UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 17, 2015
SINO AGRO FOOD, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada |
|
000-54191 |
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33-1219070 |
(State of |
|
(Commission File Number) |
|
(IRS Employer |
incorporation) |
|
|
|
Identification No.) |
Room 3801, Block A, China Shine Plaza
No. 9 Lin He Xi Road
Tianhe District
Guangzhou City, P.R.C. |
|
510610 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (860) 20 22057860
Copies to:
Sichenzia Ross Friedman Ference LLP
621Broadway, 32nd Floor
New York, NY 10006
Attn. Marc Ross, Esq.
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 DFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))
| ITEM 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
On November 16, 2015, Sino Agro Food, Inc.
(the “Company”) issued a press release regarding the Company’s financial results for its fiscal quarter
ended September 30, 2015. A copy of the Company’s press release is attached hereto as Exhibit 99.1.
The information contained in this Current Report
shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities
Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| ITEM 7.01 | REGULATION FD DISCLOSURE. |
Earnings Call Information
The Company will host an earnings call on November
30, 2015 at 10:00 A.M. EDT to discuss financial results for the third quarter of 2015. To participate in the conference call please
make note of the following information:
Date: November 30, 2015
Time: 10:00 A.M., U.S. Eastern Daylight Time
Participant Dialing Instructions from: |
|
Sweden: +46 8 566 427 00 |
United Kingdom: +44 203 428 14 13 |
Norway: +47 235 002 66 |
China: +86 400 612 12 62 |
United States: + 1 (866) 388-1925 |
Conference Code: 320956# (only needed if calling from China) |
An audio replay of the conference call will
be made available in the Investor Relations section of the Company’s web site, www.sinoagrofood.com.
Separately, on November 11, 2015, the Company
issued a press release regarding the Company’s financial results for its fiscal quarter ended September 30, 2015. A copy
of the Company’s press release is attached hereto as Exhibit 99.2.
In addition, on November 16, 2015, the Company
released a quarterly interim report (the “Report”) that provides detailed segment operational performance and developments,
complementing the quarterly results press release attached hereto as Exhibit 99.1. The Report is attached hereto as Exhibit
99.3.
The Securities and Exchange Commission encourages
registrants to disclose forward-looking information so that investors can better understand the future prospects of a registrant
and make informed investment decisions. This Current Report on Form 8-K and exhibits may contain these types of statements, which
are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and which
involve risks, uncertainties and reflect the Registrant’s judgment as of the date of this Current Report on Form 8-K. Forward-looking
statements may relate to, among other things, operating results and are indicated by words or phrases such as “expects,”
“should,” “will,” and similar words or phrases. These statements are subject to inherent uncertainties
and risks that could cause actual results to differ materially from those anticipated at the date of this Current Report on Form
8-K. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented within.
The information in this Current Report on Form
8-K furnished pursuant to Items 2.01 (in the case of Exhibits 99.1 and 99.3), 7.01 and 9.01 shall not be deemed “filed”
for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This information shall
not be incorporated by reference into any registration statement pursuant to the Securities Act. The furnishing of the information
in this Current Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required
by Regulation FD or that the information contained in this Current Report on Form 8-K constitutes material investor information
that is not otherwise publicly available.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits.
The following exhibit is furnished herewith:
Exhibit No. |
|
Description |
|
|
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99.1 |
|
Text of press release issued by Sino Agro Food, Inc. on November 16, 2015. |
|
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99.2 |
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Text of press release issued by Sino Agro Food, Inc. on November 11, 2015. |
|
|
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99.3 |
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Text of quarterly interim report issued by Sino Agro Food, Inc. on November 16, 2015. |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
|
SINO AGRO FOOD, INC. |
|
|
Date: November 17, 2015 |
By: |
/s/ LEE YIP KUN SOLOMON |
|
|
Lee Yip Kun Solomon |
|
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Chairman and Chief Executive Officer |
Exhibit 99.1
Sino
Agro Food Inc. Reports Third Quarter Results
Revenue
Increases 16% to USD 124.7M with EPS of USD 1.14
Return
to Growth in Sale of Goods and Project Development
November 16, 2015
GUANGZHOU, China—
Sino Agro Food, Inc. (OTCQB: SIAF).
The Company achieved the following
quarterly results, comparing 2015 to 2014:
(USD M,
except per share data) | |
Q3
'15 | | |
Q3
'14 | | |
% | | |
9M
'15 | | |
9M
'14 | | |
% | |
Revenue | |
| 124.7 | | |
| 107.2 | | |
| 16 | % | |
| 331.0 | | |
| 295.2 | | |
| 12 | % |
Gross Profit | |
| 32.3 | | |
| 34.5 | | |
| -6 | % | |
| 89.8 | | |
| 95.4 | | |
| -6 | % |
Gross Profit Margin | |
| 25.9 | % | |
| 32.2 | % | |
| | | |
| 27.1 | % | |
| 32.3 | % | |
| | |
Net Income | |
| 27.7 | | |
| 30.9 | | |
| -10 | % | |
| 73.5 | | |
| 86.1 | | |
| -15 | % |
Net Income attributable to SIAF | |
| 21.5 | | |
| 24.5 | | |
| -12 | % | |
| 54.6 | | |
| 68.4 | | |
| -20 | % |
Earnings Per Share (USD) - fully diluted | |
| 1.14 | | |
| 1.43 | | |
| -20 | % | |
| 3.02 | | |
| 4.23 | | |
| -29 | % |
Diluted weighted average number of shares (millions) | |
| 18.8 | | |
| 17.2 | | |
| 9 | % | |
| 18.1 | | |
| 16.2 | | |
| 12 | % |
Key Points
Record setting revenue
for the third quarter of 2015 increased by 16 percent to USD 124.7M (107.2). Compared to the second quarter of 2015, revenue growth
amounted to USD 33.8M or 37 percent, mainly due to external factors that affected the previous quarter. Revenue from sales of
goods increased by 17 percent to USD 96.3M (82.6) primarily due to increased deboning of imported beef at Integrated Cattle Farm
(SJAP) and secondarily due to higher seafood production.
| · | Aquaculture
sale of goods increased by 24 percent to USD 28.8M (23.2). The increase is mainly due
to increased volumes of mixed seafood and prawns. Demonstrating the dynamic nature of
RAS, several new, higher profit margin species of fish were sold during the quarter,
offsetting the USD 5.5M decrease in eel sales. |
| · | Integrated
Cattle Farm sale of goods increased by 27 percent to USD 35.5M (27.9) mainly due to increased
deboning of imported beef quadrupling production compared to Q3 2014. The increase in
deboning volumes substantially offset the effect of lower prices of live cattle. |
| · | Revenue
from Project Development increased by 15 percent to USD 28.4M (24.6) at a rate exceeding
three times the previous quarter. Weather improved in August, and the Company completed
roof build out to allow interior construction to continue independent of weather conditions.
The Zhongshan New Prawn Project (“ZSNPP”) accounted for USD 19.4 M or 68%
of Product Development revenue. |
Gross profit decreased
7 percent to USD 32.3M (34.5), equivalent to a margin of 25.9% (32.2%). The decrease was mainly due to lower margins at the Integrated
Cattle Farm and Aquaculture segments.
| · | Aquaculture
gross profit decreased by 22 percent to USD 5.7M (7.2) equivalent to a margin of 19.7%
(31.3%). The decrease is mainly due to a lower eel gross profit of USD 5.1M offset by
an increase in mixed seafood gross profit of USD 1.8M. |
| · | Integrated
Cattle Farm gross profit decreased by 26 percent to USD 6.7M (9.1) equivalent to a margin
of 18.9% (32.7%). Live cattle gross profit decreased by USD 3.9M, offset by an increase
in the gross profit of quarter cut imported beef deboning of USD 1.6M. |
| · | Project
Development gross profit increased by 2 percent to USD 11.3 (11.0) equivalent to a margin
of 39.6% (44.7%). |
G&A expenses
increased by 11 percent to USD 4.0M (3.6) reflecting ongoing heightened expenses related to various corporate exercises including
listing costs.
Stockholders’
equity increased by 24 percent to USD 464.3M (373.3) or USD 24.66 per share, based on the weighted average number of fully diluted
outstanding shares in the quarter, an increase of USD 21.0M or USD 1.12 per share in Q3 2015.
As of September
30 2015, the Company had unrestricted cash and cash equivalents of USD 9.55M (4.69) and net working capital of USD 304.6M.
Net
of 280,000 shares securing a new trade facility, as of November, 12, 2015 the outstanding common share count increased
less than .7% compared to 18,951,737 as of the last previously
reported date, August 11, 2015.
Subsequent Events and Outlook
A three-year secured
trade finance facility amounting to USD 15M was entered into with a China based lender.
The Agricultural
Development Bank of China renewed SJAP’s credit facility of RMB 60M, supplemented by an additional new project loan of RMB35M
for new development or possible M&A activity. Under certain conditions, the project loan may be converted to long-term debt.
First stocking of
the Zhongshan project is expected in early 2016 with completion of phase 1 and 10,000 MT of seafood capacity targeted to be achieved
in 2016. The delay of the stocking is due to certain workmanship in smoothing all tanks that has not been up to standard, thus
requiring refurbishment that delayed the installation work of various filters of the tanks. The delay is not expected to have
any impact on the long-term plan of the project. In the meantime, most of the basic infrastructure work for stage 2 of phase 1
has been carried out, preparing for construction of stage 2 tanks starting in December.
At Prawn Farm 2 the Company is finalizing
roof work for newly developed RAS covered dams using newly improved APM technology. The aim is to improve production capacity
to 6-7 harvests per year instead of 2-3 harvests per year of traditional Chinese open dams, while saving water and power costs
and better utilizing land.
SJAP plans to expand
its deboning capacity to 12,500 MT/year and its freezer capacity to 10,000 MT. The USD
15M trade finance facility provides revolving working capital for imports. Hence, the Company expects trading revenue to grow
faster in the remaining months of 2015 and beyond.
Sino Agro Food, Inc. Third Quarter 2015 Press Release | Page 2 |
CEO Commentary
CEO Solomon Lee summarized the quarter,
“Third quarter results met expectations, returning to top-line growth. Sale of goods in both aquaculture and beef continue
to perform well, growing revenue by a combined USD 13M.
Due to external factors, lower profitability
in eels and live cattle sales reduced operating margins, mitigated by higher volumes of mixed seafood and beef imports.
We have seen some
challenges in 2015. These include structurally lower prices for domestic beef in China, exceptionally heavy rains at the wrong
time in Zhongshan, a cyclically weak supply of eel elvers, and a restriction on seafood exports in Madagascar. Overcoming each
enhances opportunities for 2016. Historically we have adapted well to adversities that are unavoidable in the agriculture business.
Likewise, now at
SJAP we are countering currently moderating margins by transitioning the herd, while still growing revenue by deboning imported
beef. We are also engaging new export suppliers to replace those in Madagascar, while expanding import and distribution of beef
from Australia.
In Aquaculture,
similar to the second quarter, the cyclically weak supply of eel elvers resulted in reduced sales of eels. We introduced new fresh
water species partially offsetting the decrease in sales, taking advantage of changing market conditions and prices.
Project development
activity and profitability in the third quarter was restored compared to the second quarter. I look forward to reporting stocking
and sales at ZSNPP during 2016.
Investments made in previous years
at the HU-plantation to increase resilience and yield have paid off in the third quarter, with good performance despite challenging
weather throughout this year’s season.
The value of our
individual assets has rarely been perceived according to potential. It was not until we proved compelling economics that outside
perceptions improved materially, broadening our opportunities. This is why the time is right to begin to spin-off self-sufficient
businesses.
Restructuring our businesses as
standalone organizations will create better understood and more appreciated businesses, bringing more value to our shareholders.
As announced last week, a separate listing of our aquaculture operations is now underway in Norway; the leading capital market
for seafood and the perfect home for our Aquaculture business.”
