Agria Reports Financial Results for the Six Months Ended December 31, 2012

Agria Reports Financial Results for the Six Months Ended December 31, 2012 
BEIJING -- (Marketwire) -- 03/13/13 --  Agria Corporation (NYSE: GRO)
(the "Company" or "Agria") today announced its financial results for
the six months ended December 31, 2012. The financial results reflect
the consolidation of its controlling interest in its New Zealand
listed subsidiary, PGG Wrightson Limited (NZSE: PGW) ("PGW"). 
Mr. Alan Lai, Agria's Chairman of the Board, commented, "I am pleased
to see continued improvement in PGW's performance year on year. PGW
reported improved profits and strong net cash inflow from operating
and investing activities which led to significant improvement to its
financial position. With this half-year announcement, PGW has also
timely followed through with its dividend policy to its shareholders
as announced last December. I look forward to PGW playing a more
significant role in Agria's global strategy and future performance.
Our results represent another major milestone for the Company. We
anticipate positive benefits will be generated from our strategic
investments in PGW and our China seeds business. Our recent
initiatives and collaboration with key provincial agriculture
authorities in the provinces of Guangdong, Shaanxi and Shandong will
pave way for our future growth opportunities in the Greater China
market. We anticipate further improvements in these important
businesses with both revenue and profit growth in 2013." 
Financial Highlights: 


 
--  Consolidated revenues were RMB3,046.8 million (US$489.1 million) for
    the six months ended December 31, 2012, representing a decrease of
    14.7% as compared to RMB3,571.3 million for the same period last year.
    The major reason for the decrease was that PGW's revenue for the
    retail business was not directly comparable to the same period last
    year due to the way PGW delivers certain categories of rural supplies
    to its customers. PGW accounts for these contracts as agency
    transactions (that is, recording the commission income versus
    recording gross revenues and cost of revenues). This did not have an
    impact on gross profit or operating income but resulted in a reduction
    in stated revenue of RMB469.1 million.
--  The Company recorded an operating loss of RMB319.2 million (US$51.2
    million) for the six months ended December 31, 2012, compared to
    operating income of RMB32.7 million for the same period last year. The
    major reason for the decrease was due to an impairment loss on land
    use rights and non-current prepayments of RMB357.3 million (US$57.3
    million) that were provided for the six months ended December 31,
    2012. Operating income excluding impairment loss on land use rights
    and non-current prepayments was RMB38.1 million (US$6.1 million).
--  Net loss attributable to shareholders was RMB374.8 million (US$60.2
    million) for the six months ended December 31, 2012, compared to net
    loss attributable to shareholders of RMB45.6 million for the same
    period last year.

