China One Corporation

China One Corporation

May 01, 2009 19:54 ET

China One Corporation Reports Fiscal 2008 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 1, 2009) - China One Corporation (TSX VENTURE:IND) today announced financial results for the year ended December 31, 2008. The audited annual consolidated financial statements along with management's discussion and analysis have been filed with SEDAR ( and are also available at the website of the Company (

Revenue for the year was $9.6 million compared to $2.5 million in fiscal 2007. Net loss for fiscal 2008 was $2.6 million or $0.03 per share as compared to a loss of $0.6 million in the prior year. On an EBITDA basis, the Company earned $1.5 million for the year ended December 31, 2008, compared to EBITDA loss of 0.2 million in fiscal 2007. For the fourth quarter ended December 31, 2008, the Company achieved revenue of $8.2 million and net earnings of $0.6 million.

Revenue in 2008 includes $2.3 million from milk sales and $7.3 million from the sale of 3,000 cows to Yili Group. In 2007, no milk was produced as the herd was too young, and revenue was derived primarily from activities that are no longer as part of the Company's business strategy. Management expects milk revenue to increase in 2009, as the milking herd size expands.

At December 31, 2008, the Company had a herd size of just more than 7,000. The Company continues to use its inventory of over 200,000 embryos to produce Canadian Holsteins. These embryos have historically been implanted in Chinese domestic cows as surrogates. The Company has paid the owner of the surrogate a fee on the successful birth of a cow. As the herd has developed, the Company has also sought to grow its herd by artificially inseminating the best of breed of its China-born Canadian heifers. As of the end of March 2009, the total herd size had increased to more than 9,000 cows.

As a result of new government regulations adopted after the melamine scandal in 2008, management believes that a new market opportunity for further growth presents itself in 2009. New Chinese government regulations encourage dairy processors to purchase raw milk from larger-scale farms. The government has established a goal that all dairy processors obtain at least 70% of their raw milk from these scaled farms by October 2011. This has provided the Company with the opportunity to acquire Chinese Holsteins at favorable prices as small-scale dairy farms transition out of dairy farming. By purchasing mature Chinese Holstein cows locally, the Company expects to increase the herd size on its large scale farms faster and at lower costs. So far, during the month of April 2009, the Company has acquired more than 2,000 Chinese Holsteins at approximately $900 (5,000 RMB) per cow.

During 2008, the Company signed a cow sales agreement with the largest dairy processor in China, Yili Group, to sell 5,000 cows at $2,955 (RMB16,250) each. The Company delivered 3,000 cows in 2008 and realized $7.3 million in revenue. The remaining 2,000 cows are expected to be delivered in the second half of 2009, pending the construction of new farms by Yili, generating expected revenue of approximately $5.8 million. As specified in the sales agreement, the Company has the right to buy back newly born Canadian Holsteins from those cows sold to Yili at approximately $1,091 (6,000 RMB).

As of December 31, 2008, the Company reported cash and cash equivalents of $8.8 million. The Company's resources are dedicated to expanding farms and herd size in China.

With favourable financing facilities and terms provided by local partners and subsidies from government agencies as announced in March 2009, and taking into account certain planned purchases of Chinese Holstein cows, the Company expects the herd size to increase to 30,000 by the end of 2009 and to 60,000 by 2010, making the Company the largest Canadian Holstein dairy company in China.

China One, through its operating subsidiaries, is an emerging raw milk producer in China that is seeking to become a leading provider of high quality raw milk to the Chinese dairy industry. To meet China's increasing demand for dairy products, the Company is using Canadian cattle genetics and North American farming practices to establish and increase its dairy herd in China. At its 2009 shareholder meeting, China One intends to seek shareholder approval to change its name to IND DairyTech Ltd.

The Company plans to develop its herd in China through the use of advanced breeding techniques employing Canadian Holstein embryos that it intends to use to impregnate surrogate cows. These embryos have been created through in vitro fertilization using sexed semen to achieve an approximate 90% female birth rate. The use of these advanced breeding techniques is expected to allow the Company to rapidly expand its herd. The use of Canadian Holstein embryos also provides a practical solution to China's ban on the import of live Canadian cattle.


This news release contains forward-looking statements and information that are based on the beliefs of management and reflect China One's current expectations. Such statements and information reflect the current view of China One with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking information in this news release includes revenue expected from cow sales, the development and increases in herd size in China, the purchase of Chinese Holstein cows (including cost savings expected to result from the investment made in purchasing these cows), the use of Canadian Holstein embryos to impregnate surrogate cows, the establishment of large scale North American-style farming operations in China, the size of China One as a Canadian Holstein dairy company in China, and the aim of becoming a leading provider of high quality raw milk to the Chinese dairy industry.

There are a number of important factors that could cause China One's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others, risks related to China One's business such as failure of the business strategy and limited operating history, reliance on farm development partners, disruptions due to bovine diseases, dependence on biotechnology, reduction in government support and access to raw materials; risks related to China One's operations, such as additional financing requirements and access to capital, the ability to repay debt, reliance on key personnel, fluctuation in feedstock costs, fluctuations in costs of production, product spoilage and liability, loss of embryo inventory, factors related to milk production, fluctuations in milk prices, fluctuations in milk demand, lack of specificity in certain agreements, litigation, indemnities, insurance, competition, intellectual property and variations in cow lactation periods; risks related to China One and its business generally such as potential exposure to tax under Canadian tax, regulations of the Peoples' Republic of China (the "PRC") relating to offshore special purpose companies, recent PRC regulations relating to cross-border mergers and acquisitions, environmental protection, currency exchange rates and conflicts of interest; and risks related to doing business in the PRC such as tax, repatriation of profit and currency conversion, acquisition and appropriation of land use rights, foreign investment, permits and business licences, employment contracts, government intervention, shareholders' rights and enforcement of judgments and a developing legal system.

China One cautions that the foregoing list of material factors is not exhaustive. When relying on China One's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. China One has assumed a certain progression of its business, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. For additional information with respect to certain of these and other factors, refer to the risk factors section of China One's Management's Discussion & Analysis dated April 28, 2009 available on SEDAR at

The forward-looking information contained in this news release represents the expectations of China One as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While China One may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable securities legislation.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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