EX-99.1 2 d310262dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

  

HONG KONG, February 29, 2012 - Le Gaga Holdings Limited (NASDAQ: GAGA) (“Le Gaga” or “the Company”), one of the largest greenhouse vegetable producers in China as measured by the area of greenhouse coverage and one of the fastest growing major vegetable producers in China, today announced its financial results for the third fiscal quarter ended December 31, 2011.1

Highlights of the Quarter Ended December 31, 2011

 

   

Revenue increased by 41.0%, from RMB106.9 million for Q3 FY2011 to RMB150.8 million (US$24.0 million) for Q3 FY2012.

 

   

Profit for the period increased by 48.5%, from RMB45.0 million for Q3 FY2011 to RMB66.8 million (US$10.6 million) for Q3 FY2012.

 

   

Adjusted profit for the period2 (non-IFRS measure) increased by 54.4%, from RMB41.8 million for Q3 FY2011 to RMB64.5 million (US$10.2 million) for Q3 FY2012. A reconciliation of the adjusted profit for the period to profit for the period determined in accordance with IFRS was set forth in Appendix V.

 

   

Adjusted EBITDA3 (non-IFRS measure) increased by 56.6%, from RMB54.4 million for Q3 FY2011 to RMB85.1 million (US$13.5 million) for Q3 FY2012. A reconciliation of the adjusted EBITDA to profit for the period determined in accordance with IFRS was set forth in Appendix VI.

 

 

1 

This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2939 to US$1.00, the effective noon buying rate as of December 30, 2011 in The City of New York for cable transfers of RMB as set forth in H.10 weekly statistical release of the Federal Reserve Board.

2 

Defined as profit for the period before the net impact of biological assets fair value adjustment and further adjusted to exclude the effects of non-cash share-based compensation, impairment losses on property, plant and equipment and prepayments and offering expenses charged to the income statement.

3 

Defined as EBITDA (earnings before net finance income (costs), income tax expense, depreciation and amortization), as further adjusted to exclude the effects of non-cash share-based compensation, the net impact of biological assets fair value adjustment, impairment losses on property, plant and equipment and prepayments and offering expenses charged to the income statement.

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

   

Basic and diluted earnings per share was RMB2.92 cents (0.46 US cents) and RMB2.91 cents (0.46 US cents), respectively, for Q3 FY2012. Basic and diluted earnings per ADS4 was RMB146.0 cents (23.20 US cents) and RMB145.5 cents (23.12 US cents), respectively, for Q3 FY2012.

 

   

Cash generated from operating activities increased from RMB2.0 million for Q3 FY2011 to RMB51.9 million (US$8.2 million) for Q3 FY2012.

 

   

Revenue-per-mu increased by 25.7% from RMB5,764 for Q3 FY2011 to RMB7,247 for Q3 FY2012.

 

   

Production output increased by 13.1% from 32,318 metric tons for Q3 FY2011 to 36,536 metric tons for Q3 FY2012.

 

   

Our product mix shifted further towards solanaceous vegetables. Solanaceous vegetables sold to third parties in the PRC mainland increased from 47% for Q3 FY2011 to 69% for Q3 FY2012 of total revenue.

 

   

Average selling price (ASP) of vegetables sold to third parties in the PRC mainland increased from 3.11 RMB/kg for Q3 FY2011 to 4.02 RMB/kg for Q3 FY2012.

 

   

Total arable land as of December 31, 2011 was 25,618 mu (1,708 hectare), representing an increase of 3,266 mu compared to September 30, 2011, and an increase of 5,571 mu compared to December 31, 2010.

 

   

Total greenhouse area as of December 31, 2011 was 8,459 mu (564 hectare), representing an increase of 165 mu compared to September 30, 2011 and an increase of 3,120 mu compared to December 31, 2010.

 

 

4 

American depositary shares, which are traded on the NASDAQ Global Select Market, each represents 50 ordinary shares of the Company.

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Mr. Shing Yung Ma, the Chairman and CEO of Le Gaga, commented, “We are pleased with our performance in the third fiscal quarter. The third quarter demonstrates the competitive advantage of our greenhouse business model as we achieved a significant increase in average selling prices. Our greenhouses lead to improved quality of our products and allow us to upgrade our product mix as we are able to grow more solanaceous vegetables, including more specialty varieties. Average selling prices further benefitted from enhanced cultivation know-how leading to better quality and market inflation. Our greenhouses allowed us to capture the high prices at the end of the quarter, which were a result of the cold weather in South China, as our crops are better protected compared to open field farming. Another factor contributing to higher selling prices is our focus on packaging for developing a brand name in the wholesale markets and among our institutional customers. Going forward, we will continue to focus on high quality off-season products and further upgrade our product mix, in particular in the solanaceous product category, in which we plan to further expand production of high-end and specialty tomato and pepper varieties.”

