Sino Agro Food, Inc. (OTCBB: SIAF.OB), an emerging integrated,
diversified agriculture technology and organic food company with
principal operations located throughout the Peoples Republic of
China (“PRC”), is pleased to announce financial results for the
fiscal year ended December 31, 2011:
Financial Summary:
2011
2010 Change Revenue $51,879,903 $40,551,066 27.94%
Gross Profit $24,928,029 $22,453,425 11.02% Net Income $25,894,983
$12,697,080 103.94% Basic EPS $0.43 $0.16 168.75% Diluted EPS $0.39
$0.14 178.57% *Adjusted Diluted EPS $0.43 $0.17 152.94% * Adjusted
diluted EPS is a non-GAAP financial measure used to focus
management and investors on comprehensive income per share, thereby
providing visibility to the underlying trends of the currency
appreciation of the Company’s assets denominated in Chinese
Renminbi. For more information about this non-GAAP financial
measure contained in this press release, please see "About Non-GAAP
Financial Measures" below.
2011 Operational Highlights:
- Divestment of Dairy Operations due to a
weakening business environment and fundamentals
- Awarded four Consulting and Servicing
Contracts for the development of Aquaculture Farms
- Awarded one Consulting and Servicing
Contract for the development of a Cattle Farm
Mr. Solomon Lee, Chief Executive Officer of the Company, stated,
"The Company reorganized its business activities in 2011 by
disposing its equity interest in its Dairy operations and stepping
up the development of its fishery and beef operations dedicating
efforts in quality and productivity. Results of the Company’s 2011
performance confirmed our management’s belief that the business
environment and fundamentals of the dairy industry in China was not
heading in the right direction. The dairy industry in China will
take quite certain times before it would be able to regain the
confidence of the local consumer markets (if ever). In this respect
and during 2011, locally produced milk products were losing much
ground against the imports, as such none of the biggest three dairy
product manufacturers in China have been able to regain their sales
revenues set in 2009, and overall average wholesale prices of fresh
liquid milk in 2011 was lower by over 10% compared to 2010."
Aquaculture Operations
Revenue from fishery increased by $22,258,292 or 534.56% from
$4,163,833 for the year ended December 31, 2010 to $26,422,125 for
the year ended December 31, 2011. The increase in fishery was
primarily due to our increase in revenue from the sale of Sleepy
Cods and Baits, and development contracting services for the year
ended December 31, 2011 compared to the sale of fingerlings and
consulting income for the year ended December 31, 2010.
Mr. Solomon Lee, Chief Executive Officer of the Company, stated,
"Our Fishery division was performing nicely in a very stable
environment in 2011, having been awarded with four (4) consulting
and servicing contracts for the construction and development of
four fishery farms utilizing our A-Power technology, of which sold
over 200 MT (Metric Ton) of fish in the domestic markets at
wholesale prices averaging $24 per Kg, which is some $3 per Kg
lower than our earlier expectation for our Sleepy Cod, but it is a
sound and viable price that could provide good profits for our
farms’ operations going forward."
Beef Operations
Revenue from beef increased by $13,202,143 or 666.75% from
$1,980,079 for the year ended December 31, 2010 to $15,182,222 for
the year ended December 31, 2011 as operations gradually moved into
an operational stage instead of developing stage.
Revenue from cattle farm development increased by $4,159,921
from $0 for the year ended December 31, 2010 to $4,159,921 for the
year ended December 31, 2011. The increase in cattle farm revenue
was primarily due to the commencement of our contracting services
in the cattle farming industry for the year ended December 31,
2011.
Revenue from organic fertilizer increased by $2,480 from $0 for
the year ended December 31, 2010 to $2,480 for the year ended
December 31, 2011. The increase in organic fertilizer was primarily
due to the commencement of our production of organic fertilizer for
the year ended December 31, 2011.
Mr. Solomon Lee, Chief Executive Officer of the Company, stated,
"Our beef division had been awarded with a cattle farm consulting
and servicing contract for the construction and development of a
cattle farm using our feed technology and managed to sell all of
our reared beef cattle (about 600 head) at an average price of
$2,560 per head based on an average of unit live weight price of
$3.2 per Kg which is about 18.5% above the average price set in
2010. Furthermore in recent months in 2012, beef cattle prices went
up steadily and as of March 10, 2012, wholesales price for live
cattle at the Guangzhou wholesale market were recorded as high as
$4 per Kg."
Plantation Operations
Revenue from our plantation increased by $1,338,301 or 28.03%
from $4,774,854 for the year ended December 31, 2010 to $6,113,155
for the year ended December 31, 2011 due to a better than average
harvest in 2011.