  
Business Highlights
 We are an agricultural company with operations in
China and internationally. We operate three principal business lines:
China seeds, international seeds and agriservices. We operate our
international seeds and agriservices businesses through our
subsidiary PGW, New Zealand's largest agricultural services company.
We operate our China seeds business through our PRC subsidiaries,
which engage in research and development, production and sale of seed
products, including field corn seeds, edible corn seeds and vegetable
seeds. 
PGW businesses:
 PGW recorded improved earnings, reflecting strong
operating performance across all of its major businesses. In
particular, the performance of the New Zealand seeds, retail, wool
and irrigation & pumping businesses showed sizeable gains. We have
also seen progress being made in the PGW rural supplies and fruitfed
supplies businesses, which face intense competition from farmer owned
co-operatives. While trading businesses such as livestock, grains and
real estate are more susceptible to overall market conditions, their
underlying performance remained solid. In livestock, our tallies
remained broadly in line with previous year period, but the decline
in sheep and deer values impacted on earnings. 
The Australia seeds business remained challenging due to unexpected
weather conditions resulting in a premature end to the spring sales
season, in contrast to increased sales of seeds in New Zealand driven
by the growth of new and recently released products. The South
American seeds business recorded a modest increase in operating
results, which good top line growth in Uruguay from increased sales
of pasture seeds and crop protection products, along with increased
costs as the business continues to grow. 
China Seeds:
 Total revenue of our China seeds business increased
from RMB7.9 million for the six months ended December 31, 2011 to
RMB31.2 million (US$5.0 million) for the six months ended December
31, 2012. 
Field corn seeds
 We have built up a strong sales network covering
more than 300 counties of the major provinces for field corn market
in prior sales season. For the six months ended December 31, 2012, we
continued to develop our sales network throughout China and
consolidated our own production base in Xinjiang. Field corn sales
showed robust growth in the period, with an increase in revenue from
RMB3.0 million for the six months ended December 31, 2011 to RMB17.5
million (US$2.8 million) for the six months ended December 31, 2012.  
Edible corn seeds
 Edible corn sales also increased sharply from
RMB4.7 million for the six months ended December 31, 2011 to RMB13.5
million (US$2.2 million) for the six months ended December 31, 2012.
This increase was mainly due to an increase in sales of new sweet
corn seeds in southern China market. We have now set up our
production base in Zhuhai to focus on the southern China market and
capturing this main market of sweet corn seeds. 
The Company and PGW recently entered into memoranda of understanding
with PRC agricultural partners in Shaanxi, Shandong and Guangdong
provinces to cooperate in areas such as showcasing and promotion of
innovative agricultural products and technology, scientific research
and application of New Zealand's experience in various agricultural
areas. We expect that our cooperation with PGW and our PRC
agricultural partners will bring synergistic effects and positive
developments to our China business. 
Impairment loss on land use rights and non-current prepayments:
 As
previously disclosed in our Form 20-F for the fiscal year ended June
30, 2012, we were in the process of assessing appropriate revenue
generating opportunities on the approximately 13,500 acres of land
which was retained by us following the divestiture of Taiyuan
Primalights III Agriculture Development Co., Ltd. ("P3A"), our former
consolidated affiliated entity and primary operating entity. The land
parcels were acquired in the time when the Company was engaged in
sheep breeding business, which has since ceased after disposal of
P3A. We have since explored, apart from finding third-party tenants,
long-term viable alternative commercial use of the land parcels,
especially with respect to trial plantation of grass varieties.
Extensive trial plantation of grass was conducted over the last
several years. These trial plantations, results and evaluations were
completed in late 2012 and indicated that it would not be
e
conomically viable to carry out large scale commercial plantation on
this land. After completion of the trial plantations, the Company
engaged a separate and independent professional valuer to evaluate
the land. The independent valuation was received in February 2013 and
indicated a substantial impairment on the land. The valuation has
taken into consideration the results of the trial plantations, as
well as other possible changes in the extent or manner these land
parcels could be used. In compliance with US GAAP Accounting
Standards Codification (ASC) Section 360, without clear visibility as
to its cash flow generating capacity in the foreseeable future, we
determined that it was appropriate to record an impairment provision
of RMB357.3 million (US$57.3 million) for the six months ended
December 31, 2012, which was the aggregate sum of our unamortized
prepayments for the land. While we will continue to maintain our
legal rights (subject to certain risks detailed in our Form 20-F for
the fiscal year ended June 30, 2012) as to the land parcels as part
of our divestiture arrangement of P3A, we do not anticipate to derive
significant future economic benefit from the land parcels in the
foreseeable future. 
Disposal of investment:
 In September 2010, we acquired a 49% equity
interest in Wuwei Ganxin Seeds Company Limited ("Ganxin"). Ganxin has
the proprietary right for JiXiang No. 1, a field corn seed variety
which was sold through our distribution network. 
In line with our strategy to focus on our proprietary corn seed
products, we decided to discontinue our commercial arrangement with
Ganxin. Accordingly, in December 2012, we entered into an equity
transfer agreement to dispose of our 49% equity interest in Ganxin at
a consideration of approximately RMB40.7 million (US$6.5 million). 
The transaction is expected to be completed in the second half of the
fiscal year ending June 30, 2013. An impairment provision of
approximately RMB13.0 million (US$2.1 million) has been reflected in
our results for the period ended December 31, 2012, representing the