Mr. Auke Cnossen, the CFO of Le Gaga, added, “In the third quarter we see that more greenhouses resulted in strong improvement in key performance indicators, i.e. revenue per mu and adjusted profit. Although our increased seasonality resulted in lower margins in the second quarter, which is our low season, we achieved much higher margins in the third quarter. We have generated continued strong operating cash flow, particularly in light of a significant volume of sales in December for which collection of cash were not fully reflected in the third quarter operating cashflow. We have added additional farmland during the third quarter and have started land improvement and greenhouse construction on these farmlands. Our new farm in Putian, Fujian Province, is fully in production and is already showing a productivity level comparable to our other farms, which is a testimony to our effective training and development of farm managers and workers.”

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Summary of Operating Data

 

     As of December 31, 2010   As of September 30, 2011   As of December 31, 2011
     Operating   Under
construction

or Reserved
  Total   Operating   Under
construction

or Reserved
  Total   Operating   Under
construction or
Reserved
  Total

Arable land (1)

   17,952 mu   2,095 mu   20,047 mu   20,852 mu   1,500 mu   22,352 mu   20,013 mu   5,605 mu   25,618 mu
   (1,197 hectare)   (140 hectare)   (1,337 hectare)   (1,390 hectare)   (100 hectare)   (1,490 hectare)   (1,334 hectare)   (374 hectare)   (1,708 hectare)

Greenhouse area (2)

   5,339 mu   —     5,339 mu   8,294 mu   —     8,294 mu   8,459 mu   —     8,459 mu
   (356 hectare)   —     (356 hectare)   (553 hectare)   —     (553 hectare)   (564 hectare)   —     (564 hectare)

Greenhouse area as a percentage of total arable land

   29.7%   —     26.6%   39.8%   —     37.1%   42.3%   —     33.0%

 

     Three Months Ended December 31,      Nine Months Ended December 31,  
     2010      2011      2010      2011  

Total production output (metric tons)

     32,318         36,536         93,649         114,122   

Production yield (metric tons per mu)

     1.7         1.8         5.0         5.5   

Revenue-per-mu (RMB) (3)

     5,764         7,247         15,229         18,306   

 

(1) Total arable land area excludes land that we used on a temporary basis.

Land under construction or reserved includes (i) newly leased land which has not yet been put into production and is either under construction or in reserve for future development, and (ii) land which we plan to return and is not in operation.

As of December 31, 2011, we had 3,266 mu of newly leased land and 2,242 mu of land which we plan to return.

 

(2) As of December 31, 2010, there were 929 mu bamboo-made greenhouses and 4,410 mu steel-made greenhouses.

As of September 30, 2011, there were 710 mu bamboo-made greenhouses and 7,584 mu steel-made greenhouses.

As of December 31, 2011, there were 630 mu bamboo-made greenhouses and 7,829 mu steel-made greenhouses.

 

(3) For the purposes of calculating production yield and revenue-per-mu, average land area within each reporting period also includes land that we used on a temporary basis to generate the production output and revenue.

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Financial Results for the Three Months Ended December 31, 2010 and 2011

Revenue increased by RMB43.9 million, or 41.0%, from RMB106.9 million for Q3 FY2011 to RMB150.8 million (US$24.0 million) for Q3 FY2012. The increase in revenue was primarily attributable to (1) an increase in revenue-per-mu from RMB5,764 for Q3 FY2011 to RMB7,247 (US$1,151) for Q3 FY2012, which was in turn primarily due to an increase in the average selling price of our produce and (2) an increase in average operating land in Q3 FY2012 as compared to Q3 FY2011.

The increase in revenue-per-mu and average selling price for Q3 FY2012 was primarily driven by (1) increased greenhouse coverage, which leads to improved quality of our products and allows us to further improve product mix, (2) enhanced cultivation know-how, and (3) market inflation.

