WEB NEWS Comments & Business Outlook
Second Quarter 2019 Financial Results
Revenue in the fourth quarter of 2019 was USD 38.6 M, an increase of 14% from Q2 of 2018, and an increase of 32% compared to Q1 of 2019.
Earnings Per Dilute Share $0.13 vs last $0.02.
Solomon Lee, Chief Executive Officer of Sino Agro Food, commented, "Second quarter results were substantially better than the first quarter, supporting our efforts to ensure a baseline scenario in which all our business sectors are self sufficient and then positioned for gradual organic growth. By limiting capital expenditures, SJAP, JHST, CA and the Corporate business sectors have met our baseline goal. Market conditions for HSA and MEIJI products -- organic mixed fertilizer and Yellow Asian Cattle -- are currently favorable. Consequently, each is slowly demonstrating growth beyond the baseline scenario.
Notable Share Transactions
GUANGZHOU, China, June 27, 2019 /PRNewswir e/ -- Sino Agro Food, Inc. (SIAF) (OSE:SIAF-ME), a company focused on high protein food including seafood and cattle ("SIAF"), has filed forms S-1 and S-4 with the SEC relating to the offering of a new class of preferred shares. The transactions described in the S-1 and S-4 are expected to commence in the third quarter of 2019, subject to clearance by the Securities and Exchange Commission. Such approval cannot be assured.
Preferred Share Offerings
SIAF today filed a Form S-1 with the SEC, relating to a direct public offering of up to 1,000,000 shares of a new class of preferred shares, priced at $40.00 per share: Series G Non-Convertible Cumulative Redeemable Perpetual Preferred Stock.
Concurrently, SIAF filed a Form S-4 with the SEC, relating to an additional direct offering of up to 1,000,000 shares of Series G Non-Convertible Cumulative Redeemable Perpetual Preferred exclusively to shareholders of the Company, in exchange for shares of SIAF's common stock.
Dividends on both offers of Series G Preferred Stock are cumulative from the date of original issue and will be payable annually when, as, and if confirmed declared by our board of directors. Dividends will be payable at a rate equal to 7% per annum per $40.00of stated liquidation preference per share, or $2.80 per share of Series G Preferred Stock per year.
Each share of our Series G Preferred Stock is being sold under the S-1 is sold together with ten warrants to purchase an aggregate of ten shares of common stock, one common share per warrant. All warrants shall have an exercise price of $1.00 per common share. The warrants are divided into three tranches relating to available exercise dates as follows:
Series 1 warrants will be exercisable from January 1, 2022 through their termination on December 31, 2022.
Series 2 warrants will be exercisable from January 1, 2023 through their termination on December 31, 2023. The
Series 3 warrants will be exercisable from January 1, 2024 through their termination on December 31, 2024
All warrants will be issued separately, but will be purchased together in the S-1 offering.
On and after five years from the Dividend Record Date, we may, at our option, redeem the Series G Preferred Stock (GP Stock) in whole or in part, at any time or from time to time, in exchange for 15 common shares plus any accumulated and unpaid dividends thereon.
Exchange Offering
Concurrent with the S-1, the Company filed a Form S-4 with the SEC, relating to offering to exchange up to 1,000,000 shares of the preferred Series G Preferred Stock, priced at $27.00 per share of common shares to be exchanged.
The number of shares of Common Stock required for submission in exchange for one share of Series G Preferred Stock will be determined by the market price of the common stock calculated by the average closing price for the three days before the expiration date. One share of Series G Preferred Stock will be exchanged for such number of shares of Common Stock having a market price equal to $27.00. The offering commencement date will not occur until after the SEC has declared both this registration statement on S-4 and the related registration statement on S-1 effective. The expiration date of this exchange offer will be at least 20 business days after the commencement of the exchange offer.
Comments & Business Outlook
First Quarter 2019 Financial Results
Total revenue decreased USD 4.4 M, or 13%, to USD 29.3 M for the quarter ended March 31, 2019 when compared to the corresponding 2018 quarter.
Fully diluted GAAP earnings totaled USD .8M or USD .01 per share.
CEO Commentary
Solomon Lee, Chief Executive Officer of Sino Agro Food, commented, "First quarter results were a bit softer than we expected because of the difficulties Chinese New Year presented. We believe this delayed most of the sales that were short of expectation; therefore, we anticipate a pick up in Q2 and beyond, assuming underlying market conditions remain stable. In general, we are on track with strategic plans, which I'd like to elaborate upon.
During and around 2017, we experienced conditions analogous in effect to the global financial crisis in 2008. As we've communicated in quarterly reports and press releases for some time now, two main factors contributed:
1) a severe relaxation in the Chinese government's taxes on imported beef, led to writing off SJAP's slaughterhouse, and cutting back co-operative beef farming , and
2) unanticipated difficulties to scale successful fishery operations at aquafarms one, two, and three to aquafarms four and five.
We reevaluated all our businesses, prioritizing to accommodate these conditions that diminished and threatened cash flow. We decided to "rightsize" all operations by curtailing capital expenditure that would not show short-term return, perhaps sacrificing upside potential in some cases, with the aim of establishing derisked businesses that would sustain profits and support modest growth by reinvesting any available, discretionary cash flow on a standalone basis, after paying down what we've called "legacy debt," commensurate with a projected level of "non-discretionary" cash flow. Efforts have resulted in lease arrangements and JV agreements to provide incremental cash flow at both the HU plantation and HSA relieving the need for SIAF provided capital funding, or working capital. Largely, this restructuring has been accomplished, with a caveat or two. This has led to some businesses becoming much smaller and with low or no short-term growth – like SJAP – and others with reasonable size and reasonable growth prospects intact, like MEIJI.
A second caveat is maintaining a level and pace of debt repayment that can be be supported by existing cash flow, which is a baseline scenario projection, not taking into account any of several plans to generate incremental discretionary funds. Therefore, we have been in ongoing discussions to, in essence, refinance certain legacy debts. As agreements are reached, they are reported in the quarterly SEC filings which shareholders are encouraged to read.
Here's the good news. Our reevaluation clearly showed we are best served to concentrate our growth efforts where the Company's crown jewels lay; namely, Tri-Way, its APRAS technology and infrastructure – and where the crown jewels' cousin lays; namely, Capital Award's business to engineer and build aquafarms, using the crown jewels. In the case of Tri-Way's businesses, the relatively new trading business shows a path to solid growth, constrained by working capital. And in the case of fish and prawn sales, revitalization of aquafarms four and five is underway. We've had good results in trial runs of Pacific White prawns, and will employ the new methods at ODRAS farms within the mega farm, the scale of which is dependent again on the magnitude of working capita available. In the case of Capital Award, there are no capital constraints. Because Tri-Way's best use of funds is for expansion working capital, they will have limited need to build new facilities in the near-term. Therefore, we are in discussions to contract the engineering and/or building of APRAS aquafarms in both India and Malaysia. Any signed contract, should one occur, would result in revenue incremental to baseline plans.
We are endeavoring to align the pace of debt repayment in line with baseline cash flow to satisfy creditor terms and provide internally generated working capital for the Company. Flexibility and overall results would be greatly enhanced, if and when any of the above efforts bear fruit.
In addition, if and when one or more of our efforts to obtain outside project-based funding materializes, we would expect to generate "discretionary" cash flow sufficient to obtain considerably more favorable debt to cash flow ratios. As the global financial crisis made refinancing and new financing more difficult, we have discovered an analogous situation, post our downsizing. We believe this situation has been alleviated by our current plan, results, and trajectory, and remain cautiously sanguine with respect to significant upside potential related to successful debt or equity financing(s)."
Comments & Business Outlook
GUANGZHOU, China, Feb. 28, 2019 /PRNewswire / -- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME), is an agricultural technology company focused on high protein food including seafood and cattle.
Sino Agro Food inc. has applied to the Oslo Stock Exchange for a delisting from the Merkur Market. The regulatory burden and general expense of maintaining a listing in two markets is not practical, particularly given the current market capitalization of the Company. Should the Oslo Stock Exchange approve the application for delisting, the Company will provide further information about how the Company's shareholders can transfer their current holdings to DTC for trading on the OTCQX-Premier.
Comments & Business Outlook
GUANGZHOU, China, Dec. 28, 2018 /PRNewswire / --
Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME), is an agricultural technology company focused on high protein food including seafood and cattle.
Built by Sino Agro Food Inc. in 2014, aquafarm 2 ("AF2") has been awarded provincial Dragon Head Enterprise ("DHE") status. AF2 is now owned by Tri-way Industries Ltd. ("TRW"), a Hong Kong based corporation. TRW was spun out from SIAF in 2017 as a pure aquaculture company, transferring all SIAF's joint venture aquaculture interests and assets. SIAF holds a 36.6% equity interest in Tri-way.
Dragon Head Enterprise is a prestigious and increasingly uncommon stature awarded on the basis of size, financial performance, products, competitiveness, and influence on societal benefits and positive upstream and downstream industries. It confers potential benefits in the form of government grants or financing, tax exemptions, favorable policies, and support of infrastructure and technology.
DHE status validates Tri-way's A Power Recirculating Aquaculture System ("APRAS"), which the company believes is the leading technology in the world for indoor raising and harvesting of seafood and shrimp from post larvae through full growth.
Comments & Business Outlook
GUANGZHOU, China, Nov. 23, 2018 /PRNewswire / -- Sino Agro Food, Inc. (SIAF) (OSE:SIAF-ME), a company focused on high protein food including seafood and cattle is pleased to announce signing a memorandum of understanding ("MOU") with Nortus, Lda. for consultation toward building an aquafarm in Angola.
Sino Agro Food, Inc. has partnered with Nortus Aquacultura e Pesca, Lda, a private company headquartered in Angola. The companies have signed an MOU to engage in efforts to develop a vertically integrated farming system in Angola modeled after the conceptual plan of Sino Agro's Aquafarms 4 and 5. In addition to production farms and training, the plan calls for both upstream and downstream assets, including hatcheries, feed mills, marketing, distribution, and export. The document will serve as registration for a funding request from a regional Angolan state sponsored aquaculture agency to Angolan authorities for inclusion in the China Credit Line to Angola within the framework of existing excellent relations between the two countries.
SIAF will conduct the project deployment operations.
A step-wise, milestone based and dependent project is planned to build an aquaculture farm to produce 60,000 metric tons per year of seafood, primarily Tilapia, African Catfish and Malaysian Tiger prawns, as well as 150,000 metric tons per year of feed, and fruits and vegetables.
Nortus, Lda. Principal Rui Sancho commented, "Nortus, Lda has extensive knowledge of the aquaculture industry and the mandates of the Angolan regional and national agriculture agencies, as well as existing relations with the proper authorities to guide the project to funding and fruition.
"Nortus, Lda appreciates SIAF's great experience and know how in the development of projects to reach the full potential of Angola's ambitions to improve the food diet of the populations of Angola, other parts of Africa, and to export surplus product. The project will utilize identified extensive arable land with clean water springs in the municipalities of Porto Amboim and Cela in Kwanza Sul, Angola, and Ambaca in Kwanza Norte, Angola. In the future, the project may be expanded to other locations; namely, the "Tiger's Bay Development Plan in Namibe, Angola."
Solomon Lee, CEO of Sino Agro Food Inc., stated, "Capital Award, our wholly owned subsidiary, has deep knowledge and experience developing just the kind of aquaculture assets envisioned in Angola, where various projects are being funded through an existing cooperative understanding between China and Angola. We are delighted to partner with Nortus, Lda to tailor our technology to the project aims and to the physical conditions of the project locales.
"For some time Capital Award has evaluated opportunities to export its expertise. This opportunity presents the best set of commitments to proceed."
Comments & Business Outlook
Second Quarter 2018 Financial Results
Revenue from the sale of goods decreased USD 14.8M, or 31%, to USD 32.9M for the quarter ended June 30, 2018 when compared on a year over year basis ("YoY"). When compared to Q1 2018 ("QoQ"), revenue from the sale of goods during Q2 2018 increased USD 1.5M or 5%. Revenue from project development was USD 1.1M, compared to no revenue during Q2 2017.
Fully diluted earnings per share were USD .02 in the second quarter, the same as Q2 2017 (YoY) and versus USD .17 QoQ.
As stated last quarter, results reflect a reprioritization of businesses according to bottom line performance and guided by stricter cost control and capital expense rationale for each. From a revenue and gross profit perspective, results were in line with Q1.
Continuing in the first half of 2018:
Businesses with negative gross margins had been either discontinued or markedly curtailed.
As in the first quarter, because the benefits of business reprioritization had not yet overcome obligations incurred before the reprioritization, shares were issued to cover some current and non-current other payables that typically would have been covered through normal cash-flow levels in the past.
The Company has adopted austerity measures to reduce its dependence on equity funding by approaching it as the exception. The Company expects the benefits of its reprioritization to materialize progressively in the coming quarters and continue to drive improved results.
CEO Commentary
Solomon Lee, Chief Executive Officer of Sino Agro Food, commented, "We were pleased that, despite our strategy to restrict capital expenditures, we reported a leveling out or slight increase in revenues on a sequential basis at the Organic Fertilizer business segment, (HSA), Cattle Farms (MEIJI), Plantation (JHST) and Seafood & Meat Trading. SJAP continued to face near-term headwinds due to external factors that have impacted our strategic plans, but still demonstrated sustainability.
"Over the past several months we have reorganized SJAP, the Integrated Cattle Farm, to better withstand the price volatility that we have witnessed in the cattle and livestock market. As expected, sustained pricing pressure from foreign imports continued to affect sales of both live cattle and livestock feed in the second quarter; however, we were pleased to report a net operating profit at SJAP. The beef market in China undeniably presents a major opportunity, and, fueled by a steadily growing middle-class and rising incomes, beef and lamb consumption continues to grow steadily. We are confident that, supported by both our organizational structure and our work with government officials, we can restructure the business model to overcome the challenges brought about by the loosening of restrictions on beef imports. We expect that, over the medium to long-term, SJAP will be a major revenue driver for the Company.
"In the meantime, we have made solid progress positioning our other segments for growth. In particular, we are pleased to have started planting 15 acres for Immortal Vegetables at JHST to advance our entry into the herbal tea market, which, if successful, should prove to be a lucrative source of revenue growth for the Company. To further diversify our product mix, we are also producing aromatic oils and passion fruit juice through this segment. Again, we are encouraged by these initiatives and believe our willingness to adapt to changing market conditions and implement growth strategies will drive our growth going forward. Moreover, at HSA our organic fertilizer segment, we are ramping production following the completion of the retrofitting of the production plant. This has led to steadily increasing revenues throughout the first half of 2018 and we expect this ramp to continue to contribute to sales growth throughout the remainder of the year.
"Furthermore, the seafood and meat trading business continued to demonstrate positively trending results on both a year-over-year and sequential basis. This segment is well positioned to leverage trends in the market as a result of our transition toward higher quality, and higher margin, products. China is short of seafood supply with demand increasing each year, as is reflected in our results."
Mr. Lee concluded, "While our top-line performance is not as strong as it has been in the past, several of our segments performed well and we have identified the factors restricting growth at SJAP and Capital Award. Tri-way, our investee aquaculture operation, continues to hold promise as a future growth driver, while management remains committed to securing additional financing.
"The Company underwent a major overhaul in 2017, shedding some businesses which had become unprofitable, rationalizing others, and introducing more stringent capital standards throughout. The first half of 2018 represents a transition to a smaller Sino Agro Food, but one with better-defined opportunities. We were left with some obligations befitting our former, larger size. We are working through these, and are confident enough about overall prospects to have announced a USD 0.05 per share dividend projected to be paid in the fourth quarter once all the regulatory requirements are met."
Regular Dividend News
GUANGZHOU, China, May 21, 2018 /PRNewswire / -- Sino Agro Food, Inc. (SIAF) (OSE:SIAF-ME), a specialized investment company focused on protein food including seafood and cattle announces results for the quarter ending March 31, 2018.
