Table of Contents
I Financial Highlights for 1H 2004/2005FY
II Market and Business Review
III Market and Business Outlook
Appendix: Financial Details
Chaoda Modern Agriculture 1
超大現代農業
Chaoda Modern Agriculture
超大现代农业
Financial Highlights for 1H 2004/2005FY
(For the period ended 31 December 2004)
Chaoda Modern Agriculture 2
超大現代農業
2005FY Interim Results Summary
Significant Increase in Sales by 23% and Net Profit by 26% (before exceptional
item) and 64% (after exceptional item)
1H 2005FY 1H 2004FY Change
RMB mn RMB mn %
Sales 1,053 858 23
EBITDA* 555 456 22
Profit before M.I. & Taxation* 510 403 27
Profit attributable to shareholders
509 403 26
- Before exceptional item
Exceptional item : Gain arising from
150 - N/A
adoption of SSAP36
Profit attributable to shareholders
659 403 64
- After exceptional item
Earning per share – before exceptional item
- Basic RMB 21.7 cents RMB 19.9 cents 9
- Diluted RMB 21.3 cents RMB 19.7 cents 8
Earning per share – after exceptional item
- Basic RMB 28.1 cents RMB 19.9 cents 41
- Diluted RMB 27.6 cents RMB 19.7 cents 40
* : Excluding exceptional item
Chaoda Modern Agriculture 3
超大現代農業
Sales and Gross Margins
Core business of vegetables and fruits accounted for 93% of total business
with a gross margin of 69%
Segment
Sales (RMB mn) Change Gross Margin
Breakdown
1H 2005FY 1H 2004FY % 1H 2005FY 1H 2004FY
Crops 982 774 27 69% 69%
Livestock 22 20 10 66% 78%
Supermarkets 49 64 (23) 8% 10%
Total 1,053 858 23 66% 65%
Chaoda Modern Agriculture 4
超大現代農業
Main Profitability Benchmarks Increased by more
than 20% with Healthy Margins
Profits and Margins 1H 2005FY 1H 2004FY Change
RMB mn RMB mn %
EBITDA* 555 456 22
EBITDA margin 53% 53%
Depreciation & amortisation 70 58 21
EBIT* 486 398 22
EBIT margin 46% 46%
Net profit* 509 403 26
Net profit margin 48% 47%
* : Excluding exceptional item for current period 31 Dec 2004
Chaoda Modern Agriculture 5
超大現代農業
Cash Flow Summary
High capital investment to gain market share
Cash Flow Summary 1H 2005FY 1H 2004FY Change
RMB mn RMB mn %
Cash & cash equivalents at 1 July 944 743 27
Cash generated from operations 587 401 46
Net cash used in investing activities (686) (375) 83
Free cash flow (99) 26 (381)
Net cash inflow/(used) from financing activities (37) (352) (89)
Cash & cash equivalents at 31 Dec 808 417 94
Chaoda Modern Agriculture 6
超大現代農業
Balance Sheet At-A-Glance
31/12/2004 30/6/2004 Change
RMB mn RMB mn %
Fixed assets 1,460 1,426 2.4
Construction-in-progress 408 409 -
Long-term prepaid rentals 1,447 1,138 27
Biological assets 279 - N/A
Interests in associates 298 272 10
Other long-term assets 156 163 (4)
Net current assets 1,061 1,238 (14)
Net assets 5,109 4,646 10
Shareholders’ funds 5,108 4,644 10
Minority interests 1 2 (56)
Chaoda Modern Agriculture 7
超大現代農業
Turnover and Profit Trends
Turnover EBITDA
RMB mn RMB mn 983
1,862
Interim 2000 1000
1,485 776
Annual 1500
800
1,053 555*
858 600 456
1000 651 351
400
500 200
0 0
2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005
Profit attributable to shareholders Shareholders' Funds
RMB mn
RMB mn 6,000 5,108
904** 4,644
1000 5,000
725 3,336
800 4,000
509* 2,896
600 2,445
3,000
403
400 273 2,000
200 1,000
0 0
2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005
* : Excluding exceptional gain from adoption of SSAP36
** : Before written back of tax provision in prior years
Chaoda Modern Agriculture 8
超大現代農業
Turnover by Segment
1H 2005FY
Superm arkets
5% Livestock
Rice 2%
6%
Fruits
8%
k
Vegetables
79%
2004FY Supermarkets
7% Livestock
1H 2004FY
Rice
Fruits 1% 2% Superm arkets
6% Rice 8%
Fruits
2% Livestock
8%
2%
k
Vegetables
k
84% Vegetables
80%
Chaoda Modern Agriculture 9
超大現代農業
Turnover by Channel
1H 2005FY
CROPS ONLY Export
30.5%
Retail
Wholesale
0.9%
61.5%
Institutional
7.1%
2004FY
Export
1H 2004FY
31.2% Export
31.5%
Retail Wholesale Retail
1.3% 63.2% Wholesale
1.3%
63.6%
Institutional
Institutional
4.3%
3.6%
Chaoda Modern Agriculture 10
超大現代農業
Production Areas and Volume
Total Production Base Area
Weighted Av Production Area for Crops mu
mu 137,738
150,000 200,000 171,889
Interim 111,835 156,439
103,229 140,487
95,581 97,678 150,000 130,387
Annual
100,000 102,185
100,000
50,000
50,000
0 0
2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005
Tonne Sales Volume of Crops Yield per Mu Average Sales Unit Price per Kg
'000 Tonne
712 RMB