 

     Three Months Ended December 31,      Nine Months Ended December 31,  
     2010      2011      2010      2011  
     Revenue     ASP
(RMB/kg)
     Revenue
(%)
    ASP
(RMB/kg)
     Revenue
(%)
    ASP
(RMB/kg)
     Revenue
(%)
    ASP
(RMB/kg)
 
   (%)                   

PRC revenue5

                   

Solanaceous

     47     3.32         69     4.54         34     3.16         50     3.83   

Leafy

     22     2.82         16     3.41         32     2.57         30     2.58   

Cruciferous

     16     3.03         9     2.71         16     3.10         12     2.62   

Others

     7     3.01         3     3.10         8     2.23         2     3.21   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Sub-total

     92     3.11         97     4.02         90     2.82         94     3.15   

Hong Kong revenue

     8        3        10        6  
  

 

 

      

 

 

      

 

 

      

 

 

   

Total

     100        100        100        100  

We primarily grow solanaceous vegetables (primarily peppers and tomatoes) during the third quarter. Solanaceous vegetables generally have a higher selling price. Due to increased greenhouse coverage, more high quality solanaceous vegetables were harvested in Q3 FY2012 compared to Q3 FY2011. The production volume of leafy, cruciferous and other vegetables declined slightly in Q3 FY2012 compared to Q3 FY2011 as our product mix shifted towards solanaceous products.

 

 

5 

Defined as revenue from sales of respective products in the PRC mainland to external customers

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Cost of inventories sold increased by RMB40.4 million, or 43.5%, from RMB92.9 million for Q3 FY2011 to RMB133.3 million (US$21.2 million) for Q3 FY2012.

Adjusted cost of inventories sold6 (non-IFRS measure) increased by RMB12.4 million, or 37.3%, from RMB33.4 million for Q3 FY2011 to RMB45.8 million (US$7.3 million) for Q3 FY2012. Adjusted cost of inventories sold as a percentage of revenue decreased from 31.2% for Q3 FY2011 to 30.4% for Q3 FY2012, primarily due to the lower variable costs. Increased greenhouse coverage resulted in more efficient use of variable inputs such as seeds, fertilizers and direct labor, partially offset by the increase in depreciation charge, as a percentage of revenue. A reconciliation of adjusted cost of inventories sold to cost of inventories sold determined in accordance with IFRS is set forth in Appendix IV.

 

     Three Months Ended December 31,     Nine Months Ended December 31,  
     2010     2011     2010     2011  
     RMB     RMB     US$     RMB     RMB     US$  
     (In thousands)  

Biological assets fair value adjustment included in cost of inventories sold

     (59,493     (87,444     (13,893     (158,770     (198,080     (31,472

Changes in fair value less costs to sell of biological assets

     77,740        95,423        15,160        199,463        251,037        39,886   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net impact of biological assets fair value adjustment

     18,247        7,979        1,267        40,693        52,957        8,414   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The net impact of the biological assets fair value adjustment represents the net increase or decrease in gain from fair value less costs to sell of crops on our farmland at the end of the reporting period compared to the end of the immediately preceding reporting period.

A net gain of RMB8.0 million was recognized arising from biological assets fair value adjustment for Q3 FY2012, as compared to a net gain of RMB18.2 million recognized for Q3 FY2011.

The net gain of RMB8.0 million for Q3 FY2012 primarily arose from more solanaceous products planted, that had a higher expected selling prices as a seasonal trend, as compared to those products for Q2 FY2012 (the immediately preceding reporting period end), resulting in a positive net impact.

 

 

6 

Defined as cost of inventories sold before biological assets fair value adjustment

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

The smaller positive net impact for Q3 FY2012 compared to that of Q3 FY2011 was primarily due to the change in our plantation methods of solanaceous products, with a larger fair value gain recognized in Q2 for FY2012 compared to FY2011.

Our packing expenses increased by RMB1.2 million, or 15.6%, from RMB7.6 million for Q3 FY2011 to RMB8.8 million (US$1.4 million) for Q3 FY2012, primarily due to an increase of RMB1.2 million in packing materials consumed as a result of the increased production volume of solanaceous products, which require more packaging.

Our land preparation costs increased by RMB2.3 million, or 38.0%, from RMB6.0 million for Q3 FY2011 to RMB8.3 million (US$1.3 million) for Q3 FY2012, which was primarily due to (1) an increase in greenhouse coverage which increased the unit land preparation cost and (2) an increase in the amount of land in reserve or under construction.

