Sino Agro Food, Inc. Reports Revenue of $41.3M With EPS of $0.22 for 1st Half 2012 $25.3 Million in Revenue for 2nd Quarter Representing 278% Growth over 2nd Quarter of 2011

GUANGZHOU, China, Aug. 14, 2012 /PRNewswire/ -- Sino Agro Food, Inc. (OTCBB: SIAF.OB), an emerging integrated, diversified agriculture technology and organic food company with its principal operations located throughout the Peoples Republic of China ("PRC"), is pleased to announce financial results for its 2nd Quarter of 2012.

Consolidated Financial Summary:



Q2 2012

Q2 2011

Change

Revenue

$25,348,287

$6,705,370

278%

Gross Profit

$13,558,248

$3,823,722

254%

Net Income Continued Op's

$11,405,729

$3,774,142

202.21%

Basic EPS Continued Op's

$0.14

$0.05

180%

Diluted EPS Continued Op's

$0.13

$0.05

160%

Earnings Call Information

The Company will host an earnings call on August 24, 2012 at 12:00 PM EDT to discuss financial results for the 2nd Quarter of 2012. To participate in the conference call please make note of the following information:

Date: August 24, 2012

Time: 12:00 PM, U.S. Eastern Daylight Time


Participant Dialing Instructions:

Toll Free Number: 1.800.868.1837

Direct Dial Number: 1.404.920.6440

Conference Code: 466928#


Conference Playback Instructions:

Toll Free Number: 1.800.704.9804

Direct Dial Number: 1.404.920.6604

Conference Code: * then 466928#

Aquaculture Operations

Revenue from fishery increased by $13,244,291, or 518%, to $15,799,765 for the three months ended June 30, 2012 from $2,555,474 for the three months ended June 30, 2011. The increase was primarily due to our increased contract service income from fishery, wholesale center one and prawn development contracts and sale of fish for the three months ended June 30, 2012 compared to consulting income and sale of fish for the three months ended June 30, 2011.

(1) The 1st Demonstration fish farm (Fish Farm 1), situated within the district of Enping City operating under "Jiangman A Power Fishery Development Co. Ltd." ("JFD"), was built and completed for operation in February 2011 and is underway with production.  During the second quarter of 2012, Capital Award, Inc. ("CA") purchased from JFD and sold just under 260,000 fish of the sleepy-cod variety averaging about 532g/fish compared to Q1 where 76,000 sleepy-cod @ 575g/fish were sold. Between external growers and the open dam farm, CA purchased 230,000 sleepy cod (350g/fish average) to expand JFD's inventory.

(2) The 1st Demonstration prawn farm (Prawn Farm 1) is also situated within the district of Enping City. As of April 30, 2012, all basic infrastructure work had been carried out with construction work now in progress.  A long-lasting rainy season that had begun in mid-April and continued through the month of July has curtailed construction, and while progress has been made, the farm building, brood-stock dams, and grow-out tanks expected to be partly constructed by the end of July will not be ready for final installation work until August of 2012.

(3) The 2nd Fish and Eel Farm (Fish Farm 2) is situated within District of Jiangman City. Its development was begun in May of 2011, and management expects the Company's Phase 1 to be completed during 2012, and Phase 2 development, (involving the grow-out farms, the nursery fingerling farm, the Research and Development Station and all other associated facilities), will begin during January of 2013 with production operations beginning by year-end 2013.

(4) The 2nd prawn farm (Prawn Farm 2) is situated within the District of Zhong Shan City. Its development was begun in November 2011.  As of April 30, 2012, up to 75% of Phase 1's development work was completed, and although work was still in progress, the farm was sufficiently equipped to start up production activities, having resulted in 2 million prawn flies (fingerlings) produced and sold to the regional prawn growers on May 3, 2012. By June 30, 2012, Prawn Farm (2) has produced more than 40 million Mexican White prawn flies with a survival rate of 94.6%, resulting in more than 37.5 million one-week old flies sold to local growers at an average of RMB158 per 10,000 flies (equivalent to about $25.00 per 10,000 flies).