800 7.00 6.11 6.37
700 597 2.45 2.42
6.00 2.41
600 2.38
2.4
5.00
500 408
4.00 3.10 2.96 2.35
400 320 2.85 2.28
273 2.27
3.00 2.3
300
200 2.00 2.25
100 1.00 2.2
0 0.00 2.15
2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005
Chaoda Modern Agriculture 11
超大現代農業
Expense Ratios
Total Oper. Exp as % of Sales Depre. & Amort. as % of Sales
% % 6.71 6.78 6.61
25 21.0 21.6 21.4 21.3 7 6.05
Interim 19.4 5.38
20 6
Annual
5
15
4
10 3
2
5
1
0 0
2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005
Selling & Distribution Exp as of Sales General & Adm Exp as % of Sales
% %
12 10 .6 8 7.0
9 .4 9 .4 9. 7 9 .9
7 6.0
10 5.6 5.5
6 4.9
8
5
6 4
4 3
2
2
1
0 0
2 00 2/ 2 00 3 2 00 3/ 2 00 4 20 0 4/ 20 0 5 2002/2003 2003/2004 2004/2005
Chaoda Modern Agriculture 12
超大現代農業
Profit Margins and ROE
Gross Margin EBITDA Margin
69
% 67 65 66 66 %
Interim 70 70
54 53 53 53*
60 60 52
Annual
50 50
40 40
30 30
20 20
10 10
0 0
2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005
Net Margin Return on Equity (ROE)
% %
50 49 49** 40
48*
47 35
48
30 25
46 20**
25
44 20
42 11 12
15 10*
42
10
40 5
38 0
2002/2003 2003/2004 2004/2005 2002/2003 2003/2004 2004/2005
* : Excluding exceptional gain from adoption of SSAP36
** : Before written back of tax provision in prior years
Chaoda Modern Agriculture 13
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Chaoda Modern Agriculture
超大现代农业
Market and Business Review
Chaoda Modern Agriculture 14
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Review of China Vegetable Market
In 2004, the total area of vegetable production in China was about 265 million
mu, a decrease of 2% or 4.35 million mu as compared to the same period last
year
– The main reason for the decrease was the shift to non-vegetable cultivation
(grain, cotton and others) after further incentives was granted by the
government
In 2H 2004, as a result of floods in some provinces and the increase in
transportation costs, the average selling price of vegetables has increased,
particularly for the premium vegetables. The prices for general low-end
vegetables have, on the other hand, decreased
China’s vegetable exports maintained high growth:
– Total sales volume increased by 8.9% to 6.02 million tonnes
– Sales in value increased by 23.7% to US$3.8 billion
* Source：Industry report by the Ministry of Agriculture
Chaoda Modern Agriculture 15
超大現代農業
Chaoda’s Business Maintained Strong
Growth Momentum
During the reporting period, Chaoda’s management has successfully
implemented the development strategies and plans. The increase in production
capacity has exceeded the plan with satisfactory operating results:
– Turnover for crops up 27% to RMB 982 million
– Sales volume up 27.5% to 408,000 tonnes
The weighted average cultivation area for crops reached 137,738 mu, an
increase of 33% over the same period last year
– During the period, the Company has added 21,500 mu land for crops in
the following production bases:
• 10,000 mu in Zhangzhou, Fujian
• 8,000 mu in Yangzhou, Jiangsu
• 3,500 mu in Zhangbei, Beijing/Hebei
Chaoda Modern Agriculture 16
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Chaoda Modern Agriculture
超大现代农业
Market and Business Outlook
Chaoda Modern Agriculture 17
超大現代農業
Outlook of the China Agricultural Market
The Chinese government continued to provide supportive policies and benefits to
the agricultural sector in light of the “Three Rural Problems”, these include:
– Continued favorable tax and credit policies
– More incentives to invest in agricultural infrastructure
– Farmers continued to be entitled the land use rights for a long term
Value of quality farmland will appreciate due to limited supply
Outlook of the vegetable market in China
– Area of vegetable production will be stable with gradual increase
– Increased demand for premium vegetables
– Production of green and organic vegetables will gradually increase
Chaoda Modern Agriculture 18
超大現代農業
Outlook of Chaoda’s Business
Chaoda’s bond issue in February 2005 raised US$220 million. The funds of the
bonds will accelerate the Company’s land expansion plan
Chaoda will leverage its first mover’s position and market know-how and intends
to invest heavily to gain market share so as to solidify its leadership position in
China’s agriculture industry
– Expand our production base by 20-25% annually over the next 3-5 years.