Our selling and distribution expenses increased by RMB2.8 million, or 43.2%, from RMB6.4 million for Q3 FY2011 to RMB9.2 million (US$1.5 million) for Q3 FY2012, which was primarily due to an increase of RMB5.1 million in transportation costs, in line with the increase in our revenue, partially offset by a decrease of RMB1.7 million in salary and commission payment as concessionary sales in the Hong Kong business decreased.

Our administrative expenses decreased by RMB9.0 million, or 38.5%, from RMB23.4 million for Q3 FY2011 to RMB14.4 million (US$2.3 million) for Q3 FY2012, primarily due to the RMB8.5 million one-time IPO expenses incurred during Q3 FY2011.

We recorded income tax of RMB2.9 million (US$0.5 million) in Q3 FY2012, which was primarily due to withholding tax incurred in connection with capital gains and the distribution of earnings by the PRC subsidiaries to our offshore holding company.

As a result of the foregoing factors, profit for Q3 FY2012 increased by RMB21.8 million, or 48.5%, from RMB45.0 million for Q3 FY2011 to RMB66.8 million (US$10.6 million) for Q3 FY2012.

Our adjusted profit for the period, increased by RMB22.7 million or 54.4% from RMB41.8 million for Q3 FY2011 to RMB64.5 million (US$10.2 million) for Q3 FY2012.

Our adjusted EBITDA increased by RMB30.7 million, or 56.6%, from RMB54.4 million for Q3 FY2011 to RMB85.1 million (US$13.5 million) for Q3 FY2012.

Basic and diluted earnings per share was RMB2.92 cents (0.46 US cents) and RMB2.91 cents (0.46 US cents), respectively, for Q3 FY2012. Basic and diluted earnings per ADS was RMB146.0 cents (23.20 US cents) and RMB145.5 cents (23.12 US cents), respectively, for Q3 FY2012.

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Our operating cash inflow increased by RMB49.9 million from RMB2.0 million for Q3 FY2011 to RMB51.9 million (US$8.2 million) for Q3 FY2012, primarily due to (1) an increase in our revenue, (2) a decrease in prepayments for land sanitation and pest control projects, (3) the impact of RMB 8.5 million in offering expenses charged to the income statement in Q3 FY2011, and partially offset by (4) a higher accounts receivable balance as of December 31, 2011 as compared to December 31, 2010 due to strong December sales in 2011.

Cash used in investing activities increased by RMB51.0 million, or 103.0%, from RMB49.6 million for Q3 FY2011 to RMB100.6 million (US$16.0 million) for Q3 FY2012. The cash outflow in investing activities of RMB100.6 million for Q3 FY2012 was primarily due to our payment for construction in progress and prepayments for construction works totalling RMB100.0 million which mainly consisted of (1) payment for construction of greenhouses of RMB57.1 million, (2) payment of RMB14.2 million for agricultural infrastructure, and (3) payment for land improvements of RMB27.3 million.

Recent developments

The Company reviews the productivity and efficiency of the utilization of its resources for each of its existing farms on a regular basis. We have decided to dispose farms with a total land area of 2,242 mu during the second fiscal quarter. These farms (1) are either small and thus cannot enjoy the economies of scale we can generate at our larger farms, (2) have less productive bamboo shelters or (3) are less suitable for the current product mix of the Company (solanaceous, leafy and cruciferous products), as we have ceased production of certain products for the export market (primarily low value root crops). Of the 2,242 mu of farm land, we have signed a sales and purchase agreement in early January 2012 with a third party producer to transfer our subsidiary in Shantou, which is located in Guangdong Province, with a total land area of 1,314 mu. We are still in discussion with several interested parties regarding the disposal of the remaining 928 mu of farm land.

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Business Outlook for the fiscal quarter ending March 31, 2012

The Company estimates that its revenue for the fourth fiscal quarter ending March 31, 2012 will be between RMB140 million and RMB150 million (representing a full year revenue of RMB 517 million to RMB 527 million for fiscal year ending March 31, 2012), representing a year over year growth rate of approximately 15% to 24% (representing a full year growth rate of approximately 27 to 30% for the fiscal year ending March 31, 2012). This forecast reflects the Company’s current and preliminary view, which is subject to change.

Conference Call

The Company will host a conference call at 8:00 a.m. ET on February 29, 2011 (9:00 p.m. Hong Kong Time) to review the Company’s financial results and answer questions. You may access the live interactive call via:

 

   

+1 866 549 1292 (U.S. Toll Free)

 

   

+ 1230 020 2112 (China Toll Free)

 

   

+852 3005 2050 (International)

 

   

Pass Code: 534242#

Please dial-in approximately 10 minutes in advance to facilitate an on-time start.

