BEIJING--(Marketwire - August 12, 2008) - Agria Corporation (NYSE: GRO) (the "Company" or
"Agria"), an innovative China-based agri-solutions provider, today
announced its financial results for the second quarter ended June 30, 2008.
Revenues for the second quarter of 2008 were RMB 143.3 million (US$20.9
million), as compared to revenues of RMB 160.7 million for the second
quarter of 2007. In the second quarter of 2008, gross profit was RMB 64.3
million (US$9.4 million) as compared to RMB 99.8 million in the second
quarter of 2007. In the second quarter of 2008, gross margins were 30%,
60% and 51% from the Company's corn seed, sheep breeding and seedling
segments, respectively.
For the second quarter of 2008, net loss was RMB 687.2 million (US$100.2
million) or net loss of RMB 10.87 (US$1.59) per basic and diluted ADS,
compared to net income of RMB 92.4 million in same period last year, or net
income of RMB 1.85 and RMB 1.84 per basic and diluted ADS respectively.
The net loss in the second quarter of 2008 is primarily due to the RMB
702.3 million (US$ 102.4 million) payment by our major shareholder,
Brothers Capital Limited, to management of P3A (please refer to our press
release dated June 2, 2008; the "P3A Payment"). This payment from our
major shareholder, Brothers Capital Limited, to management of P3A resulted
in a non-cash charge to Agria. The second quarter also reflects other
share-based compensation expense of RMB 10.4 million (US$1.5 million), as
well as the impact of recognizing a deferred income tax expense of RMB 13.7
million (US$2.0 million) relating to P3A in the second quarter of 2008,
which did not exist in the same period in 2007. Excluding the above
mentioned non-cash compensation expenses (the P3A Payment and other
share-based compensation), net income for the second quarter of 2008
(non-GAAP) was RMB 25.5 million (US$3.7 million) or net income of RMB 0.40
(US$0.06) per basic and diluted ADS.
The Company had cash and cash equivalents of RMB 1.28 billion (US$187.3
million) as of June 30, 2008.
Kenneth Hua Huang, Agria's chief executive officer, commented, "We are
encouraged with our improved performance as revenue in the second quarter
of 2008 came in above prior guidance. As expected, revenue derived from
our sheep breeding segment started to rebound in Q2 given the completion of
our facility centralization and technology upgrade this past May. We
expect continued improvement through the second half of the year as our
operation is now geared-up. "
Business Outlook
Huang, stated, "Per typical seasonality, we expect corn seed sales to be
nil in the third quarter with a resumption in sales in the fourth quarter.
We are targeting sequential growth through the remainder of the year in
sales derived from our sheep breeding segment. Per typical seasonality we
would expect sales in our seedling segment to decline in the third quarter
compared to the second quarter, followed by an uptick in the fourth
quarter. As we look forward, our goal is to maximize company and
shareholder value. We are focused on building Agria into one of the
agri-solution industry's leading companies through the development of a
strong research and development organization in each of our three business
segments, through continued organic growth, the pursuit of acquisitions,
and the establishment of the Agria brand in each of our business segments."
Based on current business conditions, Agria expects to generate total
revenues in the range of approximately RMB 76 million (US$11 million) to
RMB 80 million (US$11.7 million) for the third quarter of 2008,
representing a year-on-year increase, as compared to RMB 73 million in the
third quarter of 2007. For the full year 2008, Agria reiterates prior
expectations for total revenues in the range of approximately RMB 738
million (US$108 million) to RMB 771 million (US$112 million), representing
year-on-year growth in the range by approximately 10% to 15%, respectively.
This forecast reflects Agria's current and preliminary view, which is
subject to change, and is expected to be back-end weighted to the fourth
quarter due to normal seasonality of the industry as corn seed revenue is
typically nil in the third quarter with the major selling season occurring
in the fourth quarter.
Convenience Currency Translation
The conversion of RMB into U.S. dollars in this release, made solely for
the convenience of the reader, is based on the noon buying rate in The City
of New York for cable transfers of RMB as certified for customs purposes by
the Federal Reserve Bank of New York. For the second quarter of 2008, the
rate is as of June 30, 2008, which was RMB 6.8591 to US$1.0000. No
representation contained herein is intended to imply that the RMB amounts
could have been, or could be, converted, realized or settled into U.S.
dollars at that rate on June 30, 2008, or at any other date. The
percentages stated in this press release are calculated based on RMB.
Investor Conference Call / Webcast Details
The dial-in number for the live audio call beginning on August 12, 2008 at
8:00 a.m. U.S. Eastern Time (8:00 p.m. August 12, 2008 in Beijing) is
+1-201-689-8560. A live webcast of the conference call will be available
on Agria's website at www.agriacorp.com.