During the quarter ended June 30, 2012, there were over 300,000 sleepy-cod fish taken from the open dam farm, of which 149,000 were transferred to JFD for further grow-out, and the balance of 151,000 (average size 514g/fish) were sold by CA to wholesale markets in Guangzhou City, PRC.  Current inventory as of June 30, 2012 is estimated to be approximately 180,000 fish in the open dam farm.

Cattle Farm, Beef and Fertilizer Operations

Revenue from the cattle farm increased by $827,389, or 87%, to $1,781,966 for the three months ended June 30, 2012 from $954,577 for the three months ended June 30, 2011. The increase in cattle farm revenue was primarily due to increased development of contract services for the cattle farm for the three months ended June 30, 2012.

Revenue from beef increased by $1,541,461 or 78% to $3,514,539 for the three months ended June 30, 2012 from $1,973,078 for the three months ended June 30, 2011.The increase was primarily due to our increase of sales of beef and our installment of new weather insulated facilities to maintain production.

Revenue from organic fertilizer increased by $2,170,154 for the three months ended June 30, 2012 from $0 for the three months ended June 30, 2011.  The increase was primarily due to the start-up of the new business of organic fertilizer in this quarter.

Sanjiang A Power sold 2,088 metric tons in the second quarter of 2012 and manufactured no organic fertilizer during this period with current inventory levels at 3,029 metric tons. The Company sold 5,939 metric tons and produced 285 metric tons of livestock feed with current inventory levels at 1,404 metric tons. The Company also sold 915 head of over 13 month-old cattle with current inventory levels at 1,450 head; and saw its restaurant operations continue to perform well.

On May 25, 2012, a Sino Joint Venture Agreement (an "SJVA") was executed between MEIJI and another group of Chinese businessmen for the development and construction of a cattle farm at a 500 Mu site in YaneXiaoban Village, Enping District for the growth of cattle and sheep using our Aromatic Feed formula and our free ranging systems.

On May 6, 2012, a supply contract was executed with a well-established farm at Chang Chun District, Jilin Province for the supply of 4,000 head of young cattle.

Plantation Operations

Revenue from plantation of flowers increased by $859,622, or 70%, to $2,081,863 for the three months ended June 30, 2012 compared to $1,222,241 for the three months ended June 30, 2011. The increase was primarily due to the increase of wholesale prices in fresh and dried flowers in this quarter.

As of June 30, 2012, construction and building of half of the green houses were completed, and trials on better disease control and fertilizing programs were commenced during the first week of July, 2012. 

Harvest results as of June 30, 2012 were similar to June last season, where more than 3.5 million pieces of fresh flowers at an average of RMB 0.85 per piece were sold (about 54.5% higher in price compared to the same period last year), and dried 175,350 Kg of dried flowers (equivalent to about 9.75 million pieces of fresh flowers) were sold at an average of RMB 58/Kg, which also is higher than last season's sale price of RMB 46/Kg.

Marketing and Distribution Network

On May 30, 2012, a group of Chinese businessmen and the Company formed and began operating a Sino Joint Venture Company.  The Chinese businessmen also entered into and a Consulting and Servicing Agreement with the Company and CA, respectively for the development and establishment of a Wholesale and Seafood Processing Shop ("WSPS").  Management anticipates that preliminary operation of the WSPS will start in August 2012.

As of June 30, 2012, the Company had ordered over 80 metric tons of mixed variety fish from Norway, of which over 60 metric tons was delivered to a wholesaler/processor operating in Malaysia, and another 20 metric tons was imported to China to be sold by our WSPS. The Company also ordered over 260 metric tons of peeled shrimp from Vietnam and Cambodia suppliers targeting delivery for resale at WSPS beginning in August 2012. The peeled shrimp are ocean captured species requiring sanitary certification by the health department of each of Vietnam and Cambodia, and are subject to clearance by the China Commercial Goods Investigation Authority before being imported to China.