The 2011 season started very nicely having harvested over 11
million pieces of fresh flowers during the month of June, which is
exceptional compared to the previous year, and this trend continued
into late August producing over 29.5 million pieces of fresh
flowers during the quarter. The result was a total harvest
exceeding 40.5 million pieces for the June through August period.
Larger volume of production during this quarter attributed to
lowering the cost of production to RMB 0.125 per piece of fresh
flowers and RMB 11.95 per Kg of dried flowers compared to June’s
cost at RMB 0.18 per piece of fresh flowers and RMB 13.63 per Kg of
dried flowers.
The region experienced extremely dry weather conditions
throughout September, resulting in a scarce harvest throughout the
third quarter of 2011. As a result, there were about 10 million
pieces of fresh flowers and 357 tons of dried flowers sold during
the third quarter of 2011, amounting to over RMB 20.77 million
($3.24 million) of revenue generated for this quarter. Therefore,
the performance of this year yielded 28.03% over 2010, however it
still fell short of our earlier harvest projection (60 million to
75 million pieces of fresh flowers) for 2011.
Consolidated Results
Revenues
Revenues including continued and discontinued operations
increased by $11,328,837 or 27.94% from $40,551,066 for the year
ended December 31, 2010 to $51,879,903 for the year ended December
31, 2011. The increase was primarily due to maturity of all sectors
of the businesses (i.e. the fishery, the plantation organic
fertilizer and the cattle farm) as they gradually move into
operational stages instead of developing stages.
Cost of Goods Sold
Cost of goods sold including continued and discontinued
operations increased by $8,854,233 or 48.92% to $26,951,874 for the
year ended December 31, 2011 from $18,097,641 for the year ended
December 31, 2010. The increase was primarily due to increase of
sales revenue thus in turn cost of goods sold proportionately
increased as our operations are gradually moving into scale of
operation.
Gross Profit
Gross profit including continued and discontinued operations
increased by $2,474,604 or 10.21% from $22,453,425 for the year
ended December 31, 2010 to $24,928,029 for the year ended December
31, 2011. The increase was primarily due to maturity of all sectors
of the businesses (i.e. the fishery, the plantation organic
fertilizer and the cattle farm) as they gradually move into
operational stages instead of developing stages even though the
sale of diary sector on January 2011.
General and Administrative Expenses and Interest Expenses
General and administrative and interest expenses from continuing
and discontinued operation (including depreciation and
amortization) increased by $1,397,035 or 35.77% from $3,905,701 for
the year ended December 31, 2010 to $5,302,736 for the year ended
December 31, 2011. The increase was primarily due to increase on
the depreciation and amortization amounting to $936,509 for the
year ended December 31, 2011 from $244,177 for the year ended
December 31, 2010, and the increase in wages and salaries of
$2,122,975 for year ended December 31, 2011 from $1,403,102 for the
year ended December 31, 2010.
Earnings Call Information
The Company will host an earnings call and web conference with
presentation on April 18th, 2012 at 10:00 AM EST to discuss
financial results for 2011 as well as provide guidance for 2012. To
participate in the conference call and web presentation please make
note of the following information:
Date: April, 18th, 2012 Time: 10:00 AM, U.S. Eastern Standard Time
Participant Dialing Instructions: Toll Free Number: (1-800)
868-1837 Direct Dial Number: (1-404) 920-6440 Conference Code:
486548# Conference Playback Instructions: Toll Free Number:
(1-800) 704-9804 Direct Dial Number: (1-404) 920-6604 Conference
Code: * then 486548#
Web Conference Login:
https://www.accuconference.com/join
Enter your conference dial-in number, conference code and name,
and then click Join.
About Adjusted Non-GAAP Financial Measures
The reporting currency of the Company is the U.S. dollar. The
functional currency of the Company is the Chinese Renminbi
(RMB).
For those entities whose functional currency is other than the
U.S. dollars, all assets and liabilities are translated into U.S.
dollars at the exchange rate on the balance sheet date; shareholder
equity is translated at historical rates and items in the
statements of income and of cash flows are translated at the
average rate for the period.
Because cash flows are translated based on the weighted average
translation rate, amounts related to assets and liabilities
reported in the statements of cash flows will not necessarily agree
with changes in the corresponding balances in the balance sheets.
Translation adjustments resulting from this process are included in
accumulated other comprehensive income in the consolidated
statements of equity.
Transaction gains and losses that arise from exchange rate
fluctuations on transactions denominated in a currency other than
the functional currency are included in the statements of income
and comprehensive income as incurred.
The balance sheet amounts with the exception of equity as of
December 31, 2011 and December 31, 2010 were translated at RMB 6.30
to $1.00 and RMB 6.62 to $1.00, respectively.
The average translation rates applied to the consolidated
statements of income and comprehensive income and of cash flows for
the years ended December 31, 2011 and December 31, 2010 were RMB
6.33 to $1.00 and RMB 6.73 to $1.00, respectively.