Third Quarter Interim Report
For detailed segment
operational performance and developments, please take the time to read our latest 10-Q filing, or refer to the third quarter interim
report posted to the Company website: Third Quarter Interim Report
Earnings Call Information
The Company will
host an earnings call on Monday, November 30, 2015 at 10:00 AM EDT/4:00 PM CET to discuss financial results for Q3 2015, with
questions and answers. To participate in the conference call please use the following information:
Sino Agro Food, Inc. Third Quarter 2015 Press Release | Page 3 |
SIAF 2015 Third Quarter Results Call Information |
|
Date: November 30, 2015 |
Time: 10:00 AM, EDT/4:00 PM CET |
|
|
Participant Dialing Instructions: |
SE:
+46 8 566 427 00
NO: +47
235 002 66
US: + 1
(866) 388-1925
|
UK: +44
203 428 14 13
CN: +86
400 612 12 62 |
|
|
Conference Pincode China Only (otherwise,
not needed):
320956#
The earnings call
will also be available over the web.
To access, click
the following link: Sino Agro Q3 Earnings Call
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),
the Company’s Facebook page (https://www.facebook.com/SinoAgroFoodInc),
and on twitter @SinoAgroFood.
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.
Sino Agro Food, Inc. Third Quarter 2015 Press Release | Page 4 |
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 |
Erik Ahl |
|
|
Investor Relations |
Nordic Countries |
|
|
+1 (775) 901-0344 |
+46 (0) 760 495 885 |
|
|
info@sinoagrofood.com |
se-info@sinoagrofood.com |
Sino Agro Food, Inc. Third Quarter 2015 Press Release | Page 5 |
Exhibit 99.2
Sino
Agro Food To Seek a Listing for Aquaculture Operations
Triway to Consolidate
and Spin-Off Aquaculture Operations
Nov 11, 2015
GUANGZHOU, China, Nov. 11, 2015
/PRNewswire/ — Sino Agro Food, Inc. (OTCQB: SIAF, also referred to herein as "SIAF" or the "Company")
is an integrated, diversified agriculture technology and organic food company with principal operations as primary producer, processor,
and marketer of protein foods in the People's Republic of China ("PRC").
The Company is pleased to announce
it has begun the first of three or four planned divestitures, and is currently exploring various opportunities for a spin-off
including a separate listing on the Oslo Stock Exchange ("OSE") for a new Aquaculture Company comprised of its aquaculture
operations. Creating a separate entity is a decisive step towards SIAF's vision to become a leading aquaculture company. Seeking
a listing on the OSE is in line with the OSE's position as the world's largest and certainly one of the most important financial
marketplaces for the seafood sector. SIAF intends to distribute a majority of its holdings in the new company to its shareholders
as a result of the spin-off.
For some time SIAF has sought a
listing in the Nordic region to facilitate trading of its shares closer to its largest shareholder base. The Company's recent
focus has been to achieve a senior listing of the whole SIAF Group on the OSE as soon as practicable, and this process has been
in motion since May 2015.
Given today's announcement that
the Aquaculture Company will be listed in Norway, and given that the work required for listing is greater than initially estimated,
the listing of the group company on OSE listing will not occur during 2015.
CEO Commentary
CEO Solomon Lee commented: "The
Company has received feedback from its current institutional investors and major retail shareholders, as well as advisors, that
restructuring our businesses as stand alone organizations will create better understood and appreciated businesses bringing more
value to our shareholders.
A separate listing of our aquaculture
operations carries the additional advantage of facilitating a listing in Norway; a natural market for making our aquaculture opportunities
known."
Proposed New Aquaculture Company
The proposed new company will have
one single share class and conform to Nordic corporate governance standards. It is targeted to include the bulk of SIAF's aquaculture
operations; namely:
| · | Jiang
Men City A Power Fishery Development Co., Ltd. (Fish Farm 1, "FF1") |
| · | Enping
City Bi Tao A Power Prawn Culture Development Co., Ltd. (Prawn Farm 1, "PF1")
|
| · | Zhongshan
A Power Prawn Culture Farms Development Co., Ltd. (Prawn Farm 2, "PF2") |
| · | Zhongshan
New Prawn Project ("ZSNPP") Phase 1 as well as an opportunity to acquire additional
phases of the project as development continues. The ZSNPP is targeted to reach an annual
production capacity of at least 200,000 metric tons over the long term. |
In Q2 2015, the annual production
of the Aquaculture segment was 5,331 metric tons of seafood and the trailing twelve-month revenue from sale of goods (seafood)
was USD 96.0 million, with a gross profit of USD 27.9 million. By year-end 2016, when Phase 1 of ZSNPP is scheduled to be fully
built the annual production capacity of the new company is expected to grow to approximately 15,000 metric tons.
Strategy
After consultation with financial
advisors, major shareholders, and several prospective institutional investors, several important advantages for the proposed structure
guided SIAF's decision. Establishing the new Aquaculture Company expedites several strategic objectives:
| · | Simplify
the structure of Sino Agro Food, Inc. by creating a rapidly growing, profitable Aquaculture
Company focused on the production of seafood with unique expansion potential |
| · | Create
a company establishing an independent Board of Directors, a shareholder nomination committee,
a single share class, a separate management team and auditors, dedicated reporting and
investor relations functions |
| · | Expose
the company to institutional investors with in-depth knowledge and high appreciation
of aquaculture businesses. The OSE has more than 15 listed companies in the seafood sector,
with a combined market capitalization of more than NOK150bn. The sector trades at an
average 2015 price/earnings multiple of 10.5x |
| · | Facilitate
funding to increase ownership in existing aquaculture facilities |
| · | Create
an independent company to secure funding for the future development of additional stages
at the significant Zhongshan New Prawn Project. |
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), the Company's
Facebook page (https://www.facebook.com/SinoAgroFoodInc), and on twitter @SinoAgroFood.
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.
Logo - http://photos.prnewswire.com/prnh/20150803/254079LOGO
SOURCE Sino Agro Food, Inc.
For further information: Peter Grossman,
Investor Relations, +1 (775) 901-0344, info@sinoagrofood.com; Erik Ahl, +46 (0) 760495885, se-info@sinoagrofood.com
Exhibit 99.3
Interim Report Third Quarter 2015
Revenue Increases 16% to USD 124.7M with EPS of USD 1.14
Return to Growth in Sale of Goods and Project development
July – September 2015
| · | Revenue for the period: USD 124.7M (107.2)
|
| · | Gross profit for the period: USD 32.3M
(34.5) |
| · | Gross profit margin: 25.9% (32.2%) |
| · | Net Income attributable to SIAF for the
period: USD 21.5M (24.5) |
| · | Diluted earnings per share: USD 1.14 (1.43)
|
Key figures
(USD M, except per share data) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | | |
% | |
Revenue | |
| 124.7 | | |
| 107.2 | | |
| 16 | % | |
| 331.0 | | |
| 295.2 | | |
| 12 | % |
Gross profit | |
| 32.3 | | |
| 34.5 | | |
| -7 | % | |
| 89.8 | | |
| 95.4 | | |
| -6 | % |
Gross profit margin | |
| 25.9 | % | |
| 32.2 | % | |
| | | |
| 27.1 | % | |
| 32.3 | % | |
| | |
EBITDA | |
| 29.3 | | |
| 32.1 | | |
| -9 | % | |
| 79.5 | | |
| 90.2 | | |
| -12 | % |
EBITDA margin | |
| 23 | % | |
| 30 | % | |
| | | |
| 24 | % | |
| 31 | % | |
| | |
Net income | |
| 27.7 | | |
| 30.9 | | |
| -10 | % | |
| 73.5 | | |
| 86.1 | | |
| -15 | % |
Net income attributable to SIAF | |
| 21.5 | | |
| 24.5 | | |
| -12 | % | |
| 54.6 | | |
| 68.4 | | |
| -20 | % |
Earnings per share (USD) - fully diluted | |
| 1.14 | | |
| 1.43 | | |
| -20 | % | |
| 3.0 | | |
| 4.3 | | |
| -29 | % |
Diluted weighted average number of shares (millions) | |
| 18.8 | | |
| 17.2 | | |
| 10 | % | |
| 18.1 | | |
| 16.2 | | |
| 12 | % |
Quarterly revenue (USD M)
|
Quarterly gross profit (USD M)
|
*Including commission and management fees
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 1 |
Summary of operations
Record setting revenue for the third
quarter of 2015 increased by 16 percent to USD 124.7M (107.2). Compared to the second quarter of 2015, revenue growth amounted
to USD 33.8M or 37 percent, mainly due to external factors that affected the previous quarter. Revenue from sales of goods increased
by 17 percent to USD 96.3M (82.6) primarily due to increased deboning of imported beef at Integrated Cattle Farm (SJAP) and secondarily
due to higher seafood production.
| · | Aquaculture
sale of goods increased by 24 percent to USD 28.8M (23.2). The increase is mainly due to increased volumes of mixed seafood and
prawns. Demonstrating the dynamic nature of RAS, several new, higher profit margin species of fish were sold during the quarter,
offsetting the USD 5.5M decrease in eel sales |
| · | Integrated
Cattle Farm sale of goods increased by 27 percent to USD 35.5M (27.9) mainly due to increased deboning of imported beef quadrupling
production compared to Q3 2014. The increase in deboning volumes substantially offset the effect of lower prices of live cattle |
| · | Revenue
from Project development increased by 15 percent to USD 28.4M (24.6) at a rate exceeding three times the previous quarter. Weather
improved in August, and the Company completed roof build out to allow interior construction to continue independent of weather
conditions. The Zhongshan New Prawn Project (“ZSNPP”) accounted for USD 19.4M or 68% of Product Development revenue |
Revenue (USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | |
Aquaculture* | |
| 28.8 | | |
| 23.2 | | |
| 24 | % | |
| 76.2 | | |
| 81.9 | |
Integrated Cattle Farm (SJAP) | |
| 35.5 | | |
| 27.9 | | |
| 27 | % | |
| 108.2 | | |
| 79.7 | |
Organic Fertilizer (HSA) | |
| 4.9 | | |
| 5.8 | | |
| -16 | % | |
| 14.0 | | |
| 15.8 | |
Cattle Farms (MEIJI) | |
| 9.6 | | |
| 6.8 | | |
| 41 | % | |
| 27.4 | | |
| 21.5 | |
Plantation | |
| 7.4 | | |
| 5.8 | | |
| 27 | % | |
| 11.6 | | |
| 9.1 | |
Seafood & Meat Trading | |
| 10.1 | | |
| 13.1 | | |
| -23 | % | |
| 27.5 | | |
| 36.0 | |
Sale of goods total | |
| 96.3 | | |
| 82.6 | | |
| 17 | % | |
| 264.9 | | |
| 244.0 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Aquaculture | |
| 28.4 | | |
| 24.6 | | |
| 15 | % | |
| 62.3 | | |
| 49.6 | |
Cattle Farms | |
| - | | |
| - | | |
| n.a. | | |
| - | | |
| - | |
Seafood & Meat Trading | |
| - | | |
| - | | |
| n.a. | | |
| 3.8 | | |
| 1.6 | |
Project development total | |
| 28.4 | | |
| 24.6 | | |
| 15 | % | |
| 66.1 | | |
| 51.2 | |
Group total | |
| 124.7 | | |
| 107.2 | | |
| 16 | % | |
| 331.0 | | |
| 295.2 | |
*Including commission & management fees from
Prawn Farm 2
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 2 |
Gross
profit decreased 7 percent to USD 32.3M (34.5), equivalent to a margin of 25.9% (32.2%). The decrease was mainly due to lower margins
at the Integrated Cattle Farm and Aquaculture segments.
| · | Aquaculture
gross profit decreased by 22 percent to USD 5.7M (7.2) equivalent to a margin of 19.7% (31.3%). The decrease is mainly due to
a lower eel gross profit of USD 5.1M offset by an increase in mixed seafood gross profit of USD 1.8M |
| · | Integrated
Cattle Farm gross profit decreased by 26 percent to USD 6.7M (9.1) equivalent to a margin of 18.9% (32.7%). Live cattle gross
profit decreased by USD 3.9M, offset by an increase in the gross profit of quarter cut imported beef deboning of USD 1.6M |
| · | Project
development gross profit increased by 2 percent to USD 11.3 (11.0) equivalent to a margin of 39.6% (44.7%) |
G&A expenses increased by 11
percent to USD 4.0M (3.6) reflecting ongoing heightened expenses related to various corporate exercises including listing costs.