Dividend Approval
Under the advisement of its Board of Directors, the Company has decided to issue the following cash dividends for Fiscal Years 2018 and 2019:
For 2018: $0.05/share to be declared and payable during Q4 2018, date to be determined.
Comments & Business Outlook
First Quarter 2018 Financial Results
Revenue from the sale of goods decreased USD 26.1M, or 45.5%, to USD 31.3M for the quarter ended March 30, 2018 when compared on a year over year basis ("YoY").
Fully diluted earnings per share were USD .17 in the first quarter versus USD .36 YoY and versus a loss of USD 1.04 QoQ.
It should be noted that the pace and duration of some of the adverse market conditions required immediate action be taken by the Company could not be fully anticipated. Hence, a consequential cash shortfall had ensued requiring an issuance of shares to cover some of the ordinary operational expenses that typically would have been covered through ordinary cash-flow levels in the past.
The Company has adopted austere measures to reduce its dependence on equity funding by approaching it as the exception rather than the rule when it comes to determining which modes of operation are necessary to maintain the Company's outlook over the next two years.
"We are pleased to see our restructuring initiatives take hold as improved operational efficiency strengthened our bottom line results, compared with Q4 2017," commented Mr. Solomon Lee, CEO of Sino Agro Food.
"At SJAP, the Integrated Cattle Farm, we took steps to reduce our fixed costs in response to increased price competition from abroad, including eliminating our QZH slaughtering and deboning subsidiary, and scaling back the live cattle business. Having reorganized these unprofitable business areas, we are now implementing several initiatives to position the Company to build out new revenue streams. Supported by our close ties to local government agencies, we believe our lean operations give us a strong foundation on which to achieve this goal. As an example, we are exploring plans to establish a commercial cattle and meat trade center, which would further diversify the Company's operations within China's protein market and enable us to reposition ourselves in a new but related vertical.
"We also made progress at the HU plantation (JHST), which suffered from unfavorable weather conditions in 2017. To counterbalance the decline in sales, we commenced processing and repackaging a new herbal health tea product, which is already being sold at a franchise of one of China's best brand names in health and herbal products. We are encouraged by this opportunity and are exploring ways to leverage this new revenue stream to generate additional sales.
"The trading business generated improved revenues and gross margins, across both meat and seafood, as our strategy to transition toward higher quality, and higher margin, products positively impacted results. To support this new product mix, we are building out our distribution channels, and believe our early success will continue throughout 2018. Likewise, sales and gross margins improved at HSA as we scaled up production of organic fertilizer, following the completion of the retrofitting of our production plant.
"Tri-way and CA Award generated slightly improved results compared with Q4 2017 as the businesses grow at a gradual pace. We expect the true potential of these operations will be realized if and when Tri-way secures additional funding. Although this process is taking longer than initially expected, this continues to be a core component of the Company's long term growth strategy.
"Given the positive direction the Company is moving in, the Board of Directors has approved a dividend to further its commitment to unlocking value for shareholders. We believe the progress we have made throughout the first quarter demonstrates our flexibility in the face of changing market conditions, our willingness to rapidly identify new growth opportunities, and our ability to execute on these plans. While the business is smaller than it was a year ago, primarily as a result of increased competition from foreign imports, it is also leaner, better organized and well positioned to take advantage of new opportunities. As a result of these strategic changes, we now have a strong foundation on which to strengthen the business and grow the Company's market value," concluded Mr. Lee.
Comments & Business Outlook
GUANGZHOU, China, Dec. 1, 2017 /PRNewswire / -- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME), also referred to as "SIAF" or the "Company," is an agricultural technology corporation focused on protein food including seafood and cattle. The Company produces, distributes, markets, and sells sustainable seafood and beef to meet growing demand for safe, quality food in China.
The Company has posted an open memo to its shareholders and other interested parties to provide a comprehensive update on the operations of its investee, Tri-way Industries, Ltd.
CEO Commentary
Mr. Solomon Lee, CEO of Sino Agro Food, commented, "Our investors have expressed a desire for more detailed information of our operations and concepts behind plans for Tri-way Industries. Please take the time to read the lengthy memo, as we believe it provides an informative appraisal of recent operations, technical considerations, and seafood markets in China. We believe all of these to be positive. Even though occasional modifications to plans may be required, many present marginal opportunities.
The memo indicates history-based production extrapolation for several species, based upon SIAF's proofs of concept and continual refinements at its first three aquafarms, dating from 2011, and at the Zhongshan aquafarm 4 facility in the last year plus. Tri-way's historical financial profitability is a matter of record, reported quarterly. We remain highly confident that Tri-way is well positioned to increase both production numbers and gross margins, the pace of which would be accelerated if and when expected development capital additional to cash flow materializes."
Comments & Business Outlook
Third Quarter 2017 Financial Results
Compared to Q2 2017, total revenue increased USD 0.7M or 1.5% to USD 48.4M, including project development revenue of USD 3.0M versus no revenue in the prior quarter.
Earnings Per Diluted Share (FD) (USD) – from continuing and discontinued operations $0.15 VS. last years $0.95
Mr. Solomon Lee, CEO of Sino Agro Food, commented, "Our year over year results continued to reflect the impact of increased competition from imported beef on the local beef raising industry, as well as the marked decrease in aquaculture sales that are no longer conducted by the Company, but rather by its investee, Tri-way Industries. However, we are pleased to see a leveling off in the revenue decline, with total sales of USD 48.4 million in Q3 2017, (versus USD 47.7 million in Q2 2017) and gross profit of USD 6.5 million in Q3 2017, consistent with Q2 2017.
"Even though an immediate solution for SJAP is not expected, we are hopeful that one materializes in the near future since SJAP's business is directly associated with the livelihood of thousands of farmers. It is a major concern and responsibility of the Government to secure an ultimate and practical solution for the farmers, with SJAP available to assist when it can do so profitably.
"Under current circumstances, we believe our most significant growth opportunities will come from:
Tri-Way, which is focused on ramping up its seafood production for domestic sales, and on utilizing its marketing network and global connections to increase sales on imported frozen seafood into China. As such, we are confident that the pace of revenue growth will rapidly accelerate once Tri-way secures adequate debt financing. The process to secure this funding has made significant progress, the details of which will be made public once the funding is secured and its closing in place.
Import sales of high grade quality meats (i.e., Wagyu beef with higher overall margins) will continue to improve, achieving better performance as we secure additional high quality products from new reputable suppliers and from loyal, consistent customers.
"Adjusting to the current spectrum of external agricultural market conditions, we are pleased to have achieved USD 0.15 earnings per share during the third quarter, a meaningful improvement compared with USD 0.03 in Q2 2017. This result is a testimony to our agility to execute even under unfavorable conditions, establishing a positive baseline for improved results, when external conditions return to more 'normal' levels.
"We continue to believe that there is a major opportunity to capitalize on the growth of China's economy as the disposable income of China's middle class continues to rise, leading to increased demand for premium seafood. We will continue to tailor our strategy to leverage this growth, mindful of the shorter term macro trends affecting agriculture in China, while Tri-way continues its efforts to secure financing to accelerate production expansion.
"During the quarter we also continued several initiatives aimed at improving financial discipline across the business to support a sustainable and cost-efficient business model, such as concentrating on increasing free cash flow at Tri-way by optimizing operations at each aquafarm in terms of product mix and APRAS performance, and retrofitting HSA's second production plant's fertilizer processor to allow for better cost savings in raw material.
"I would like to again thank our loyal shareholders as we implement these steps and work through this transition period toward building long-term value at the Company, while at the same time, continuing with positive momentum on our carve-out and spinoff strategies."
Comments & Business Outlook
GUANGZHOU, China, July 17, 2017 /PRNewswire / --
Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME), a specialized investment company focused on protein food including seafood and cattle, wishes to announce a key agreement toward the financing and spinoff of its former subsidiary, Tri-way Industries, in which Sino Agro Food, Inc. holds a 36.6% ownership interest.
Agricultural Bank of China ("ABC") and Jiangman Yili Fisheries Co. Ltd. China ("JFD"), a fully owned subsidiary of Tri-way Industries Ltd. ("TW") have signed a Bank-Enterprise Comprehensive Strategic Cooperation Agreement ("BECSCA") this past week in Guangzhou. JFD is one of the select companies afforded this level of partnership with ABC in the Guangdong region.
ABC is providing a revolving credit facility to TW/JFD, which is eligible to be drawn incrementally up to its maximum line of RMB 100 million, with the maximum line intermittently increased as experience and corollaries between ABC and TW/JFD materialize. The monetary amount designated for each draw and its use will be determined in consultation between both parties. A rolling audit of TW/JFD by ABC is one of the conditions that must be met satisfactorily to permit continued use and increase of the revolving credit facility.
In addition to the revolving credit facility, the other major provisions of the agreement include:
Personal banking VIP channel, which provides one-on-one consultation and expedited services to its clients;
Agricultural Bank of China Co., Ltd., the world's third largest bank based on reported assets, is oriented to create partnerships with well-vetted corporations with an international focus.
TW plans to develop an aggressive export sales side to complement its already strong domestic sales operations. This is one of the primary reasons ABC has requested the Company to become an Enterprise Partner during the build-out phase of its development.
CEO and CFO Commentary
Mr. Solomon Lee, interim Chairman of TW as well as Chairman and CEO of Sino Agro Food, Inc., extended his sincere appreciation to the collective management of ABC for their high level of trust and confidence expressed in TW/JFD's current operations, and its future impact, both locally and internationally.
Mr. Lee stated, "the 'win-win' partnership signed today with ABC, increases TW/JFD's capacity to meet its development goals while enhancing its status as an economic driver throughout the region. Along with its recent 5A-1 rating by Dun and Bradstreet, the BECSCA arrangement provides further testament to JFD's parent, TW, providing additional merit to the Company's overall standing and expanded opportunities within the banking and business communities."
SIAF CFO Dan Ritchey elaborated, "ABC is perhaps uniquely well-suited to help Tri-Way meet its aims, through not only financial commitment, but also direct strategic communication, and what it says to partners, customers, and other constituents about Tri-Way. As communicated previously, Tri-way is in discussions with financial institutions in other Asian countries."
Comments & Business Outlook
GUANGZHOU, China, March 16, 2017 /PRNewswire / -- Sino Agro Food, Inc. (OTCQX: SIAF; OSE: SIAF-ME), a specialized investment company focused on protein food including seafood and cattle, is pleased to announce the following annual results ending December 31, 2016:
Key Points
Summary Financials
Results reflect the carve-out of aquaculture operations announced March 2. Revenue from aquaculture is not consolidated on the top line, nor is proceeds from the sale of a technology master license. However, income related to its sale of goods is reported as income from discontinued operations and the Master License proceeds are reported as part of the net gain from the disposal of subsidiaries. In the future, SIAF will report recurring income from aquaculture sale of goods derived from its 36.6% interest in the carved-out company as a separate item, "income from associate." In the future, SIAF will receive recurring revenue from project development, including master license fees, which will be included in the revenue line item. The de-consolidation of aquaculture sale of goods and reporting of certain project development revenue as a gain on the disposal of subsidiaries explain the disparity between EPS from continuing operations alone and from both continued and discontinued operations.
Revenue of USD 342.9M in 2016 was essentially unchanged from 2015. Revenue from the sale of goods increased by 8% to USD 270.8M (251.4).
Gross profit for the year ending December 31, 2016 declined 9% to USD 83.9M (92.2). The decline was due to the accounting treatment cited above, and to adverse business conditions in the first quarter of 2016.
Net income attributable to SIAF stockholders increased by 73% to USD 115.0M (66.4). The sharp increase was due to Net Income from Discontinued Operations (Aquaculture) of USD 14.9M and from a net gain from the revaluation of SIAF's interest in Tri-Way Industries amounting to USD 56.9M.
As of December 31 2016, the Company had net working capital of USD 297.3M (321.8), reflecting the disposition of aquaculture assets.
Stockholders' equity increased by 25% year over year to USD 604.8M (482.7) or USD 26.08 per share, based on the weighted average number of fully diluted outstanding shares in the quarter. The increase of USD 2.56 per share versus Q3, 2016 is largely due to the deemed gain on sale from the aquaculture carve-out.
Core Businesses and Outlook
The decline in gross profit stemmed from Project Development; however, it was more than overcome by the gain of USD 56.9M from the revaluation of equity interest related to the carve-out, and recorded as part of the disposition of subsidiary assets. A provision of the carve-out calls for CA to receive licensing fees as recurring income upon completion of ongoing future aquaculture development.
SIAF believes that aquaculture operations are now poised for growth by:
Having substantially completed renovations and modernization at Aquafarm 1 ("AF1"), AF2, and AF3,
Comments & Business Outlook
GUANGZHOU, China, Mar. 1, 2017 /PRNewswire / -- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME) ("SIAF" or the "Group"), a specialized investment company focused on protein food including seafood and cattle, today announced the carve-out of Tri-way Industries Ltd ("Tri-way"), its enterprise value assessed at US$340.6M, with Sino Agro Food, Inc. retaining and / or acquiring holdings of US$124.7M (of US$340.6M), which includes a provision for repayment of debt owed to SIAF. The carve out, which is immediately accretive to SIAF's earnings per share and EBITDA, confirms the Company's strategy to unlock the value of its current aquaculture business assets and plans for one of the world's largest land-based aquaculture projects.
As discussed in prior communications, the purpose for the carve-out is to provide Tri-way a means toward capitalizing on market conditions that currently support entities with strong aquaculture focus. Therefore, in addition to its currently held assets, namely those of Aquafarm 1, Tri-way has completed the acquisition of assets held in Aquafarms 2, 3, 4 and 5 from their respective owners / investors, including SIAF, as well as rights to technology licensed from Capital Award, a wholly owned subsidiary of SIAF.
SIAF's US$124.7M held interest in Tri-way represents 36.6% (36,600,000 common shares) ownership in the company: 23.89% (EV = US$81,367,997) as a result of retained interest in Tri-way, and 12.71% (EV = $US$43,289,545) acquired in exchange for outstanding debt owed to SIAF. Share settlement is expected to occur on or before March 31, 2017.
As a result of the carve-out, Tri-way will be registered as an "investment in associate" holding by SIAF, going forward.
The benefit afforded SIAF from the transition is 1) SIAF is accorded a (deemed) gain in the amount of US$53,495,649, reflected in its consolidated statement of profit and loss account for the Group as summarized (reconciled), below, and 2) taking into account the value SIAF held in Tri-way prior to the carve-out (i.e. as a wholly owned subsidiary) versus the value it holds today at as an investor in associate, including its ownership acquired in exchange for outstanding debt, coupled with Triway's acquisition of Aquafarms 2, 3 4, and 5, Sino Agro Food, Inc. is provided in excess of a 4:1 increase in enterprise value held in Tri-way.
Solomon Lee, Chairman and Chief Executive Officer of SIAF commented, "This milestone represents one of the key steps in SIAF's more than decade-long transformation.
"The Group strongly believes that separating into two industry-leading companies – one focused on the aquaculture industry and the other focused on investing in technology-based agriculture initiatives with substantial growth potential – will generate significant value for shareholders by enabling each company to focus on its specific business and strategic priorities.
"For SIAF, that means becoming a 'solutions destination", supporting a wide range of agriculture endeavors through the delivery of value-added technology and world-class operations.
"Additional information regarding Tri-way's progress will be disclosed as it becomes available" concluded Mr. Lee.
Comments & Business Outlook
GUANGZHOU, China, Jan. 17, 2017 /PRNewswire / -- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME) (or the "Company"), an agriculture technology and natural food company that produces and sells protein food including seafood and cattle, on behalf of its wholly owned subsidiary Tri-way Industries Ltd. ("Tri-way"), today announced it has completed important legal due diligence and made meaningful progress toward the restructuring, carve-out and subsequent spin-off of the Company's aquaculture operations into an independent, publicly traded company.
The completion of this legal due diligence represents a significant milestone in the Company's strategic plan, allowing it to move forward with the carve-out and spin-off of its aquaculture assets. The lead advisor for the planned IPO of the aquaculture business has accepted all legal opinions related to the below items.