Non - GAAP financial measure can represent our actual U.S.
dollars reported earnings per share including foreign exchange gain
of net assets denominated in RMB as the underlying trend shows
Chinese Renminbi appreciates steadily against United States
dollars. As such, we measure diluted earnings per share growth rate
using comprehensive income divided by weighted average numbers of
shares outstanding, and provide guidance on the comprehensive
income per shares.
Below is a reconciliation of reported EPS to non - GAAP measure
EPS for the fiscal years 2011 and 2010:
Consolidated results
2011
2010
Diluted net earnings per share (EPS) $0.39 $0.14
Translational impact (a) $0.04 $0.03 Non - GAAP measure EPS
$0.43 $0.17
Non - GAAP measure EPS growth rate (b)
153%
(a)
Translation impact is the difference
between reported EPS and using non-GAAP measure.
(b) Calculated as a percentage of growth from the prior
year's reported EPS.
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 “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.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,2011 AND DECEMBER
31,2010
2011 2010
ASSETS
Current assets Cash and cash equivalents $ 1,387,908 $
3,890,026 Accounts receivable, net of allowance for doubtful
accounts 27,531,915 12,803,771 Inventories 4,435,445 8,913,127 Cost
and earnings in excess of billings on uncompleted contracts 456,104
- Deposits and prepaid expenses 14,868,838 14,229,711 Due from
related parties 15,820,752 - Other receivables 9,688,871
3,967,680
Total current assets
74,189,833 43,804,315
Property and equipment
Property and equipment, net of accumulated depreciation 2,667,765
17,155,782 Construction in progress 3,577,869 2,231,475 Land use
rights, net of accumulated amortization 56,507,470
16,829,410
Total property and equipment
62,753,104 36,216,667
Other assets Goodwill
724,940 12,000,000 Proprietary technologies, net of accumulated
amortization 6,977,675 7,287,883 Long term accounts receivable
5,936,718 8,459,044 License rights 1 1 Investment in unconsolidated
corporate joint venture 1,258,607 -
Total
other assets 14,897,941 27,746,928
Total assets $ 151,840,878 $ 107,767,910
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable and accrued expenses $ 1,202,104 $
390,846 Billings in excess of cost and estimated earnings on
uncompleted contracts 1,962,119 - Due to a director 289,764 926,196
Dividends payable 155,957 210,262 Other payables 11,968,148
1,188,406 Due to related parties 867,413
223,884
Total current liabilities 16,445,505
2,939,594
Other liabilities Long term debt
- 3,776,435
Total liabilities
16,445,505 6,716,029
Commitments and
contingencies - -
Stockholders'
equity Preferred stock: $0.001 par value $ - $ - (10,000,000
shares authorized, 0 share issued and outstanding as of December
31, 2011 and December 31, 2010, respectively) Series A preferred
stock: $0.001 par value - - (100 shares authorized, 100 and 0
shares issued and outstanding as of December 31, 2011 and December
31, 2010, respectively) Series B convertible preferred stock:
$0.001 par value) 7,000 7,000 (10,000,000 shares authorized,
7,000,000 shares issued and outstanding) as of December 31, 2011
and December 31, 2010, respectively) Common stock: $0.001 par value
67,034 55,474 (100,000,000 shares authorized, 67,034,262 and
55,474,136 shares issued and outstanding as of December 31, 2011
and December 31, 2010, respectively) Additional paid - in capital
72,794,902 58,586,362 Retained earnings 50,395,444 25,019,971 Less:
Treasury stock (1,250,000 ) - Accumulated other comprehensive
income 3,446,838 3,804,116
Total Sino Agro
Food, Inc. and subsidiaries stockholders' equity
125,461,218 87,472,923 Non - controlling interest
9,934,155 13,578,958
Total stockholders'
equity 135,395,373 101,051,881
Total
liabilities and stockholders' equity $ 151,840,878 $
107,767,910
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMEBER 31, 2011
AND DECEMBER 31, 2010
2011 2010
Continuing
operations Revenue $ 51,879,903 $ 10,918,766
Cost of goods sold 26,951,874 3,731,204
Gross profit 24,928,029 7,187,562
General and administrative expenses (5,302,736 )
(2,916,102 )
Net income from operations
19,625,293 4,271,460
Other income
(expenses) Other income 449,498 226,586
Gain/(loss) of extinguisjment of debts 987,518
(6,077,230 )
Net income (expenses)
1,437,016 (5,850,644 )
Net income
before income taxes 21,062,309 (1,579,184 )
Provision
for income taxes (31 ) -
Net
income (loss) from operations 21,062,278 (1,579,184 )
Less: Net income attributable to the non - controlling
interest (5,371,246 ) (134,716 )
Net income
(loss) of continuing operations attributable to the Sino
Agro Food, Inc. and subsidiaries 15,691,032
(1,713,900 )
Discontinued operations Net income
from discontinued operations 10,203,951 14,276,264
Less: Net
income attributable to the non - controlling interest -
(4,061,542 )
Net income (loss) of discontinued
operations attributable to to the Sino Agro Food, Inc. and
subsidiaries 10,203,951 10,214,722
Net income attributable to the Sino Agro Food, Inc. and
subsidiaries 25,894,983 8,500,822
Other comprehensive
income
Foreign currency translation gain 3,815,775
2,097,324
Comprehensive income 29,710,758
10,598,146
Less: other comprehensive income attributable to the
non - controlling interest (721,880 ) (461,411 )
Comprehensive income attributable to Sino Agro Food, Inc. and
subsidiaries $ 28,988,878 $ 10,136,735
Earnings per share attributable to Sino Agro Food, Inc.