A replay of the call will be available approximately 2 hours after the
conclusion of the live call through midnight on August 26, 2008, U.S.
Eastern Time (12 p.m., August 27, 2008 in Beijing) by telephone at
+1-201-612-7415. To access the replay use conference ID#292551, with
account #3055. A webcast replay will also be available at
www.agriacorp.com.
About Agria Corporation
Agria Corporation (NYSE: GRO) is an innovative China-based agri-solutions
provider focusing on research and development, production and distribution
of three different types of upstream agricultural products. Its diversified
portfolio of products comprises corn seeds, sheep breeding and seedlings,
including proprietary products. The Company has access to approximately
27,000 acres of farmland in seven provinces and its extensive distribution
network provides direct or third party distribution in 14 provinces. For
more information about Agria Corporation, please visit www.agriacorp.com.
Safe Harbor Statement:
This announcement contains forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates," "confident" and
similar statements. Agria may also make written or oral forward-looking
statements in its periodic reports to the U.S. Securities and Exchange
Commission on Forms 20-F and 6-K, etc., in its annual report to
shareholders, in press releases and other written materials and in oral
statements made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements about
Agria's beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties. A
number of important factors could cause actual results to differ materially
from those contained in any forward-looking statement. Potential risks and
uncertainties include, but are not limited to, those risks outlined in
Agria's filings with the U.S. Securities and Exchange Commission. All
information provided in this press release is as of the date of this
announcement unless otherwise stated, and Agria does not undertake any
obligation to update any forward-looking statement, except as required
under applicable law.
Non-GAAP Financial Measures
To supplement our consolidated financial information prepared in accordance
with U.S. GAAP, Agria Corporation uses non-GAAP measures of net income and
earnings per share and per ADS, which are adjusted to exclude non-cash
compensation expenses. The presentation of these non-GAAP financial
measures is not intended to be considered in isolation or as a substitute
for the financial information prepared and presented in accordance with
U.S. GAAP. For more information on these non-GAAP financial measures,
please see the tables captioned "Reconciliations of non-GAAP Measures" set
forth at the end of this release.
Agria believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its performance and liquidity by
excluding non-cash compensation expenses that may not be indicative of its
operating performance from a cash perspective. We believe that both
management and investors benefit from referring to these non-GAAP financial
measures in assessing our performance and when planning and forecasting
future periods. These non-GAAP financial measures also facilitate
management's internal comparisons to Agria's historical performance and
liquidity. Agria intends to compute its non-GAAP financial measures using
the same consistent method from quarter to quarter. We believe these
non-GAAP financial measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by management in
its financial and operational decision making. A limitation of using
non-GAAP net income and earnings per share and per ADS excluding non-cash
compensation expenses is that these non-GAAP measures exclude non-cash
compensation charge that has been and may continue to be for the
foreseeable future a significant recurring expense in our business.
Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from each non-GAAP measure.
The accompanying tables have more details on the reconciliations between
GAAP financial measures that are most directly comparable to non-GAAP
financial measures.
-- Tables Attached --
Agria Corporation
Consolidated Statements of Operations
(In thousands of RMB, except per share and per ADS data)
(Unaudited)
Three months ended Six months ended
30-June 30-June 30-June 30-June
2007 2008 2007 2008
Revenue:
Corn seeds 40,867 62,989 133,853 164,897
Sheep breeding products 90,851 46,744 110,599 51,211
Seedlings 28,995 33,529 34,955 41,602
----------- ----------- ----------- -----------
Total revenue 160,713 143,262 279,407 257,710
----------- ----------- ----------- -----------