estimated loss on disposal of the equity interest upon completion of
the equity transfer. 
Guidance and Strategic Outlook
 PGW has not provided any specific
guidance for the year ending June 30, 2013 due to inherent volatility
associated with earnings for the six months ending June 30, 2013. For
our China business, we believe that revenues for our China Seeds
business for the year ending June 30, 2013 will be approximately
RMB100.0 million (US$16.1 million). 
We have built Agria into an international agriculture company with
the consolidation of our controlling interest in PGW and the steps
taken towards integrating the PGW's leading proprietary forage
technology and other technology into the Greater China market, where
we have a vast network of relationships to build on. We believe this
technology matches with our international market reach, including
South America and Greater China, putting us in a good position for
future growth and opportunities. 
Our strategic investment in PGW has yielded improved earnings across
all major businesses and better working capital efficiencies. PGW's
AgriServices division, which serves the rural communities in New
Zealand and South America, continues to underpin solid growth in net
income. We believe PGW's AgriServices division will continue to
contribute positively to Agria's results of operations. In the
context of recent market consolidation of agriservices in New Zealand
with the proposed mergers of Combined Rural Traders (CRT) and
Farmlands Trading Society (two farmers-owned co-operatives), we see
both opportunities and challenges in the more competitive market
environment in which our AgriServices operate.  
Although the performance of PGW's seeds business was relatively mixed
due largely to unexpected weather conditions in Australia, we remain
optimistic on the future growth prospects in South America and long
term opportunities in the Greater China market. 
We see significant long term potential synergy between Agria and PGW,
which would bring better returns to our shareholders. Under China's
Twelfth Five-Year Plan, agriculture is one of the key sectors
emphasized by the central government. This plan was designed to
promote the "modernization of agriculture" in mainland China. In
addition to industrialization, standardization and scalable
production, a great amount of emphasis has been placed on innovation
and advanced agricultural technology. Given the limited area of
arable land in China, it is essential for China to further its
agricultural development in this direction. We believe we are
well-positioned to capture the market opportunities in the Greater
China market with several key initiatives and collaboration with key
agricultural provinces in this market. 
Leveraging on PGW's proprietary seeds technology and research and
development capability, Agria is also confident to tap the
opportunities in the fast expanding seed market in China. To this
end, we have embarked on active technological and market integration
of the PGW seeds business and our China seeds operation. As part of
the implementation of the strategy, we have signed memoranda of
understanding with China's Administrative Authority for Yangling
Agricultural High-Tech Industries Demonstration Zone in Shaanxi
province and agricultural partners in Guangdong and Shandong
provinces to develop showcases and promotion of innovative products,
advanced agricultural technology, advanced plant species and advanced
agricultural production models. Working committees will be set up
later this year to coordinate the establishment and development of
the projects. We anticipate these initiatives and collaboration will
yield long term benefits to our shareholders. 
The strategic integration of PGW technological capability and our
market reach is expected to enhance complementary strengths of both
sides and boost our future plan for the joint development of South
American and China markets. The agricultural and seeds sectors and
economies are highly recognized in these fast expanding markets. With
world-leading seed technologies and management expertise, we believe
we will create values for our customers in these markets and generate
long term significant investment return for our shareholders. 
We expect further consolidation trends in the global agriculture
industry, and in particular, in markets which would create merger and
acquisition opportunities for us, including North America and Greater
China. We plan to explore external financing to facilitate expansion
of our market reach in these key markets. We consider that it is of
strategic importance that we continue to stay ahead of these market
opportunities with an aim of enhancing returns to our shareholders. 
Management Change
 Agria announced that the contract of Dr. Weizhong
Wang, its chief strategy officer focusing on the corn seeds business,
will not be renewed, effective from March 13, 2013. Dr. Wang has
served in this position since October 2009. No replacement is
expected to be made in the near future, and Agria's board will assess
this position on a strategic and ongoing basis. 
Currency Convenience Translation
 The conversion of Renminbi into
U.S. dollars in this release, made solely for the convenience of the
reader. The conversion of RMB into US dollars in this release 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. Unless otherwise noted, all translations
from RMB to US dollars and from US dollars to RMB in this release
were made at a rate of RMB6.2301 to US$1.00, the noon buying rate in
effect as of December 31, 2012. Certain comparative figures are
converted by using the rate as of the respective balance sheet dates. 
About Agria Corporation
 Agria Corporation (NYSE: GRO) is an
agricultural company with operations in China and internationally.
Agria operates three principal business lines: China seeds,
international seeds and agriservices. In China, Agria engages in
research and development, production and sale of seed products,
including field corn seeds, edible corn seeds and vegetable seeds.
Agria owns through Agria Asia a 50.22% equity interest in PGG
Wrightson Limited, New Zealand's largest agricultural services
comp
any. For more information about PGG Wrightson Limited, please
visit www.pggwrightson.co.nz. For more information about Agria
Corporation, please visit www.agriacorp.com. 
Safe Harbor Statement:
 This announcement contains forward-looking
statements. These statements, including the management's commentary,
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.  


