Sinofert Announces 2013 Annual Results

HONG KONG, March 27, 2014 /PRNewswire/ --

2013 Annual Results Highlights:

• Sales volume decreased 5.02% year-on-year to 16.28 million tonnes.
• Turnover declined 15.70% year-on-year to RMB34.722 billion.
• Loss attributable to shareholders of the Company was RMB476 million.
• By implementing the strategy of "broadening revenue sources and cutting expenditures, reducing costs and improving efficiency, reinforcing risk control", the Group kept various financial indicators, including cash flow from operating activities, current ratio and capital structure, in good condition.

Sinofert Holdings Limited ("Sinofert" or the "Company") (stock code: 00297) today announced the annual results of the Company and its subsidiaries (the "Group") for the twelve months ended 31 December 2013 (the "Period").

During the Period, the overcapacity problems of fertilizer industry aggravated and the market remained sluggish. Amidst such adverse operating environment, sales volume of the Group decreased 5.02% year-on-year to 16.28 million tonnes. Turnover declined 15.70% year-on-year to RMB34.722 billion. Gross profit saw a year-on-year decrease of 46.19% to RMB1.279 billion.

The Company recorded a loss of RMB125 million in 2013 due to lower fertilizer selling prices and increased logistics costs, which caused a loss of RMB125 million. It was also because the Company expected that there might not be sufficient taxable profit available in the future to offset the tax losses carried forward from previous years which were due to expire, thus reversed deferred tax assets of RMB351 million recognized in previous years in accordance with the applicable accounting principles. Basic loss per shares for 2013 was RMB0.0678.

Various financial indicators remained at healthy levels

In the face of difficulties, the Group adhered to the business strategy of "broadening revenue sources and cutting expenditures, reducing costs and improving efficiency, reinforcing risk control." It implemented a series of measures to reinforce "internal risk control, financial management, centralized procurement, quality assurance, logistics management, project management and lean management." With these measures, a number of its financial indicators, including cash flow from operating activities, current ratio and capital structure, were maintained in good condition. Besides, the Group strengthened its market leadership as the largest fertilizer distributor in China, while maintaining a good strategic partnership with international potash fertilizer suppliers and achieving breakthroughs in the development of technologically advanced products for marketing.

In 2013, the Group achieved turnover of RMB7.465 billion from the sale of potash fertilizer, representing a decrease of 23.30% year-on-year. Turnover of nitrogen fertilizer and compound fertilizer was RMB12.475 billion and RMB5.451 billion, respectively, down 11.83% and 11.91% from a year ago. Turnover of phosphate fertilizer reduced 15.42% year-on-year to RMB7.936 billion. Meanwhile, turnover of feed-grade phosphate grew 15.61% year-on-year to RMB627 million.

As to potash fertilizer business, the Group successfully concluded the potash supply agreement for the first half of 2014 at very competitive prices, laying a concrete foundation for its potash fertilizer operation this year. Furthermore, it strengthened the channel marketing of agricultural potash so as to increase customer loyalty. As for nitrogen fertilizer operation, the Group retained its leading market share in domestic market and forged closer partnership with key suppliers by entering into annual strategic cooperation agreements with them. For phosphate operation, the Group reinforced the management of MAP and DAP suppliers and took measures to enhance the integration of production and sales and optimize sales channels in order to increase its brand influence and customer loyalty. As to compound fertilizer business, the Group pushed for consolidated management of its manufacturing enterprises and subsidiaries in five provinces of Northern China to reduce channel duplication and enhance their operating efficiency. Moreover, it continued to improve product mix and hence increased sales volume through product differentiation. For feed-grade phosphate business, Sinochem Yunlong increased the utilization rate of low-grade phosphate mines and adopted diversified logistics and delivery channels to lower transportation costs, while strengthening domestic sales force to better serve customers.

Distribution network optimization, capacity expansion and resources acquisition

During the Period, the Group further optimized its distribution network to boost profitability, with 240 distribution centers were optimized last year. As of the end of 2013, the number of distribution centers was more than 2,000. Meanwhile, the Group further strengthened its professional team, enhanced the marketing capability of its sales force and actively expanded its customer base.

The Group carried out a series of measures to expand the production capacity of manufacturing enterprises it controlled or invested, including the use of advanced production technology, lean management, technological upgrades and innovation. As a result, their capacity increased to over 12 million tonnes as at the end of 2013.

To capture opportunities arising from the market ebb, the Group stepped up efforts to identify targets around the world for resources acquisition. It closely monitored targets with upstream resources such as coal, natural gas, phosphate mines, and potash mines both within China and overseas. Moreover, it has put in place a professional team for project negotiations.

Drive strategic transformation for sustainable business development

Looking ahead, Mr. Wang Hong Jun, Chief Executive Officer of Sinofert, said, "In 2014, the market imbalance of fertilizer industry will remain evident. Operating costs are expected to go up due to rising transportation costs. Nevertheless, with its commitment to securing food safety in the country, speeding up the development of new agricultural management system, promoting large-scale agricultural production, and management modernization, the government will continue to attach great importance to agricultural development and put in resources for this sake. The supportive government policy lays a solid foundation for the sustainable development of domestic fertilizer sector."

"While reinforcing our competitive edges in trading business, the Group will exercise stringent risk management, play to full potential of our distribution network and strive hard to develop stellar products. In addition, we will increase the proportion of sales of products for distribution and technologically advanced products, drive transformation in marketing strategy. In order to enhance our competitiveness in the business segments we operate, the Group will carry out various cost reduction and efficiency enhancement measures and promote technological innovation. While accelerating the development of existing resources, we will seize opportunities at the market trough and prudently identify suitable targets for acquisitions. All these measures enable us to promote the integration of resources and fertilizer operations, the integration of fertilizer and chemical operations, the integration of production and marketing, the integration of product and services, therefore creating a sustainable development and operating models for our core fertilizer business. They help us to realize persistent development and deliver greater investment value for shareholders."

Background of Sinofert Holdings Limited

Sinofert Holdings Limited is the largest fertilizer distributor, the largest supplier of imported fertilizers and one of the largest fertilizer manufacturers in China. Based on its distribution services, it integrates production, supply, and sales to achieve synergies between different operations. The Company produces and distributes nitrogen, phosphate, potash and compound fertilizers, offering customers the widest range of fertilizer products. It owns and operates the country's largest fertilizer distribution and sales network and a comprehensive agrichemical services system. Moreover, it forges strategic alliances with major international suppliers for exclusive distribution of their products in China. As one of China's leading phosphate resource owners, the Company is also the largest feedstuff phosphate manufacturer in Asia. Sinofert is a flagship company of Sinochem Corporation specializing in fertilizer operations. Sinochem Corporation was established in 1950 and has been named one of the Fortune Global 500 for 23 consecutive years. Its ranking in 2013 was 119th.

This press release is distributed by PRChina Limited on behalf of Sinofert Holdings Limited.

Investor and media enquiries:

David Shiu / Karl Cheung / Henry Chik
PRChina Limited
Tel: (852) 2522 1838 / 2522 1368 / 2521 2823
Fax: (852) 2521 9955
E-mail: [email protected] / [email protected] / [email protected]

SOURCE Sinofert Holdings Limited

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