Stockholders’ equity increased
by 24 percent to USD 464.3M (373.3) or USD 24.66 per share, based on the weighted average number of fully diluted outstanding shares
in the quarter, an increase of USD 21.0M or USD 1.12 per share in Q3 2015.
As of September 30 2015, the Company
had unrestricted cash and cash equivalents of USD 9.6M (4.7) and net working capital of USD 304.6M.
As of August 11, 2015, there were 18,951,737 shares of
common stock outstanding
Net of 280,000 shares securing a new trade facility,
as of November, 12, 2015 the outstanding common share count increased less than .7% compared to 18,951,737 as of the last previously
reported date, August 11, 2015.
Gross profit (USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | |
Aquaculture* | |
| 5.7 | | |
| 7.2 | | |
| -22 | % | |
| 18.3 | | |
| 27.3 | |
Integrated Cattle Farm (SJAP) | |
| 6.7 | | |
| 9.1 | | |
| -26 | % | |
| 27.2 | | |
| 26.5 | |
Organic Fertilizer (HSA) | |
| 1.9 | | |
| 1.1 | | |
| 75 | % | |
| 5.8 | | |
| 5.4 | |
Cattle Farms (MEIJI) | |
| 0.6 | | |
| 0.4 | | |
| 72 | % | |
| 1.3 | | |
| 1.1 | |
Plantation | |
| 4.9 | | |
| 4.1 | | |
| 20 | % | |
| 8.0 | | |
| 6.4 | |
Seafood & Meat Trading | |
| 1.1 | | |
| 1.6 | | |
| -28 | % | |
| 3.6 | | |
| 4.3 | |
Sale of goods total | |
| 21.0 | | |
| 23.5 | | |
| -11 | % | |
| 64.1 | | |
| 71.0 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Aquaculture | |
| 11.3 | | |
| 11.0 | | |
| 2 | % | |
| 23.3 | | |
| 24.3 | |
Cattle Farms | |
| - | | |
| - | | |
| n.a. | | |
| - | | |
| - | |
Seafood & Meat Trading | |
| - | | |
| - | | |
| n.a. | | |
| 2.4 | | |
| 0.1 | |
Project development total | |
| 11.3 | | |
| 11.0 | | |
| 2 | % | |
| 25.7 | | |
| 24.4 | |
Group total | |
| 32.3 | | |
| 34.5 | | |
| -7 | % | |
| 89.8 | | |
| 95.4 | |
*Including commission & management fees from Prawn
Farm 2
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 3 |
CEO
commentary
“Third quarter results
met expectations, returning to top-line growth. Sale of goods in both aquaculture and beef continue to perform well, growing revenue
by a combined USD 13M.
Due to external factors,
lower profitability in eels and live cattle sales reduced operating margins, mitigated by higher volumes of mixed seafood and beef
imports.
We have seen some challenges
in 2015. These include structurally lower prices for domestic beef in China, exceptionally heavy rains at the wrong time in Zhongshan,
a cyclically weak supply of eel elvers, and a restriction on seafood exports in Madagascar. Overcoming each enhances opportunities
for 2016. Historically we have adapted well to adversities that are unavoidable in the agriculture business.
Likewise, now at SJAP we
are countering currently moderating margins by transitioning the herd, while still growing revenue by deboning imported beef. We
are also engaging new export suppliers to replace those in Madagascar, while expanding import and distribution of beef from Australia.
In Aquaculture, similar
to the second quarter, the cyclically weak supply of eel elvers resulted in reduced sales of eels. New fresh water species were
introduced partially offsetting the decrease in sales, as a response to changing market conditions and prices.
Project development activity
and profitability in the third quarter was restored compared to the second quarter. I look forward to reporting stocking and sales
at ZSNPP during 2016.
Investments made in previous
years at the HU-plantation to increase resilience and yield have paid off in the third quarter, with good performance despite challenging
weather throughout this year’s season.
The value of our individual
assets has rarely been perceived according to potential. It was not until we proved compelling economics that outside perceptions
improved materially, broadening our opportunities. This is why the time is right to begin to spin-off self-sufficient businesses.
Restructuring our businesses
as standalone organizations will create better understood and more appreciated businesses, enhancing more value to our shareholders.
As announced last week, a separate listing of our aquaculture operations is now underway in Norway; the leading capital market
for seafood and the perfect home for our Aquaculture business.”
Mr. Solomon Lee
Chief Executive Officer and Chairman of the Board
of Directors
Subsequent events
and outlook
A three-year secured trade finance facility amounting
to USD 15M was entered into with a China based lender.
The Agricultural Development
Bank of China renewed SJAP’s credit facility of RMB 60M, supplemented by an additional new project loan of RMB 35M for new
development or possible M&A activity. Under certain conditions, the project loan may be converted to long-term debt.
First stocking of the Zhongshan
project is expected in early 2016 with completion of phase 1 and 10 000 MT of seafood capacity targeted to be achieved in 2016.
The delay of the stocking is due to certain workmanship in smoothing all tanks that has not been up to standard, thus requiring
refurbishment that delayed the installation work of various filters of the tanks. The delay is not expected to have a material
impact on the long-term plan of the project. In the meantime, most of the basic infrastructure work for stage 2 of phase 1 has
been carried out, preparing for construction of stage 2 tanks starting in December.
At Prawn farm 2 the Company
is finalizing roof work for newly developed RAS covered dams using newly improved APM technology. The aim is to improve production
capacity to 6-7 harvests per year instead of 2-3 harvests per year of traditional Chinese open dams, while saving water and power
costs and better utilizing land.
SJAP plans to expand its deboning
capacity to 12 500 MT/year and its freezer capacity to 10 000 MT. The USD 15M trade finance facility provides revolving working
capital for imports. Hence, the Company expects trading revenue to grow faster in the remaining months of 2015 and beyond.
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 4 |
Business
divisions
Aquaculture (CA & Tri-Way)
(USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | | |
% | |
Sleepy cod | |
| 2.5 | | |
| 1.5 | | |
| 62 | % | |
| 6.2 | | |
| 7.2 | | |
| -14 | % |
Eels | |
| 8.9 | | |
| 14.4 | | |
| -38 | % | |
| 29.8 | | |
| 56.8 | | |
| -48 | % |
Prawns | |
| 11.1 | | |
| 6.8 | | |
| 63 | % | |
| 31.9 | | |
| 16.7 | | |
| 91 | % |
Prawn post-larvae | |
| 0.2 | | |
| 0.5 | | |
| -50 | % | |
| 1.3 | | |
| 1.2 | | |
| 5 | % |
Mixed seafoods | |
| 6.1 | | |
| - | | |
| n.a. | | |
| 7.1 | | |
| - | | |
| n.a. | |
Revenue | |
| 28.8 | | |
| 23.2 | | |
| 24 | % | |
| 76.2 | | |
| 81.9 | | |
| -7 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sleepy cod | |
| 0.5 | | |
| 0.3 | | |
| 54 | % | |
| 1.2 | | |
| 1.6 | | |
| -21 | % |
Eels | |
| 0.2 | | |
| 5.4 | | |
| -96 | % | |
| 7.3 | | |
| 21.0 | | |
| -65 | % |
Prawns | |
| 2.9 | | |
| 1.1 | | |
| 164 | % | |
| 6.4 | | |
| 3.5 | | |
| 82 | % |
Prawn post-larvae | |
| 0.2 | | |
| 0.5 | | |
| -50 | % | |
| 1.3 | | |
| 1.2 | | |
| 5 | % |
Mixed seafoods | |
| 1.8 | | |
| - | | |
| n.a. | | |
| 2.1 | | |
| - | | |
| n.a. | |
Gross profit | |
| 5.7 | | |
| 7.2 | | |
| -22 | % | |
| 18.3 | | |
| 27.3 | | |
| -33 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sleepy cod | |
| 20.6 | % | |
| 21.7 | % | |
| | | |
| 20.2 | % | |
| 21.8 | % | |
| | |
Eels | |
| 2.5 | % | |
| 37.3 | % | |
| | | |
| 24.6 | % | |
| 37.0 | % | |
| | |
Prawns | |
| 26.0 | % | |
| 16.1 | % | |
| | | |
| 20.2 | % | |
| 21.2 | % | |
| | |
Prawn post-larvae | |
| 100.0 | % | |
| 100.0 | % | |
| | | |
| 100.0 | % | |
| 100.0 | % | |
| | |
Mixed seafoods | |
| 30.2 | % | |
| n.a. | | |
| | | |
| 29.0 | % | |
| n.a. | | |
| | |
Gross profit margin | |
| 19.7 | % | |
| 31.3 | % | |
| | | |
| 24.0 | % | |
| 33.3 | % | |
| | |
Revenue from Aquaculture sale
of goods increased by 24 percent to USD 28.8M (23.2). The increase was primarily due to productivity improvement and introducing
new species of fish into our Recirculating Aquaculture System. A reduction in the sale of eel due to a cyclically weak supply of
eel elvers was offset by increases in the sale of prawns.
Gross profit decreased by 22
percent to USD 5.7M (7.2) equivalent to a margin of 19.7% (31.3%). The decrease was primarily due to the lower profit generated
from the sale of eels. Eel prices were 16 percent lower in 2015, while unit costs rose. The opposite was true of prawns, as prices
increased 14 percent year on year while costs remained relatively flat, resulting in a 164% increase in gross profits.
The variation in prices is
not atypical, with some species rising and some falling. In this respect, the vitality of the Company’s farms to adapt when
supply or price conditions change lends flexibility to optimize overall margins and profitability, within the overall business
and market environments. This was evident in Q3 with the introduction of higher margin new fish species, replacing reduced production
of eels.
During the quarter and to date,
at PF2 the Company approached completion of covering open dams and converting from traditional to modern, using the latest APM
technology. Projected cost savings, and yield improvements are significant, potentially tripling the number of harvests per year.
If and when proven, the same technique will be applied at ZSNPP with very significant product development savings in time and cost.
Stocking of the first Phase
1, Stage 1 tanks at ZSNPP was delayed due to needed refurbishments causing delayed installation of tank filters. Most of the basic
infrastructure work for Phase 1, Stage 2 was carried out, preparing for constructing Stage 2 tanks starting in December.