A replay will be available for two weeks after the call and may be accessed via:

 

   

+852 3005 2020

 

   

Passcode: 135415#

A live and archived webcast of the call, as well as a presentation with the Company’s financial results will be available on the Company’s website at www.legaga.com.hk/html/index.php.

About Le Gaga Holdings Limited (Nasdaq:GAGA)

Le Gaga is one of the largest greenhouse vegetable producers in China as measured by the area of greenhouse coverage and one of the fastest growing major vegetable producers in China. The Company sells and markets over 100 varieties of vegetables to wholesalers, institutional customers and supermarkets in China and Hong Kong with a trusted brand among customers. The Company supplies vegetables to supermarkets, such as Walmart in China and Wellcome, ParknShop and Vanguard in Hong Kong.

The Company currently operates farms in the Chinese provinces of Fujian, Guangdong and Hebei. The Company produces and sells high quality vegetables all-year-round leveraging its large-scale greenhouses, proprietary horticultural know-how and comprehensive database.

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Safe Harbor Statement

This press release contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. These forward-looking statements may include, but are not limited to, statements containing words such as “may,” “could,” “would,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “expects,” “intends” and “future” or similar expressions. Among other things, the management’s quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements speak only as of the date of this press release and are subject to change at any time. These forward-looking statements are based upon management’s current expectations and are subject to a number of risks, uncertainties and contingencies, many of which are beyond the Company’s control that may cause actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company’s actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including those described under the heading “Risk Factors” in the Company’s final prospectus, dated October 28, 2010, filed with the Securities and Exchange Commission, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Potential risks and uncertainties include, but are not limited to: the Company’s ability to continue to lease farmland or forestland; the legality or validity of the Company’s leases of agricultural land; risks associated with extreme weather conditions, natural disasters, crops diseases, pests and other natural conditions; fluctuations in market prices and demand for the Company’s products; risks of product contamination and product liability claims as well as negative publicity associated with food safety issues in China; risks of labor shortage and rising labor costs; the Company’s ability to comply with U.S. public accounting reporting requirements, including maintenance of an effective system of internal controls over financial reporting; and the Company’s susceptibility to adverse changes in political, economic and other policies of the Chinese government that could materially harm its business. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Further information regarding risks and uncertainties faced by the Company is included in its filings with the U.S. Securities and Exchange Commission, including its final prospectus, dated October 28, 2010.

Use of Non-IFRS measures

Adjusted cost of inventories sold is defined as cost of inventories sold before biological assets fair value adjustment. We are primarily engaged in agricultural activities of cultivating, processing and distributing vegetables and have therefore adopted International Accounting Standard 41 “Agriculture”, or IAS 41, in accounting for biological assets and agricultural produce. Unlike the historical cost accounting model, IAS 41 requires us to recognize in our income statements the gain or loss arising from the change in fair value less costs to sell of biological assets and agricultural produce for each reporting period. Cost of inventories sold determined under IAS 41 reflects the deemed cost of agricultural produce, which is based on their fair value (less costs to sell) at the point of harvest. Biological assets fair value adjustment is the difference between the deemed cost of the agricultural produce and the plantation expenditure we incurred to cultivate the produce to the point of harvest.

 

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Le Gaga Third Quarter FY 2012 Earnings Release

 

February 29, 2012

 

 

Although an “adjusted” cost of inventories sold excluding these fair value adjustments is a non-IFRS measure, we believe that separate analysis of the cost of inventories sold excluding these fair value adjustments adds clarity to the constituent parts of our cost of inventories sold and provides additional useful information for investors to assess our cost structure. A reconciliation of adjusted cost of inventories sold to IFRS cost of inventories sold was set forth in Appendix IV.

Adjusted profit for the period represents profit for the period before the net impact of biological assets fair value adjustment and further adjusted to exclude the effects of non-cash share-based compensation, offering expenses and impairment losses on property, plant and equipment and prepayments charged to the income statement. We believe that separate analysis of the net impact of the biological assets fair value adjustments, non-cash share-based compensation, offering expenses and impairment losses on property, plant and equipment and prepayments adds clarity to the constituent part of our results of operations and provides additional useful information for investors to assess the operating performance of our business. A reconciliation of adjusted profit for the period was set forth in Appendix V.