1) JFD registered as a Wholly Foreign Owned Enterprise of Tri-way
The operating company of Aqua Farm 1, Jiangmen City A Power Fishery Development Co. Ltd. ("JFD") has been registered as a Wholly Foreign Owned Enterprise ("WFOE") of Tri-way by the Authorities of PRC Business Registration. Thus, shareholders of Sino Agro Food, Inc. are legally eligible to own shares in Tri-way directly, both prior to and at the time of IPO, under Hong Kong foreign ownership laws.
2) Legal agreements pertaining to transfer of assets secured
JFD has secured the requisite legal agreements needed to acquire all farm assets of Aquafarm 2 ("AF2")*, Aquafarm 3 ("AF3")*, Aquafarm 4 ("AF4")*, as well as the authority to determine and hire contractors for Aquafarm 5 ("AF5")*. This is a positive step toward creating an efficient and streamlined single entity, which holds all the Company's aquaculture operations, in preparation for the carve-out and spin-off of JFD's parent company, Tri-way. Today, JFD also owns and operates Aquafarm 1, a grow-out facility for fish, prawns and eels in the Guangdong Province in China.
3) Tri-way granted master license for APRAS technology
Furthermore, Sino Agro Food's wholly owned subsidiary, Capital Award Inc., has granted Tri-way a China Master License to develop and operate up to 20,000 units of its A Power Recirculating Aquaculture System ("APRAS" technology) over a 50-year period, at a combined Developer and Operator's license fee of $100,000 per APRAS. This will allow Tri-way to develop and operate additional aquaculture facilities using the APRAS technology, opening up long-term expansion opportunities in China. For a frame of reference, AF4 uses 144 APRAS modules and plans for AF5 call for 864 APRAS modules. The proprietary APRAS technology produces seafood using less water, less land, less feed, and is more bio-secure than other methods of aquaculture. Moreover, it produces a higher seafood yield and, due to its climate-controlled environment, ensures more reliable production all year round, compared with other farming methods (such as net-pen or pond culture).
Solomon Lee, the Chairman and CEO of Sino Agro Food Inc., stated, "The significant progress we have made restructuring our business and completing legal due diligence has helped with our preparation for the anticipated carve-out and subsequent spin-off of our aquaculture operations, which is designed to provide greater clarity to investors and to drive current and future value for the business and its stakeholders. Tri-way, as an independent entity, will be listed on the public markets where it is expected to trade at a market value commensurate with its peers, unleashing value for shareholders."
Mr. Lee continued, "We continue to make solid progress toward our vision to build the world's largest, indoor APRAS aquaculture farm, which will produce live shrimp, prawns, fish and eels. As we move forward with this strategic plan we are confident that our APRAS technology, high-margin seafood sales, and ability to scale means we are uniquely positioned to capitalize on increasing consumer demand from China's burgeoning middle class."
The aquaculture spin-off strategy
Spinning off Tri-way into an independent company is expected to provide the investor community with greater clarity into the financial and operational structure of the aquaculture business, and facilitate growth in the company. Sino Agro Food, Inc. believes creating a stand-alone company, afforded with a talented management team, top ranked auditor, as well as meeting the requirements set forth by the Stock Exchange, including corporate governance, will provide the necessary foundation for long-term value creation. In addition to providing dividend shares to current shareholders of Sino Agro Food, Inc., the Company, itself, will maintain a stake in Tri-way. As mentioned, Tri-way is underway with efforts toward listing on a senior exchange where it will trade as a pure aquaculture play, unlocking value for shareholders.
*The Company has recently changed the terminology it uses to refer to each farm because it is interchanging the species of seafood and prawns at its various farms. Referring to each as "aquaculture farms ("AF")" is now more accurate. Fish Farm 1 becomes AF1 and Prawn Farms 1 through 4 become AF2 - 5. These labels will be forthcoming in the Company's financial reports and collateral as the carve-out materializes.
Comments & Business Outlook
First Quarter 2016 Financial Results
Revenue was $71.9 million down 27% from last years same quarter of $98.1 million.
EPS fully diluted was $0.39 down 39% from last years same quarter results of $0.64.
CEO Commentary
Summarizing the quarter, Sino Agro Food’s Chairman and CEO Solomon Lee states, “In Q1, the Company produced and sold record tonnage in each of the aquaculture, beef import/ distribution, and value added beef sectors, while remaining profitable, even with the adverse cyclical circumstances arising in the first quarter.
“As for the Aquaculture sector, during the first quarter we had an historically low contribution from high value, high margin fish; however, we expect contribution from higher value prawns and seafood to normalize for the remainder of the year.
“In the first quarter of 2016, due to exceptionally low prices effectively curtailing live cattle sales, we experienced a decrease in return on capital employed for our beef operations, which had seen favorable levels in previous years. Over the long term, we anticipate that higher proportions of revenue derived from value added processing and high value, high margin premium cattle will return capital efficiency to previous levels.
“We have maintained focus on creating competitively advantaged, stand-alone protein food business entities that have demonstrated full cycle production and sales, and readily exhibit growth potential based on newer and complementary facilities entering production. These facilities also create size, vertical integration, and competitive advantages within our subsidiaries, adding to the evident growth path that makes them more viable for carve out at more attractive valuations. For instance, the brood stock and nursery facilities at Prawn Farm 2 will feed the initial grow out tanks at Prawn Farm 3. The new canning facility further positions SJAP as a full service cattle farm and beef processor, expanding sales into overseas markets.
“Steps are being taken to carve out these entities for separate listings in an effort to align the operations and assets into proper market valuations. We are pleased with reception to date, and remain dedicated to these tasks involved to achieve our primary corporate strategic initiative for 2016.”
Comments & Business Outlook
GUANGZHOU, China, March 30, 2016 /PRNewswire / -- Sino Agro Food, Inc. (OTCQX: SIAF | OSE: SIAF-ME).
Revenue for 2015 increased by 6 percent to USD 429.1M (404.3). Revenue from the sale of goods increased by 4.4 percent to USD 338.7M (324.2).
Earnings Per Share (USD) - fully diluted for the year was $3.60 vs last years $5.53.
CEO Commentary
Sino Agro Food's Chairman and CEO Solomon Lee summarized the year, stating that "2015 was very much a transitional year during which we have continued to build operational capacity to support production well beyond current revenue. Further, we have laid the groundwork for financial restructurings. We expect to capitalize on these efforts in 2016.
"Operationally, during the fourth quarter we continued to see the same challenges as in the third; namely, which consisted primarily of structurally lower prices for domestic beef in China, lower market prices for some fish species, certain supply shortages of juvenile animals for aquaculture grow out, weather related construction delays, and changing import and export regulatory policies for food into China. Nonetheless, we remained profitable while providing the underpinnings for increasing revenue in most businesses and improving margins in many.
"We will continue to build scale in our three main operations in 2016: Aquaculture, value added processing of meat products at SJAP and wholesale imports of beef and seafood from abroad. As well as having significant scale up potential, these segments provide the highest return on invested capital.
"Our focus in Aquaculture is on the Zhongshan MegaFarm, where we achieved some major milestones. We have completed construction of the first two buildings in the project's first phase and started construction of the third. The first test tanks were stocked in February with 1.2 million postlarvae prawns. In March 2.4 million were stocked, as the first cycle progresses. Considerable investments made in 2014 and 2015 by the project owner at the Zhongshan MegaFarm will start generating sale of goods revenue in 2016.
"Gross profit in the Integrated Cattle segment grew by 8%, more than countering diminished prices for domestic beef by expanding value added processing of imported beef. Meanwhile, phasing out of existing large-muscled Charolais and Simmental breeds in favor of more premium breeds continues, with circa 3,000 head of beef cattle currently being fattened. We expect this to improve live cattle margins later in 2016 and in 2017; albeit, with somewhat lower live cattle volume.
"We have initiated restructuring of the Aquaculture segment in preparation for a separate listing in Norway, the leading capital market for seafood. Contracts are currently being consolidated into our Hong Kong based Tri-way Industries Ltd. subsidiary.
"Steps are also being taken in preparation for separate listing of other of our subsidiaries, again in an effort to align those operations and assets into proper market valuations."
CFO Trail
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
Bertil Tiusanen
On February 29, 2016, the Board of Directors (the “Board”) of Sino Agro Food, Inc. (the “Company”) accepted the resignation of Bertil Tiusanen as its Chief Financial Officer. Mr. Tiusanen was contemporaneously appointed as the Company’s Senior Vice President of Business Development & New Ventures – Europe.
Daniel Ritchey
In connection with Mr. Tiusanen’s resignation, effective March 1, 2016, the Company appointed Daniel Ritchey, then one of the Company’s independent directors, to the position of Acting Chief Financial Officer. The Company cannot predict how long Mr. Ritchey’s tenure will be, but it has launched a search for a permanent replacement for Mr. Tiusanen and is seeking an individual fluent in both English and Mandarin with the ability to spend most of his or her time in and around the People’s Republic of China. While Mr. Ritchey remains a member of the Board, he resigned as a member of the Audit Committee concomitantly with his appointment as the Company’s Acting Chief Financial Officer. For his services as the Company’s Acting Chief Financial Officer, Mr. Ritchey will receive an annual salary of $120,000 and be entitled to receive 24,000 shares of common stock of the Company per year, accumulating at 2,000 shares per month payable on February 28th each year.
Auditor trail
ITEM 4.01 CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT
Sino Agro Food, Inc. (the “Company”) has accepted the resignation of Anthony Kam & Associates Limited (“AK&A”) as its independent registered public accounting firm, which resignation was submitted to the Company in a letter dated January 28, 2016. The Company became aware of the letter on February 10, 2016. On February 11, 2016, the Company engaged ECOVIS David Yeung Hong Kong (“ECOVIS”) as its new independent registered public accounting firm based on the recommendation of the audit committee of its board of directors.
The reports of AK&A on the financial statements of the Company for the fiscal years ended December 31, 2013 and December 31, 2014 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. In connection with its audits of the Company’s financial statements for the fiscal years ended December 31, 2013 and December 31, 2014 and its review of the Company’s financial statements for the fiscal quarters ended March 31, June 30, and September 30, 2015, there were no disagreements with AK&A on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of AK&A, would have caused it to make reference thereto in its report on the financial statements for such years or periods, as the case may be.
The Company has furnished to AK&A the statements made in this Item 4.01. Attached as Exhibit 16.1 to this Form 8-K is AK&A’s letter to the Securities and Exchange Commission, dated February 12, 2016, regarding these statements.
Comments & Business Outlook
NEW YORK, Jan. 19, 2016 /PRNewswire / -- OTC Markets Group Inc. (OTCM), operator of Open, Transparent and Connected financial markets, today announced Sino Agro Food, Inc. (or "SIAF") (SIAF), an agriculture technology and natural food holding company serving the People's Republic of China, has qualified to trade on the OTCQX Best Market. SIAF upgraded to OTCQX from the OTCQB Venture Market.
SIAF begins trading today on OTCQX under the symbol "SIAF." U.S. investors can find current financial disclosure and Real-Time Level 2 quotes for the company on www.otcmarkets.com.
"SIAF is developing natural, sustainable methods for producing high-quality seafood and beef to serve China's growing middle-class," said Jason Paltrowitz, Executive Vice President of Corporate Services at OTC Markets Group. "We are pleased to welcome this innovative company to the OTCQX market and look forward to helping build its visibility in the U.S. investment market."
SIAF CEO Solomon Lee commented, "I am very pleased to have our Company's shares traded on the OTCQX U.S. Premier Market tier. Improving accessibility and liquidity, trading on OTCQX will create greater exposure to investment communities. This latest milestone enhances the Company's capacity to attract institutional investors, in line with the Company's goal to open additional opportunities toward shareholder value. We are proud of our story, delivering solid and growing financial returns providing natural, sustainable protein foods in China, and welcome the additional visibility afforded us through OTCQX U.S. Premier."
Comments & Business Outlook
GUANGZHOU, China, Jan. 4, 2016 /PRNewswire / -- Sino Agro Food, Inc. or the "Company" (SIAF).
The Company is pleased to announce the approval for admission to trading of its common shares on the Oslo Bors' Merkur Market. Trading is expected to commence on January 13, 2016 under the symbol "SIAF-ME," subject to satisfaction of conditions for admission to trading as described below. The Company's common shares will continue to trade on the OTCQB under the symbol "SIAF."
The decision reflects the Company's desire for its shares to be listed on the world's leading aquaculture listing venue and to provide its European shareholder base with a more suitable platform for trading.
No new shares are to be issued in connection with the admission to trading. Current shareholders will be able to convert their shares traded on the OTCQB in the U.S. to shares traded on the Merkur Market through their account operator. Further instructions are available on the Company's website, http://sinoagrofood.com/shares.
The ISIN and CUSIP codes will remain the same. Shares on the Oslo Bors' Merkur Market will be traded and settled in Norwegian Krone ("NOK"). In conjunction with the admission to trading on the Merkur Market, Swedbank Norway acts as the financial advisor to the Company and Wikborg-Rein & Co. Advokatfirma DA as the Norwegian legal advisor.
The approval for admission to trading is subject to the Company, prior to the first day of trading, completing the registration of its share capital in the Norwegian Central Securities Depositary with a minimum of 10% of its common shares so registered distributed among the general public. The Company must also publish an approved admission document before the first day of trading. The admission document will be available on the Company's website http://sinoagrofood.com and on Swedbank's website at http://www.swedbank.no on January 13, 2016.
SIAF CEO Solomon Lee commented, "Our goal is to facilitate access to Sino Agro Food for additional European investors who seek exposure to the growing Chinese seafood and protein food sector. This admission to trading raises Sino Agro Food's profile to European institutions, and provides a more accessible trading venue for our substantial Nordic shareholder base. We also look forward to welcoming many new shareholders, as Norway hosts the world's largest financial seafood cluster.
"In light of our strategic focus to streamline the Company and to list aquaculture assets on Oslo Bors, we believe that the Oslo Bors' Merkur Market is the most suitable venue for Sino Agro Food, Inc."
Comments & Business Outlook
Third Quarter 2015 Financial Results
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.
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."
Comments & Business Outlook
Second Quarter 2015 Financial Results
Sale of goods of $82.0M, virtually unchanged from Q2 2014 revenue of $82.3M, and
Consulting and Services Project Development revenue of $8.8M, a 40% decrease from Q2 2014 revenue of $14.7M.
Earnings Per Share (USD) - fully diluted was $0.51 vs. last years same quarter of $1.41.
SIAF CEO Solomon Lee summarized the quarter. "Second quarter results were disappointing, breaking a string of record quarters, due to several external factors coming together. Bad weather had a major impact on construction at ZSNP; supply of eel fingerlings remained limited; Madagascar introduced quotas to limit export of live seafood; and the price of live cattle declined sharply.
"As an agriculture company, revenue is subject to weather conditions, commodity and food prices, and seasonality. Each detracted from second quarter financial results. We are structurally mitigating these factors by ramping up our distribution arm, which is unaffected by all three, and which will make significant contributions to the top and bottom lines, starting in Q3. With these contributions, with weather conditions returning to normal in August, and with efforts detailed in the next section of this release; overall, we expect a return to healthy growth in the second half, ramping in the third quarter."
SIAF CFO Bertil Tiusanen commented, "With so many external factors affecting the second quarter, it can appear challenging to analyze the implications for our business going forward. I see the earnings in Q2 as a bump in the road.
"Since I joined the company in May, my confidence in our operations has grown stronger each month. Hidden within a complex conglomerate and reporting structure, at the heart of the company is very possibly the world leader in the most interesting and sustainable niche of the aquaculture industry. The recent appointment of Dr. Anthony Ostrowski as Chief Scientific Officer, a leading U.S. aquaculture authority, further validates the Company's leading position.
"The second quarter was characterized by a strategy transition in Xining (SJAP) that is already proving wise. The company has made large investments in its Zhongshan prawn project, which is scheduled to start to generating product sales revenue by the end of the year."