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 5 |
| |
Q3 '15 | | |
Q3 '14 | | |
2014 | | |
2013 | |
Sleepy cod | |
| | | |
| | | |
| | | |
| | |
Harvest volume (MT) | |
| 145 | | |
| 98 | | |
| 1 326 | | |
| 2 616 | |
ASP / kg (USD) | |
| 17.1 | | |
| 15.7 | | |
| 15.3 | | |
| 15.2 | |
Gross profit / kg (USD) | |
| 3.5 | | |
| 3.4 | | |
| 3.4 | | |
| 2.7 | |
- Gross profit margin | |
| 21 | % | |
| 22 | % | |
| 22 | % | |
| 18 | % |
| |
| | | |
| | | |
| | | |
| | |
Giant mottled eel | |
| | | |
| | | |
| | | |
| | |
Harvest volume (MT) | |
| 425 | | |
| 577 | | |
| 2 461 | | |
| 1 661 | |
ASP / kg (USD) | |
| 21.1 | | |
| 25.0 | | |
| 23.9 | | |
| 16.6 | |
Gross profit / kg (USD) | |
| 0.5 | | |
| 9.3 | | |
| 9.8 | | |
| 7.7 | |
- Gross profit margin | |
| 2 | % | |
| 37 | % | |
| 41 | % | |
| 46 | % |
| |
| | | |
| | | |
| | | |
| | |
Giant river prawn | |
| | | |
| | | |
| | | |
| | |
Harvest volume (MT) | |
| 676 | | |
| 483 | | |
| 1 802 | | |
| 417 | |
ASP / kg (USD) | |
| 16.4 | | |
| 14.1 | | |
| 14.8 | | |
| 12.3 | |
Gross profit / kg (USD) | |
| 4.3 | | |
| 2.3 | | |
| 2.9 | | |
| 2.5 | |
- Gross profit margin | |
| 26 | % | |
| 16 | % | |
| 20 | % | |
| 20 | % |
| |
| | | |
| | | |
| | | |
| | |
Mixed Fish | |
| | | |
| | | |
| | | |
| | |
Harvest volume (MT) | |
| 1 609 | | |
| - | | |
| - | | |
| - | |
ASP / kg (USD) | |
| 3.8 | | |
| - | | |
| - | | |
| - | |
Gross profit / kg (USD) | |
| 1.1 | | |
| - | | |
| - | | |
| - | |
- Gross profit margin | |
| 30 | % | |
| n.a. | | |
| n.a. | | |
| n.a. | |
Project development
(USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | | |
% | |
Revenue | |
| 28.4 | | |
| 24.6 | | |
| 15 | % | |
| 62.3 | | |
| 49.6 | | |
| 26 | % |
Gross profit | |
| 11.3 | | |
| 11.0 | | |
| 2 | % | |
| 23.3 | | |
| 24.3 | | |
| -4 | % |
Gross profit margin | |
| 39.6 | % | |
| 44.7 | % | |
| | | |
| 37.3 | % | |
| 49.1 | % | |
| | |
Revenue from Project development
increased by 15 percent to USD 28.4M (24.6). Revenue from the construction and development work done on the Zhongshan New Prawn
Project amounted to USD 19.4M, contributing 68% of total Project development revenue. Compared to the second quarter 2015, revenue
at ZSNPP increased by USD 10.6M or 120 percent. Heavy rains dampened revenue in Q2. They continued through the first month of Q3.
Gross profit increased by 2 percent to USD 11.3M
(11.0) equivalent to a margin of 39.6% (44.7%).
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 6 |
Integrated
Cattle Farm (SJAP) – Cattle operation
(USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | | |
% | |
Live cattle | |
| 16.4 | | |
| 17.6 | | |
| -7 | % | |
| 48.7 | | |
| 52.9 | | |
| -8 | % |
Bulk livestock feed | |
| 1.6 | | |
| 1.1 | | |
| 47 | % | |
| 5.1 | | |
| 3.9 | | |
| 33 | % |
Concentrated livestock feed | |
| 2.7 | | |
| 3.1 | | |
| -12 | % | |
| 9.5 | | |
| 10.1 | | |
| -6 | % |
Fertilizer | |
| 0.6 | | |
| 0.4 | | |
| 34 | % | |
| 1.8 | | |
| 5.4 | | |
| -67 | % |
Revenue | |
| 21.3 | | |
| 22.2 | | |
| -4 | % | |
| 65.1 | | |
| 72.2 | | |
| -10 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Live cattle | |
| 1.1 | | |
| 5.0 | | |
| -78 | % | |
| 8.1 | | |
| 14.9 | | |
| -46 | % |
Bulk livestock feed | |
| 0.9 | | |
| 0.6 | | |
| 52 | % | |
| 2.7 | | |
| 1.9 | | |
| 40 | % |
Concentrated livestock feed | |
| 1.1 | | |
| 1.1 | | |
| 0 | % | |
| 3.9 | | |
| 4.1 | | |
| -7 | % |
Fertilizer | |
| 0.2 | | |
| 0.2 | | |
| -10 | % | |
| 0.6 | | |
| 2.7 | | |
| -76 | % |
Gross profit | |
| 3.3 | | |
| 7.0 | | |
| -52 | % | |
| 15.3 | | |
| 23.7 | | |
| -35 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Live cattle | |
| 6.7 | % | |
| 28.6 | % | |
| | | |
| 16.6 | % | |
| 28.3 | % | |
| | |
Bulk livestock feed | |
| 53.6 | % | |
| 52.0 | % | |
| | | |
| 52.3 | % | |
| 49.5 | % | |
| | |
Concentrated livestock feed | |
| 42.1 | % | |
| 36.8 | % | |
| | | |
| 40.6 | % | |
| 41.0 | % | |
| | |
Fertilizer | |
| 35.0 | % | |
| 52.0 | % | |
| | | |
| 36.3 | % | |
| 49.8 | % | |
| | |
Gross profit margin | |
| 15.6 | % | |
| 31.3 | % | |
| | | |
| 23.5 | % | |
| 32.8 | % | |
| | |
Revenue from SJAP's cattle
operation decreased by 4 percent to USD 21.3M (22.2). Gross profit from the division decreased by 52 percent to USD 3.3M (7.0)
equivalent to a margin of 15.6% (31.3%) mainly due to the lower live cattle prices.
The average of live cattle
prices fell by more than USD 450/head based on average prices of RMB25 / Kg (live weight) compared to the average of RMB32 / Kg
in Q3 2014 representing a drop of 22 percent in averaged live weight prices of the local cattle.
The increase of bulk livestock
feed sales by some 2 891 MT in the quarter is mainly due to the natural increases of cattle being kept by the regional farmers
in preparation for the coming winter season.
Live beef cattle | |
Q3 '15 | | |
Q3 '14 | | |
2014 | | |
2013 | |
Reared head of Beef cattle (#) | |
| 5 136 | | |
| 4 777 | | |
| 18 585 | | |
| 9 375 | |
- o/w sold externally as live cattle | |
| 3 936 | | |
| 3 932 | | |
| 17 185 | | |
| 9 375 | |
- o/w sold internally for valued added processing | |
| 1 200 | | |
| 845 | | |
| 1 400 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
ASP per head (USD) | |
| 3 185 | | |
| 3 648 | | |
| 3 397 | | |
| 3 461 | |
Gross profit per head (USD) | |
| 213 | | |
| 1 016 | | |
| 1 034 | | |
| 1 196 | |
Gross profit margin | |
| 7 | % | |
| 28 | % | |
| 30 | % | |
| 35 | % |
Animal feed | |
Q3 '15 | | |
Q3 '14 | | |
2014 | | |
2013 | |
Bulk livestock feed | |
| | | |
| | | |
| | | |
| | |
Produced volume (MT) | |
| 8 939 | | |
| 6 048 | | |
| 37 390 | | |
| 38 194 | |
ASP / MT (USD) | |
| 182 | | |
| 182 | | |
| 167 | | |
| 155 | |
Gross profit / MT (USD) | |
| 98 | | |
| 95 | | |
| 83 | | |
| 45 | |
Gross profit margin | |
| 54 | % | |
| 52 | % | |
| 50 | % | |
| 29 | % |
| |
| | | |
| | | |
| | | |
| | |
Concentrated livestock feed | |
| | | |
| | | |
| | | |
| | |
Produced volume (MT) | |
| 6 000 | | |
| 7 625 | | |
| 32 191 | | |
| 31 717 | |
ASP / MT (USD) | |
| 452 | | |
| 406 | | |
| 1 034 | | |
| 1 196 | |
Gross profit / MT (USD) | |
| 200 | | |
| 149 | | |
| 158 | | |
| 162 | |
Gross profit margin | |
| 44 | % | |
| 37 | % | |
| 15 | % | |
| 14 | % |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 7 |
Integrated
Cattle Farm (SJAP) – Value added processing
(USD
M) | |
Q3
'15 | | |
Q3
'14 | | |
% | | |
9M
'15 | | |
9M
'14 | | |
% | |
Slaughter | |
| 0.4 | | |
| 0.3 | | |
| 29 | % | |
| 0.9 | | |
| 0.3 | | |
| 175 | % |
Deboning of locally supplied livestock | |
| 3.4 | | |
| 3.6 | | |
| -6 | % | |
| 9.1 | | |
| 4.3 | | |
| 111 | % |
Deboning of imported beef | |
| 8.3 | | |
| 1.7 | | |
| 379 | % | |
| 30.9 | | |
| 1.7 | | |
| 1
686 | % |
Other | |
| 2.1 | | |
| - | | |
| n.a. | | |
| 2.1 | | |
| 1.1 | | |
| 96 | % |
Revenue | |
| 14.2 | | |
| 5.7 | | |
| 151 | % | |
| 28.9 | | |
| 1.8 | | |
| 1
506 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Slaughter | |
| 0.2 | | |
| 0.1 | | |
| 51 | % | |
| 0.5 | | |
| 0.1 | | |
| 238 | % |
Deboning of locally supplied livestock | |
| 0.8 | | |
| 1.2 | | |
| -37 | % | |
| 2.3 | | |
| 1.2 | | |
| 90 | % |
Deboning of imported beef | |
| 2.3 | | |
| 0.8 | | |
| 199 | % | |
| 9.0 | | |
| 0.8 | | |
| 1
057 | % |
Other | |
| 0.1 | | |
| - | | |
| n.a. | | |
| 0.1 | | |
| 0.7 | | |
| -91 | % |
Gross profit | |
| 3.4 | | |
| 2.1 | | |
| 58 | % | |
| 11.9 | | |
| 2.8 | | |
| 326 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Slaughter | |
| 50.9 | % | |
| 43.5 | % | |
| | | |
| 53.4 | % | |
| 43.5 | % | |
| | |
Deboning of locally supplied livestock | |
| 22.7 | % | |
| 33.9 | % | |
| | | |
| 24.7 | % | |
| 27.4 | % | |
| | |
Deboning of imported beef | |
| 28.2 | % | |
| 45.1 | % | |
| | | |
| 29.2 | % | |
| 45.1 | % | |
| | |
Other | |
| 2.9 | % | |
| n.a. | | |
| | | |
| 2.9 | % | |
| 63.1 | % | |
| | |
Gross
profit margin | |
| 23.9 | % | |
| 37.9 | % | |
| | | |
| 41.1 | % | |
| 155.0 | % | |
| | |
Revenue from SJAP's Value added
processing operation increased by 151 percent to USD 14.2 M (5.7) mainly due to higher volumes of imported quarter cut beef. Gross
profit from the division increased by 58 percent to USD 3.4M (2.1) equivalent to a margin of 23.9% (37.9%) mainly due to the lower
live cattle prices.
Changing domestic live cattle
prices as well as prices of imported beef affect the pricing of final VAP products. However packed and dressed meat prices are
not a simple derivation of live cattle prices mainly due to different cuts of meats having different demands and prices. Hence
it is difficult for the Company to itemize each and every cut of meat. Therefore, these are presented as averaged figures instead.