The crop area is expected to exceed 300,000 mu in the next few years
– Key regions for expansion are Zhangzhou in Fujian, Beijing and its
surrounding area, Jiangsu and Hubei
Strengthen the Company’s competitiveness in the mid and downstream
operation and secure long term institutional customers, such as supermarket
chains and export clients
– Processing facilities for vegetables and fruits
– Logistics and supply chain systems
Chaoda Modern Agriculture 19
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Chaoda Modern Agriculture
超大现代农业
Appendix：Financial Details
Chaoda Modern Agriculture 20
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Consolidated Profit and Loss Account
(Unaudited) (Unaudited)
[RMB’ mn] 1H 2005 1H 2004 % Change
Turnover 1,053 858 23%
Cost of sales (359) (298) 20%
Gross profit 694 560 24%
Operating expenses (205) (159) 29%
Operating profit 489 401 22%
Finance cost (4) (8) (46%)
Share of profit from Asso. Co. 25 10 150%
Profit before tax 510 403 27%
Taxation – Asso. Co. (2) (1) 100%
Profit after tax 508 402 26%
Minority interests 1 1 -
Profit attributable to shareholders
-before exceptional item 509 403 26%
Exceptional item : Gain arising from
adoption of SSAP36 150 - N/A
Profit attributable to shareholders
-after exceptional item 659 403 64%
EPS (before exceptional item)-Basic RMB 0.217 RMB 0.199 9%
-Diluted RMB 0.213 RMB 0.197 8%
EPS (after exceptional item)-Basic RMB 0.281 RMB 0.199 41%
-Diluted RMB 0.276 RMB 0.197 40%
Chaoda Modern Agriculture 21
超大現代農業
Statement of Net Asset
(Unaudited) (Audited) % Change
[RMB’ mn] 31 Dec 2004 30 JUN 2004
Fixed assets 1,460 1,426 2%
Construction-in-progress 408 409 -
L/T prepaid rentals 1,447 1,138 27%
Biological assets 279 - N/A
Computer software development cost 10 20 (50%)
Deferred development costs 75 75 -
Land use rights 23 23 -
Deferred expenditure 41 43 (6%)
Other L/ T deposits 7 2 226%
Interests in associates 298 272 10%
Current assets
Biological assets 212 - N/A
Inventories 20 126 (84%)
Trade receivables 90 60 52%
Other receivables, deposits & prepayments 199 207 (4%)
Cash & bank balances 808 944 (14%)
Current liabilities
Amount due to a related company 10 7 35%
Trade payables, other payables & accruals 61 53 14%
Bank loans - secured 197 39 411%
NET ASSETS 5,109 4,646 10%
Chaoda Modern Agriculture 22
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Sales Analysis
1H 2005 1H 2004
% %
BY SEGMENT
Crops
Vegetables 79 80
Fruits 8 8
Rice 6 2
Supermarkets 5 8
Livestock 2 2
100 100
BY CHANNEL (for Crops only)
Domestic
Wholesale 61.5 63.6
Institutional sale 7.1 3.6
Retail sale 0.9 1.3
69.5 68.5
Export 30.5 31.5
100.0 100.0
Chaoda Modern Agriculture 23
超大現代農業
Production Analysis (Crops Only)
1H 2005 1H 2004 % Change
OUTPUT [Tonnes ’ 000]
Vegetables 347 281 23
Fruits 31 26 19
Rice 30 13 130
408 320 28
Total Production Base Area [mu] 171,889 140,487 22
Total Production Base Area [ha] 11,459 9,366 22
Weighted Av. Production Area [mu] 137,738 103,229 33