Outlook
Since opening May 5, 2015, the Shanghai Distribution Center ("SDC") has seen demand for beef outstrip supply, growing faster than originally anticipated at over 30% per month. The Company is confident it will exceed original target production of 1,000 metric tons per month during this quarter. Gross margins are between 12.5% and 25%, across more than 100 product/pricing categories. Starting a short while ago, seafood sales also exhibit very strong growth during this ramp up period. Next quarter will begin to show results of increased volumes at SDC, all of which accrue as incremental year over year revenue and accretive quarter to quarter. In addition, 2016 will be the first full year of operations that approach capacity.
With the weather related construction delays at ZSNP, the Company now targets stocking first tanks in late September, with first sales of stage one small prawns during the fourth quarter. Like SDC revenue, virtually 100% of sales at ZSNP in 2016 will also accrue incrementally.
In addition to the major impact of the new Shanghai Distribution Center, a return to healthy growth has already begun, due to several additional factors:
Although heavy rain in Zhongshan continued in July, it improved in August. Construction has restarted on a par with the first quarter's pace. Once completed, ongoing roof build out will allow construction to continue even during any future periods of heavy rain.
The Company has executed plans to source more seafood from other countries that will counteract theMadagascar quotas, adding incremental revenue starting in the third quarter.
Typically, the natural supply of eel fingerlings alternates between higher and lower quantity outputs every other year. In response the Company has been establishing supply lines for certain eel varieties that yield both higher price and margin. Company allocates seafood, prawns, and eels to meet APM tank capacity, according to supplies. A larger proportion of higher priced eels would produce higher revenue.
Persistent efforts and improvements at the HU plantation succeeded in overcoming problems of plant disease experienced in past years, resulting in a good harvest in Q2 despite the heavy rainy season. Combined with improving weather conditions, these efforts bode well for higher revenue performance during H2 2015 than experienced during the same period in 2014.
The Company anticipated that laws relaxing beef import would change the business landscape for beef sales. Consequently, the Company is transitioning its herd to higher quality, less price sensitive Wagyu beef and Angus beef grain fed for 550 days, while importing beef from Australia to debone, process and distribute.
Comments & Business Outlook
First Quarter 2015 Financial Results
SIAF CEO Solomon Lee summarized first quarter results. "The Company met its internal projections for the first quarter of 2015. We are an agriculture company, so seasonal variations in product mix and wholesale prices will produce changes from quarter to quarter.
"As we commence our second five-year plan, the main growth factors are in place. Consistent with our longer-term vision to become a concentrated advanced aquaculture company, we continue to invest in the Zhongshan New Prawn Project. Also, we are investing in our other subsidiaries to reach a critical mass toward optimizing full or partial divestitures of non-aquaculture subsidiaries. Particularly, in the first quarter, we have invested in Sanjiang A Power Agriculture Co. Ltd. ("SJAP"), where added capacity facilitates our strategic plans, and in Hunan Shenghua A Power Agriculture Company Ltd. ("HSA"), where product demand is high and we will benefit from economies of scale.
"We look forward to the second quarter results also producing to plan, with the Shanghai Distribution Center coming on line to demonstrate its results, and first sections of tanks at the Zhongshan New Prawn Project becoming operational, while the next section of tanks are constructed to add capacity."
Comments & Business Outlook
First Quarter 2015 Financial Results
Revenue of $115.5M for its consolidated first quarter 2015 results, ending March 31, 2015, attaining a new high for the seventh consecutive quarter.
Earnings (loss) per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:Diluted was $1.33 vs last years same quarterly earnings of $1.38
Commentary from Solomon Lee, President and CEO
SIAF CEO Solomon Lee summarized first quarter results. "The Company met its internal projections for the first quarter of 2015. We are an agriculture company, so seasonal variations in product mix and wholesale prices will produce changes from quarter to quarter.
"As we commence our second five-year plan, the main growth factors are in place. Consistent with our longer-term vision to become a concentrated advanced aquaculture company, we continue to invest in the Zhongshan New Prawn Project. Also, we are investing in our other subsidiaries to reach a critical mass toward optimizing full or partial divestitures of non-aquaculture subsidiaries. Particularly, in the first quarter, we have invested in Sanjiang A Power Agriculture Co. Ltd. ("SJAP"), where added capacity facilitates our strategic plans, and in Hunan Shenghua A Power Agriculture Company Ltd. ("HSA"), where product demand is high and we will benefit from economies of scale.
"We look forward to the second quarter results also producing to plan, with the Shanghai Distribution Center coming on line to demonstrate its results, and first sections of tanks at the Zhongshan New Prawn Project becoming operational, while the next section of tanks are constructed to add capacity."
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (UNAUDITED)
Three months ended
Three months ended
Note
March 31, 2015
March 31, 2014
Revenue
- Sale of goods
$
85,572,543
$
78,272,309
- Consulting and service income from development contracts
29,369,839
12,243,202
- Commission and management fee
534,068
412,278
115,476,450
90,927,789
Cost of goods sold
(63,289,988
)
(55,864,529
)
Cost of services
(16,608,011
)
(6,503,412
)
Gross profit
35,578,451
28,559,848
General and administrative expenses
(4,565,907
)
(2,668,394
)
Net income from operations
31,012,544
25,891,454
Other income (expenses)
Government grant
83,180
113,232
Other income
62,646
3,258
Gain of extinguishment of debts
4
-
43,020
Interest expense
(783,606
)
(109,107
)
Net income (expenses)
(637,780
)
50,403
Net income before income taxes
30,374,764
25,941,857
Provision for income taxes
5
-
-
Net income
30,374,764
25,941,857
Less: Net (income) loss attributable to the non - controlling interest
(6,619,923
)
(5,153,938
)
Net income from continuing operations attributable to the Sino Agro Food, Inc. and subsidiaries
23,754,841
20,787,919
Other comprehensive (loss) income
Foreign currency translation loss
(29,361
)
(707,636
)
Comprehensive income
23,725,480
20,080,283
Less: other comprehensive (income) loss attributable to the non - controlling interest
13,255
113,521
Comprehensive income attributable to the Sino Agro Food, Inc. and subsidiaries
$
23,738,735
$
20,193,804
Earnings (loss) per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
Basic
30
$
1.39
$
1.45
Diluted
30
$
1.33
$
1.38
Weighted average number of shares outstanding:
Basic
17,114,989
14,308,910
Diluted
17,822,059
15,015,980
Management Discussion and Analysis
Revenues increased by $17,248,427 or 136% from $12,655,480 for Q1 2014 to $29,903,907 for Q1 2015. The increase was primarily due to a increase in revenue from work in progress on the Zhongshan New Prawn Project’s development..
Fishery: Consulting Service Revenue from fishery related development works (generated by CA) increased by $13,462,453 or 106% from $12,655,480 for Q1 2014 to $26,117,933 for Q1 2015. The increase was due to a higher volume of work done by CA on the Zhongshan New Prawn Project.
Corporate: Consulting Service Revenue from other development work generated by the corporate sector (billed by SIAF) increased by $3,785,974 from $0 for Q1 2014 to $3,785,974 for Q1 2015.
CFO Trail
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On May 3, 2015, the Board of Directors (the “Board”) of Sino Agro Food, Inc. (the “Company”) appointed Bertil Tiusanen as the Company’s Chief Financial Officer, effective May 1, 2015.
From 2004 through 2012, Mr. Tiusanen served as the chief executive officer of Statens Lånekasse, a state owned Norwegian organ for loans and grants. From 2013 to the present, he served as a Senior Advisor to the Norwegian Government.
Mr. Tiusanen holds a Master of Science Degree in Business from the Gothenburg School of Economics and Business Administration, which he received in 1973.
There are no arrangements or understandings between Mr. Tiusanen and/or any other persons pursuant to which he was named as the Chief Financial Officer of the Company. Mr. Tiusanen has no family relationship with any of the Company's directors or executive officers or any persons nominated or chosen by the Company to be a director or executive officer.
Other than as set forth herein, Mr. Tiusanen has no direct or indirect material interest in any transaction or proposed transaction required to be reported under Section 404(a) of Regulation S-K or Item 5.02(d) of Form 8-K.
In connection with Mr. Tiusanen’s appointment, the Company’s former Chief Financial Officer accepted an appointment to serve as the Company’s Deputy Chief Financial Officer as well as its Chief Corporate Affairs Officer.
Comments & Business Outlook
GUANGZHOU, China , April 24, 2015 /PRNewswire / -- Sino Agro Food, Inc. (OTCQB: SIAF) -- In late September 2014, Sino Agro Food, Inc. and Euro China Capital AB ("ECAB") initiated a strategic plan designed to complement operational performance with corporate steps to unlock shareholder value. Progress in the form of a "broad strategic plan" was announced in late December 2014. The Company is now ready to provide the following update:
Long term vision: Sino Agro Food's long-term vision is to become a leading sustainable aquaculture company focused on organically farmed fish and prawns. In this process, other businesses will be divested, either through separate listings or M&A.
Listing of the Company's shares on the Oslo Stock Exchange: The Company has together with its newly appointed financial advisor Arctic Securities set an objective to list its common equity on the Oslo Stock Exchange as soon as practicable.
New Chief Financial Officer: Mr. Bertil Tiusanen has been appointed as group CFO. Mr. Tuisanen has previously been CFO at large Swedish corporations such as Vattenfall AB and Coop AB. Mr. Tiusanen is currently employed as advisor to the Norwegian Government and will start as full-time CFO of Sino Agro Food on May 1st 2015.
New Nordic Investor Relations: Box Communications has been engaged to handle the Company's Nordic IR activities. Mr. Tomas Oqvist , previously top-ranked Swedish equity analyst, will act as Nordic IR Manager with special responsibility for institutional investors.
Chairman and CEO Solomon Lee commented, "During the last few months, we have worked intensively together with Euro China Capital in order to execute on our strategic plan to convert operational performance into shareholder value. I am convinced that our newly formulated long-term vision to focus on sustainable aquaculture is right for the Company. With today's management appointments, I am confident that we have the right team in place to continue to execute on our plan, for the benefit of the Company, our employees and our shareholders. I am particularly happy about the recruitment of our new CFO Bertil Tiusanen , whom I am certain will add valuable expertise and experience to the Company when it comes to financing matters."
Comments & Business Outlook
GUANGZHOU, China, April 1, 2015 /PRNewswire / -- Sino Agro Food, Inc. (OTCQB: SIAF) today announced record revenue of $404.3Mfor its consolidated and audited fiscal year ("FY") 2014 results, ending December 31, 2014. Revenue in the fourth quarter totaled$109.2M. Annual gross profit, net income, and diluted earnings per share ("EPS") for 2014 were $129.3M, $92.1M, and $5.56 per share, respectively.
Corporate Developments
Solomon Lee, CEO, reflecting on the state of the Company, commented "2014 was a momentous year for Sino Agro Food, Inc. We have proved our operational concepts and business models to provide protein food in China. We have demonstrated commercial success using our unique approaches for cattle and for seafood. This is as easy to appreciate by reviewing our financial metrics, year over year, as it is by eating our food. We accomplished very major milestones in 2014; principally, completing the abattoir at SJAP, readying the new Shanghai Distribution Center, and preparing the Zhongshan New Prawn Project for production.
"We have ambitious plans to scale our businesses to new heights. To do so, we have taken steps, and are taking more steps to fortify our corporate capabilities to further enhance shareholder value.
"I am gratified that our efforts are being rewarded, as we finally see validation and acceptance across a variety of increasingly reputable and enabling constituents and business partners, including suppliers, customers, consultants, and financial institutions.
"People behind some doors we used to knock on fruitlessly are now knocking on our door.
"We are extending our corporate footprint in Sweden, adding Nordic specific IR/PR capability and having established a valued partnership with Euro China Capital AB in late August 2014. Consequently, in mid-March 2015 we engaged Arctic Securities as advisors with respect to the Company's future financing plans and activities in the Nordic region. Arctic Securities is a leading Nordic financial advisor, with particular expertise in the seafood sector.
"We continue to pursue relationships with and through our friends in the United States. Also in mid-March we engaged Burnham Securities to provide us further advisory services for future listing plans and financing activities. We believe that Burnham Securities is a leading U.S. underwriter with affiliations with major China-based investment funds.
"The Company is well positioned to fund its growth from internally generated cash flow, which provides baseline growth targets. The opportunities tied to the Company's facilities and projects already in place, or being put in place are great. The latest financing described below provides a strong measure of flexibility. The pace of growth that may be made available by the new relationships will be modulated to optimize operational scale, balanced by a view toward shareholder value.
"We are very encouraged by recent recognitions of the vitality of our opportunities and the health of our balance sheet, evidenced by the terms and trend of terms of recent offerings."
Deal Flow
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to Be Registered Amount to Be Registered (1) Proposed Maximum Aggregate Offering Price (1) Amount Of Registration Fee
10.5% Convertible Note due February 28, 2020 $15,516,667 $15,516,667 $1,803.04
SINO AGRO FOOD, INC.
On August 29, 2014, we completed the closing of a private placement financing transaction with Euro China Capital AB, an accredited investor, which purchased a 10.5% Convertible Note in the aggregate principal amount of up to $33,300,000. The note carries an original issue discount of 25% over its term and matures on February 28, 2020.The investor agreed to make advances to us, in its sole discretion, based on the following schedule: up to (i) $5,000,000 on August 12, 2014, (ii) $5,000,000 on August 31, 2014, (iii) $5,000,000 on November, 2014, and (iv) $18,300,000 on February 28, 2015. We received the initial advance of $5,000,000 less the 25% discount on August 12, 2014. Since then, we have received additional advances of $10,516,667, less the 25% discount.
Deal Flow
GUANGZHOU, China, Jan. 7, 2015 /PRNewswire / -- Sino Agro Food, Inc. (OTCQB:SIAF.QB) is an integrated, diversified agriculture technology and organic food company (the "Company") with principal operations as primary producer, processor, and marketer in the People's Republic of China ("PRC").
Agricultural Development Bank of China ("ADBC") has doubled its loan facilities to SJAP to 80M RMB (from 40M RMB). In November 2014, Sino Agro announced it would evaluate and explore proposed listing and M&A opportunities for SJAP, its integrated cattle farm subsidiary.
ADBC is one of the largest banks in China, and is owned by the Chinese Government.
Chairman and CEO of the Company, Solomon Lee commented, "I am glad that such a well renowned bank as Agricultural Development Bank of China showed their trust in us by doubling the size of its loan commitment to SJAP. The loan amount itself is not yet particularly significant, but the loan process in China works this way. Starting with smaller loans, the bank builds confidence, and gradually increases commitments. We look forward to a continued good relationship with ADBC, taking us forward on this path, and helping us reach our goals for SJAP."
Comments & Business Outlook
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION; CHANGE IN FISCAL YEAR
Comments & Business Outlook
Third Quarter 2014 Financial Results
Total revenue for the quarter ended September 30, 2014 was $107,220,059, representing a 52% increase over revenue of $70,707,697 in the corresponding quarter in 2013.
Diluted EPS was $0.14 vs. last years same quarter $0.15.
Comments & Business Outlook
GUANGZHOU, China, Nov. 13, 2014 /PRNewswire / -- Sino Agro Food, Inc. (SIAF) is an integrated, diversified agriculture technology and organic food company (the "Company" or "SIAF") with principal operations as primary producer, processor, and marketer in the People's Republic of China ("PRC").
As the press release issued on September 4, 2014 alluded, the Company has conducted strategy sessions spanning four days with Euro China Capital AB ("ECAB") in Stockholm in late September planning how to best enhance shareholder value. As a result of these strategy sessions, the Board of Directors has agreed in principle on an initial general plan as well as some concrete initial action items as first steps of this plan.
Initiated work to unlock value in the corporate structure
A review of the corporate structure has led to a decision by the Board of Directors on November 11, 2014 to evaluate and to explore proposed listing opportunities available to the integrated cattle farm joint venture in Xining, which we refer to as "SJAP." In this respect, a suitable financial advisor will be hired to evaluate and to explore the said listing as well as any prospects for domestic or international merger and acquisition or disposition transactions for SJAP. The primary purpose of this process is to crystallize the values that have been built in SJAP. The Company expects to work closely with ECAB throughout this process.