On June 1, 2012 a Memorandum of Understanding (the "MOU") was executed between the Company and the controlling shareholder of a restaurant group, Guangzhou City Wang XiangCheng Enterprise Management Consulting Co. Ltd. ("WXCE"). WXCE is the developer and franchisor of a restaurant chain under the Brand Name "Leonie" having restaurant operations located throughout Malaysia and Guangzhou City, PRC.  Pursuant to the MOU, the Company (or its designee) will have the right to acquire up to 51% of WXCE within two years of its execution for a price equal to 125% of the net tangible assets of 51% of WXCE at the time the purchase is consummated.  In the interim, the MOU provides that the Company will be the main supplier of beef, HU flowers and seafood to WXCE. Management believes this arrangement will allow the Company to begin conducting its retailing activity earlier than expected and at a lower initial cost that it would have incurred had it opted to attempt to create its own restaurant chain.

Consolidated Results

Revenues

Revenue including continued and discontinued operations increased by $18,642,917, or 278%, to $25,348,287 for the three months ended June 30, 2012 compared to $6,705,370 for the three months ended June 30, 2011. The increase was primarily due to the natural growth of revenue generated from the fishery, plantation, organic fertilizer, cattle farm, beef and the maturity of on-going divisional businesses improving their revenues.

Cost of Goods Sold

Cost of Goods Sold included in continued and discontinued operations increased by $8,908,391, or 309%, to $11,790,039 for the three months ended June 30, 2012 compared to $2,881,648 for the three months ended June 30, 2011. The increase was primarily due to the Company increasing its scale of operations from continuing operations in terms of its fishery, plantation, cattle farm and beef operations for three months ended June 30, 2012 as compared to the three months ended June 30, 2011.

Gross Profit

Gross profit, including continued and discontinued operations, increased by $9,734,526, or 254%, to $13,558,248 for the three months ended June 30, 2012 compared to $3,823,722 for the three months ended June 30 2011. The increase was primarily due to the corresponding increases in revenues from our fishery, cattle farm and beef operations.

General and Administrative Expenses

General and administrative expenses (including depreciation and amortization) incurred in continuing operations increased by $2,187,284, or 399%, to $2,735,677 for the three months ended June 30, 2012 compared to $548,394 for the three months ended June 30 2011. The increase was primarily due to an increase in wages and salaries, and miscellaneous fees amounting to $788,034 and $879,942, respectively.

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 Peoples 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, bio-organic 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 "estimates," "believes," "anticipates," "intends," expects" and 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.

SINO AGRO FOOD, INC. CONSOLIDATED BALANCE SHEETS














June 30, 2012

 


December 31, 

2011






(Unaudited)


(Audited)






$


$











ASSETS






Current assets






   Cash and cash equivalents


$2,692,365


$1,387,908

   Inventories



11,024,263


4,435,445

   Cost and estimated earnings in excess of billings on uncompleted contracts

2,422,815


456,104

   Deposits and prepaid expenses


23,623,347


14,868,838

   Accounts receivable, net of allowance for doubtful accounts

36,773,165


27,531,915

   Due from related parties


12,820,752


15,820,752

   Other receivables



10,528,554


9,688,871

Total current assets



99,885,261


74,189,833

Property and equipment





   Property and equipment, net of accumulated depreciation

7,856,217


2,667,765

   Construction in progress


6,857,296


3,577,869

   Land use rights, net of accumulated amortization

55,421,316


56,507,470

Total property and equipment


70,134,829


62,753,104

Other assets






   Goodwill



724,940


724,940

   Proprietary technologies, net of accumulated amortization

8,301,667


6,977,675

   Long term accounts receivable


3,206,513


5,936,718

   License rights



1


1

   Unconsolidated equity investee


1,076,489


1,258,607

Total other assets



13,309,610


14,897,941









Total assets



$183,329,700


$151,840,878











LIABILITIES  AND STOCKHOLDERS' EQUITY












Current liabilities






   Accounts payable and accrued expenses

$1,922,201


$1,202,104

   Billings in excess of costs and estimated earnings on uncompleted contracts

2,541,008


1,962,119

   Due to a director



635,840


289,764

   Dividends payable



21,326


155,957

   Other payables



15,569,342


11,968,148

   Due to related parties



815,092


867,413

Total liabilities



21,504,809


16,445,505









Commitments and contingencies


-


-









Stockholders' equity






   Preferred stock: $0.001 par value


-


-

   (10,000,000 shares authorized, 7,000,100  shares issued and outstanding




       as of  June 30, 2012 and December 31, 2011, respectively)




