Sino Agro Food, Inc. Reports Q1 2015 Results

GUANGZHOU, China, May 18, 2015 /PRNewswire/ -- Sino Agro Food, Inc. (OTCQB: SIAF) (also referred to herein as "SIAF" or the "Company") posted revenue of $115.5M for its consolidated first quarter 2015 results, ending March 31, 2015, attaining a new high for the seventh consecutive quarter.

In the first quarter, stockholders' equity increased by $31.4M or $1.76 per share, based on the weighted average number of outstanding shares in the quarter. As of March 31, 2015, the Company had unrestricted cash and cash equivalents of $10.9M and working capital of $254.5M.

As of May 12, the number of common shares outstanding has increased by 129,789 to 18,199,201 from 18,069,412 at the end of Q1 2015.

The Company achieved the following quarterly results, comparing 2015 to 2014:

Consolidated Financial Summary: Q1, 2015 vs. Q1, 2014
	Q1 2015	Q1 2014	Change
Revenue	$115,476,450	$90,927,789	27%
Gross Profit	$35,578,451	$28,559,848	25%
Net Income (to SIAF and Subs)	$23,754,841	$20,787,919	14%
Diluted EPS	$1.33	$1.38	-4%
Stockholders' Equity	$431,089,735	$317,433,893	36%
Operating Cash Flow	$27,545,084	$20,725,513	33%

Highlights

Total revenue from the sale of goods increased 9% to $85.6M ($78.3M) in the first quarter. Declines in the Fishery, Plantation and Organic Fertilizer section were offset by strong growth in the Company's cattle businesses. Due to seasonal factors, the sale of eels declined by $10.5M, partially offset by an increase of $6.6M in prawns. This seasonal variation alone created a net decline of $2.4M in gross profits versus Q1 2014, or 11%; in the sale of goods, a decline of $3.9M from eels offset by an increase of $1.6M from prawns.

During the quarter, the Company substantially increased deboning of imported beef, contributing revenue of $9.4M.

Revenue from Consulting and Services Project Development more than doubled to $29.9M ($12.7M), attributable mainly to the Zhongshan New Prawn Project ("ZSNP"), contributing an increase of $7.1M in overall gross profit.

Commentary from Solomon Lee, President and CEO

SIAF CEO Solomon Lee summarized first quarter results. "The Company met its internal projections for the first quarter of 2015. We are an agriculture company, so seasonal variations in product mix and wholesale prices will produce changes from quarter to quarter.

"As we commence our second five-year plan, the main growth factors are in place. Consistent with our longer-term vision to become a concentrated advanced aquaculture company, we continue to invest in the Zhongshan New Prawn Project. Also, we are investing in our other subsidiaries to reach a critical mass toward optimizing full or partial divestitures of non-aquaculture subsidiaries. Particularly, in the first quarter, we have invested in Sanjiang A Power Agriculture Co. Ltd. ("SJAP"), where added capacity facilitates our strategic plans, and in Hunan Shenghua A Power Agriculture Company Ltd. ("HSA"), where product demand is high and we will benefit from economies of scale.

"We look forward to the second quarter results also producing to plan, with the Shanghai Distribution Center coming on line to demonstrate its results, and first sections of tanks at the Zhongshan New Prawn Project becoming operational, while the next section of tanks are constructed to add capacity."

Consolidated Financial Results

Revenue

Total revenue for Q1 2015 was comprised of:

Sale of goods of $85,572,543, a 9% increase over Q1 2014 revenue of $78,272,309, and
Consulting and Services Project Development revenue of $29,903,907, a 136% increase over Q1 2014 revenue of $12,655,480.

Revenue from sale of goods amounted to 74% of total revenue, with Consulting and Services Project Development accounting for the remaining 26%.

Category	Q1 2015	Q1 2014	Change ($)	Change (%)

Fishery (CA)	$ 53,336,774	$43,764,265	$9,572,509	22%
- Sale of Goods	$27,218,843	$31,108,785	$3,889,942	-13%
- Consulting	$26,117,933	$12,655,480	$13,462,453	106%
Plantation (JHST)		$ 760,052	($ 760,052)
Organic Fertilizer (SJAP/HSA)	$ 40,376,589	$28,975,083	$11,401,506	39%
Cattle Farm (MEIJI)	$ 8,289,986	$7,544,591	$ 745,395	10%
Corporate (SIAF)	$13,473,011	$9,883,798	$3,589,222	36%
- Sale of Goods	$9,687,127	$9,883,798	-$196,671	-
- Consulting	$3,785,974		$3,785,974	-

Total	$115,476,450	$90,927,789	$ 24,548,661	27%

Cost of Goods

Cost of goods totaled $79,897,999 in Q1 2015: $63,289,988 for sale of goods and $16,608,011 for consulting and services.