During the first six months of 2014 alone, SJAP reported Sales of US$50.5 million ($26.9M in 2013) and Net Profit of US$15.9million ($10.9M in 2013). A summary of SJAP is available on the
Deal Flow
GUANGZHOU, China, Sept. 4, 2014 /PRNewswire / -- Sino Agro Food, Inc. (OTCQB:SIAF.OB) is an integrated, diversified agriculture technology and organic food company ("the Company") with principal operations in the People's Republic of China.
The Company is pleased to announce that it has closed a net US $24,975,000 convertible note funding with Euro China Capital AB ("ECAB"), a Nordic investment house, on the 29th of August, 2014.
The convertible note carries an interest rate of 10.5% p.a. fixed, a term of 5� years, and a conversion price of US $1.00. The principal amount of the note is $33.3M.
The note is junior to any existing or new debt and does not restrict the Company from adding any amount of new debt regardless of form, and neither does the note restrict the Company from any cash nor non-cash dividends to shareholders. The basis for any subsidiary spin-off is set out in detail in the agreement.
The Company has covenanted and committed to discontinue the issuance of equity to our trade suppliers and similar except for those that have been agreed to prior to the signing of the convertible notes agreement. The Company will settle all remaining commitments of this kind during the third quarter, resulting in a total number of outstanding shares of 170m.
Proceeds of the note will be used to complete the Company's existing 5-year plan. The Company will meet with Euro China Capital in Stockholm in September to agree on a plan on how to best create shareholder value.
Sino Agro Food CEO Solomon Lee commented, "I am very pleased to announce the agreement of this US $25M convertible note funding. This is a major milestone in Sino Agro Food's corporate strategy. We have now secured the necessary funding to successfully complete the 5-year investment plan we initiated in 2010, and gained a partner in Euro China Capital with broad and valuable experience in the capital markets that will help us to create better shareholder value."
Euro China Capital AB's Managing Partner Fredrik Danielsson commented, "We have conducted extensive due diligence on Sino Agro Food over the past two years and are impressed by the operations that Mr. Lee and his team have managed to develop. However, it is also fair to say that we have been less impressed by the Company's ability to cost efficiently fund its impressive growth with the help of capital markets. I believe shareholders of the Company have found it painfully frustrating to see a constant dilution of the share count at ever more depressed valuation multiples as a means of financing the Company's growth ambitions. As part of this convertible bond, Sino Agro Food has undertaken a commitment to cease the issuance of new shares as a means to pay suppliers and similar. Our ambition is that the equity will never again be used as currency until it has reached a value that to some degree reflects the fundamental value of the Company. With this foundation and Mr. Lee's commitment to work with Euro China Capital now in place, we are confident that we have established a platform from which Sino Agro Food has the ability to transform its operational success into value for all its shareholders. We are excited to get involved and hope to be able to present our first initiatives already before the announcement of the Company's next quarterly report."
Complete Terms & Conditions of the convertible note can be found on the Company's website and the 8-K filing of this press release on EDGAR.
Comments & Business Outlook
Second Quarter 2014 Financial Results:
Revenue for the quarter ended June 30, 2014 was $97,032,504 a 78% increase over revenue of $54,400,329 in the corresponding quarter in 2013.
EPS of $0.14 vs $0.12 in prior year.
Overall, we achieved ample and sustainable gross margins across all core divisions and subsidiaries.
While I expect that the current core businesses will continue to provide innovative opportunities to further the farm to table concept, we find ourselves in a new and enviable position. We are now able to achieve growth without new business contracts; yet, we will continue to consider new opportunities on a case-by-case basis as they arise. The newly producing abattoir at SJAP and the new Zhongshan Prawn project portray scaling potential, and projected volumes to feed growing distribution and retail facilities."
Auditor trail
GUANGZHOU, China, Aug. 1, 2014 /PRNewswire / -- Sino Agro Food, Inc. (OTC BB: SIAF.OB), is an integrated, diversified agriculture technology and organic food company ("the Company") with principal operations as primary producer, processor, and marketer in the People's Republic of China ("PRC").
The Company is pleased to announce the appointment of Mr. Alan Wong as Chief Internal Auditor for Sino Agro Food, Inc. effective August 1, 2014.
In accordance with the Internal Audit Charter, the position will strengthen internal audit functions for the Company in 2014.
Mr. Wong has over 20 years of accounting and auditing experience, most recently practicing in Hong Kong as Alan Wong & Company, with experience in corporate accounting, auditing, restructuring, and tax planning, as well as corporate governance, controls and reporting systems. Mr. Wong is a member of the Association of Chartered Certified Accountants in the United Kingdom, the Hong Kong Institute of Certified Public Accountants, and the Hong Kong Institute of Chartered Secretaries. Mr. Wong holds a Bachelor of Accounting and a Master of Arts, both from the University of Hong Kong.
CEO Solomon Lee commented, "We are very pleased with the recent appointment of Mr. Wong as the new Chief Internal Auditor. Our growth demands a level of corporate sophistication that supports this position, and which is well served by the qualifications Mr. Wong brings to the Company. With recent appointments in finance and internal controls our goal of streamlining financial and regulatory reporting throughout the entire Sino Agro Food, Inc. network comes closer to fruition."
Joint Venture
GUANGZHOU, China , June 26, 2014 /PRNewswire / -- Sino Agro Food, Inc. (OTC BB: SIAF), is an integrated, diversified agriculture technology and organic food company ("the Company") with principal operations as primary producer, processor, and marketer in the People's Republic of China ("PRC").
The Company is delighted to announce that its China joint venture company Qinghai Sanjiang A Power Agriculture Co., Ltd. ("SJAP") has entered into two contracts with Tesco, PLC to become both a supplier and an in-store butcher shop concessionaire of beef and lamb. The contracts became effective June 19, 2014 and run for five years.
Tesco, PLC is one of the largest grocery and merchandise retail chains in the world, operating almost 7,000 stores with revenue of US $120 Billion. On May 29, 2014, Tesco formed a joint venture with China Resources Enterprise, Ltd. ("CRE"), operators of the "Vanguard" retail chain, to create the largest multi-format retailer inChina .
Sino Agro /SJAP will provide its own brand of product lines, as well as design for its in-store butcher shops. Supply of beef and lamb will start in major Shanghai Tesco stores, and branded outlets will expand in phases.
More information regarding grand openings, product lines offered, and relevant developments will be forthcoming as it materializes.
The Company's CEO, Solomon Lee commented, "Understanding that retail space within Tesco stores is a guarded commodity, we are gratified by the confidence Tesco has in the quality of our products and our abilities to meet production volumes and Tesco standards. This contract will bring a new level of awareness, stature, and value to the SJAP enterprise."
Sino Agro CFO Olivia Lai observed, "This partnership with Tesco, PLC provides a most cost effective and cash flow effective manner to integrate the distribution and retail levels of SJAP's business model."
CFO Trail
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
Ms. Lai has over 20 years accounting and finance experience and held senior positions in many multi-national and public accounting and consulting firms; including Cisco Systems, Ernst & Young and PricewaterhouseCoopers. She is a U.S. and Hong Kong Certified Accountant with memberships in the American Institute of Certified Public Accountants, Charted Global Management Accountants, Hong Kong Institute of Certified Public Accountants, and the Taxation Institute of Hong Kong.
Ms. Lai holds a BSC in Accounting with the highest distinction from the University of Illinois — University of Science and Technology, Hong Kong (“UST-HK”), which she received in 1992 and an EMBA from the Kellogg School of Management, Northwestern University and UST-HK, which she received in 2005. An American and Hong Kong Chinese, she is fluent in English, Cantonese, and Mandarin.
There are no arrangements or understandings between Ms. Lai and/or any other persons pursuant to which she was named as the Chief Financial Officer of the Company. Ms. Lai has no family relationship with any of the Company's directors or executive officers or any persons nominated or chosen by the Company to be a director or executive officer.
Comments & Business Outlook
First Quarter 2014 Financial Results
Revenue of $90.9M exceeded the Company's previous high by over $9M.
Earnings per share diluted was $0.14 which was the same as last years same quarter.
CEO Solomon Lee commented, "2014 got off to a great start. I am particularly pleased that the fishery division's ability to reconfigure its products resulted in eels producing a major contribution to gross profits. We expect this trend to continue, as we increase the proportion of eels sold while the market price is high. The abattoir at Qinghai Sanjiang A Power Agriculture Co Ltd. ("SJAP") will start producing toward capacity in June. The reception to the division's marbled meat products indicates another new high profit margin product, just as operations scale up. Prospects for the new Zhongshan Prawn Project have moved from concept to commencement. I look forward to reporting progress on this project that promises long-term consulting and services work, and sales volumes of a new scale for the Company."
Comments & Business Outlook
SINO AGRO FOOD, INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
2012
Revenue
- Sale of goods
$
208,614,041
$
88,072,327
- Counsulting and service income from development contracts
51,179,311
50,541,312
- Commission income
1,632,461
-
261,425,813
138,613,639
Cost of goods sold
(139,346,055
)
(50,558,514
)
Cost of services
(20,548,608
)
(18,248,957
)
Gross profit
101,531,150
69,806,168
General and administrative expenses
(8,859,777
)
(8,385,862
)
Net income from operations
92,671,373
61,420,306
Other income (expenses)
Government grant
613,678
139,836
Other income
230,840
308,332
Gain of extinguishment of debts
1,318,947
1,666,386
Interest epense
(393,592
)
(282,320
)
Net other income (expenses)
1,769,873
1,832,234
Net income before income taxes
94,441,246
63,252,540
Provision for income taxes
-
-
Net income
94,441,246
63,252,540
Less: Net (income) loss attributable to the non - controlling interest
(20,234,717
)
(5,706,708
)
Net income attributable to the Sino Agro Food, Inc. and subsidiaries
74,206,529
57,545,832
Other comprehensive income
Foreign currency translation gain
3,208,876
448,984
Comprehensive income
77,415,405
57,994,816
Less: other comprehensive (income) loss attributable to the non - controlling interest
(817,019
)
(27,548
)
Comprehensive income attributable to the Sino Agro Food, Inc. and subsidiaries
$
76,598,386
$
57,967,268
Earnings per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
Basic
$
0.62
$
0.70
Diluted
$
0.58
$
0.63
Weighted average number of shares outstanding:
Basic
119,730,338
82,016,910
Diluted
127,437,187
92,016,910
Management Discussion and Analysis
Revenues (sale of goods)
Revenues generated from sale of goods increased by $120,541,714 (or 137% from $88,072,327 for the year ended December 31, 2012 to $ 208,614,041 for the year ended December 31, 2013). The increase was primarily due to increase of revenue from organic fertilizer by $32,814,290 and was attributable to 27% of total increase of $120,541,714. Revenue from organic fertilizer of $41,269,544 (2012: $8,455,254) was attribute 20% (2012: 101%) to total of revenue generated from sale of goods of $208,614,041 (2012: $88,072,327).
Earnings per shares (EPS)
Earnings per share reduced by $0.08 (basic) and $0.05 (diluted) per share from EPS of $0.70 (basic) and $0.63 (diluted) in the Fiscal Year 2012 to EPS of $0.62 (basic) and $0.58 (diluted) in the Fiscal Year 2013. The reason for the reduction is primarily due to the increment of issuance of common stocks of 38 million shares from its weighted average number of shares outstanding of 82 million as of December 31, 2012 to 120 million as of December 31,.2013.
Joint Venture
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On November 27, 2013, Capital Award, Inc., a company incorporated in Belize (the “Licensor”) and wholly owned subsidiary of the Company entered into a license agreement (the “Agreement”) with Glory Ocean Development Ltd., a company incorporated in Hong Kong (the “Licensee”) that provides that the Licensor shall license up to an aggregate of 10,000 of its A Power Modules (the “APM’s”) for a price per APM of $25,000. The Agreement describes an APM as being an engineered, self-contained water treatment system for the growing of aquatic animals on a commercial scale. The term of the Agreement began on its date of execution and will, unless earlier terminated pursuant to its terms, continue in force until its parties mutually determine that the project that the Agreement is designed to accomplish has been completed. The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the document, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Joint Venture
GUANGZHOU, China , March 4, 2014 /PRNewswire / -- Sino Agro Food, Inc. (OTC BB: SIAF.OB) is an integrated, diversified agriculture technology and organic food company (the "Company") with principal operations in the People's Republic of China .
Capital Award, Inc. ("CA"), a wholly owned subsidiary of Sino Agro Food, Inc, has licensed its A-Power Technology ("APT") to Glory Ocean Development Ltd ("GODL," a Hong Kong corporation), who has signed a Sino Foreign Joint Venture ("SFJV") agreement with a group of business partners in Zhongshan City, Guangdong Province , PRC. Pursuant to the SFJV agreement, a Sino Foreign Joint Venture Company will be incorporated to develop an 8,000 MU prawn and agriculture center in Zhongshan ("Project"). Hong Kong law governs the license agreement.
The SFJV agreement specifies that one of the responsibilities of GODL thereunder is to "procure and secure the services of Capital Award, Inc. as the master consulting and servicing provider and management of the Project and its developed operations, to be in charge of all affairs of the Project using the said technology to develop the Project."
In accordance with the agreement, as GODL fulfills this responsibility, CA will be engaged to provide construction and development, as well as consulting support in the form of management, supervision, and training. Phase I fees payable to CA are presently estimated to total approximately 149.6M USD, consisting of 104.3M USD from construction and development, and 45.3M USD from consulting, including 8.5M USD in license fees for 350 A-Power Modules for Phase I. Phase I covers the period beginning on the date of the license agreement and ending two years thereafter.
In addition, CA is expected to be designated as the marketer and distributor of the project's end product prawns and produce.
APT is an engineered, self-contained water treatment and recirculating aquaculture system for the growing of aquatic animals on a commercial scale. CA holds the master license for this technology in China .
Sino Agro Food CEO Solomon Lee commented, "I am very pleased and gratified to make this announcement today. The license agreement represents a culmination and a beginning at the same time. It validates our technology and the success of our current indoor fish and prawn farms, which, in a sense, have served as demonstration farms. The agreement is a major marker in the Company's growth and stature. I look forward to reporting more details as further approvals materialize, and project activities progress."
Regular Dividend News
GUANGZHOU, China , Feb. 20, 2014 /PRNewswire / -- Sino Agro Food, Inc. (OTC BB: SIAF) is an integrated, diversified agriculture technology and organic food company ("the Company") with principal operations in the People's Republic of China .
The Company has decided to delay announcing its comprehensive dividend policy in order to ensure that, when announced, the Company's Board of Directors will have determined that the new policy will be fully consistent with its long-term objectives and be properly aligned with its cash flow expectations for the foreseeable future.
Comments & Business Outlook
Third Quarter 2013 Financial Results
Record revenue of $70.7M exceeded the Company's previous quarterly high water mark by over $15M, in line with Company guidance for 2013.
Net income from continuing operations for the third quarter totaled $18,752,774 or $0.15 per share vs. last years $0.25
The Company made some strategic operational decisions mainly relating to resource allocation in Consulting and Services, and embarked upon complementary financial initiatives designed to greatly increase flexibility in both, and to expedite operating cash flow increases. The Company intends to strengthen its growth path as it completes the final year of its five-year plan in 2014.
Mr. Solomon Lee, CEO commented, "I am very pleased with the progress the Company continues to demonstrate, and look forward to attaining greater benchmarks throughout the coming year, in concert with our strategic plan. I would encourage everyone to take the time and review Management's Discussion and Analysis in the Q3 filing. It contains many details on overall performance, and adds clarity and perspective to the Company's methodology behind its stellar growth and development."
Comments & Business Outlook
GUANGZHOU, China , Oct. 3, 2013 /PRNewswire/ -- Sino Agro Food, Inc. (OTC BB: SIAF), is an emerging integrated, diversified agriculture technology and organic food company ("the Company") with principal operations located throughout the People's Republic of China ("PRC").