Weighted Av. Production Area [ha] 9,183 6,892 33
Yield per mu [Tonnes] 2.96 3.10 (5)
Harvest ratio 1.59 1.73 (8)
Yield per harvest [Tonnes per mu] 1.86 1.79 4
Av. Sales per kg [RMB] 2.41 2.42 -
No. of species 150+ 150+ -
No. of production bases 33 36 (8)
No. of provinces & municipal cities covered 11 13 (15)
Chaoda Modern Agriculture 24
超大現代農業
Key Financial Measures
1H 2005 1H 2004
MARGINS & EXP. AS % OF TURNOVER
Gross margin 66% 65%
Pre-tax profit margin* 48% 47%
Net margin – before exceptional item 48% 47%
Net margin – after exceptional item 63% 47%
Selling & distribution exp TO turnover 11% 10%
General & administrative exp TO turnover 5% 6%
Research expenses TO turnover 3% 2%
FINANCIAL RATIOS
Inventory turnover period 10 days 11 days
Accounts receivable turnover 16 days 14 days
Current ratio 5.0 4.2
Gearing ratio (Total bank loans TO total assets) 3.7% 1.6%
*1H2005 : Excluding exceptional gain from adoption of SSAP36
Chaoda Modern Agriculture 25
超大現代農業
Production Area by Location
[15 mu = 1 hectare]
Weighted Average for Crops Only Total Production Base Area
1H 2005 1H 2004 1H 2005 1H 2004
Provinces
Fujian 62,415 40,198 82,149 67,009
Jiangsu 21,333 15,000 24,000 15,000
Shaanxi 17,500 18,300 17,500 18,300
Guangdong 4,000 4,000 4,000 4,000
Shandong 3,000 3,000 3,000 3,580
Liaoning 1,100 1,100 1,100 1,100
Zhejiang 2,000 2,000 2,000 2,000
Hubei 16,000 2,250 16,000 2,500
Jiangxi - - 9,750 10,000
Hainan - 7,233 - 7,600
Municipal Cities
Shanghai 890 3,148 890 2,398
Beijing 5,500 3,000 7,500 3,000
Tianjin 4,000 4,000 4,000 4,000
TOTAL(mu) 137,738 103,229 171,889 140,487
Chaoda Modern Agriculture 26
超大現代農業
Production Area by Business Line
As at 31 December 2004, Chaoda had 33 production bases in 11 provinces in
China, including 24 crops land, 2 tea gardens, 7 fruit gardens and 2 plots of
vacant land in mountain area
Total production area amounted to 171,889 mu (11,459 Hectares)
Percentage of total area
Area (mu) Growth rate
(%)
1H 2005 1H 2004 1H 2005 1H 2004 %
Crops land 144,571 112,679 72% 68% 28%
Tea garden 12,050 11,710 6% 7% 3%
Fruit garden 15,268 16,098 8% 10% (5%)
Total production
171,889 140,487 85% 85% 22%
area
Mountain area 29,588 24,928 15% 15% 19%
Total land area 201,477 165,415 100% 100% 22%
Chaoda Modern Agriculture 27
超大現代農業
Top Five Products Analysis
By Sales Value By Sales Volume
1. Cabbage Cabbage
2. Rice Rice
3. Broccoli Chinese Cabbage
4. Cauliflower Cauliflower
5. Sweet Corn Okra
Chaoda Modern Agriculture 28
超大現代農業
Production Base Distribution
As at 31 December 2004
Liaoning
Beijing (1,100mu)
(7,500mu)
Tianjin
(4,000mu)
Shandong
(3,000mu)
Jiangsu
Shaanxi
(24,000mu)
(17,500mu)
Hubei Shanghai
(16,000mu) (890mu)
Zhejiang
(2,000mu)
Jiangxi
Fujian
Leased by the Group (9,750mu)
(82,149mu)
(Total no. of production base = 33)
Leased by the Associated Company Guangdong
Guangxi (4,000mu)
(47,000mu)
Hong Kong
Chaoda Modern Agriculture 29
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