Adjusted EBITDA is defined as EBITDA (earnings before net finance income (costs), income tax expense, depreciation and amortization), as further adjusted to exclude the effects of non-cash share-based compensation, the net impact of biological assets fair value adjustment, offering expenses and impairment losses on property, plant and equipment and prepayments charged to the income statement. We believe adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. You should use adjusted EBITDA as a supplemental analytical measure to, and in conjunction with, our IFRS financial data. In addition, we believe that adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of adjusted EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending, which items may vary for different companies for reasons unrelated to overall operating performance. We use these non-IFRS financial measures for planning and forecasting and measuring results against the forecast. Using several measures to evaluate the business allows us and investors to assess our relative performance against our competitors and ultimately monitor our capacity to generate returns for our shareholders. A reconciliation of the adjusted EBITDA to profit for the period was set forth in Appendix VI.

Contact Information

 

For further information, please contact:   
PRChina      
Jane Liu    Henry Chik   
Tel: (852) 2522 1838    Tel: (852) 2522 1368   
Email: jliu@prchina.com.hk    Email: hchik@prchina.com.hk   

 

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Appendix I

Le Gaga Holdings Limited

Unaudited Condensed Consolidated Income Statements

For the three months and nine months ended December 31, 2010 and 2011

 

     Three Months Ended December 31,    Nine Months Ended December 31,  
     2010          2011    2010          2011  
     RMB          RMB          US$          RMB          RMB          US$  
     (In thousands, except per share data)  

Revenue

     106,938           150,797           23,959           285,544           377,225           59,935   

Cost of inventories sold

     (92,864        (133,276        (21,175        (255,951        (332,510        (52,831

Changes in fair value less costs to sell related to

                           

Crops harvested during the period

     16,511           41,284           6,559           126,605           141,538           22,488   

Growing crops on the farmland at the period end

     61,229           54,139           8,602           72,858           109,499           17,398   

Total changes in fair value less costs to sell of biological assets

     77,740           95,423           15,161           199,463           251,037           39,886   

Packing expenses

     (7,644        (8,837        (1,404        (18,395        (22,727        (3,611

Land preparation costs

     (5,978        (8,252        (1,311        (13,597        (26,469        (4,206

Other income

     8           695           110           122           1,595           253   

Research and development expenses

     (1,954        (2,557        (406        (5,267        (6,430        (1,022

Selling and distribution expenses

     (6,419        (9,194        (1,461        (16,183        (22,964        (3,649

Administrative expenses

     (23,353        (14,359        (2,281        (56,354        (43,537        (6,917

Other expenses

     (1,541        (592        (94        (5,157        (8,557        (1,360
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Results from operating activities

     44,933           69,848           11,098           114,225           166,663           26,478   

Finance income

     2,012           2,443           388           3,023           11,266           1,790   

Finance costs

     (1,985        (2,653        (422        (2,190        (8,108        (1,288
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net finance income

     27           (210        (34        833           3,158           502   

Profit before taxation

     44,960           69,638           11,064           115,058           169,821           26,980   

Income tax expense

     —             (2,878        (457        —             (3,135        (498
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Profit for the period

     44,960           66,760           10,607           115,058           166,686           26,482   
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Earnings per ordinary/preferred share (in cents)

                           

Basic

     2.09           2.92           0.46           6.05           7.28           1.16   
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Diluted

     1.99           2.91           0.46           5.90           7.09           1.13   
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Earnings per ADS (in cents)

                           

Basic

     104.50           146.00           23.20           302.50           364.00           57.83   
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Diluted

     99.50           145.50           23.12           295.00           354.50           56.32   
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

12


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Appendix II

Le Gaga Holdings Limited

Unaudited Condensed Consolidated Balance Sheets

As of March 31 and December 31, 2011

 

     March 31, 2011      December 31, 2011  
     RMB      RMB      US$  
     (In thousands)  

Non-current assets

        

Property, plant and equipment

     575,246         660,452         104,935   

Construction in progress

     24,294         76,769         12,197   

Lease prepayments

     2,413         1,277         203   

Long-term deposits and prepayments

     56,991         97,309         15,461   

Biological assets

     6,049         8,293         1,318   

Deferred tax assets

     —           2,188         348   
  

 

 

    

 

 

    

 

 

 

Total non-current assets

     664,993         846,288         134,462   
  

 

 

    

 

 

    

 

 

 

Current assets

        