Uplisting
Sino Agro Food, Inc. is pleased to announce that on October 2, 2013 it applied to have its equity shares listed on NASDAQ's Capital Market � exchange.
Under current conditions, and pertaining to NASDAQ-OMX guidelines, it appears that SIAF meets all listing requirements for the NASDAQ Capital Market� except for the minimum closing price per share under each qualifying standard.
In concert with the Company's intent to cross-list on the Nordic Exchange, the Company will pursue the NASDAQ-OMX Fast Track process subject to its listing in the U.S.A.
Comments & Business Outlook
2013 Second Quarter Financial Results
Quarterly revenue of $54.4M and earnings of $14.3M and $.13 per share confirm the Company's operations are on track to plan. In addition, the Company realized a foreign currency translation gain of $1.7M in the second quarter.
Gross profit increased by $5,832,199 or 43.02% to $19,390,447 for the three months ended June 30, 2013 compared to $13,558,248for the three months ended June 30, 2012.
Diluted EPS (Continuing Ops) was $0.12 vs. last years $0.13.
Solomon Lee, the Company's CEO commented, "All of the Company's divisions achieved strong year over year growth in the second quarter, integrating with one another to strengthen the company's strategic 'farm to plate' business and product concept. As such, we are on target to meet our stated 2013 revenue and earnings guidance."
Comments & Business Outlook
2012 Annual Results
Revenues for fiscal 2012 were $138.6 million vs $51.9 in the prior year.
Diluted EPS for fiscal 2012 were$0.63 vs $0.39 in the prior year.
Sino Agro Food, Inc. (the "Company") continues on target toward its 5-year plan of a $500M asset base . In 2012, the Company saw record financial growth and significant operational expansion complemented by progress in corporate governance, international import export business, and the planned listing on NASDAQ-OMX
Regular Dividend News
GUANGZHOU, China , Sept. 19, 2012 /PRNewswire / -- Sino Agro Food, Inc. (OTCBB: SIAF), an emerging integrated, diversified agriculture technology and organic food company with principal operations located throughout the People's Republic of China ("PRC"), announced today that it has adopted an alternative means of verifying ownership of its common stock for purposes of distributing its declared dividend made on August 22, 2012 , removing the requirement for the Company's stockholders to register for dividend payment by submitting "Statement of Ownership" forms.
All other matters related to the dividend remain in effect. That is, as stated in its August 22, 2012 press release, "The Company's Board of Directors has fixed September 28, 2012 as the record date (the "Record Date") in determining which stockholders are entitled to receive the dividend. The Company's common stockholders of record as of the close of business on the "Record Date shall be entitled to receive a dividend consisting of one (1) share of restricted Series F Non-Convertible Preferred Stock ("Series F") for every 100 shares of common stock owned by the stockholder as of the Record Date, with lesser or greater amounts being rounded up to the nearest 100 shares of common stock for purposes of the computing the dividend."
The Series F stock carries with it a cash coupon, which shall be redeemed on May 30, 2014 ("Coupon Redemption Date") and thereafter until Redemption (as defined below) occurs. Upon the Coupon Redemption Date, holders of the Series F stock shall be entitled to a lump-sum cash payment directly from the Company (or one or more of its authorized agents) equal to $3.40 for every one (1) share of Series F stock held ("Redemption"). Upon proper Redemption, the Series F stock shall terminate and thereafter cease to exist."
The new means of verifying common stock ownership does not require any action on the part of stockholders, their nominees, brokers, banks, etc.
Each stockholder or designated nominee will be receiving a letter/statement verifying the amount of Series F shares being credited to their accounts. These shares will be recorded in book-entry form (non-trading/non-transferable) with the Company and its Transfer Agent, and shall be redeemed for cash in the manner described above.
Even though these Series F shares will not be reflected on your monthly or annual financial statements, those accounts to which Series F shares have been assigned will automatically receive a cash distribution equal to $3.40 for every one (1) share of Series F stock on the Redemption date.
There is no action required to be taken by the stockholders. The Company and its Transfer Agent will oversee and administer all matters related to determining the stockholders of record on the September 28, 2012 Record Date, their respective distribution of Series F shares to all applicable accounts, and the subsequent Redemption of those shares for cash on May 30, 2014 .
Acquisition Activity
GUANGZHOU, China,
August 30th, 2012 — Sino Agro Food, Inc. (OTCBB: SIAF.OB), an emerging integrated, diversified agriculture technology and organic food company with its principal operations located throughout the Peoples Republic of China (“PRC”), is pleased to announce it has acquired new technologies in feedstock manufacturing, fish feed and "sleepy cod" breeding techniques.
Investor Presentations
On
August 30, 2012 , Sino Agro Food, Inc. (the “Company”) issued a press release regarding the Company’s livestock and fishery operations. The press release contained a link to a
corporate presentation relating to, among other items, its financial results for the second quarter of
2012.
Regular Dividend News
GUANGZHOU, China , Aug. 22, 2012 /PRNewswire / -- Sino Agro Food, Inc. (OTCBB: SIAF.OB), an emerging integrated, diversified agriculture technology and organic food company with principal operations located throughout the Peoples Republic China ("PRC"), announced today that, after proper notice made to the Financial Industry Regulatory Authority ("FINRA"), the Company declared an additional dividend on its common stock pursuant to the Company's Annual Dividend Policy consistent and in accordance with certain statements made by the Company over the past several months.
The Company's Board of Directors has fixed September 28, 2012 as the record date (the "Record Date") in determining which stockholders are entitled to receive the dividend. The Company's common stockholders of record as of the close of business on the "Record Date shall be entitled to receive a dividend consisting of one (1) share of restricted Series F Non-Convertible Preferred Stock ("Series F") for every 100 shares of common stock owned by the stockholder as of the Record Date, with lesser or greater amounts being rounded up to the nearest 100 shares of common stock for purposes of the computing the dividend.
The Series F stock carries with it a cash coupon, which shall be redeemed on May 30, 2014 ("Coupon Redemption Date") and thereafter until Redemption (as defined below) occurs. Upon the Coupon Redemption Date, holders of the Series F stock shall be entitled to a lump-sum cash payment directly from the Company (or one or more of its authorized agents) equal to $3.40 for every one (1) share of Series F stock held ("Redemption"). Upon proper Redemption, the Series F stock shall terminate and thereafter cease to exist.
In order for stockholders shareholders of record as of the close of business on the Record Date to receive the dividend, a Statement of Ownership form must be filled out and mailed to the Company, postmarked no later than December 31, 2012 .
This Statement of Ownership form must contain the name, address, and taxpayer identification number of the stockholder. The taxpayer identification number (TIN), consisting of a valid Social Security number (SSN) for individuals, or employer identification number (EIN) for business entities, trusts, estates, etc., and the stockholder's telephone number may be used in verifying ownership and is required to be provided. Non-USA residents can submit a copy of their passport's identification page in lieu of TIN.
For shares held in certificate form you must provide the quantity of shares and the stock certificate number for each certificate held. Certificate numbers are not required for shares held in "street name" through brokerage or bank accounts. A stockholder must sign the Statement of Ownership form in the space provided in order to deposit a valid claim. Please also provide your brokerage statement for September 2012 or a letter from your bank, broker, or other nominee indicating the quantity of shares held as of September 28, 2012 , if you did not hold shares in certificate form. If you held shares in certificate form, please provide confirmation from the transfer agent of record.
Comments & Business Outlook
financial results for the 1st Quarter of 2012.
Consolidated Financial Summary:
Q1 2012
Q1 2011
Change
Revenue
$15,980,016
$3,121,531
411.93%
Gross Profit
$8,013,592
$1,930,916
315.02%
Net Income Continued Op's
$5,632,769
$910,913
518.37%
Basic EPS Continued Op's
$0.08
$0.02
300.00%
Diluted EPS Continued Op's
$0.07
$0.01
600.00%
GeoTeam ® Note : 2012 vs. 2011 First Quarter Adjusted EPS was $0.08 vs. $0.01.
Revenue including continued and discontinued operations increased by $12,858,485, or 411.93%, to $15,980,016 for the three months ended March 31, 2012 from $3,121,531 for the three months ended March 31, 2011. The increase was primarily due to the natural growth of revenue generated from the fishery, cattle farm, beef and the maturity of ongoing divisional businesses improving their revenues.
Comments & Business Outlook
Year End results announced on February 14, 2012 Sino Agro Food, Inc. (OTCBB: SIAF.OB), an emerging integrated, diversified agriculture technology and organic food company with principal operations located throughout the Peoples Republic of China (“PRC”), is pleased to announce financial results for the fiscal year ended December 31, 2011:
Financial Summary:
2011
2010
Change
Revenue
$51,879,903
$40,551,066
27.94%
Gross Profit
$24,928,029
$22,453,425
11.02%
Net Income
$25,894,983
$12,697,080
103.94%
Basic EPS
$0.43
$0.16
168.75%
Diluted EPS
$0.39
$0.14
178.57%
*Adjusted Diluted EPS
$0.43
$0.17
152.94%
GeoTeam ® Note : We believe that management could have provided a more relevant presentation of 2011 and 2010 adjusted EPS numbers. The company only adjusted numbers for currency translation issues, but failed to take into account stock compensation expenses and bad debt gains or losses.
2011
2010
Net income (loss) from continuing operations
$ 21,062,278
$ ( 1,579,184)
Adjustments to reconcile net income (loss) from continuing operations to net cash from operations:
Depreciation
220,810
720,214
Amortization
1,043,181
453,625
(Gain) loss on extinguishment of debts
(987,518 )
6,077,230
Common stock issued for services
2,139,057
530,809
Furthermore, the relevant adjusted numbers should omit the sales of one of its subsidiaries that took place in 2011.
Our adjusted numbers: 2011vs. 2010
Year End Adjusted EPS: $0.28 vs. $0.05
Fourth Quarter Adjusted EPS: $0.13 vs. $0.00
Please note that the SAIF does not pay any taxes.
Mr. Solomon Lee, Chief Executive Officer of the Company, stated, "The Company reorganized its business activities in 2011 by disposing its equity interest in its Dairy operations and stepping up the development of its fishery and beef operations dedicating efforts in quality and productivity. Results of the Company’s 2011 performance confirmed our management’s belief that the business environment and fundamentals of the dairy industry in China was not heading in the right direction. The dairy industry in China will take quite certain times before it would be able to regain the confidence of the local consumer markets (if ever). In this respect and during 2011, locally produced milk products were losing much ground against the imports, as such none of the biggest three dairy product manufacturers in China have been able to regain their sales revenues set in 2009, and overall average wholesale prices of fresh liquid milk in 2011 was lower by over 10% compared to 2010."
Conference Call Notes
Welcome to Sino Agro Food, Inc.’s Annual Financial Results
Conference Call for the fiscal year ended 2011. During this call, Mr. Solomon Lee, the Chief Executive Officer and Chairman for Sino Agro Food, will provide shareholders with an overview of results from operations in 2011 and guidance for 2012. Following comments by our CEO, the lines will be open for a question and answer session.
Investor Presentations
Comments & Business Outlook
GUANGZHOU, China--(BUSINESS WIRE US $18 million, subject to future market cattle prices and demand.
The Contract calls for the delivery of 4,000 head of cattle of Simmental and Charolais breeds. The cattle will weigh between 600kg to 750kg with meat content at 52% or more of DWT (deadweight tonnage) at time of delivery. The first 1,000 head of cattle are to be delivered by December 31, 2012 with the remaining 3,000 head delivered through fiscal year 2013.
Wholesale prices for live cattle are currently averaging $3.94-$4.73/Kg depending on locality (i.e. North or South China). Based on current demand and the above-quoted wholesale prices, the Company believes it could realize revenues of approximately $4.1M - $4.7M USD during Fiscal Year 2012 from the Contract. Barring a downturn in demand and prices, the Company believes it could realize revenues of approximately $12.3M - $14.1M USD during Fiscal Year 2013.
Mr. Solomon Lee, Chief Executive Officer of the Company, stated, "Over the past several months, beef prices have been rising sharply in China. Two months ago the wholesale price for live cattle was between $2.50 and $3.15 per kilogram. Today's prices have risen to an average of approximately USD $3.94-$4.73 per kilogram. We expect this trend to continue and we believe that we could see prices as high as USD $5.92 per kilogram by the end of Fiscal Year 2012. With the rapid rise of the middle class and improved living standards, beef markets in China are accelerating due to a greater demand for beef, especially higher quality grades. Our Aromatic Beef technology provides consumers with a product that meets these demands. We look forward to potentially announcing more beef contracts in the future as we attempt to expand our operations in 2012 with the development of more cattle farms, currently targeting the districts of Enping City and Hunan Linli, and abattoir and boning facilities on a 33,000 m2 block of land adjacent to our Xining SanJiang A-Power’s property, that is expected to be acquired this year. The Company currently has three beef cattle farms in operation located throughout China.”
Comments & Business Outlook
The following discussion provides only a brief description of the Agreement described below. The discussion is qualified in its entirety by the full text of the Agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated by reference herein.
On February 29, 2012, Sino Agro Food, Inc., a Nevada corporation (the “Company”), announced that the Company’s wholly-owned subsidiary company, Capital Award, Inc., has been awarded and entered into a two-phase service and consulting contract (the “Contract” or “Agreement”) with Mr. Liu Gang, a PRC national and businessman including those interests he represents, (“Liu Gang, et al”) to develop a second prawn farm located in San Jiao Town, Zhong Shan City, Guangdong Province, PRC, utilizing Sino Agro Food’s A-Power Module Technology Systems (or “APM”). The Agreement was formally executed by the parties on November 18, 2011.
The Agreement calls for the development and construction of a prawn hatchery and nursery station on a six acre block of land. The facility is projected to develop some 2.8 billion prawn fingerlings in its first year of operation.
The project is divided into two phases with Phase One already approved and underway. Phase One construction has commenced with an anticipated completion date of approximately early April 2012. Construction under Phase One includes infrastructure development, utilities, staff quarters, offices, prawn hatchery and nursery construction. Phase Two of the project, which requires some additional approvals, includes the development and construction of a prawn grow-out farm consisting of 16 APM indoor units and the conversion of twelve acres of outdoor ponds for use with the APM technology. Phase Two construction is expected to commence sometime in Mid-2012 and it is anticipated that construction could be completed as early as by the end of fiscal year 2012.
Up-Listing Watch
Sino Agro Food, Inc. (OTCBB: SIAF.OB), a Nevada corporation and agriculture technology and organic food company with principal operations located throughout the Peoples Republic China (“PRC”),
announced that its common stock has been accepted for quotation and has begun trading on the Over-the-Counter Bulletin Board (“OTCBB”) under the ticker symbol "SIAF" or "SIAF.OB".
Comments & Business Outlook
GUANGZHOU, China--(BUSINESS WIRE
GJAC specializes in nursery services and breeding of a number of high quality table fish such as Puff fish, Murray and Sleepy Cod. The Company operates over 164 acres of fisheries in the Pun Yu District of GuangZhou, PRC.
The contract between GJAC and EAPF is for the supply of 500,000 sleepy cod ranging from 150g - 300g in 2012 and 800,000 sleepy cod in 2013. The contract also includes the supply of 250 tons of bait fish in 2012 and 500 tons in 2013.
Mr. Solomon Lee, Chief Executive Officer of the Company, stated, "With these supplies and additional supplies from alternative sources, we anticipate that Enping A Power Fishery will be able to produce a minimum of 500 Tons and 1,000 Tons of sleepy cods at minimum marketable weights of 500g /fish in year 2012 and 2013, respectively, thus eliminating part of the growing risk involved in the growing from baby fingerling to 300g per fish. The supplies are based on a fixed cost such that it will also eliminate the variation of the fish supply cost due to seasonal factors. Based on current wholesale prices, Enping A Power Fishery is targeting and projecting US$13.5 million and $27 million of fish sales for 2012 and 2013."