Value added processing | |
Q3 '15 | | |
Q3 '14 | | |
2014 | | |
2013 | |
Slaughter | |
| | | |
| | | |
| | | |
| | |
Sales of associated products (# pieces) | |
| 1 200 | | |
| 999 | | |
| 1 554 | | |
| - | |
ASP (USD) | |
| 358 | | |
| 335 | | |
| 346 | | |
| - | |
Gross profit / piece (USD) | |
| 178 | | |
| 142 | | |
| 158 | | |
| - | |
- Gross profit margin | |
| 50 | % | |
| 42 | % | |
| 46 | % | |
| n.a. | |
| |
| | | |
| | | |
| | | |
| | |
Packaged meat - local cattle | |
| | | |
| | | |
| | | |
| | |
Processed volume (MT) | |
| 301 | | |
| 286 | | |
| 575 | | |
| - | |
ASP / kg (USD) | |
| 11.3 | | |
| 12.6 | | |
| 13.5 | | |
| - | |
Gross profit / kg (USD) | |
| 2.6 | | |
| 4.3 | | |
| 4.0 | | |
| - | |
- Gross profit margin | |
| 23 | % | |
| 34 | % | |
| 30 | % | |
| n.a. | |
| |
| | | |
| | | |
| | | |
| | |
Packaged meat - imported beef | |
| | | |
| | | |
| | | |
| | |
Processed volume (MT) | |
| 996 | | |
| 84 | | |
| 289 | | |
| - | |
ASP / kg (USD) | |
| 11.3 | | |
| 8.7 | | |
| 9.5 | | |
| - | |
Gross profit / kg (USD) | |
| 2.6 | | |
| 4.1 | | |
| 2.6 | | |
| - | |
- Gross profit margin | |
| 23 | % | |
| 47 | % | |
| 27 | % | |
| n.a. | |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 8 |
Organic
Fertilizer (HSA)
(USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | | |
% | |
Organic fertilizer | |
| 0.9 | | |
| 1.1 | | |
| -16 | % | |
| 2.6 | | |
| 3.1 | | |
| -17 | % |
Organic mixed fertilizer | |
| 3.9 | | |
| 4.7 | | |
| -16 | % | |
| 11.4 | | |
| 12.6 | | |
| -10 | % |
Revenue | |
| 4.9 | | |
| 5.8 | | |
| -16 | % | |
| 14.0 | | |
| 15.8 | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Organic fertilizer | |
| 0.2 | | |
| 0.3 | | |
| -22 | % | |
| 0.6 | | |
| 0.8 | | |
| -17 | % |
Organic mixed fertilizer | |
| 1.7 | | |
| 0.8 | | |
| 108 | % | |
| 5.1 | | |
| 4.6 | | |
| 11 | % |
Gross profit | |
| 1.9 | | |
| 1.1 | | |
| 75 | % | |
| 5.8 | | |
| 5.4 | | |
| 7.4 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Organic fertilizer | |
| 23.9 | % | |
| 25.8 | % | |
| | | |
| 25.1 | % | |
| 25.0 | % | |
| | |
Organic mixed fertilizer | |
| 43.0 | % | |
| 17.3 | % | |
| | | |
| 45.0 | % | |
| 36.4 | % | |
| | |
Gross profit margin | |
| 39.3 | % | |
| 18.9 | % | |
| | | |
| 41.4 | % | |
| 34.2 | % | |
| | |
Revenue from HSA decreased
by 16 percent to USD 4.9M (5.8). Gross profit increased by 75 percent to USD 1.9M (1.1) equivalent to a margin of 39.3% (18.9%)
mainly due to a 32% reduction in raw material costs for organic mixed fertilizer.
Organic Fertilizer remained
fairly constant year over year in terms of unit prices received, unit cost prices and volumes sold.
Organic mixed fertilizer accounted
for 81 percent of HSA revenue in the quarter and 82 percent of the gross profit. Volumes declined by 14 percent to 8 884 MT (10
383) due to lake fishermen planning fertilizer inventories based on the price of carp. However, eventually they must use Organic
mixed fertilizer to provide enough nutrients in the lakes to support their overall production levels and goals. Usually, these
type of purchases occur over one or two quarters.
HSA is currently constructing on-site cattle farm
facilities.
| |
Q3 '15 | | |
Q3 '14 | | |
2014 | | |
2013 | |
Organic fertilizer | |
| | | |
| | | |
| | | |
| | |
Traded volume (MT) | |
| 3 355 | | |
| 4 080 | | |
| 14 128 | | |
| 19 230 | |
ASP / MT (USD) | |
| 264 | | |
| 264 | | |
| 260 | | |
| 323 | |
Gross profit / MT (USD) | |
| 60 | | |
| 66 | | |
| 84 | | |
| 85 | |
Gross profit margin | |
| 23 | % | |
| 25 | % | |
| 32 | % | |
| 26 | % |
| |
| | | |
| | | |
| | | |
| | |
Organic mixed fertilizer | |
| | | |
| | | |
| | | |
| | |
Traded volume (MT) | |
| 8 884 | | |
| 10 383 | | |
| 35 868 | | |
| 12 775 | |
ASP / MT (USD) | |
| 444 | | |
| 453 | | |
| 452 | | |
| 413 | |
Gross profit / MT (USD) | |
| 191 | | |
| 79 | | |
| 208 | | |
| 220 | |
- Gross profit margin | |
| 43 | % | |
| 17 | % | |
| 46 | % | |
| 53 | % |
| |
| | | |
| | | |
| | | |
| | |
Fertilizer for retail market | |
| | | |
| | | |
| | | |
| | |
Traded volume (MT) | |
| 51 | | |
| 20 | | |
| 120 | | |
| - | |
ASP / MT (USD) | |
| 738 | | |
| 927 | | |
| 928 | | |
| - | |
Gross profit / MT (USD) | |
| 356 | | |
| 584 | | |
| 582.0 | | |
| - | |
- Gross profit margin | |
| 48 | % | |
| 63 | % | |
| 63 | % | |
| n.a. | |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 9 |
Cattle
Farms (MEIJI)
(USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | | |
% | |
Sale of live cattle | |
| 9.6 | | |
| 6.8 | | |
| 41 | % | |
| 27.4 | | |
| 21.5 | | |
| 28 | % |
Revenue | |
| 9.6 | | |
| 6.8 | | |
| 41 | % | |
| 27.4 | | |
| 21.5 | | |
| 28 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of live cattle | |
| 0.6 | | |
| 0.4 | | |
| 72 | % | |
| 1.3 | | |
| 1.1 | | |
| 22 | % |
Gross profit | |
| 0.6 | | |
| 0.4 | | |
| 72 | % | |
| 1.3 | | |
| 1.1 | | |
| 22 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of live cattle | |
| 6.6 | % | |
| 5.5 | % | |
| | | |
| 4.8 | % | |
| 5.0 | % | |
| | |
Gross profit margin | |
| 6.6 | % | |
| 5.5 | % | |
| | | |
| 4.8 | % | |
| 5.0 | % | |
| | |
Revenue from MEIJI increased
by 41 percent to USD 9.6M (6.8) mainly due to a 56 percent increase in the volume of cattle sold.
Gross profit from the division
increased by 72 percent to USD 0.6M (0.4) equivalent to a margin of 6.6% (5.5%) mainly due to lower per unit production costs despite
average sales price per head of cattle sold declined by 10 percent.
| |
Q3 '15 | | |
Q3 '14 | | |
2014 | | |
2013 | |
Reared head of Beef cattle (#) | |
| 4 449 | | |
| 2 846 | | |
| 7 842 | | |
| 5 597 | |
| |
| | | |
| | | |
| | | |
| | |
ASP per head (USD) | |
| 2 166 | | |
| 2 395 | | |
| 4 194 | | |
| 3 157 | |
Gross profit per head (USD) | |
| 144 | | |
| 131 | | |
| 222 | | |
| 806 | |
- Gross profit margin | |
| 7 | % | |
| 5 | % | |
| 5 | % | |
| 26 | % |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 10 |
HU Plantation
(JHST)
(USD M) | |
Q3 '15 | | |
Q3 '14 | | |
% | | |
9M '15 | | |
9M '14 | | |
% | |
Fresh HU-flowers | |
| 0.5 | | |
| 0 | | |
| 15 | % | |
| 1.0 | | |
| 0.5 | | |
| 114 | % |
Dried HU-flowers | |
| 6.5 | | |
| 4 | | |
| 53 | % | |
| 8.7 | | |
| 6.4 | | |
| 35 | % |
Immortal vegetables | |
| 0.3 | | |
| 1 | | |
| -72 | % | |
| 1.8 | | |
| 2.2 | | |
| -17 | % |
Vegetable products | |
| 0.1 | | |
| - | | |
| n.a. | | |
| 0.1 | | |
| - | | |
| n.a. | |
Revenue | |
| 7.3 | | |
| 5.8 | | |
| 26 | % | |
| 11.5 | | |
| 9.1 | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fresh HU-flowers | |
| 0.3 | | |
| 0 | | |
| 3 | % | |
| 0.7 | | |
| 0.3 | | |
| 115 | % |
Dried HU-flowers | |
| 4.4 | | |
| 3 | | |
| 43 | % | |
| 6.1 | | |
| 4.6 | | |
| 31 | % |
Immortal vegetables | |
| 0.2 | | |
| 1 | | |
| -73 | % | |
| 1.2 | | |
| 1.5 | | |
| -19 | % |
Vegetable products | |
| 0.0 | | |
| - | | |
| n.a. | | |
| 0.0 | | |
| - | | |
| n.a. | |
Gross profit | |
| 4.9 | | |
| 4.1 | | |
| 19 | % | |
| 7.9 | | |
| 6.4 | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fresh HU-flowers | |
| 60.5 | % | |
| 67.5 | % | |
| | | |
| 67.8 | % | |
| 67.5 | % | |
| | |
Dried HU-flowers | |
| 67.5 | % | |
| 72.1 | % | |
| | | |
| 69.7 | % | |
| 71.8 | % | |
| | |
Immortal vegetables | |
| 66.3 | % | |
| 66.7 | % | |
| | | |
| 66.2 | % | |
| 67.8 | % | |
| | |
Vegetable products | |
| 54.2 | % | |
| n.a. | | |
| | | |
| 54.2 | % | |
| n.a. | | |
| | |
Gross profit margin | |
| 66.9 | % | |
| 70.7 | % | |
| | | |
| 69.0 | % | |
| 70.6 | % | |
| | |
Revenue from HU Plantation
increased by 26 percent to USD 7.3M (5.8) mainly due to added production of 91 MT (+30%) of dried HU flowers and average unit prices
were 18 percent higher. Gross profit from the division increased by 19 percent to USD 4.9M (4.1) equivalent to a margin of 66.9%
(70.7%).
This year, the extremely wet season created severe
problems for local growers, who contributed very little to this quarter’s volume of 398 MT. Persistent improvements in past
years at the HU plantation have succeeded in providing a more reliable, healthy harvest.
| |
Q3 '15 | | |
Q3 '14 | | |
2014 | | |
2013 | |
Dried HU flower sales | |
| | | |
| | | |
| | | |
| | |
Produced volume (MT) | |
| 398 | | |
| 307 | | |
| 465 | | |
| 1 504 | |
ASP / MT (USD) | |
| 16 294 | | |
| 13 802 | | |
| 13 832 | | |
| 12 412 | |
Gross profit / MT (USD) | |
| 10 993 | | |
| 9 948 | | |
| 9 991 | | |
| 6 569 | |
- Gross profit margin | |
| 67 | % | |
| 72 | % | |
| 72 | % | |
| 53 | % |
| |
| | | |
| | | |
| | | |
| | |
Fresh HU flower sales | |
| | | |
| | | |
| | | |
| | |
Million pieces (#) | |
| 3.0 | | |
| 3.0 | | |
| 4.0 | | |
| 14.4 | |
ASP / MT (USD) | |
| 0.18 | | |
| 0.15 | | |
| 0.15 | | |
| 0.15 | |
Gross profit / MT (USD) | |
| 0.11 | | |
| 0.10 | | |
| 0.10 | | |
| 0.10 | |
- Gross profit margin | |
| 61 | % | |
| 67 | % | |
| 67 | % | |
| 67 | % |
| |
| | | |
| | | |
| | | |
| | |
Immortal vegetables | |
| | | |
| | | |
| | | |
| | |
Produced volume (MT) | |
| 4 | | |
| 15 | | |
| 50 | | |
| 10 | |
ASP / MT (USD) | |
| 87 859 | | |
| 74 412 | | |
| 81 078 | | |
| 152 534 | |
Gross profit / MT (USD) | |
| 58 234 | | |
| 49 615 | | |
| 54 034 | | |
| 103 592 | |
- Gross profit margin | |
| 66 | % | |
| 67 | % | |
| 67 | % | |
| 68 | % |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 11 |
SIAF Corporate (Import / Export)
(USD M) | |
Q3
'15 | | |
Q3
'14 | | |
% | | |
9M
'15 | | |
9M
'14 | | |
% | |
Seafood | |
| 2.7 | | |
| 11.8 | | |
| -77 | % | |
| 12.4 | | |
| 34.7 | | |
| -64 | % |
Beef & mutton | |
| 7.3 | | |
| 1.4 | | |
| 440 | % | |
| 15.1 | | |
| 1.4 | | |
| 1
015% | |
Revenue | |
| 10.1 | | |
| 13.1 | | |
| -23 | % | |
| 27.5 | | |
| 36.0 | | |
| -24 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Seafood | |
| 0.3 | | |
| 1.1 | | |
| -73 | % | |
| 1.4 | | |
| 3.9 | | |
| -64 | % |
Beef & mutton | |
| 0.8 | | |
| 0.4 | | |
| 86 | % | |
| 2.2 | | |
| 0.4 | | |
| 405 | % |
Gross profit | |
| 1.1 | | |
| 1.6 | | |
| -28 | % | |
| 3.6 | | |
| 4.3 | | |
| -16 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Seafood | |
| 11.1 | % | |
| 9.6 | % | |
| | | |
| 11.1 | % | |
| 11.1 | % | |
| | |
Beef & mutton | |
| 11.1 | % | |
| 32.4 | % | |
| | | |
| 14.7 | % | |
| 32.4 | % | |
| | |
Gross profit margin | |
| 11.1 | % | |
| 11.9 | % | |
| | | |
| 13.1 | % | |
| 11.9 | % | |
| | |
Revenue
from Import / Export decreased by 23 percent to USD 10.1M (13.1) mainly due to lower seafood sales not entirely offset by the
increased import of beef and mutton. The Madagascar government imposed export restrictions, resulting in the Company’s import
of seafood decreasing USD 9.0M year on year. Import of beef from Australia increased by USD 6.0M (440%), accounting for 73 percent
of sales.