Biological assets

     73,662         124,004         19,702   

Inventories

     4,608         7,415         1,178   

Trade and other receivables

     63,000         88,139         14,004   

Cash

     598,722         475,199         75,502   

Assets classified as held for sale

     —           20,508         3,258   
  

 

 

    

 

 

    

 

 

 

Total current assets

     739,992         715,265         113,644   
  

 

 

    

 

 

    

 

 

 

Total assets

     1,404,985         1,561,553         248,106   
  

 

 

    

 

 

    

 

 

 

Equity

        

Capital

     687,706         688,733         109,429   

Reserves

     592,041         746,628         118,627   
  

 

 

    

 

 

    

 

 

 

Total equity

     1,279,747         1,435,361         228,056   
  

 

 

    

 

 

    

 

 

 

Non-current liabilities

        

Bank loan

     78,835         75,882         12,056   
  

 

 

    

 

 

    

 

 

 

Current liabilities

        

Bank loan

     6,000         —           —     

Trade and other payables

     36,321         39,299         6,244   

Current taxation

     4,082         6,501         1,033   

Liabilities classified as held for sale

     —           4,510         717   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     46,403         50,310         7,994   
  

 

 

    

 

 

    

 

 

 

Total liabilities

     125,238         126,192         20,050   
  

 

 

    

 

 

    

 

 

 

Total equity and liabilities

     1,404,985         1,561,553         248,106   
  

 

 

    

 

 

    

 

 

 

 

13


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Appendix III

Le Gaga Holdings Limited

Unaudited Condensed Consolidated Statements of Cash Flow

For the three months and nine months ended December 31, 2010 and 2011

 

 

     Three Months Ended December 31,     Nine Months Ended December 31,  
     2010     2011     2010     2011  
     RMB     RMB     US$     RMB     RMB     US$  
     (In thousands)  

Operating activities

            

Profit before taxation

     44,960        69,638        11,064        115,058        169,821        26,980   

Adjustments for:

            

Amortization of lease prepayments

     25        24        4        77        73        12   

Depreciation

     12,590        17,509        2,782        34,145        49,048        7,793   

Equity settled share-based transactions

     6,558        5,717        908        15,315        17,988        2,858   

Changes in fair value less costs to sell of biological assets

     (77,740     (95,423     (15,161     (199,463     (251,037     (39,886

Interest income

     (80     (380     (60     (193     (727     (116

Interest expense

     1,968        2,646        420        2,139        8,101        1,287   

Net loss on disposal of property, plant and equipment

     1,364        514        82        4,354        1,941        308   

Impairment losses:

     —              —          —       

- property, plant and equipment

     —          —          —          —          4,364        693   

- prepayments

     —          —          —          —          2,052        326   

Foreign exchange gain

     (1,594     (1,709     (271     (3,130     (7,606     (1,205
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (11,949     (1,464     (232     (31,698     (5,982     (950

Changes in current biological assets due to plantations

     (34,802     (44,848     (7,126     (95,765     (123,434     (19,612

Changes in inventories, net of effect of harvested crops transferred to inventories

     93,074        131,619        20,912        246,629        320,400        50,906   

Increase in trade and other receivables

     (4,450     (39,950     (6,347     (13,264     (23,780     (3,778

(Increase)/decrease in long-term deposits and prepayments

     (31,609     2,685        427        (27,902     6,711        1,066   

(Decrease)/increase in trade and other payables

     (8,234     4,371        694        9,252        15,686        2,492   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated from operations

     2,030        52,413        8,328        87,252        189,601        30,124   

Income tax paid

     —          (561     (89     —          (2,917     (463
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated from operating activities

     2,030        51,852        8,239        87,252        186,684        29,661   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

14


LOGO  

Appendix III

Le Gaga Holdings Limited

Unaudited Condensed Consolidated Statements of Cash Flow

For the three months and nine months ended December 31, 2010 and 2011

 

     Three Months Ended December 31,     Nine Months Ended December 31,  
     2010     2011     2010     2011  
     RMB     RMB     US$     RMB     RMB     US$  
     (In thousands)  

Investing activities

            

Interest received

     80        380        60        193        727        116   

Plantations of non-current biological assets

     (570     (448     (71     (1,316     (1,322     (210

Payment for the purchase of property, plant and equipment

     (2,445     (1,082     (172     (7,444     (6,141     (976

Payment for construction in progress and prepayments for construction works

     (48,771     (100,010     (15,890     (185,372     (268,631     (42,681

Proceeds from disposal of property, plant and equipment and lease prepayments

     2,150        570        91        12,720        5,331        847   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (49,556     (100,590     (15,982     (181,219     (270,036     (42,904
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities

            

Repayment to a director

     —          —          —          (40     —          —     

Interest paid

     (2,551     (5,072     (806     (6,450     (10,450     (1,660

Proceeds from bank loans

     —          —          —          53,632        —          —     

Repayment of bank loans

     —          —          —          —          (6,000     (953

Proceeds from exercise of share options

     —          157        25        22,245        676        107   

Payment for repurchase of shares

     —          (10,185     (1,618     —          (10,185     (1,618

Net proceeds from issue of ordinary shares, net of issuing costs

     534,891        —          —          534,891        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated from/(used in) financing activities

     532,340        (15,100     (2,399     604,278        (25,959     (4,124
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase/(decrease) in cash

     484,814        (63,838     (10,142     510,311        (109,311     (17,367
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash at beginning of the period

     163,309        540,451        85,869        139,207        598,722        95,127   

Effect of foreign exchange rate changes

     (6,088     (1,414     (225     (7,483     (14,212     (2,258
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash at December 31

     642,035        475,199        75,502        642,035        475,199        75,502   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

15


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Appendix IV

Le Gaga Holdings Limited

Reconciliation of Non-IFRS adjusted cost of inventories sold

to cost of inventories sold

For the three months and nine months ended December 31, 2010 and 2011

 

     Three Months Ended December 31,     Nine Months Ended December 31,  
     2010     2011     2010     2011  
     RMB     RMB     US$     RMB     RMB     US$  
     (In thousands)  

Cost of inventories sold

     (92,864     (133,276     (21,175     (255,951     (332,510     (52,831

Less: biological assets fair value adjustment

     59,493        87,444        13,893        158,770        198,080        31,472   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted cost of inventories sold

     (33,371     (45,832     (7,282     (97,181     (134,430     (21,359
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

16


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Appendix V

Le Gaga Holdings Limited

Reconciliation of Non-IFRS adjusted profit for the period

to profit for the period

For the three months and nine months ended December 31, 2010 and 2011

 

     Three Months Ended December 31,     Nine Months Ended December 31,  
     2010     2011     2010     2011  
     RMB     RMB     US$     RMB     RMB     US$  
     (In thousands)  

Profit for the period

     44,960        66,760        10,607        115,058        166,686        26,482   

Add:

            

Non-cash share-based compensation

     6,558        5,717        908        15,315        17,988        2,858   

Impairment losses from property, plant and equipment and prepayments

     —          —          —          —          6,416        1,019   

Offering expenses

     8,500        —          —          20,323        —          —     

Less:

            

Net impact of biological assets fair value adjustment

     (18,247     (7,979     (1,267     (40,693     (52,957     (8,414
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted profit for the period

     41,771        64,498        10,248        110,003        138,133        21,945   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

17


LOGO  

Appendix VI

Le Gaga Holdings Limited

Reconciliation of Non-IFRS adjusted EBITDA to profit for the period

For the three months and nine months ended December 31, 2010 and 2011

 

     Three Months Ended December 31,     Nine Months Ended December 31,  
     2010     2011     2010     2011  
     RMB     RMB     US$     RMB     RMB     US$  
     (In thousands)  

Profit for the period

     44,960        66,760        10,607        115,058        166,686        26,482   

Add:

            

Amortization of lease prepayments

     25        24        4        77        73        12   

Depreciation

     12,590        17,509        2,782        34,145        49,048        7,793   

Finance costs

     1,985        2,653        422        2,190        8,108        1,288   

Income tax expense

     —          2,878        457        —          3,135        498   

Non-cash share-based compensation

     6,558        5,717        908        15,315        17,988        2,858   

Impairment losses from property, plant and equipment and prepayments

     —          —          —          —          6,416        1,019   

Biological assets fair value adjustment included in cost of inventories sold

     59,493        87,444        13,893        158,770        198,080        31,472   

Offering expenses

     8,500        —          —          20,323        —          —     

Less:

            

Finance income

     (2,012     (2,443     (388     (3,023     (11,266     (1,790

Changes in fair value less costs to sell of biological assets

     (77,740     (95,423     (15,160     (199,463     (251,037     (39,886
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     54,359        85,119        13,525        143,392        187,231        29,746   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

18