   Series A preferred stock:  $0.001 par value

-


-

   (100 shares issued and outstanding




       as of  June 30, 2012 and December 31, 2011, respectively)




   Series B convertible preferred stock:  $0.001 par value)

7,000


7,000

   (7,000,000 shares issued  and outstanding)




       as of  June 30, 2012 and December 31, 2011, respectively)




   Common stock:  $0.001 par value


77,770


67,034

   (100,000,000 shares authorized, 77,769,893 and 67,034,262 shares issued and outstanding




       as of  June 30, 2012 and December 31, 2011, respectively)




   Additional paid - in capital


78,912,904


72,794,902

   Retained earnings



66,356,928


50,395,444

   Accumulated other comprehensive income

3,862,339


3,446,838

  Treasury stock



(1,250,000)


(1,250,000)

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

147,966,941


125,461,218

Non - controlling interest


13,857,950


9,934,155

Total stockholders' equity


161,824,891


135,395,373

Total liabilities and stockholders' equity

$183,329,700


$151,840,878

















The notes accompanying these financial statements included in the Form 10-Q to be filed with the Securities and Exchange Commission on August 14, 2012 are an integral part of these consolidated financial statements.

SINO AGRO FOOD, INC. CONSOLIDATED STATEMENTS OF INCOME
















Three months


Three months


Six months


Six months





ended


ended


 ended


 ended





June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011





(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)
















$


$


$


$

Continuing operations









Revenue



25,348,287


6,705,370


41,328,303


9,826,901












Cost of goods sold


11,790,039


2,881,648


19,756,463


4,072,263












Gross profit



13,558,248


3,823,722


21,571,840


5,754,638












General and administrative expenses

(2,735,677)


(548,394)


(4,957,999)


(1,241,712)

Net income from operations


10,822,571


3,275,328


16,613,841


4,512,926












Other income (expenses)




















Government grant


-


-


79,401


-












Other income



20,797


9,314


436,649


18,616












Gain (loss) of extinguishment of debts

562,361


489,500


817,513


582,426












Net other  income  (expenses)


583,158


498,814


1,333,563


601,042












Net income  before income taxes

11,405,729


3,774,142


17,947,404


5,113,968












Provision for income taxes


-


-


-


-












Net income (loss)  from continuing operations

11,405,729


3,774,142


17,947,404


5,113,968

Less: Net (income) loss attributable








       to the non - controlling interest

(1,115,707)


(762,664)


(1,985,920)


(1,191,577)

Net income (loss) from continuing operations attributable








       to the Sino Agro Food, Inc. and subsidiaries

10,290,022


3,011,478


15,961,484


3,922,391

Discontinued operations









Net income from discontinued operations

-


-


-


10,203,951

Less: Net income attributable to the non - controlling interest

-


-


-


-

Net income  from discontinued operations attributable








       to the Sino Agro Food, Inc. and subsidiaries

-


-


-


10,203,951

Net income (loss) attributable to








       the Sino Agro Food, Inc. and subsidiaries

10,290,022


3,011,478


15,961,484


14,126,342

Other comprehensive income (loss)








      Foreign currency translation gain (loss)

(73,645)


1,676,536


546,712


2,852,210

Comprehensive income (loss)


10,216,377


4,688,014


16,508,196


16,978,552

Less: other comprehensive (income)  loss attributable to








       the non - controlling interest

23,878


(101,798)


(131,211)


(395,716)

Comprehensive income (loss) attributable to








       the Sino Agro Food, Inc. and subsidiaries

10,240,255


4,586,216


16,376,985


16,582,836












Earnings (loss) per share attributable to Sino Agro Food, Inc.








       and subsidiaries common stockholders:








From continuing and discontinued operations








  Basic



$0.14


$0.05


$0.22


$0.25












  Diluted



$0.13


$0.05


$0.20


$0.22












Earnings (loss) per share attributable to Sino Agro Food, Inc.








       and subsidiaries common stockholders:








From continuing operations




















  Basic



$0.14


$0.05


$0.22


$0.07












  Diluted



$0.13


$0.05


$0.20


$0.06












Weighted average number of shares outstanding:



















 Basic



73,836,392


57,420,993


71,312,129


57,272,885












 Diluted



80,836,392


64,620,993


78,312,129


64,272,885























The notes accompanying these financial statements included in the Form 10-Q to be filed with the Securities and Exchange Commission on August 14, 2012 are an integral part of these consolidated financial statements.