Corresponding numbers in Q1 2014 were $62,367,941 (total), $55,864,529 (from sale of goods), and $6,503,412 (consulting and services).

Gross Profit

Total gross profit increased by $7,018,603 or 25% to $35,578,451 for Q1 2015 from $28,559,848 for Q1 2014.

Gross profit from sale of goods decreased by $125,225 to $22,282,555 in Q1 2015 from $22,407,780 in Q1 2014. Gross profit from consulting services increased by $7,143,828 or 116% to $13,295,896 in Q1 2015 from $6,152,068 in Q1 2014.

Division Operation Performance and Developments

Fishery Division

Revenue from the fishery division totaled $53,336,774 for Q1 2015, 47% of total revenue and an increase of 22% over Q1 2014.

Sale of goods amounted to $27,218,842, or 51% of the division total, a decrease of $3,889,943 or 12.5% from the corresponding 2014 quarter. Due to the seasonal factors affecting the availability and supply of captured seafood from quarter to quarter, the sale of eels decreased by $10.5M, while the sale of prawns increased by $6.6M.

Revenue from consulting, services, and management fees increased by $13,462,453, or 106%, from $12,655,480 in Q1 2014 to $26,117,933 in Q1 2015. The increase is mainly due to the unprecedented scale of the Zhongshan New Prawn Project ("ZSNP").

The first phase of ZSNP remains on plan, with the first section of tanks designed for a capacity of 3,000 metric tons scheduled to begin sales in August. The Company's 11^th generation of its APM technology will improve production efficiency and enhance environmentally friendly conditions for prawn sustainability.

Plantation Division

Typically, the vast majority of plantation division revenue is booked in the third and fourth quarters, as there is a limited harvest season. There was no revenue in the first quarter of 2015 versus $760,052 in Q1 2014, which mainly resulted from the unharvested crops at year-end 2013 being collected and sold during Q1 2014. Bad weather at year end 2014 precluded such collection and sale during Q1 2015.

Organic Fertilizer Division

For purposes of segment reporting, the Company consolidates the results from Qinghai Sanjiang A Power Agriculture Co., Ltd. ("SJAP") and Hunan Shenghua A Power Agriculture Company Ltd. ("HSA"), including sales of beef.

Revenue from this division increased by $11,401,506 or 39% from $28,975,083 for Q1 2014 to $40,376,589 for Q1 2015. Revenue (with changes Q1 2015 vs. Q1 2014) breaks down as follows:

HSA
1) Organic Fertilizer	$ 771,320	(-22%)
2) Organic Mixed Fertilizer	$ 3,411,120	(-11%)
HSA Total	$ 4,182,440	(-13%)
SJAP
1) Fertilizer	$ 589,517	(-80%)
2) Bulk Livestock Feed	$ 2,080,669	(55%)
3) Concentrated Livestock Feed	$ 4,296,880	(24%)
4) Live Cattle	$ 17,071,207	(4%)
Sub-Total	$ 24,038,273	(3%)
QZH
1) Slaughter and deboning	$ 189,916	(vs. 0)
2) Deboning (local)	$ 2,581,866	(vs. 0)
3) Deboning (imported)	$ 9,384,094	(vs. 0)
QZH Sub-Total	$ 12,155,876	(vs. 0)
SJAP Total	$ 36,194,149	(50%)
Total	$ 40,376,589	(39%)

Gross profit from the division increased by $2,532,892 or 24% from $10,717,899 in Q1 2014 to $13,250,791 in Q1 2015.

SJAP sold 5,032 head of live cattle in Q1 2015, an increase of 1,317, or 35% over Q1 2014 sales of 3,715 head. SJAP slaughtered 500 head of cattle, and deboned 1,227 metric tons of beef in Q1 2015, equating to 3,665 head of cattle. Deboning of quarter cut imported beef totaled 1,037 metric tons, contributing quarterly revenue of $9.4M, and on track for full year 2015 projections of 4,000 to 6,000 metric tons.

These changes are consistent with the Company's refocused plans for SJAP to dramatically increase import of Australian beef and transition from its local Angus and Simmental cattle to higher margin Wagyu cattle.