Conference Call Notes
On November 22, 2011, the Registrant held its quarterly conference call to discuss 3rd Quarter Financial Results. Mr. Solomon Lee, the Company’s Chairman and Chief Executive Officer, was available and engaged in a question-and-answer session during the conference call.
Question and answers during the conference call dated 22 November 2011
1.
Can you explain the transaction between SIAF and Ironridge?
The Company, upon much due diligence and careful analysis, found that Ironridge Global IV (a financial institution) was able to provide the necessary funding to assist the Company in meeting the ever-growing financial demands required pursuant to our short and long-term our developmental goals. The primary purpose of the transaction between Ironridge and SIAF is for Ironridge to satisfy some outstanding corporate debt from certain creditors, and in consideration for the debt satisfaction to be accomplished on our behalf, the Company issued Ironridge a certain amount of shares of common stock held in the Company treasury and already issued and outstanding, therefore having arguably little-to-no direct dilutive effect on current shareholders and our market price.
2.
What is the reason behind the transaction?
Our Creditors (those referenced in No. 1 above) are loyal, close and friendly parties to the Company. Our working relationship depends on certain payback requirements, much like a line-of-credit an individual may have with their bank. The transaction with Ironridge facilitates our ability to meet the repayment obligations to those creditors all the while maintaining and conserving our current levels of cash-on-hand for Company projects and expansion.
3.
Why was the payment done by issuing shares instead of paying in cash?
We emphasize that the transaction with Ironridge currently does not involve an issuance of any new number of shares of common stock to the marketplace. Rather, we believe that there was a zero-sum and little-to-no dilutive effect with an equal number of shares in treasury retired in exchange for shares distributed to Ironridge.
The reason for the exchange was precisely to acquire the cash needed to pay-down the debt sums due our Creditors. Had we had the expendable cash-on-hand, the spending of which would not detract from Company operations and projects, there would not have been any need for outside financing.
4.
What is the total amount due to Ironridge?
There is no current payable outstanding with Ironridge as a result of this transaction. The arrangement with Ironridge is that adequate shares be allocated to cover the total cost of financing (our debt satisfaction as described earlier). In this instance, the exact number of shares to be given to Ironridge will depend on the market performances of our stock during the next few months. For instance, if our market price is trading at US$1.00 or $1.50, the number of shares given will be calculated based on unit price of $0.80 or $1.20 / shares respectively, however, if our market price is performing around $0.40 cents per share, the corresponding calculation will be based on a unit price of $0.32 /shares. In other words, the higher the market price of our shares, the lower the number of shares which shall be issued to Ironridge and vice-versa.
The total number of shares retained by Ironridge, of the 6.9M shares issued from stock held from our inventory in treasury, serves as a security block until financing is completed and the final number of shares to be retained by Ironridge is calculated and determined.
5.
Why is there a lawsuit involved?
The lawsuit involved was merely a formality and a requisite proceeding in accordance with US securities laws as further described herein. The issuance of the securities to Ironridge was made upon the exemption from the registration requirements of the Securities Act, pursuant to Securities Act Section 3(a)(10) as an issuance of securities in exchange for bona fide outstanding claims, where the terms and conditions of such issuance must be approved by a court after a hearing upon the fairness of such terms and conditions.
In this regard, the Ironridge issuance was approved by a court of competent jurisdiction and the shares were issued pursuant to an Order Approving Stipulation for Settlement of Claims between the Company and Ironridge entered by the Superior Court for the State of California, County of Los Angeles, West District (Case No. SC114815) on November 10, 2011.
6.
Will this transaction be dilutive?
No, as explained earlier. We emphasize that the transaction with Ironridge currently does not involve an issuance of any new number of shares of common stock to the marketplace. Rather, we believe that there was a zero-sum and little-to-no dilutive effect with an equal number of shares in treasury retired in exchange for shares distributed to Ironridge.
Sweden Presentation
7.
In Sweden you stated that it was your intention not to issue Company stock below $1.50 per share. Why is this statement not being met?
We believe this transaction to be in the best possible interests of the Company and its shareholders. This transaction is not a strict issuance of stock for cash, but an agreement to forever extinguish a large amount Company debt and balance sheet liabilities upon terms that we believe are very reasonable in the long-term.
In addition, while we make every effort to attain our objectives and honor all forward–looking statements made, our Company is still subject to extenuating circumstances and the break-neck pace of a global market and factors in that regard well beyond our control. Currently, such circumstances affecting all public companies and securities markets around the world are the eroding confidence of the investment public and the fiscal policy failures of sovereign states, particularly in Europe. These are just a few examples of external issues affecting all public companies and securities markets from a macro perspective.
Our Company has maintained its objective to issue our shares at US$1.50/share for quite some time, but neither our Company nor any company similarly situated can sustain such objective if general market conditions do not allow it. Despite this, we are of the opinion that our common stock price is currently maintaining better than average through this current fiscal quarter.
8.
Have the projections changed since the Sweden presentation?
Currently, we believe that we have been performing within target to date, and shall endeavor to perform to the best of our ability and capacity as long as the overall global markets and China’s economic conditions are stable and favorable to us.
General Questions
9.
If you spin out your subsidiaries, will you ensure that the current shareholders will own shares directly in the subsidiaries?
Not only will we take every step to ensure this, however please be advised that, pursuant to State and Federal law, you are legally entitled.
10.
Why not list SIAF in its entirety on a different exchange instead of spinning out the subsidiaries?
Our analysis shows that collectively we may be able to attain a 2:1 benefit by having the subsidiaries spun out versus doing a cross listing of SIAF on another exchange. The difference mainly will be due to the market being able to evaluate each subsidiary on its own merit rather than having the quality of each venture somewhat lost in the shuffle.
FY 2009
FY 2010
Thru Q3, 2011
Projected FY 2011
NTA ($US)
71.93 M
90.41 M
121.66M
NTA / share ($US)
1.36
1.67
2.04
Increase of NTA / share ($US)
0.31 / shares
0.37 / shares
Annual NTA growth rate
22.8%
25.5%
Revenue ($US)
21.73 M
40.551M
30.53 M
EPS (based on Continuing operations only) ($US)
0.13
0.16
0.17
0.27 / 0.29
Annual EPS growth rate ($US)
23%
68.75%
Weighted average of total Issued & Outstanding Shares
52.89 M
54.22 M
59.54 M
Change in Equity Position
2.46%
8.95%
Debt to Equity Ratio
14.28%
6.23%
19%
Looking at the share price today as an example, does anyone here honestly think that SIAF, or any one of its profit centers, for that matter, reflect a market price of only US $0.50 per share? This way, by spinning off the subsidiaries, each will be evaluated on their own credentials rather than on the market-manipulation of SIAF shares that continues to occur.
11.
Where is the additional dividend for 2011? Are you planning on carrying through?
The additional 2011 dividend is currently being planned and we anticipate it to be announced conditional upon legal clearance and FINRA approval.
Concluding summary:
In all aspects of the Company’s financial s performance s :
We believe the Company has sound fundamentals with good balanced performances .
The table above provides a synopsis of our most recent 3-year financial performance:
Upon analysis of the above statistics, we believe that the Company has managed exceptionally well in respect of its responsibility to its shareholders having achieved good growth rate in NTA/share (projected, 25% for 2011) and EPS (projected, 68.75% for 2011), while capping the increase of its total issued and outstanding shares at less than 9% this year, and maintaining its debt/equity ratio below 20%.
Resolution of Legal Issues
On November 15, 2011, Sino Agro Food, Inc. (the “Company”) issued approximately Six Million, Nine Hundred Seventy Five Thousand (6,975,000 ) shares of the Company’s common stock, par value $0.001, subject to adjustment as described below (the “Ironridge Shares”) to Ironridge Global IV, Ltd. (“Ironridge”), in settlement of $3,021,505.65 in accounts payable of the Company (the “Claim Amount”), plus attorney fees and costs. The issuance is exempt from the registration requirements of the Securities Act, pursuant to Securities Act Section 3(a)(10) as an issuance of securities in exchange for bona fide outstanding claims, where the terms and conditions of such issuance are approved by a court after a hearing upon the fairness of such terms and conditions.
The Ironridge Shares were issued pursuant to an Order Approving Stipulation for Settlement of Claims (the “Order”) between the Company and Ironridge entered by the Superior Court for the State of California, County of Los Angeles, West District (Case No. SC114815) on November 10, 2011, in settlement of bona fide accounts payable of the Company purchased by Ironridge from creditors of the Company in the aggregate amount equal to the Claim Amount, plus fees and costs.
Comments & Business Outlook
Third Quarter 2011 Results
Revenue including continued and discontinued operations increased by $5,517,298 or 36.34% to $20,700,466 for the three months ended September 30, 2011 from $15,183,168 for the three months ended September 30, 2010.
For the three months ended September 30, 2011 and 2010, diluted earnings per share from continuing operations attributable to Sino Agro Food, Inc. and subsidiaries common stockholders amount to $0.10 and $0.05, respectively.
Up-Listing Watch
GUANGZHOU, China--(BUSINESS WIRE )--Sino Agro Food, Inc. (OTCQB: SIAF.PK), an emerging integrated, diversified agriculture technology and organic food company with principal operations located throughout the Peoples Republic China, is pleased to announce that the Company has taken steps to apply for quotation on the Over the Counter Bulletin Board (“OTCBB”). In addition, the Company has enrolled in Standard and Poor's (“S&P”) prestigious Market Access Program and Stock Report Coverage and Compliance Program, in an effort to increase communications with the investment community.
The Company is currently in talks to secure sponsorship to seek quotation on the OTCBB. The OTCBB is an SEC and FINRA regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equity securities. Generally, all issuers that quote on the OTCBB must be SEC registered Exchange Act reporting issuers. An OTC equity security generally is any equity that is not listed or traded on NASDAQ® or a national securities exchange. OTCBB securities include national, regional, and foreign equity issues, warrants, units, American Depositary Receipts (ADRs), and Direct Participation Programs (DPPs).
Comments & Business Outlook
GUANGZHOU, China--(BUSINESS WIRE )--Sino Agro Food, Inc. (OTC Markets: SIAF.PK), an emerging integrated, diversified agriculture technology and organic food company with subsidiaries operating in the Peoples Republic of China, deems it prudent and in the best interests of its shareholders to provide the marketplace with a discussion and clarification with regards to the Company’s filings with the State Administration for Industry & Commerce (SAIC) in the Peoples Republic of China.
Management has recently been made aware that the Company may become the target of a negative campaign based on the premise that the Company’s SAIC filings do not correlate with the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”). In accordance with Company policy to protect its shareholder interests, we feel it necessary to preempt these sub-par analyses interwoven with charges of non-compliance made against the Company.
To substantiate facts, the Company is pulling its SAIC filings and will make them publicly available to shareholders, upon request. Reasons for discrepancies between SAIC filings and SEC filings are numerous; however, this release addresses the most material and important of reasons.
The Company's main office in the Guangzhou Province is registered as a representative office, and is not, according to PRC law, required to submit annual financial statements to the SAIC, although we are required to file financial statements related to our Guangzhou office’s Chinese related expenses with the State Administration of Taxation (“SAT”). Therefore, no comprehensive organizational or consolidated financial statements are ever filed with the SAT, or with the SAIC, and as a result, the SAIC reports do not contain the level of detail or updated financial statements that are contained in our audited and non-audited consolidated US SEC financial reports.
In addition, many of the Company’s subsidiaries only very recently have been approved as sino joint venture companies, and subsequently no filings have been made for these subsidiaries with the SAIC or SAT. However, all revenue-generating subsidiaries have completed paid in capital requirements for formation and operation. These actions have been appropriately documented in the Company's filings with the SEC.
The Company acknowledges discrepancies in its SAIC filings dated January 13th, 2010 regarding SanJiang A Power (“SJAP”) in Xining, China. For this particular reported period, there were many sales tax exemption coupons, construction tax exemption coupons, development tax exemptions as well as government incentive grant coupons that had not been fully processed at the time of filing with the SAIC. To avoid taxation complications, and because the SAIC is not a per se regulatory agency like the SEC, SJAP filed this financial report mainly for the purpose of establishing company operations. Another of the Company's subsidiaries has similar discrepancies due to tax exemption status as an agriculture Company.
With respect to our 2011 reports to be filed with the SAIC, our subsidiaries’ tax exemptions and allowances for differences between U.S. GAAP and China’s Accounting Standards for Business Enterprises (ASBEs) will be current and incorporated, and will more closely resemble those filed with the SEC. The Company acknowledges the concerns over these discrepancies, and will work diligently to ensure complete financial accuracy and congruity between such financial statements and the financial statements contained in our audited and non-audited SEC filings.
Mr. Solomon Lee, Chief Executive Officer of the Company, stated, "I want to personally assure our shareholders that everything is in order with our filings with SAIC and that there are reasonable explanations as to why they may not currently match our filings with the SEC. We have identified the site that intends to release this information and for now will give them a chance to get the facts correct before publishing false information. Neither myself, nor our investor relations team has been contacted regarding this matter by any of these outside parties who may be responsible for future false reports in this vein. We find it extremely unprofessional and reckless, that such a website that proclaims to pride itself on providing investors information, would release such false and defamatory information to the public without first contacting the Company to check facts. It is a disservice to our shareholders and the general investment public, and may be part of an agenda unrelated to providing investors information."
Up-Listing Watch
GUANGZHOU, China--(BUSINESS WIRE )--Sino Agro Food, Inc. (Pink Sheet: SIAF), an emerging integrated, diversified agriculture technology and organic food company with subsidiaries operating in the People’s Republic of China, is pleased to announce that it received notification yesterday, September 20, 2011, from the U.S. Securities and Exchange Commission (“SEC”) stating that the SEC had no further comments with regard to the Company’s Form 10 registration statement, effectively clearing comments with the SEC. This clearance renders Sino Agro Food, Inc. a fully reporting Company pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended. The Company is now eligible, pending additional corporate measures and market pricing, to seek listing on a senior exchange.
Due to recent events and scheduling conflicts, the Company will host its previously announced conference call in mid-October 2011. On or before September 30, 2011, the Company expects to release a video presentation providing an up-close look into Company operations, growth and prospects. In the near future, the Company is expecting to further update shareholders on both the previously announced dividend as well as provide guidance and pertinent information for the remainder of the 2011 fiscal year.
Over the course of the next few months, the Company intends to launch a renewed investor relations campaign, which is intended to encompass a website renovation, incorporating social media, and commencement of a road show campaign.
Mr. Solomon Lee, Chief Executive Officer of the Company, commented with regard to the SEC clearance, “Our entire Organization is extremely proud of this monumental achievement. I am delighted to share this momentous news with our shareholders today. We’ve reached a major milestone, but there is much more work to be done. Our next step is to begin preparing the Company in anticipation of our application to list on a senior exchange. I am greatly looking forward to speaking with shareholders this October about our growth, operations and future prospects. I want to thank all of our shareholders for their patience, faith and loyalty during this period.”
Comments & Business Outlook
Second Quarter 2011 Reuslts
Revenues including continued and discontinued operations increased by $444,313 or 4.74% to $9,826,901 for the six months ended June 30, 2011 from $9,382,588 for the six months ended June 30, 2010. The increase was primarily due to the increase of revenue generated from the fishery, HU plantation, cattle farm, beef and the maturity of other sectors’ businesses improving their revenues even though the Company discontinued its dairy segment in January 2011. The Company earned revenue $0 for the six months ended June 30, 2011 from discontinued dairy operations as compared with revenue $8,687,057 for the six months ended June 30, 2010 from discontinued dairy operations.
Net income (loss) from continuing operations attributable to the Sino Agro Food, Inc. and subsidiaries was $3.0 million in second quarter 2011 vs ($2.1) million in 2010. EPS was $0.05 vs ($0.09)
Plantation Harvest
As of June 30th , 2011, HST harvested just less than 15 million pieces of flowers which is a performance far superior to the 2010 season when HST had no harvest during June 2010 due to heavy rains and flooding. Out of which HST has sold over 6.5 million pieces of fresh flowers at an average of RMB0.55 per piece against the production cost of RMB0.18 per piece and has dried over 79.784 tons of dried flowers at production cost of around RMB13.63 per Kg with latest wholesale prices averaging RMB43 per Kg .