Gross
profit from the division decreased by 28 percent to USD 1.1M (1.6) equivalent to a margin of 11.1% (11.9%), roughly in line with
the overall revenue decrease.
The Company is confident
that this business segment will show rapid growth for several reasons:
| · | Management
believes that the Company is positioned to capitalize on the high demand in China for
meat and seafood, particularly as the disposable income of China’s middle class
rises |
| · | The
Company is importing seafood from other countries to bridge the shortfall from Madagascar,
and is engaged in establishing new suppliers. |
| · | Subsequent
to the end of the quarter, the Company secured a three-year trade finance facility of
up to USD 15M to provide revolving working capital for imports. Hence, mainly applied
to imported meats, the Company expects trading revenue to grow significantly faster in
the remaining months of 2015 and beyond. With a cash conversion cycle of an average of
72 days from first deposit to collection of accounts receivable combined with an operating
margin of 11 percent, the implied annual return amount to over 50 percent on the working
capital invested into the beef import business |
| |
Q3
'15 | | |
Q3
'14 | | |
2014 | | |
2013 | |
Mixed seafood | |
| | | |
| | | |
| | | |
| | |
Traded volume (MT) | |
| 132 | | |
| 728 | | |
| 3
152 | | |
| 1
521 | |
| |
| | | |
| | | |
| | | |
| | |
ASP / kg (USD) | |
| 20.8 | | |
| 16.2 | | |
| 15.1 | | |
| 14.5 | |
Gross profit / kg (USD) | |
| 2.3 | | |
| 1.5 | | |
| 1.4 | | |
| 1.9 | |
Gross profit margin | |
| 11 | % | |
| 10 | % | |
| 9 | % | |
| 13 | % |
| |
| | | |
| | | |
| | | |
| | |
Beef & lamb | |
| | | |
| | | |
| | | |
| | |
Traded volume (MT) | |
| 955 | | |
| 206 | | |
| 590 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
ASP / kg (USD) | |
| 7.7 | | |
| 7 | | |
| 5.7 | | |
| - | |
Gross profit / kg (USD) | |
| 0.9 | | |
| 2 | | |
| 2.8 | | |
| - | |
Gross profit margin | |
| 11 | % | |
| 32 | % | |
| 49 | % | |
| n.a. | |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 12 |
Definitions and SEC filings
Please
refer to our Form 10-K for definitions of terms used in this report. Filings with the SEC of Sino Agro Food's annual report to
stockholders, annual report on Form 10-K, quarterly reports on Form 10-Q, proxy statements, management certifications, press releases,
current reports on Form 8-K and other documents are available at the SEC’s website www.sec.gov and at Sino Agro Food's corporate
website.
Accounting policies
Sino
Agro Food prepares its financial statements in accordance with the Generally Accepted Accounting Principles (US-GAAP) as adopted
by the Financial Accounting Standards Board.
Review
The
consolidated balance sheets of Sino Agro Food, Inc. and subsidiaries as of September 30, 2015 and September 30, 2014, and the
consolidated statements of income and other comprehensive income, the consolidated statements of stockholders’ equity, and
the consolidated statements of cash flows for the three months ended September 30, 2015 and September 30, 2014 have been reviewed
by the Company's independent registered public accounting firm in accordance with interim standard AU 722 Interim Financial Information
as applicable to US public companies and governed by the Public Chartered Accountant Oversight Board, PCAOB.
Safe Harbor Statement
This
report contains statements that are not historical facts but rather forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that adress activities,
events or developments that Sino Agro Food, Inc. or its management believes or anticipates may occur in the future. All
forward-looking statements, including without limitation, management’s examination of historical operating trends and
data, as well as estimates of future sales, operating margin, cash flow, effective tax rate or other future operating
performance or financial results, are based upon our current expectations, various assumptions and data available from third
parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them.
However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as
forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause
actual future results, performance or achievements to differ materially from the future results, performance or achievements
expressed in or implied by such forward-looking statements. Because these forward-looking statements involve risks and
uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of
reasons, including without limitation, changes in global light vehicle production; fluctuation in vehicle
production schedules for which the Company is a supplier, changes in general industry and market conditions, changes in and
the successful execution of our capacity alignment, restructuring and cost reduction initiatives discussed herein and the
market reaction thereto; loss of business from increased competition; higher raw material, fuel and energy costs; changes in
consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies
or divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions
in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the
integration of any new or acquired businesses and technologies; continued uncertainty in pricing negotiations with customers,
our ability to be awarded new business; product liability, warranty and recall claims and other litigation and customer
reactions thereto; higher expenses for our pension and other postretirement benefits; work stoppages or other labor issues;
possible adverse results of pending or future litigation or infringement claims; negative impacts of antitrust investigations
or other governmental investigations and associated litigation (including securities litigation) relating to the conduct of
our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel;
legislative or regulatory changes limiting our business; political conditions; dependence on and relationships with customers
and suppliers; and other risks and uncertainties identified under the headings “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual
Reports and Quarterly Reports on Forms 10-K and 10-Q and any amendments thereto. The Company undertakes no obligation to
update publicly or revise any forward-looking statements in light of new information or future events. For any
forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to
update any such statement.
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 13 |
Key figures
(USD M,
except for share data) | |
Q3
2015 | | |
Q3
2014 | | |
% | | |
9M
2015 | | |
9M
2014 | | |
% | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Earnings | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue | |
| 124.7 | | |
| 107.2 | | |
| 16 | % | |
| 331.0 | | |
| 295.2 | | |
| 12 | % |
Gross profit | |
| 32.3 | | |
| 34.5 | | |
| -7 | % | |
| 89.8 | | |
| 95.4 | | |
| -6 | % |
EBITDA | |
| 29.3 | | |
| 32.1 | | |
| -9 | % | |
| 79.5 | | |
| 90.2 | | |
| -12 | % |
Net income attributable to SIAF | |
| 21.5 | | |
| 24.5 | | |
| -12 | % | |
| 54.6 | | |
| 68.4 | | |
| -20 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Share data | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Earnings per share (USD) – basic | |
| 1.14 | | |
| 1.49 | | |
| -23 | % | |
| 3.02 | | |
| 4.46 | | |
| -32 | % |
Earnings per share (USD) – fully diluted | |
| 1.14 | | |
| 1.43 | | |
| -20 | % | |
| 3.02 | | |
| 4.26 | | |
| -29 | % |
Weighted average number of shares (million) | |
| 18.8 | | |
| 16.5 | | |
| 14 | % | |
| 18.1 | | |
| 15.5 | | |
| 17 | % |
Diluted weighted average number of shares (millions) | |
| 18.8 | | |
| 17.2 | | |
| 10 | % | |
| 18.1 | | |
| 16.2 | | |
| 12 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash
flow | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net cash provided by operating activities | |
| -9.2 | | |
| -28.0 | | |
| -67 | % | |
| 37 | | |
| 26 | | |
| 40 | % |
Net cash used in investing activities | |
| -7.4 | | |
| 28.5 | | |
| -126 | % | |
| -44.5 | | |
| -25.6 | | |
| 74 | % |
Net cash provided by (used in) financing activities | |
| 12.8 | | |
| 1.1 | | |
| n.r. | | |
| 9.7 | | |
| 3.6 | | |
| n.r. | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Financial
position* | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total assets | |
| 625.8 | | |
| 481.0 | | |
| 30 | % | |
| | | |
| | | |
| | |
Total liabilities | |
| 80.8 | | |
| 49.7 | | |
| 63 | % | |
| | | |
| | | |
| | |
Total stockholder's equity | |
| 544.9 | | |
| 431.3 | | |
| 26 | % | |
| | | |
| | | |
| | |
Net debt | |
| 29.9 | | |
| 9.8 | | |
| 205 | % | |
| | | |
| | | |
| | |
Capital employed | |
| 574.8 | | |
| 439.3 | | |
| 31 | % | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ratios | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gross margin (%) | |
| 25.9 | % | |
| 32.2 | % | |
| | | |
| 27.1 | % | |
| 32.3 | % | |
| | |
EBITDA margin (%) | |
| 23.5 | % | |
| 29.9 | % | |
| | | |
| 24.0 | % | |
| 30.6 | % | |
| | |
Return on capital employed
(%) | |
| 20.5 | % | |
| 29.5 | % | |
| | | |
| 29.0 | % | |
| 44.5 | % | |
| | |
Total
equity ratio (%) | |
| 87.1 | % | |
| 89.7 | % | |
| | | |
| | | |
| | | |
| | |
| *Closing | balance
for relevant period |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 14 |
Consolidated
income statement
(USD M) | |
Q3
2015 | | |
Q3
2014 | | |
9M
2015 | | |
9M
2014 | |
Sale of goods | |
| 96.0 | | |
| 82.2 | | |
| 263.6 | | |
| 242.8 | |
Consulting and service income from development
contracts | |
| 28.4 | | |
| 24.6 | | |
| 66.1 | | |
| 51.2 | |
Commission and management
fee | |
| 0.2 | | |
| 0.5 | | |
| 1.3 | | |
| 1.2 | |
Total revenue | |
| 124.7 | | |
| 107.2 | | |
| 331.0 | | |
| 295.2 | |
| |
| | | |
| | | |
| | | |
| | |
Sale of goods | |
| -75.3 | | |
| -59.1 | | |
| -200.8 | | |
| -173.0 | |
Consulting and service income from development
contracts | |