Cattle Farm Division

Revenue from the cattle farm division increased by $745,395 or 10% from $7,544,591 for Q1 2014 to $8,289,986 for Q1 2015. Jiangmen City Hang Mei Cattle Farm Development Co. Ltd. ("JHMC" or "Cattle Farm 1") sold 2,935 head of live cattle (aromatic) in Q1 2015, an increase of 263 or 10% from 2,672 head in Q1 2014.

Corporate Division (Marketing and Trading)

Revenue in the corporate division increased by $3,589,222 or 36% from $9,883,798 for Q1 2014 to $13,473,011 for Q1 2015. The increase was primarily due to marketing more imported seafood and newly developed imported beef. Revenue from sale of goods (import/trading) totaled $9,687,127: $6,248,780 from seafood and $3,438,347 from beef. Revenue from consulting services accounted for the remaining $3,785,974.

The Shanghai Distribution Center commenced operation on May 5, 2015, and will begin reporting incremental revenue and returns in the second quarter. Invitations were sent to 30 wholesalers and distributors for a grand opening event. Due to word of mouth and keen interest, 80 had attended. The Center's small shop at the Shanghai wholesale meat market in the PoDong District opened the same day. By May 7, the entire inventory of 25 metric tons of grain fed Angus had been sold out.

There is a big difference in the prices and quality of meat between "grain fed Angus" and normal pasture fed cattle. Imported grain fed Angus beef from Australia commands a premium price, selling for over RMB 80 RMB per kilogram, and is in higher overall demand in Chinese cities. "Normal" imported beef meat sell for approximately RMB 40/KG. For reference, the Company's own Xining grain fed meat sells for approximately RMB 60/KG.

Corporate Developments

The Company secured two drawdown loan facilities with two third parties totaling $25M with attractive interest rates. During the quarter, the Company obtained net loan amounts of $4,797,232 (loan principal) that were secured by 753,304 newly issued shares of the Company, according to terms of the agreements. At maturity and after the Company will have paid back said loan principal plus all interest payments, the said 753,304 shares will be returned to the Company, retired, and no longer included in the outstanding share count. However in the interim, they will be counted toward the total outstanding shares (basic and diluted) of the Company.
Arctic Securities has been working diligently to prepare the Company to satisfy all requirements necessary for listing on the Oslo Stock Exchange, including legal due diligence work, etc.
In this respect, the Company has also engaged KPMG Norway and KPMG China to jointly carry out Company-wide financial due diligence, and other advisory services. The Company expects KPMG to enhance financial presentations to stakeholders.
By October, SIAF anticipates KPMG to be the official auditor of "Zhongshan City A Power Agriculture Development Co. Ltd., China," a Sino Foreign Joint Venture Company and the developer and owner of the Zhongshan New Prawn Farm Project
The Xining Government has recommended that SJAP participate in the acquisition of two beef subsidiaries of a state owned enterprise. Also, consistent with refocused plans for SJAP, the Company has teamed with Burnham Securities to explore the opportunity.

Burnham Securities, SJAP, and the Sanjiang Group ("SG") are currently in discussions on the next steps to create a joint venture between SJAP and two of SG's subsidiaries. Both subsidiaries are profitable segments of SG's multi-billion dollar corporation, and both would complement and enhance SJAP operations very well.
The Company appointed Mr. Peter Rosta Director and Board Chairman for the Company's subsidiary, "A Power Agriculture Development Co. Ltd. (Macau)," the holding company of SJAP.

Please take the time to read our latest 10-Q filing and visit our website, both of which have additional information describing the Company's businesses.

Earnings Call Information

The Company will host an earnings call on Friday, May 22, 2015 at 10:00 AM EDT/4:00 PM CET to discuss financial results for Q1 2015, with questions and answers. To participate in the conference call please use the following information:

SIAF 2015 First Quarter Results Call Information
Date: May 22, 2015	Time: 10:00 AM, EDT/4:00 PM CET
Participant Dialing Instructions:
SE: +46 85 66 42 700 NO: +47 23 50 02 52 US: + 1 (855) 753-2235	UK: +44 20 342 814 13 CN: +86 40 061 212 62
Conference Pincode (China Only; otherwise, not needed): 681266# The earnings call will also be available over the web. To access, click the following link: Sino Agro Q1 2015 Earnings Call

A webcast will be made available in the Investor Relations section of the Company's website.