Cost of revenue:
Corn seeds (27,138) (44,013) (80,395) (105,772)
Sheep breeding products (24,207) (18,573) (30,543) (27,169)
Seedlings (9,526) (16,369) (10,679) (17,536)
----------- ----------- ----------- -----------
Total cost of revenue (60,871) (78,955) (121,617) (150,477)
----------- ----------- ----------- -----------
Gross profit 99,842 64,307 157,790 107,233
Operating expense
(Note 1):
Selling expenses (4,377) (4,592) (7,937) (8,606)
General and
administrative
expenses (1,917) (733,312) (3,562) (822,160)
Research and
development expenses (512) (3,185) (1,025) (6,362)
----------- ----------- ----------- -----------
Total operating
expenses (6,806) (741,089) (12,524) (837,128)
----------- ----------- ----------- -----------
Operating profit/(loss) 93,036 (676,782) 145,266 (729,895)
Interest income 71 7,856 150 18,427
Interest expense (839) (379) (2,239) (831)
Exchange loss -- (5,083) -- (10,273)
Other income 174 990 174 993
Other expense -- (138) -- (4,329)
----------- ----------- ----------- -----------
Income/(loss) before
income tax 92,442 (673,536) 143,351 (725,908)
Income tax -- (13,655) -- (19,288)
----------- ----------- ----------- -----------
Net income/(loss) 92,442 (687,191) 143,351 (745,196)
=========== =========== =========== ===========
Earnings/(loss) per
share:
-Basic RMB0.92 RMB(5.44) RMB1.43 RMB(5.90)
-Diluted RMB0.92 RMB(5.44) RMB1.43 RMB(5.90)
=========== =========== =========== ===========
Weighted average number of ordinary shares outstanding:
-Basic 100,000,000 126,400,000 100,000,000 126,400,000
-Diluted 100,237,363 126,400,000 100,119,337 126,400,000
Earnings/(loss) per ADS
(Note 2):
-Basic RMB1.85 RMB(10.87) RMB2.87 RMB(11.79)
-Diluted RMB1.84 RMB(10.87) RMB2.86 RMB(11.79)
=========== =========== =========== ===========
Note 1:
P3A cash payment
included in G&A
expense -- (62,340) -- (126,992)
=========== =========== =========== ===========
Share based
compensation expense
is included in:
General and
administrative
expenses -- (650,280) -- (658,676)
Research and
development expenses -- (6) -- (12)
Cost of revenue -- (75) -- (156)
----------- ----------- ----------- -----------
Total (Note a) -- (650,361) -- (658,844)
=========== =========== =========== ===========
Note a: Included in share-based compensation expense is an amount of
RMB640,000, which relates to the P3A Payment.
Note 2: Each ADS represents two ordinary shares.
Agria Corporation
Consolidated Statements of Operations
(In thousands of US$, except per share and per ADS data)
(Unaudited)
Three months ended Six months ended
30-June 30-June
2008 2008
Revenue:
Corn seeds 9,183 24,041
Sheep breeding products 6,815 7,466
Seedlings 4,888 6,065
------------------ ------------------
Total revenue 20,886 37,572
------------------ ------------------
Cost of revenue:
Corn seeds (6,417) (15,421)
Sheep breeding products (2,708) (3,961)
Seedlings (2,386) (2,556)
------------------ ------------------
Total cost of revenue (11,511) (21,938)
------------------ ------------------
Gross profit 9,375 15,634
Operating expense (Note 1):
Selling expenses (669) (1,255)
General and administrative expenses (106,911) (119,864)
Research and development expenses (464) (927)
------------------ ------------------
Total operating expenses (108,044) (122,046)
------------------ ------------------
Operating loss (98,669) (106,412)
Interest income 1,145 2,686
Interest expense (55) (121)
Exchange loss (741) (1,498)
Other income 144 145
Other expense (20) (631)
------------------ ------------------
Loss before income tax (98,196) (105,831)
Income tax (1,991) (2,812)
------------------ ------------------
Net loss (100,187) (108,643)
================== ==================
Loss per share:
-Basic US$(0.79) US$(0.86)
-Diluted US$(0.79) US$(0.86)
================== ==================
Weighted average number of ordinary shares outstanding:
-Basic 126,400,000 126,400,000
-Diluted 126,400,000 126,400,000
Loss per ADS (Note 2):
-Basic US$(1.59) US$(1.72)
-Diluted US$(1.59) US$(1.72)
================== ==================
Note 1:
P3A cash payment included in G&A
expense (9,089) (18,514)
================== ==================
Share based compensation expense
is included in:
General and administrative
expenses (94,805) (96,029)
Research and development
expenses (1) (2)
Cost of revenue (11) (23)
------------------ ------------------
Total (Note a) (94,817) (96,054)
================== ==================
Note a: Included in share-based compensation expense is an amount of
US$93,307, which relates to the P3A Payment.
Note 2: Each ADS represents two ordinary shares.