and subsidiaries common stockholders: From continuing and
discontinued operations Basic $ 0.43 $ 0.16
Diluted $ 0.39 $ 0.14
Earnings (loss) per share attributable to Sino Agro Food,
Inc. and subsidiaries common stockholders: From
continuing operations Basic $ 0.26 $ (0.05
)
Diluted $ 0.23 $ (0.05 )
Weighted
average number of shares outstanding: Basic
60,158,210 54,223,823
Diluted 67,158,210 61,223,823
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2011 AND DECEMBER 31, 2010
2011 2010
Cash flows from operating
activities Net income (loss) from continuing operations $
21,062,278 $
(1,579,184
)
Adjustments to reconcile net income (loss)
from continuing operations to net cash fromoperations:
Depreciation 220,810 720,214 Amortization 1,043,181 453,625 (Gain)
loss on extinguishment of debts (987,518 ) 6,077,230 Common stock
issued for services 2,139,057 530,809 Changes in operating assets
and liabilities: (Increase) decrease in inventories (4,477,682 )
1,843,520 Decrease (increase) in deposits and prepaid expenses
1,499,930 (3,212,027 ) Increase in due from directors - 112,267
(Decrease) increase in due to a director (6,313,946 ) 3,403,200
Increase in accounts payable and accrued expenses 811,258 347,575
Increase (decrease) in other payables 11,798,629 55,957 Increase in
accounts receivable (9,567,456 ) (6,949,508 ) Increase in cost and
estimated earnings in excess of billings on uncompleted contracts
(456,104 ) - Increase in billings on uncompleted contracts in
excess of costs and estimated earnings 1,962,119 - Increase in due
from related parties (10,434,519 ) - Increase in due to related
parties 643,529 - Increase in other receivables (5,721,191 )
(375,701 )
Net cash provided by operating activities
3,222,375 1,427,977 Cash flows from
investing activities Purchases of property and equipment (252,346 )
(1,188,275 ) Proceeds of disposal of subsidiaries 557,700 -
Investment in unconsolidated equity investees (1,258,607 )
(2,739,881 ) Payment for construction in progress (1,346,394
) - Net cash used in investing activities
(2,299,647 ) (3,928,156 )
Cash flows from financing
activities Series A Preferred stock issued for cash - 100
Dividends paid (622,105 ) (357,538 ) Net cash used in
financing activities (622,105 ) (357,438 ) Net cash
provided by (used in)continuing operations 300,623
(2,857,617 )
Cash flows from discontinued operations
Net cash provided by operating activities - 11,930,533 Net cash
used in investing activities (3,137,885 ) (6,759,822 ) Net cash
used in financing activities - (3,059,788 )
Net cash (used in) provided by discontinued operations
(3,137,885 ) 2,110,923 Effects on exchange
rate changes on cash 335,144 2,276,133
(Decrease) increase in cash and cash equivalents (2,502,118 )
1,529,439 Cash and cash equivalents, beginning of year
3,890,026 2,360,587 Cash and
cash equivalents, end of year 1,387,908 3,890,026 Less: cash and
cash equivalents at the end of the period - discontinued operation
- (3,137,885 ) Cash and cash equivalents at
the end of the period - continuing operations $ 1,387,908 $
752,141 Supplementary disclosures of cash flow
information: Cash paid for interest - -
Cash paid for income taxes 31 -
Non - cash transactions: Common stock issued for settlement of
debts and proprietary technology payable 11,512,386
14,360,520 Common stock issued for service and
employee compensation 4,287,114 519,559
Common stock acquired for cancellation (1,579,400 ) -
Settlement of land use rights payable in contra of disposal
proceeds receivable 38,056,750 -
Disposal proceeds receivable from sale of subsidiaries, HYT and ZX
5,386,233 - Purchases of treasury stock
(1,250,000 ) -
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