor

Sino Agro Food, Inc. is not a Registered Broker/Dealer or a Financial Advisor, nor does it hold itself out to be a Registered Broker/Dealer or Financial Advisor. All material presented in this press release, on the Company's website or other media is not to be regarded as investment advice and is only for informative purposes. Readers should verify all claims and conduct their own due diligence before investing in Sino Agro Food, Inc.

Investing in small-cap, micro cap and penny stock securities is speculative and carries a high degree of risk.

No Offer of Securities

None of the information featured in this press release constitutes an offer or solicitation to purchase or to sell any securities of Sino Agro Food, Inc.

Forward Looking Statements

This release contains certain "forward-looking statements" relating to the business of SIAF and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "believes, expects" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on SIAF's current expectations and beliefs concerning future developments and their potential effects on SIAF. There can be no assurance that future developments affecting SIAF will be those anticipated by SIAF. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. SIAF undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

SOURCE Sino Agro Food, Inc.



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