Agria Corporation
Reconciliation of Non-GAAP measures
(In thousands of RMB, except per share and per ADS data)
(Unaudited)
Three months ended Six months ended
30-June 30-June 30-June 30-June
2007 2008 2007 2008
Net income/(loss) 92,442 (687,191) 143,351 (745,196)
Non-cash compensation
expense (Note 1) -- 712,701 -- 785,836
----------- ---------- ----------- ----------
Non-GAAP net income 92,442 25,510 143,351 40,640
=========== ========== =========== ==========
Net income/(loss) per ADS -
basic RMB1.85 RMB(10.87) RMB2.87 RMB(11.79)
Net income/(loss) per ADS -
diluted RMB1.84 RMB(10.87) RMB2.86 RMB(11.79)
=========== ========== =========== ==========
Non-GAAP net income per ADS
- basic RMB1.85 RMB0.40 RMB2.87 RMB0.64
Non-GAAP net income per ADS
- diluted RMB1.84 RMB0.40 RMB2.86 RMB0.64
=========== ========== =========== ==========
Weighted average shares
used in calculating
non-GAAP basic net income
per ADS 50,000,000 63,200,000 50,000,000 63,200,000
Weighted average shares
used in calculating
non-GAAP diluted net
income per ADS 50,118,682 63,219,482 50,059,669 63,209,741
Agria Corporation
Reconciliation of Non-GAAP measures
(In thousands of US$, except per share and per ADS data)
(Unaudited)
Three Six
months ended months ended
30-June 30-June
2008 2008
Net loss (100,187) (108,643)
Non-cash compensation expense (Note 1) 103,906 114,568
------------ ------------
Non-GAAP net income 3,719 5,925
============ ============
Net loss per ADS - basic US$(1.59) US$(1.72)
Net loss per ADS - diluted US$(1.59) US$(1.72)
============ ============
Non-GAAP net income per ADS - basic US$0.06 US$0.09
Non-GAAP net income per ADS - diluted US$0.06 US$0.09
============ ============
Weighted average shares used in calculating
non-GAAP basic net income per ADS 63,200,000 63,200,000
Weighted average shares used in calculating
non-GAAP diluted net income per ADS 63,219,482 63,209,741
Note 1: Non-cash compensation in the 3 and 6 month periods of 2008 includes
compensation charge of RMB 702,340 (US$102,396) and RMB 766,992
(US$111,821), respectively, related to the P3A Payment.
Note 2: Each ADS represents two common shares.
Agria Corporation
Consolidated Balance Sheets
(In thousands)
(Audited) (Audited) (Unaudited)
31-Dec 31-Dec 30-June
2006 2007 2008
(RMB) (RMB) (US$)
ASSETS
Current assets:
Cash and cash equivalents 42,782 1,387,153 187,315
Accounts receivable (net of
allowance for doubtful accounts) 156,440 200,757 23,366
Inventories 58,007 59,937 5,013
Prepayments and other current assets 22,584 48,626 8,224
Amounts due from related parties 1,059 557 587
------------ ----------- -----------
Total current assets 280,872 1,697,030 224,505
------------ ----------- -----------
Non-current assets:
Property, plant and equipment, net 40,126 65,680 11,494
Investment 205 205 30
Intangible assets, net 74,437 189,499 48,192
Non-current prepayments -- 14,127 1,190
Deferred tax assets -- 529 77
Other assets, net 94,836 104,466 14,545
------------ ----------- -----------
Total non-current assets 209,604 374,506 75,528
------------ ----------- -----------
Total assets 490,476 2,071,536 300,033
============ =========== ===========
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Short-term bank borrowings 36,900 15,160 1,283
Long-term bank borrowing, current
portion 1,500 -- --
Accounts payable 27,161 9,011 149
Accrued expenses and other
liabilities 14,907 31,471 5,633
Deferred revenue -- 1,122 --
Amount due to a shareholder 29,992 -- --
Amounts due to related parties 16,884 212 --
------------ ----------- -----------
Total current liabilities 127,344 56,976 7,065
------------ ----------- -----------
Non-current liabilities:
Deferred tax liability -- 157,561 25,783
Amounts due to related parties 8,996 8,792 1,282
------------ ----------- -----------
Total non-current liabilities 8,996 166,353 27,065
------------ ----------- -----------
Total liabilities 136,340 223,329 34,130
------------ ----------- -----------
Shareholders equity:
Paid-up capital -- -- --
Additional paid-in capital 8,098 1,561,933 343,454
Statutory reserves 76,953 76,953 11,352
Accumulated other comprehensive loss -- (9,421) (12,150)
Retained earnings / (accumulated
loss) 269,085 218,742 (76,753)
------------ ----------- -----------
Total shareholders equity 354,136 1,848,207 265,903
------------ ----------- -----------
Total liabilities and shareholders
equity 490,476 2,071,536 300,033
============ =========== ===========
Contact Information: Contacts:
In China:
Matt Feng
Investor Relations
China Tel: 133-1130-0320
matt.feng@agriacorp.com
In the U.S.:
David Pasquale
Senior Vice President
U.S. Tel: +914-337-1117
david.pasquale@agriacorp.com