SINO AGRO FOOD, INC. CONSOLIDATED STATEMENTS OF CASH FLOW
















Six months ended


Six months ended







June 30, 2012


June 30, 2011







(Unaudited)


(Unaudited)



















Cash flows from operating activities







    Net income (loss) from continuing operations



$17,947,404


$5,113,968










   Adjustments to reconcile net income (loss) from continuing operations to net cash from operations:



      Depreciation





183,154


85,756

      Amortization





1,138,176


306,738

      Common stock issued for services




2,139,057


-

      Gain on extinguishment of debts




(817,513)


(582,426)

   Changes in operating assets and liabilities:







       Increase in inventories





(4,618,431)


(448,127)

      Increase in cost and estimated earnings in excess of billings on uncompleted contacts

(1,966,711)


-

      Increase in deposits and prepaid expenses




(10,893,566)


(2,318,847)

      Increase (decrease) in due to a director




346,076


(584,594)

      (Decrease) increase in  accounts payable and accrued expenses


(509,997)


42,908

      Increase in  other payables





9,426,533


13,059,501

      Decrease in accounts  receivable




(5,173,526)


(5,122,059)

      Increase in billings in excess of costs and estimated earnings on uncompleted contracts

578,889


1,684,804

      Decrease in amount due to related parties




(52,321)


-

      Decrease in amount due from related parties



3,000,000


-

      Increase in other receivables




(839,683)


(3,269,215)

Net cash provided by operating activities




9,887,541


7,968,407

Cash flows from investing activities







   Purchases of property and equipment




(20,423)


(6,828)

   Acquisition of land use rights




-


(4,102,453)

   Acquisition of proprietary technologies




(1,500,000)


-

   Investment in unconsolidated corporate joint venture



1,076,489


(1,256,555)

   Business combination of a subsidiary




(2,499,184)


-

   Payment for construction in progress




(6,626,688)


(493,223)

Net cash used in investing activities




(11,722,784)


(5,859,059)

Cash flows from financing activities







   Non - controlling interest contribution




1,806,664


-

   Dividends paid





(134,631)


(3,905)

Net cash provided by (used in) financing activities



1,672,033


(3,905)

Net cash (used in) provided by continuing operations



913,279


2,105,443

Cash flows from discontinued operations







Net cash provided by operating activities




-


-

Net cash used in investing activities




-


(3,137,885)

Net cash provided by financing activities




-


-

Net cash used in discontinued operations




-


(3,137,885)










Effects on exchange rate changes on cash




1,467,667


(2,001,189)

   Increase (decrease) in cash and cash equivalents



1,304,457


(3,033,631)










   Cash and cash equivalents, beginning of period



1,387,908


3,890,026

   Cash and cash equivalents, end of period




2,692,365


856,395

   Less: cash and cash equivalents at the end of the period - discontinued operation

-


-

   Cash and cash equivalents at the end of the period - continuing operations


$2,692,365


$856,395










Supplementary disclosures of cash flow information:






  Cash paid for interest





-


-

  Cash paid for income taxes





-


-










 Non - cash transactions








    Common stock issued for settlement of debts



$6,946,250


$3,910,500

    Disposal proceeds receivable of sale of subsidiaries, HYT and ZX


$         -


$34,473,905

    Land use rights payable due to related parties



$         -


$22,411

   Transfer construction in progress to property, plant and equipment


$5,317,648


$         -

    Acquisition of treasury stock




$         -


$1,250,000



















The notes accompanying these financial statements included in the Form 10-Q filed with the Securities and Exchange Commission on August 14, 2012 are an integral part of these consolidated financial statements.

SOURCE Sino Agro Food, Inc.



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