HST is expecting a harvest of 60 to 75 million pieces by the end of October 2011. As such HST will be able to retain a reasonable amount of dried stocks to be sold in 2012 in order to even out its yearly sales.
Fishery Operations
By July 15th 2011, we have two fish farms in operation.
The Enping APM fish farm is now in full operational order stocking currently over 165,000 (Sleepy Cod) fingerlings measuring from 60mm up to 120mm sized fingerlings . This farm has a total of 16 grow-out tanks, and it is anticipating that for the remainder of 2011, each tank would have a grow-out capacity to gain up to 100 Kg of net fish weight per day per tank. In this respect, we intended to arrange by August 2011 all 165,000 fingerlings to be kept in no more than 8 tanks. The remaining 8 tanks will be used to keep and grow out fish from new stock that will be of larger size (i.e. from 300 gm sized fish and upward) in order that revenues will be generated more quickly. The reason we could not house much bigger fish in quantity earlier on, is that bacteria in the Bio-filters required time to grow to a respectable quantity in order that enough soluble waste will be consumed to maintain the water quality of the tank. Based on this arrangement, we are expecting up to 250 tons of fish sales to be generated on or before December 31st , 2011.
The Company contracted 600 Mu (about 100 acres) of open dam fish farming in April 2011 with a local fish grower to grow up to 600,000 fish for and on behalf of CA between 2011 and 2012. We have stocked these dams with over 600,000 fingerlings ranging from 40mm up to 120mm , and fish ranging from 200 gram up to 350 gram . The grow-out of these fish is based on a fixed cost basis in that the grower is responsible for the mortality factor such that we are guaranteed to have a minimum of 300 tons of fish for sales within the contracted period. In this respect we are anticipating that there will be a minimum of 100 tons of fish sales to be generated from these dams on or before the year end of 2011.
Livestock, Feedstock and Fertilizer Operations
As of June 30, 2011 there was 14,575.4 Tons of fertilizer manufactured at cost of average of RMB406.92 per Ton and sales of 13,402.44 Tons at an average sale price of RMB948.99 per Ton.
There was 226.89 Tons of live-stock feed manufactured at cost of RMB426.86 per Ton which was mainly used in-house to feed its own cattle at an internal sales price averaging RMB669.85 per Ton.
As of July 15th , 2011, Qinghai SanJiang A Power Agriculture Co. Ltd. is housing over 860 head of young cattle .
Comments & Business Outlook
GUANGZHOU, China--(BUSINESS WIRE )--Sino Agro Food, Inc. (Pink Sheet: SIAF), an emerging integrated, diversified agriculture technology and organic food company with subsidiaries operating in China, is pleased to provide an update on its aquaculture projects.
The Company currently has two joint venture projects underway, Enping City Bi Tao A Power Prawn Culture Development Co. Ltd., and Enping City Bi Tao A Power Fishery Development Co. Ltd., both of which the Company holds a 25% equity stake in. Both facilities use the Company’s A Power technology.
Enping City Bi Tao A Power Prawn Culture Development Co. Ltd.
On February 11, 2011, an AP Technology Consulting Services Agreement between Capital Award, Inc., a wholly owned subsidiary of Sino Agro Food, Inc., and a group of Chinese businessmen, was executed to begin the development and construction of a prawn farm in Enping District, Guangdong Province, China. On May 23 rd , 2011, local authorities approved the engineering and building plans, construction commenced shortly thereafter. To date, all earth works have been completed, perimeter fencing installed and a new electrical substation brought online. It is anticipated that phase one construction will be completed on or before September 30 th , 2011. Phase one production is expected to produce some 500 Tons per year. There are four stages of development planned with total annual production expected to reach 2,000 tons of quality seafood and prawns per mid-year of 2013.
This new and modern aquaculture system technology pioneered by Capital Award Inc. to grow prawns indoor and on land under controlled environment, based on water re-circulation and recycling methods similar to our A Power Fish farm is to the best of management’s knowledge, the first of its kind in the world. The grow-out systems and tanks are modular in design and have the following features:
• Solid waste separator and filters to collect all solid waste from the water.
• Gravitation channels for the moving and grading of prawns between tanks.
• Sand based multi-purpose filtration systems for the habitation of prawns.
• Un-soluble waste bio-filters to absolve all un-soluble waste.
• Fine screen separators to keep the fingerlings in the tanks.
• Disinfection and antiseptic compartments.
• Diseases eliminator compartments.
• O3 generator compartments.
• O2 injector chambers.
• Sun-light penetrators.
• Heat exchangers.
The system is designed to eliminate many problems that are associated with traditional prawn aquaculture systems and methods used in many Asian countries including China. Apart from the advantage derived from the controlled growing environment, it has many economical advantages as well, such as:
• Power consumption (i.e. US$188. / Ton of production based on rate of US$0.11/Kw)
• Water Consumption (i.e. Average of 35,000 l of water / Ton of production)
• Mortality rate: (i.e. for the growing prawns from visible fingerlings at 10%)
• Feed Conversion rate (i.e. Average on 1 kg of feed to 1 kg of prawn).
• Farm labor (i.e. 150 man hours per ton of production)
Enping City Bi Tao A Power Fishery Development Co. Ltd.
Construction on the facility was completed in late 2010 and stocking operations commenced in early 2011. To date, 12 out of 16 grow tanks are in full operation stocked with approximately 120,000 x 60mm fingerlings, 80,000 x 80mm small fish and 50,000 x 100mm sized fish. The largest batches of fish are estimated at 20,000 x 120mm in size. Mortality rates have been recorded at approximately 10% in line with previous estimates. At the current growth rate, the first batch of 20,000 x 120mm fish should reach marketable size of an estimated 500 grams per fish on or before October 30, 2011.
The A-Power Technology Difference
A-Power Technology ("APT") is an engineered, self-contained water treatment and re-circulating aquaculture system ("RAS") for the growing of aquatic animals on a commercial scale. It mainly consists of the A-Power Grow Out Basin and the A-Power Treatment Stack equipment and operating techniques and procedures which Capital Award has established as essential or desirable for the establishment development and operation of the A-Power aquaculture system. In an APT designed fish growing system, fish produced are free from diseases commonly associated with other outdoor aquaculture methods. The system is fully integrated, automated and climate-controlled. With strict water quality management, APT fish growing system creates a stress-free environment for the fish. These ideal growing conditions enable improved productivity, mortality rates of less than 8% and feed-to-fish conversion ratio of 1:1 for pallet feed and 2:1 for non pallet feed. The system is housed on land in an enclosed environment under fully controlled conditions, and by avoiding contact with any outdoor contamination and using treated water; APT RAS produces healthy farmed fish guaranteed free of antibiotics and other pollutants.
It is an environmentally friendly system that recycles all water used in the farm. It enables the production and supply of fish in the vicinity of urban area all year round consistently. The RAS has been commercially applied in Europe and Australia for the past 30 years and APT has been commercially developed and used in Australia since 1998. However the RAS and APT are relatively new to the Asian countries including China.
Investor Presentations
On May 30th through May 31st, 2011, the Registrant will be participating in the Jordon Fund Conference, a privately organized conference sponsored by the Jordon Fund and Pensar Bank and held in Stockholm, Sweden at the Stockholm City Centre and the Pensar Bank Corporate Centre (the “Conference”). The Conference is not open to the general public; however the Registrant anticipates that many current shareholders will be present. The
presentation that the Registrant intends to deliver at the conference is filed as Exhibit 99.1 to this Form 8-K.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months ended
Three months ended
March 31, 2011
March 31, 2010
(Unaudited)
(Unaudited)
$
$
Continuing operations
Revenue
3,121,531 300,000
Cost of goods sold
1,190,615 -
Gross profit
1,930,916 300,000
General and administrative expenses
(690,146 ) (514,336 )
Net income from operations
1,240,770 (214,336 )
Other income (expenses)
Other income
9,302 -
Gain (loss) of extinguishment of debts
92,926 (4,565,180 )
Interest expense
(3,172 ) (2,927 )
Net income (expenses)
99,056 (4,568,107 )
Net income before income taxes
1,339,826 (4,782,443 )
.
Provision for income taxes
- -
Net income (loss) from continuing operations
1,339,826 (4,782,443 )
Less: Net (income) loss attributable to the non - controlling interest
(428,913 ) 10,647
Net income (loss) from continuing operations attributable to the Sino Agro Food, Inc. and subsidiaries
910,913 (4,771,796 )
Discontinued operations
Net income from discontinued operations
19,941,880 2,057,268
Less: Net income attributable to the non - controlling interest
(9,737,929 ) (452,599 )
Net income from discontinued operations attributable to the Sino Agro Food, Inc. and subsidiaries
10,203,951 1,604,669
Net income (loss) attributable to the Sino Agro Food, Inc. and subsidiaries
11,114,864 (3,167,127 )
Other comprehensive income (loss)
Foreign currency translation gain (loss)
1,175,674 (293,090 )
Comprehensive income (loss)
12,290,538 (3,460,217 )
Less: other comprehensive (income) loss attributable to the non - controlling interest
(293,918 ) 58,618
Comprehensive income (loss) attributable to the Sino Agro Food, Inc. and subsidiaries
11,996,620 (3,401,599 )
Earnings (loss) per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
From continuing and discontinued operations
Basic
$ 0.20 $ (0.06 )
Diluted
$ 0.18 $ (0.06 )
Earnings (loss) per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
From continuing operations
Basic
$ 0.02 $ (0.09 )
Diluted
$ 0.01 $ (0.09 )
Weighted average number of shares outstanding:
Basic
56,502,325 54,088,199
Diluted
63,502,325 54,088,199
Comments & Business Outlook
Guidance Based on 2010 Year End Conference Call Notes :
1. Capital Awards (Fishery)
Capital Award expects increased revenue in 2011 from construction, management and developer fees for its A Power RAS systems.
Current and planned projects for 2011 are estimated by the Company to generate $32.2M dollars.
Operating costs are estimated by the Company to be approximately $12.6M in 2011.
Gross profit is estimated by the Company to be $19.5M in 2011.
2. HU Plantation
Revenue for 2011 is estimated by the Company to be approximately $6.5M.
Gross profit for 2011 is estimated by the Company to be approximately $4.7M.
3. Beef Feedstock and fertilizer
The Company’s beef, feedstock and fertilizer operations are set to expand in 2011 with the addition of at least two new joint ventures.
The Company purchased $52.7M of land use rights in China to support growth.
Combined revenue for 2011 from expanded operations are estimated by management to reach approximately $19M
gross profit of approximately $6.4M.
4. Consolidated Guidance
Total revenue expected to increase to $58.3M for 2011.
Total cost of goods estimated to be approximately $27.4M.
Total gross profit estimated to increase to $30.8M.
Earnings per share of approximately $0.39 cents fully diluted. Basic earnings per share of approximately $0.43 cents EPS reflects a strong push toward improving operations and our bottom line in the future.
Note: SIAF sold its dairy business
In an agreement signed February 15, 2011 between Hang Yu Tai Investment Ltd. (“HYT”) a wholly owned subsidiary of Sino Agro Food, Inc. and Mr. Sun Ximin (“SUN”), HYT has agreed to sell its 78% equity stake in ZX and SUN has agreed to purchase HYT’s holdings resulting in the divestment of ZX. Total consideration for the sale was $31M, or the equivalent to 78% of ZX’s net assets plus a surplus sum of $4.9M.
Proceeds from the sale went towards purchase of land to support current and planned joint venture projects. The Company expects to record a profit of $8.4M on the sale of the dairy in 2011
We would like to know if the $8.4 million is included in company 2011 full year guidance. We are investigating the terms and nature of the dairy transaction.
Comments & Business Outlook
SINO AGRO FOOD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2010 AND DECEMBER 31, 2009
2010
2009
$ $
Revenue
40,551,066 21,725,839
Cost of goods sold
18,097,641 9,385,442
Gross profit
22,453,425 12,340,397
General and administrative expenses
(3,551,561 ) (2,852,084 )
Net income from operations
18,901,864 9,488,313
Other income (expenses)
Other income
226,586 26
Loss on extinguishment of debts
(6,077,230 ) -
Interest expense
(354,140 ) (470,019 )
Net income (expenses)
(6,204,784 ) (469,993 )
Net income before income taxes
12,697,080 9,018,320
Provision for income taxes
- -
Net income
12,697,080 9,018,320
Less: Net income attributable to the non - controlling interest
(4,196,258 ) (2,210,381 )
Net income attributable to the Sino Agro Food, Inc. and subsidiaries
8,500,822 6,807,939
Other comprehensive income
Foreign currency translation gain
2,097,324 31,118
Comprehensive income
10,598,146 6,839,057
Less: other comprehensive income attributable to the non - controlling interest
(461,411 ) (1,359 )
Comprehensive income attributable to Sino Agro Food, Inc. and subsidiaries
10,136,735 6,837,698
Earnings per share attributable to Sino Agro Food, Inc.
and subsidiaries common stockholders:
Basic
$ 0.16 $ 0.13
Diluted
$ 0.14 $ 0.13
Weighted average number of shares outstanding:
Basic
54,223,823 52,889,473
Diluted
61,223,823 52,889,473
GeoTeam ® Note : 2010 vs. 2009 Adjusted EPS
Full Year: $0.25 vs. $0.13
Comments & Business Outlook
3rd Quarter Financial Results
Revenues increased by $6,778,232 or 59.5% to $11,395,223 for the Q3 period ended September 30, 2010 from $4,616,991 for the Q3 period ended September 30, 2009.
Gross Profit increased by $4,674,284 or 65.6% to $7,089,064 for the Q3 period ended September 30, 2010 from $2,414,780 for the Q3 period ended September 30, 2009
Net Profit for Q3 period ended September 30, 2010 is $7,220,202 , net of Gross Profit of $7,089,064 plus Exchange gain of $2,202,824 minus all General administration expenses and minority interest etc. of $2,071,686 for the Q3 period ended September 30, 2010.
For the 9 months ended September 30, 2010, our net income from operation was $11,174,356 or $0.19 per share on a fully diluted basis. There are no changes to Company guidance for the remainder of 2010.
GeoSpecial Notes
Added to the GeoSpecial list on October 16, 2009 @ $0.98Catalyst: Was selling below book; It appeared that the company was very close to gaining compliance with the SEC to help facilitate an up-listing; Joint venture projects were on the verge of implementation; Bullish guidance.Peak performance : Reached a high of $1.90 on Current price: : Current road block : The company has not reported a break out EPS number; 2010 first quarter revenues were flat; Still awaiting details on Joint Venture status; Not current with SEC filings; Company has yet to issue the anticipated dividend.
Remains on the GeoSpecial list: As we stated in our May 6, 2009 alert, when the stock broke the $1.00 mark to the downside, SIAF is likely only suited for risk tolerant investors. Since this new cautious stance, shares have fallen to $0.53. Although the company has maintained its 2010 guidance of $0.29, we are finding this somewhat hard to believe, especially with no status updates on its J.V. projects that are expected to play a large factor in future growth, and given that the 2010 first quarter EPS was only $0.03. An investment in SIAF is a tough call. If guidance is met, investors could be well rewarded by buying the stock at current levels. However, many things have to come together. As we have stated on numerous occasions, current market conditions have led us to consider higher quality and more certain ideas.
GeoSpecial Notes
GeoSpecial Sino Agro Food shares are inching up this morning, possibly in response to a
press release issued this morning announcing it:
Approved a dividend policy starting in fiscal year 2010.
Is planning a shareholder conference call January 5th, 2010 at 11:00AM EST to discuss the dividend policy, current operations, efforts to seek quotation on the OTCBB and guidance for 2010.
Investors may view this news as management's commitment to enhancing shareholder value and a sign that cash flow generation is strong and improving. The GeoTeam ® believes that issuing guidance is a necessary step needed to instill investor confidence as SIAF trades on the Pink Sheets.