 
                                                                            
AGRIA CORPORATION                                                           
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                             
FOR THE SIX MONTHS ENDED DECEMBER 31, 2011 AND 2012                         
(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), except  
 for number of shares and per share data)                                   
                                                                            
                                          For the six months ended          
                                ------------------------------------------- 
                                Dec. 31, 2011  Dec. 31, 2012  Dec. 31, 2012 
                                    (RMB)          (RMB)          (US$)     
                                 (unaudited)    (unaudited)    (unaudited)  
Revenue                             3,571,294      3,046,838        489,051 
Cost of revenue                    (2,837,037)    (2,321,157)      (372,571)
                                -------------  -------------  ------------- 
Gross profit                          734,257        725,681        116,480 
                                -------------  -------------  ------------- 
Operating expenses:                                                         
Selling, general and                                                        
 administrative expenses             (688,226)      (670,207)      (107,576)
Provision for impairment of                                                 
 land use rights and non-                                                   
 current prepayments                        -       (357,262)       (57,345)
Research and development                                                    
 expenses                             (13,329)       (17,396)        (2,792)
                                -------------  -------------  ------------- 
Total operating expenses             (701,555)    (1,044,865)      (167,713)
                                -------------  -------------  ------------- 
Operating income                       32,702       (319,184)       (51,233)
                                                                            
Other income (expense)                                                      
Interest income                        22,449         15,995          2,567 
Interest and financing expenses       (66,324)       (45,255)        (7,264)
Exchange gain (loss)                      (66)         1,138            183 
Other income (expense)                (14,860)         2,130            342 
Provision for impairment of                                                 
 investment under equity method             -        (12,994)        (2,086)
Income (loss) from equity                                                   
 investments                           (1,116)         2,878            462 
                                -------------  -------------  ------------- 
Loss before income tax                (27,215)      (355,292)       (57,029)
Income tax                              1,060         (5,679)          (912)
                                -------------  -------------  ------------- 
Net loss                              (26,155)      (360,971)       (57,941)
                                =============  =============  ============= 
Less net income, or addition of                                             
 net loss, attributable to the                                              
 non-controlling interest             (19,489)       (13,779)        (2,212)
                                -------------  -------------  ------------- 
Net loss attributable to Agria                                              
 Corporation                          (45,644)      (374,750)       (60,153)
                                =============  =============  ============= 
                                                                            
Loss per ordinary share:                                                    
Loss per share - basic and                                                  
 diluted                                (0.41)         (3.38)         (0.54)
                                -------------  -------------  ------------- 
                                                                            
Weighted average number of                                                  
 ordinary shares outstanding-                                               
 Basic and diluted                110,766,600    110,766,600    110,766,600 
                                -------------  -------------  ------------- 
                                                                            
                                                                            
                                                                            