| -17.2 | | |
| -13.6 | | |
| -40.5 | | |
| -26.8 | |
Commission and management
fee | |
| - | | |
| - | | |
| - | | |
| - | |
Cost of goods sold and services | |
| -92.4 | | |
| -72.7 | | |
| -241.2 | | |
| -199.8 | |
| |
| | | |
| | | |
| | | |
| | |
Sale of goods | |
| 20.8 | | |
| 23.0 | | |
| 62.9 | | |
| 69.8 | |
Consulting and service income from development
contracts | |
| 11.3 | | |
| 11.0 | | |
| 25.7 | | |
| 24.4 | |
Commission and management
fee | |
| 0.2 | | |
| 0.5 | | |
| 1.3 | | |
| 1.2 | |
Total gross profit | |
| 32.3 | | |
| 34.5 | | |
| 89.8 | | |
| 95.4 | |
| |
| | | |
| | | |
| | | |
| | |
General and administrative
expenses | |
| -4.0 | | |
| -3.6 | | |
| -13.9 | | |
| -9.5 | |
Net income from operations | |
| 28.3 | | |
| 30.9 | | |
| 75.9 | | |
| 85.8 | |
| |
| | | |
| | | |
| | | |
| | |
Government grant | |
| 0.7 | | |
| 0.1 | | |
| 0.9 | | |
| 0.3 | |
Other income | |
| - | | |
| 0.2 | | |
| 0.2 | | |
| 0.2 | |
Gain of extinguishment of debts | |
| - | | |
| 0.0 | | |
| - | | |
| 0.3 | |
Interest expense | |
| -1.3 | | |
| -0.3 | | |
| -3.4 | | |
| -0.5 | |
Net income (expenses) before
income taxes | |
| 27.7 | | |
| 30.9 | | |
| 73.5 | | |
| 86.1 | |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | |
Net income | |
| 27.7 | | |
| 30.9 | | |
| 73.5 | | |
| 86.1 | |
| |
| | | |
| | | |
| | | |
| | |
Less: Net (income) loss attributable
to the NCI | |
| -6.2 | | |
| -6.4 | | |
| -18.9 | | |
| -17.7 | |
Net income attributable to SIAF | |
| 21.5 | | |
| 24.5 | | |
| 54.6 | | |
| 68.4 | |
| |
| | | |
| | | |
| | | |
| | |
Foreign currency translation gain (loss) | |
| -4.6 | | |
| 0.8 | | |
| -3.8 | | |
| -0.0 | |
Less: other comprehensive
income attributable to the NCI | |
| -0.6 | | |
| -0.1 | | |
| -0.8 | | |
| 0.0 | |
Comprehensive income attributable
to SIAF | |
| 16.2 | | |
| 25.1 | | |
| 50.0 | | |
| 68.4 | |
| |
| | | |
| | | |
| | | |
| | |
Earnings per share attributable
to SIAF: | |
| | | |
| | | |
| | | |
| | |
Basic (USD per share) | |
| 1.14 | | |
| 1.49 | | |
| 3.02 | | |
| 4.46 | |
Diluted (USD per share) | |
| 1.14 | | |
| 1.43 | | |
| 3.02 | | |
| 4.23 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic (in shares) | |
| 18.8 | | |
| 16.5 | | |
| 18.8 | | |
| 16.5 | |
Diluted (in shares) | |
| 18.8 | | |
| 17.2 | | |
| 18.8 | | |
| 17.2 | |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 15 |
Consolidated
balance sheet
| |
September 30, | | |
June 30, | | |
Dec. 31, | |
(USD M) | |
2015 | | |
2015 | | |
2015 | |
Cash and cash equivalents | |
| 9.6 | | |
| 9.2 | | |
| 3.0 | |
Inventories | |
| 51.1 | | |
| 50.2 | | |
| 46.0 | |
Costs and estimated earnings in excess of billings
on uncompleted contracts | |
| 1.3 | | |
| 1.3 | | |
| 0.0 | |
Deposits and prepayments | |
| 85.0 | | |
| 84.8 | | |
| 76.0 | |
Accounts receivable, net of allowance for doubtful
accounts | |
| 129.3 | | |
| 106.5 | | |
| 104.5 | |
Other receivables | |
| 66.6 | | |
| 68.0 | | |
| 52.3 | |
Total current assets | |
| 342.9 | | |
| 320.0 | | |
| 281.8 | |
Plant and equipment, net of accumulated depreciation | |
| 76.2 | | |
| 68.3 | | |
| 64.4 | |
Construction in progress | |
| 93.1 | | |
| 100.9 | | |
| 69.1 | |
Land use rights, net of accumulated
amortization | |
| 60.0 | | |
| 62.6 | | |
| 63.3 | |
Total plant and equipment | |
| 229.2 | | |
| 231.8 | | |
| 196.8 | |
Goodwill | |
| 0.7 | | |
| 0.7 | | |
| 0.7 | |
Proprietary technologies, net of accumulated amortization | |
| 11.0 | | |
| 11.2 | | |
| 11.5 | |
Long term investment | |
| 0.8 | | |
| 0.8 | | |
| 0.8 | |
Temporary deposits paid to
entities for investments in SFJV companies | |
| 41.1 | | |
| 41.1 | | |
| 41.1 | |
Total other
assets | |
| 53.6 | | |
| 53.8 | | |
| 54.1 | |
TOTAL ASSETS | |
| 625.8 | | |
| 605.6 | | |
| 532.7 | |
| |
| | | |
| | | |
| | |
Accounts payable and accrued expenses | |
| 20.5 | | |
| 19.6 | | |
| 22.1 | |
Billings in excess of costs and estimated earnings
on uncompleted contracts | |
| 3.9 | | |
| 4.6 | | |
| 8.1 | |
Due to a director | |
| 0.7 | | |
| 0.2 | | |
| 1.2 | |
Series F Non-convertible preferred stock redemption
payable | |
| 0.0 | | |
| 0.0 | | |
| 3.1 | |
Other payables | |
| 16.4 | | |
| 14.6 | | |
| 11.7 | |
Borrowings - Short term bank debts | |
| 0.0 | | |
| 4.4 | | |
| 4.4 | |
Bonds payable | |
| 1.7 | | |
| 1.7 | | |
| 1.7 | |
Current liabilities | |
| 43.2 | | |
| 45.2 | | |
| 52.3 | |
Other payables | |
| 0.0 | | |
| 0.0 | | |
| 0.0 | |
Borrowings - Long term debts | |
| 2.2 | | |
| 2.3 | | |
| 2.3 | |
Convertible notes payables | |
| 35.5 | | |
| 34.9 | | |
| 15.8 | |
Non-current
liabilities | |
| 37.7 | | |
| 42.0 | | |
| 18.1 | |
TOTAL LIABILITIES | |
| 80.8 | | |
| 87.2 | | |
| 70.5 | |
| |
| | | |
| | | |
| | |
Common stock: $0.001 par value | |
| 0.0 | | |
| 0.0 | | |
| 0.0 | |
Additional paid - in capital | |
| 134.3 | | |
| 130.8 | | |
| 121.2 | |
Retained earnings | |
| 327.8 | | |
| 306.3 | | |
| 273.3 | |
Accumulated other comprehensive income | |
| 3.4 | | |
| 7.4 | | |
| 6.5 | |
Treasury stock | |
| -1.3 | | |
| -1.3 | | |
| -1.3 | |
Total SIAF stockholders' equity | |
| 464.3 | | |
| 443.2 | | |
| 399.6 | |
Non - controlling interest | |
| 80.7 | | |
| 75.1 | | |
| 62.6 | |
TOTAL STOCKHOLDER'S EQUITY | |
| 544.9 | | |
| 518.4 | | |
| 462.2 | |
| |
| | | |
| | | |
| | |
TOTAL
LIABILITIES AND STOCKHOLDER'S EQUITY | |
| 625.8 | | |
| 605.6 | | |
| 532.7 | |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 16 |
Consolidated
statement of cash flows
(USD
M) | |
Q3
2015 | | |
Q3
2014 | | |
9M
2015 | | |
9M
2014 | |
Net
income for the period | |
| 27.7 | | |
| 30.9 | | |
| 73.5 | | |
| 86.1 | |
Adjustments
to reconcile net income from operations to net cash from operations: | |
| | | |
| | | |
| | | |
| | |
Depreciation | |
| 0.5 | | |
| 0.6 | | |
| 2.1 | | |
| 1.8 | |
Amortization | |
| 0.4 | | |
| 0.6 | | |
| 1.5 | | |
| 1.6 | |
Common
stock issued for services | |
| 0.2 | | |
| -0.3 | | |
| 1.9 | | |
| -0.3 | |
Gain
on extinguishment of debts | |
| - | | |
| 0.5 | | |
| 0.0 | | |
| 0.3 | |
Other
amortized cost | |
| 1.2 | | |
| 0.1 | | |
| 2.8 | | |
| 0.2 | |
Cash
flow from operating activities before change in working capital | |
| 30.1 | | |
| 32.4 | | |
| 81.9 | | |
| 89.7 | |
(Increase)
in inventories | |
| -1.0 | | |
| -11.5 | | |
| -5.2 | | |
| -29.3 | |
(Increase)
in costs and estimated earnings in excess of billings on uncompleted
contacts | |
| - | | |
| -0.5 | | |
| -1.3 | | |
| -0.6 | |
(Increase)
decrease in deposits and prepaid expenses | |
| 1.0 | | |
| -36.2 | | |
| -1.8 | | |
| -0.6 | |
Increase
in due to a director | |
| -16.7 | | |
| 0.5 | | |
| 1.6 | | |
| 2.5 | |
Change
in accounts payable and accrued expenses | |
| 0.8 | | |
| -3.4 | | |
| -1.7 | | |
| 5.4 | |
Increase
in other payables | |
| -3.2 | | |
| 1.9 | | |
| 4.5 | | |
| 12.4 | |
(Increase)
in accounts receivable | |
| -22.8 | | |
| -5.6 | | |
| -24.8 | | |
| -40.7 | |
(Decrease)
increase in billings in excess of costs and estimated earnings on uncompleted contracts | |
| -0.8 | | |
| -0.1 | | |
| -4.2 | | |
| 0.2 | |
(Increase)
in other receivables | |
| 3.3 | | |
| -5.4 | | |
| -12.4 | | |
| -12.7 | |
Change
in working capital | |
| -39.2 | | |
| -60.3 | | |
| -45.2 | | |
| -63.4 | |
Net
cash provided by operating activities | |
| -9.2 | | |
| -28.0 | | |
| 36.7 | | |
| 26.3 | |
| |
| | | |
| | | |
| | | |
| | |
Purchases
of plant and equipment | |
| -0.0 | | |
| -0.0 | | |
| -3.9 | | |
| -3.4 | |
Payment
for investment in Sino Joint Venture Companies | |
| - | | |
| 35.1 | | |
| 0.0 | | |
| 0.0 | |
Payment
for construction in progress | |
| -7.3 | | |
| -6.6 | | |
| -40.6 | | |
| -22.2 | |
Net
cash used in investing activities | |
| -7.4 | | |
| 28.5 | | |
| -44.5 | | |
| -25.6 | |
| |
| | | |
| | | |
| | | |
| | |
Short
term bank loan repaid | |
| -4.1 | | |
| - | | |
| -4.1 | | |
| - | |
Series
F Non-convertible preferred stock redemption | |
| - | | |
| - | | |
| -3.1 | | |
| - | |
Net
proceeds from convertible note payable | |
| 13.4 | | |
| - | | |
| 13.4 | | |
| - | |
Net
proceeds from negotiable promissory notes | |
| 3.5 | | |
| - | | |
| 3.5 | | |
| - | |
Proceeds
from long term debts | |
| - | | |
| -2.4 | | |
| 0.0 | | |
| - | |
Net
cash (used in) provided by financing activities | |
| 12.8 | | |
| 1.1 | | |
| 9.7 | | |
| 3.6 | |
| |
| | | |
| | | |
| | | |
| | |
Effects
on exchange rate changes on cash | |
| 4.1 | | |
| -0.6 | | |
| 4.7 | | |
| -0.8 | |
Increase
in cash and cash equivalents | |
| 0.4 | | |
| 1.1 | | |
| 6.5 | | |
| 3.4 | |
Cash
and cash equivalents, beginning of period | |
| 9.2 | | |
| 3.6 | | |
| 3.0 | | |
| 1.3 | |
Cash
and cash equivalents, end of period | |
| 9.6 | | |
| 4.7 | | |
| 9.6 | | |
| 4.7 | |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 17 |
Multi-year summary
(USD M, except for share data) | |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
| |
| | |
| | |
| | |
| | |
| |
Earnings | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue | |
| 404.3 | | |
| 261.4 | | |
| 138.6 | | |
| 51.9 | | |
| 40.6 | |
Gross profit | |
| 129.3 | | |
| 101.5 | | |
| 69.8 | | |
| 24.9 | | |
| 22.5 | |
EBITDA | |
| 119.6 | | |
| 98.3 | | |
| 63.8 | | |
| 21.1 | | |
| 21.1 | |
Net income attributable to SIAF | |
| 92.1 | | |
| 74.2 | | |
| 57.5 | | |
| 15.7 | | |
| 8.5 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Share data | |
| | | |
| | | |
| | | |
| | | |
| | |
Earnings per share (USD) – basic | |
| 5.81 | | |
| 6.14 | | |
| -0.05 | | |
| 1.87 | | |
| 2.91 | |
Earnings per share (USD) – fully diluted | |
| 5.56 | | |
| 5.76 | | |
| -0.03 | | |
| 1.87 | | |
| 2.78 | |
Weighted average number of shares (million) | |
| 15.8 | | |
| 12.1 | | |
| 8.3 | | |
| 6.1 | | |
| 5.5 | |
Diluted weighted average number of shares (millions) | |
| 16.6 | | |
| 12.9 | | |
| 9.3 | | |
| 6.8 | | |