Financial Tables

SINO AGRO FOOD, INC.
CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	2015		2014
	(Unaudited)		(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	10,932,661	$	3,031,447
Inventories		49,227,718		45,967,993
Cost and estimated earnings in excess of billings on uncompleted contracts		1,306,885		-
Deposits and prepaid expenses		76,791,239		75,951,591
Accounts receivable, net of allowance for doubtful accounts		103,774,371		104,503,071
Other receivables		60,944,553		52,305,260
Total current assets		302,977,427		281,759,362
Property and equipment
Property and equipment, net of accumulated depreciation		64,750,441		64,352,975
Construction in progress		87,710,314		69,120,277
Land use rights, net of accumulated amortization		62,763,167		63,322,202
Total property and equipment		215,223,922		196,795,454
Other assets
Goodwill		724,940		724,940
Proprietary technologies, net of accumulated amortization		11,327,787		11,480,298
Long term investment		814,067		817,127
Temporary deposits paid to entities for investments in Sino joint ventures companies		41,109,708		41,109,708
Total other assets		53,976,502		54,132,073

Total assets	$	572,177,851	$	532,686,889

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	23,127,256	$	22,138,835
Billings in excess of costs and estimated earnings on uncompleted contracts		4,034,158		8,060,580
Due to a director		1,008,000		1,172,059
Series F Non-convertible preferred stock redemption payable		3,146,063		3,146,063
Other payables		11,084,679		11,695,982
Short term bank loan		4,394,210		4,410,727
Bonds payable		1,725,000		1,725,000
		48,519,366		52,349,246
Non-current liabilities
Other payables		4,797,332		-
Long term debts		2,297,421		2,306,057
Convertible bond payables		16,286,754		15,803,928
		23,381,507		18,109,985

Commitments and contingencies		-		-

Stockholders' equity
Preferred stock: $0.001 par value
(10,000,000 shares authorized, 7,000,100 issued and outstanding as of March 31, 2015 and December 31, 2014, respectively)
Series A preferred stock: $0.001 par value		-		-
(100 shares designated, 100 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively)
Series B convertible preferred stock: $0.001 par value)		7,000		7,000
(10,000,000 shares designated, 7,000,000 shares issued and outstanding as of March 31, 2015 and December 31, 2014, 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, 2015 and December 31, 2014, respectively)
Common stock: $0.001 par value		18,069		17,162
(22,727,272 shares authorized 18,069,412 and 17,062,716 shares issued as of March 31, 2015 and December 31, 2014, respectively)
Additional paid - in capital		128,862,006		121,158,996
Retained earnings		297,015,949		273,261,108
Accumulated other comprehensive income		6,436,710		6,452,816
Treasury stock		(1,250,000)		(1,250,000)
Total Sino Agro Food, Inc. and subsidiaries stockholders' equity		431,089,734		399,647,082
Non - controlling interest		69,187,244		62,580,576
Total stockholders' equity		500,276,978		462,227,658
Total liabilities and stockholders' equity	$	572,177,851	$	532,686,889

SINO AGRO FOOD, INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME AS OF MARCH 31, 2015 AND 2014 (UNAUDITED)

	Three months ended		Three months ended
	March 31, 2015		March 31, 2014

Revenue
- Sale of goods	$	85,572,543	$	78,272,309
- Consulting and service income from development contracts		29,369,839		12,243,202
- Commission and management fee		534,068		412,278
		115,476,450		90,927,789
Cost of goods sold		(63,289,988)		(55,864,529)
Cost of services		(16,608,011)		(6,503,412)

Gross profit		35,578,451		28,559,848

General and administrative expenses		(4,565,907)		(2,668,394)
Net income from operations		31,012,544		25,891,454

Other income (expenses)

Government grant		83,180		113,232

Other income		62,646		3,258

Gain of extinguishment of debts		-		43,020

Interest expense		(783,606)		(109,107)

Net income (expenses)		(637,780)		50,403

Net income before income taxes		30,374,764		25,941,857

Provision for income taxes		-		-

Net income		30,374,764		25,941,857
Less: Net (income) loss attributable to the non - controlling interest		(6,619,923)		(5,153,938)
Net income from continuing operations attributable to the Sino Agro Food, Inc. and subsidiaries		23,754,841		20,787,919
Other comprehensive (loss) income
Foreign currency translation loss		(29,361)		(707,636)
Comprehensive income		23,725,480		20,080,283
Less: other comprehensive (income) loss attributable to the non - controlling interest		13,255		113,521
Comprehensive income attributable to the Sino Agro Food, Inc. and subsidiaries	$	23,738,736	$	20,193,804

