China Modern Net Income Increases 149% and Announces $0.31 EPS for the First Nine Months of Fiscal 2012
(firmenpresse) - HARBIN, CHINA -- (Marketwire) -- 05/15/12 -- China Modern Agricultural Information Inc. ("the Company," "China Modern") (OTCBB: CMCI), a high-tech livestock company specializing in the breeding of cows and calves, the production and sale of milk and the sale of organic fertilizer, today announced the financial results for the 2012 fiscal third quarter and first nine months ended March 31st, 2012. Net income increased 149% to $14.0 million or $0.31 per basic and diluted earnings per share.
Mr. Youliang Wang, Chief Executive Officer of China Modern Agricultural Information, commented, "China Modern has been engaged in the breeding of livestock and in the production and sale of fresh milk since January 2005. Driven by the strong demand of raw milk in China, we saw the price of raw milk has kept rising. During the quarter ended March 31, 2012, the sales price of milk was increased by approximate 15% to approximate USD 0.50 per kg comparing with prior quarter. To offset the increasing cost of animal feed, the management team adopted a new business model since June 2011 which has dramatically decreased the operating costs and improved the profit margins. Our acquisition of Yulong Cattle in November 2011 further improved our capacity of milk production, which is an important driver for our revenue growth."
Mr. Wang, continued, "The demand for raw milk in China will stay strong in the next several years, which will be a key driver for our business growth. Combined with our new operating activities in place, I am confident China Modern will keep delivering strong both top-line and bottom-line growth."
Revenue for the 2012 fiscal third quarter ended March 31, 2012 totaled $9.4 million, an increase of 38% as compared to $6.8 million for the same period the prior year. The three months revenue consisted of $6.4 million from milk sales and $3.0 million from sales commission. The increase in revenue was primarily due to the acquisition of Yulong Cattle in prior quarter and sales commission from farmer, while the revenue stream in the same quarter last year only comprised sales from nature milk, although the change of our business operating activities decreased the overall number of milk cows. The average number of milk cows for the quarter ended March 31, 2012 decreased from 10,762 to 5,354 comparing the quarter ended March 31, 2011. In contrast to the decrease in number of milk cows, the revenue per milk cow per quarter increased from $632 for the three months ended March 31, 2011 to $1,200 for the three months ended March 31, 2012, an increase by $568 or 90% due to higher sales price of raw milk, disposing of inferior cows and younger milk cows. The decrease in sales of natural milk was partially offset by sales commission from local farmers of $3.0 million for the three months ended March 31, 2012 and has become one of main revenue streams of the Company.
Cost of goods sold for the 2012 fiscal third quarter ended March 31, 2012 was reduced to $3.36 million, which represented a decrease of $66,558 or 2% compared to $3.43 million for the same period of 2011. Cost of goods sold consists of feed, feeding expenses, and other working capital. Cost of goods sold as a percentage of sales decreased mostly due to the reduced direct costs in food for livestock under the new business model. The decrease was primarily due to the decrease in number of adult cows under the new operating activities, which resulted in reduced direct costs especially in feeding food costs because the milk production and distribution are entirely the responsibility of the local farmers.
Gross profit for the 2012 fiscal third quarter ended March 31, 2012 totaled $6.0 million, an increase of 79% compared to $3.4 million for the quarter ended March 31, 2011. Gross profit margin improved to 64% for the 2012 fiscal third quarter as compared to 50% for the same period last fiscal year. The improved gross profit margin was primarily due to the change of the Company's operating activities as the new revenue stream reduced direct total costs especially in feeding food costs. However, the gross profit margin from milk sales decreased from 50% to 47% due to the increase in raw materials and feeding expenses. We believe the price of the raw materials keeps increasing in the future and that is one of the reasons we disposed a large number of adult cows.
Non-operating income consists primarily of interests charged on the outstanding payments from local farmers, government subsidy and loss on disposal of biological properties. For the quarter ended March 31, 2011, the annual interest income was $193,596 charged on the outstanding notes receivable from the farmers, government subsidy was $109,830 and a loss was $9,282 on disposal of biological properties. For the quarter ended March 31, 2011, no non- operating income incurred.
Net income for the fiscal third quarter ended March 31, 2012 totaled $4.6 million, an increase of 133% compared to $2.0 million for the 2011 fiscal third quarter ended March 31, 2011. Earnings per share for the fiscal third quarter was $0.09, based on 50 million shares outstanding versus earnings per share of $0.05 for the 2011 fiscal third quarter, based on 41 million shares outstanding.
Revenue for the 2012 fiscal first nine months ended March 31, 2012 totaled $19.5 million, an increase of 13% as compared to $17.2 million for the same period the prior year. The nine months revenue consisted of $12.8 million from milk sales and $6.7 million from sales commission.
Cost of goods sold for the fiscal first nine months ended March 31, 2012 was reduced to $6.5 million, which represented a decrease of $2.1 million or 25% compared to $8.7 million for the same period of 2011.
Gross profit for the first nine months ended March 31, 2012 totaled $13.0 million, an increase of 52% compared to $8.5 million for the fiscal nine months ended March 31, 2011. Gross profit margin improved to 67% for the 2012 fiscal first nine months as compared to 50% for the same period last fiscal year.
Non-operating income consists of a bargain purchase gain from the acquisition of Yulong Cattle and other non operating income. For the nine months ended March 31, 2012, the bargain purchase gain was $5.7 million which was generated from the acquisition of Yulong Cattle. The other non operating income consists primarily of the annual interest income of $480,854 charged on the outstanding notes receivable from the farmers. The other non-operating income includes a non operating gain of $135,839 from the disposal of biological properties and the governmental subsidy of $109,830.
Net income for the fiscal first nine months ended March 31, 2012 totaled $14.0 million, an increase of 149% compared to $5.7 million for the same period ended March 31, 2011. Earnings per share for the fiscal first nine months was $0.31, based on 45 million shares outstanding versus earnings per share of $0.14 for the 2011 fiscal first nine months, based on 40 million shares outstanding.
As of March 31, 2012, China Modern had approximately $11.5 million in cash as well as net working capital of $18.2 million. As of March 31, 2012, the operating activities provided $8.6 million in net cash, compared to $7.9 million for the same period ended March 31, 2011. Working capital increased by $10.0 million to $18.2 million as of March 31, 2012, as compared to $8.2 million as of June 30, 2011. The net cash provided in the nine months ended March 31, 2012 was much lower than our net income primarily due to the payment of $4.6 million for grassland lease.
Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our 8K/A dated March 31, 2011, and other recent filings. These filings are available at .
Wang Youliang
CEO
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Datum: 15.05.2012 - 05:58 Uhr
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