AGRIA CORPORATION                                                           
CONDENSED CONSOLIDATED BALANCE SHEETS                                       
AS OF JUNE 30, 2012 AND DECEMBER 31, 2012                                   
(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))         
                                                                            
                                Jun. 30, 2012  Dec. 31, 2012  Dec. 31, 2012 
                                    (RMB)          (RMB)          (US$)     
                                  (audited)     (unaudited)    (unaudited)  
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents           164,890        176,845         28,386 
  Restricted cash                     398,706        398,296         63,931 
  Accounts receivable                 970,839      1,317,588        211,487 
  Inventories                       1,317,931      1,141,462        183,217 
  Prepayments and other current                                             
   assets                             280,911        162,971         26,159 
  Tax receivable                       25,867         26,380          4,234 
  Short-term derivative assets         14,777          6,176            991 
  Assets held for sale                 27,794         40,533          6,506 
  Amounts due from related                                                  
   parties                             13,980         40,008          6,422 
                                -------------  -------------  ------------- 
Total current assets                3,215,695      3,310,259        531,333 
                                -------------  -------------  ------------- 
                                                                            
Non-current assets:                                                         
  Property, plant and                                                       
   equipment, net                     447,296        465,554         74,727 
  Investment under equity                                                   
   method                              63,304         17,669          2,836 
  Intangible assets, net              371,825         46,442          7,454 
  Goodwill      
                      893,009        903,358        144,999 
  Non-current prepayments              40,165          1,625            261 
  Deferred tax assets                  74,350         83,395         13,386 
  Other assets, net                   114,162        157,690         25,311 
                                -------------  -------------  ------------- 
Total non-current assets            2,004,111      1,675,733        268,974 
                                -------------  -------------  ------------- 
Total assets                        5,219,806      4,985,992        800,307 
                                =============  =============  ============= 
                                                                            
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Short-term bank borrowings,                                               
   and current portion of long-                                             
   term bank borrowings               592,661        672,481        107,941 
  Accounts payable                    845,005      1,015,104        162,935 
  Accrued expenses and other                                                
   liabilities                        344,094        287,383         46,128 
  Short-term derivative                                                     
   liabilities                          7,310          2,352            378 
  Amounts due to related                                                    
   parties                              4,520         29,181          4,684 
                                -------------  -------------  ------------- 
Total current liabilities           1,793,590      2,006,501        322,066 
                                -------------  -------------  ------------- 
                                                                            
Non-current liabilities:                                                    
  Long-term bank borrowings,                                                
   net of current portion             683,456        552,223         88,638 
  Other long-term liabilities         159,656        157,216         25,235 
                                -------------  -------------  ------------- 
Total non-current liabilities         843,112        709,439        113,873 
                                -------------  -------------  ------------- 
Total liabilities                   2,636,702      2,715,940        435,939 
                                =============  =============  ============= 
                                                                            
Equity:                                                                     
  Ordinary shares                           -              -              - 
  Additional paid-in capital        2,275,099      2,275,962        365,317 
  Statutory reserves                      834          1,306            210 
  Accumulated other                                                         
   comprehensive loss                 (98,678)      (103,075)       (16,545)
  Accumulated deficit                (728,240)    (1,099,742)      (176,521)
                                -------------  -------------  ------------- 
  Equity of the Company             1,449,015      1,074,451        172,461 
  Non-controlling interest          1,134,089      1,195,601        191,907 
                                -------------  -------------  ------------- 
Total equity                        2,583,104      2,270,052        364,368 
                                =============  =============  ============= 
Total liabilities and equity        5,219,806      4,985,992        800,307 
                                =============  =============  ============= 

 
Note: The information contained in the condensed consolidated balance
sheet as of June 30, 2012 is derived from the Company's audited
financial statements included in the annual report on Form 20-F. 
Catherine Leung
+85227489390
+85290943719
catherine.leung@agriacorp.com 
 
 
Press spacebar to pause and continue. Press esc to stop.