| 6.2 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cash
flow | |
| | | |
| | | |
| | | |
| | | |
| | |
Net cash provided by operating activities | |
| 22.0 | | |
| 84.2 | | |
| 44.4 | | |
| 4.6 | | |
| 1.4 | |
Net cash used in investing activities | |
| -31.5 | | |
| -93.3 | | |
| -44.4 | | |
| -5.4 | | |
| -3.9 | |
Net cash provided by (used in) financing activities | |
| 9.9 | | |
| 0.9 | | |
| 6.9 | | |
| -0.6 | | |
| -0.4 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Financial
position | |
| | | |
| | | |
| | | |
| | | |
| | |
Total assets | |
| 532.7 | | |
| 367.5 | | |
| 243.1 | | |
| 151.8 | | |
| 107.8 | |
Total liabilities | |
| 70.5 | | |
| 35.9 | | |
| 26.0 | | |
| 16.4 | | |
| 6.7 | |
Total shareholders equity | |
| 462.2 | | |
| 331.6 | | |
| 217.1 | | |
| 135.4 | | |
| 101.1 | |
Net debt (cash) | |
| 24.2 | | |
| 7.8 | | |
| -4.1 | | |
| -1.2 | | |
| 0.1 | |
Capital employed | |
| 486.4 | | |
| 339.4 | | |
| 213.0 | | |
| 134.2 | | |
| 101.2 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Ratios | |
| | | |
| | | |
| | | |
| | | |
| | |
Gross margin (%) | |
| 32.0 | % | |
| 38.8 | % | |
| 50.4 | % | |
| 48.0 | % | |
| 55.4 | % |
EBITDA margin (%) | |
| 29.6 | % | |
| 37.6 | % | |
| 46.0 | % | |
| 40.7 | % | |
| 52.0 | % |
Return on capital employed
(%) | |
| 22.3 | % | |
| 26.9 | % | |
| 33.1 | % | |
| 13.3 | % | |
| 8.4 | % |
Total
equity ratio (%) | |
| 86.8 | % | |
| 90.2 | % | |
| 89.3 | % | |
| 89.2 | % | |
| 93.8 | % |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 18 |
RECONCILIATION OF NON-U.S. GAAP
MEASURES TO U.S. GAAP
In
this report we sometimes refer to non-U.S. GAAP measures that we and securities analysts use in measuring Sino Agro Food's performance.
We believe that these measures assist investors and management in analyzing trends in the Company's business for the reasons given
below. Investors should not consider these non-U.S. GAAP measures as substitutes, but rather as additions, to financial reporting
measures prepared in accordance with U.S. GAAP. It should be noted that these measures, as defined, may not be comparable to similarly
titled measures used by other companies.
Use of non-U.S. GAAP financial
information
Sino
Agro Food’s (“SIAF”) financial information includes information prepared in conformity with U.S. Generally Accepted
Accounting Principles (US GAAP) as well as non-U.S. GAAP information. It is management’s intent to provide non-U.S. GAAP
financial information to enhance understanding of our consolidated financial information as prepared in accordance with U.S. GAAP.
This non-U.S. GAAP information should be considered by the reader in addition to, but not instead of, the financial reporting
measures prepared in accordance with U.S. GAAP. The non-U.S. GAAP financial information presented may be determined or calculated
differently by other companies.
Earnings Before
Interest, Taxes, Depreciation and Amortization (“EBITDA”)
EBITDA
is a non-U.S. GAAP measurement. Management uses EBITDA because it believes that such measurements are widely accepted financial
indicators used by investors and analysts to analyze and compare companies on the basis of operating performance and that these
measurements may be used by investors to make informed investment decisions.
(USD M) | |
Q3
2015 | | |
Q3
2014 | | |
9M
2015 | | |
9M
2014 | |
Net income from operations | |
| 28.3 | | |
| 30.9 | | |
| 76 | | |
| 86 | |
Depreciation and Amortization | |
| 1.0 | | |
| 1.2 | | |
| 3.7 | | |
| 4.4 | |
EBITDA
(Non-U.S. GAAP Measure) | |
| 29.3 | | |
| 32.1 | | |
| 79.5 | | |
| 90.2 | |
Return on Capital
Employed (“ROCE”)
SIAF
believes Return on Capital Employed (ROCE) is a good indicator of long-term company and management performance, both absolute
and relative to SIAF's primary peer group. ROCE is a measure of the profitability of SIAF's capital employed in its business compared
with that of its peers. SIAF calculates ROCE as a ratio, the numerator of which is Net income plus Interest expense, and the denominator
of which is average Total stockholder’s equity plus total interest bearing liabilities.
(USD M) | |
Q3
2015 | | |
Q3
2014 | | |
9M
2015 | | |
9M
2014 | |
Numerator | |
| | | |
| | | |
| | | |
| | |
Net income | |
| 27.7 | | |
| 30.9 | | |
| 73.5 | | |
| 86.1 | |
Interest Expense | |
| 1.3 | | |
| 0.3 | | |
| 3.4 | | |
| 0.5 | |
ROCE Earnings (Non-U.S. GAAP
Measure) | |
| 29.0 | | |
| 31.1 | | |
| 76.9 | | |
| 86.5 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator | |
| | | |
| | | |
| | | |
| | |
Average capital employed* (Non-U.S.
GAAP Measure) | |
| 566 | | |
| 422 | | |
| 530 | | |
| 389 | |
| |
| | | |
| | | |
| | | |
| | |
ROCE
(Non-U.S. GAAP Measure) | |
| 20.5 | % | |
| 29.5 | % | |
| 29.0 | % | |
| 44.5 | % |
*Average of current and
previous period Total stockholder's equity and Interest bearing liabilities minus cash and cash equivalents
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 19 |
Net Debt
Management
uses Net Debt, along with other factors, to evaluate SIAF’s financial condition. Management believe that Net Debt is an
appropriate supplemental measure of financial condition and may be useful to investors because it provides a more complete understanding
of our financial condition before the impact of our decisions regarding the appropriate use of cash and liquid investments.
Net
Debt include the aggregate interest bearing debt obligations in SIAF’s consolidated balance sheet, less the balance sheet
line item Cash and cash equivalents.
(USD M) | |
September
30, 2015 | | |
September
30, 2014 | |
Short term bank loan | |
| - | | |
| - | |
Series F Non-convertible preferred
stock | |
| - | | |
| 3.1 | |
Other non-current payables | |
| - | | |
| - | |
Long term debts | |
| 2.2 | | |
| 2.6 | |
Bonds payable | |
| 1.7 | | |
| 1.7 | |
Convertible bond payables | |
| 35.5 | | |
| 7.0 | |
Cash and cash equivalents | |
| -9.6 | | |
| -4.7 | |
Net Debt
(Non-U.S. GAAP Measure) | |
| 29.9 | | |
| 9.8 | |
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 20 |
This is Sino
Agro Food
SIAF 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, stressing vertical integration between the levels of the Company’s subsidiary
food chain. 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 fish and cattle. Further joint ventures market and distribute the wholesale products as part of
an overall “farm to plate” concept and business strategy.
Aquaculture (CA
and Tri-Way)
Aquaculture refers
to the operations of Capital Award Inc. (CA) and Tri-way (holding company of Fish Farm 1) covering its engineering, technology
and consulting service management of fishery farms and seafood sales operations and marketing. CA generates revenue as the sole
marketing, sales and distribution agent of the fishery farms (covering both of the fish, prawns and eel farms) developed by CA
itself in China. Also, it generates sales to and derived from the unincorporated companies EBAPCD and ZSAPP (Prawn Farm 1 &
Prawn farm 2). In addition, CA sells Engineering and Technology Services via Consulting and Service Contracts for the development,
construction, and supply of plant and equipment, and management of fishery (and prawn or shrimp) farms and related business operations,
including the Zhongshan New Prawn Project ("ZSNP").
Integrated Cattle
Farm (SJAP)
Integrated Cattle
Farm refers to the operation of SJAP in manufacturing and sales of Organic Fertilizer, bulk livestock feed, concentrated livestock
feed, and the sales of live cattle inclusive of:
(b). Cattle that
are not being slaughtered in our own slaughterhouse operated by Qinghai Zhong He Meat Products Co.,
Limited (“QZH”.
These are sold live to third party livestock wholesalers.
(a). Cattle that
are sold to QZH and slaughtered, deboned and packed by QZH. The sales of deboned and packed meats by QZH are sold to various meat
distributors, wholesalers and super market chains and our own retail butcher stores
Organic Fertilizer
(HSA)
Hunan Shenghua A
Power Agriculture Co. Ltd. (“HSA”) manufactures and sells Organic Fertilizer.
Cattle Farms
(MEIJI)
Cattle Farm refers
to the operations of Cattle Farm (1) under Jiangmen City Hang Mei Cattle Farm Development Co. Ltd
(“JHMC”).
Cattle are sold live to third party livestock wholesalers who in turn resell them mainly in Guangzhou and Beijing livestock wholesale
markets. The financial statements of JHMC are consolidated into MEIJI as one entity along with MEIJI’s operation in the
consulting and service for development of other Cattle Farms (i.e., Cattle Farm 2) or related projects.
HU Plantation
(JHST)
Plantation refers
to the operations of Jiangmen City Heng Sheng Tai Agriculture Development Co. Ltd. (“JHST”) The HU
Plantation business
grows, harvests and sells dragon fruit flowers (dried and fresh) and immortal vegetables to wholesale and retail markets JHST’s
financial statements are consolidated into the financial statements of Macau EIJI Company Ltd. (“MEIJI”) as one entity.
SIAF Corporate
/ Seafood & Meat Trading
SIAF Corporate /
Seafood & Meat Trading refers to the business operations of Sino Agro Food, Inc., including import / export business and consulting
and service operations provided to projects that are not included in the above categories, and are not limited to corporate affairs.
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 21 |
For
further information
The Company |
Auditor |
|
|
Peter Grossman |
Anthony Kam |
Investor Relations |
Suite 2105, |
+1 (775) 901-0344 |
21st floor, |
info@sinoagrofood.com |
Wing On Centre |
|
111 Connaught Road Central |
Erik Ahl |
Hongkong |
+46 (0) 760 495
885
se-info@sinoagrofood.com
Report on the fourth quarter
2015
Sino Agro Food intends
to publish the 2015 annual report and the fourth quarter 2015 results on Thursday, March 31, 2016.
Sino Agro Food, Inc. Interim report third quarter 2015 | Page 22 |