Earnings (loss) per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
Basic	$	1.39	$	1.45
Diluted	$	1.33	$	1.38

Weighted average number of shares outstanding:
Basic		17,114,989		14,308,910
Diluted		17,822,059		15,015,980

SINO AGRO FOOD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (UNAUDITED)
	Three months		Three months
	ended		ended
	March 31, 2015		March 31, 2014

Cash flows from operating activities
Net income for the period	$	30,374,764	$	25,941,857
Adjustments to reconcile net income from operations to net cash from operations:
Depreciation		802,338		534,803
Amortization		514,121		509,080
Gain on extinguishment of debts		-		(43,020)
Common stock issued for services		630,033		33,436
Other amortized cost		809,868		50,000
Changes in operating assets and liabilities:
Increase in inventories		(3,259,725)		(11,593,523)
Increase in costs and estimated earnings in excess of billings on uncompleted contacts		(1,306,885)		(4,528)
(Increase) decrease in deposits and prepaid expenses		(597,390)		6,600,205
Increase (decrease) in due to a director		6,340,525		(892,415)
Increase in accounts payable and accrued expenses		988,421		7,587,849
Increase in other payables		4,186,029		4,967,306
Decrease (increase) in accounts receivable		728,700		(10,700,017)
(Decrease) increase in billings in excess of costs and estimated earnings on uncompleted contracts		(4,026,422)		476,053
Increase in other receivables		(8,639,293)		(2,741,573)
Net cash provided by operating activities		27,545,084		20,725,513
Cash flows from investing activities
Purchases of property and equipment		(1,451,880)		(907,666)
Payment for construction in progress		(18,845,219)		(5,248,183)
Net cash used in investing activities		(20,297,099)		(6,155,849)
Cash flows from financing activities
Proceeds from long term debts		-		2,438,192
Net cash provided by financing activities		-		2,438,192
Effects on exchange rate changes on cash		653,229		431,747
Increase in cash and cash equivalents		7,901,214		17,439,603
Cash and cash equivalents, beginning of period		3,031,447		1,327,274
Cash and cash equivalents, end of period	$	10,932,661	$	18,766,877
Supplementary disclosures of cash flow information:
Cash paid for interest	$	119,181	$	109,107
Cash paid for income taxes	$	-	$	-
Non - cash transactions
Common stock issued for settlement of debts	$	-	$	5,976,105
Common stock issued	$	7,703,917	$	-
Common stock issued for services and employee compensation	$	-	$	133,744
Transfer to property and equipment from construction in progress	$	-	$	1,784,678

About Sino Agro Food, Inc.

Sino Agro Food, Inc. is an agriculture technology and natural food holding company with principal operations in the People's Republic of China. The Company acquires and maintains equity stakes in a cohesive portfolio of companies that SIAF forms according to its core mission to produce, distribute, market and sell natural, sustainable protein food and produce, primarily seafood and cattle, to the rapidly growing middle class in China. SIAF provides financial oversight and strategic direction for each company, and for the interoperation between companies. The Company owns or licenses patents, proprietary methods, and other intellectual properties in its areas of expertise. SIAF provides consulting and services to joint venture partners to construct and operate food businesses, primarily producing wholesale protein foods. Further joint ventures market and distribute the wholesale products as part of an overall "farm to table" concept and business strategy.

News and updates about Sino Agro Food, Inc., including key information, are published on the Company's website (http://www.sinoagrofood.com) and the Company's Facebook page (www.facebook.com/SinoAgroFoodInc)

Forward Looking Statements

This release may contain forward-looking statements relating to the business of SIAF and its subsidiary companies. All statements other than historical facts are forward-looking statements, which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. These statements involve risks and uncertainties that may cause actual results to differ materially from those anticipated, believed, estimated or expected. These risks and uncertainties are described in detail in our filings with the Securities and Exchange Commission. Forward-looking statements are based on SIAF's current expectations and beliefs concerning future developments and their potential effects on SIAF. There is no assurance that future developments affecting SIAF will be those anticipated by SIAF. 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 required under applicable securities laws.

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.

Contacts
Peter Grossman	Tomas Oqvist
Investor Relations	Investor Relations – Nordic Countries
+1 (775) 901-0344	+46 70 797 9793
info@sinoagrofood.com	se-info@sinoagrofood.com