China Green Star Agricultural Corporation
TSX VENTURE : GRE

China Green Star Agricultural Corporation

May 30, 2012 14:45 ET

Green Star Reports Strong First Quarter 2012 Financial Results

TORONTO, ONTARIO--(Marketwire - May 30, 2012) - China Green Star Agricultural Corporation (TSX VENTURE:GRE) ("Green Star" or the "Company"), an advanced processor of agricultural products such as canned fruits and vegetables for distribution to international and domestic markets, today announced financial results for the three months period ended March 31, 2012.

Q1 2012 Key Financial Metrics
In $'000 except EPS Q1 2012 Q1 2011 Change
Key Operation Results
Total revenue $ 8,975 $ 8,215 9.25 %
Gross profit $ 3,864 $ 3,003 28.67 %
EBITDA1 $ 3,824 $ 2,703 41.47 %
Profit before income tax $ 3,381 $ 2,540 33.11 %
Profit for the period $ 2,509 $ 1,902 31.91 %
EPS - basic $ 0.17 $ 0.15 13.33 %
EPS - diluted2 $ 0.08 $ 0.15 -46.67 %
Mar. 31, 2012 Dec. 31, 2011
Key Balance Sheet Highlights
Cash and cash equivalents $ 9,093 $ 7,602 19.61 %
Total assets $ 37,576 $ 36,761 2.22 %
Total Liabilities $ 5,192 $ 6,491 -20.01 %
Shareholders' Equity $ 32,383 $ 30,270 6.98 %
(1) Earnings before interest, taxes, depreciation and amortization (EBITDA) is often used as a measure of financial performance. However, EBITDA is a not a term that has specific meaning in accordance with IFRS, and may be calculated differently by other companies. EBITDA excludes cost associated with the IPO.
(2) Includes the effect of the 16,069,892 special warrants granted on completion of the Qualifying Transaction. Each special warrant is convertible into one common share for no additional consideration.

"The growth in our first quarter of 2012 results demonstrates the successful execution of our business plan to maximize our production capacity, for canned tomato paste and increasing sales to the local Chinese market," said Guan Lianyun, Chairman and CEO of Green Star. "We are making progress towards eventually marketing and developing our own brand. We remain committed to investing in future expansion plans".

Q1 2012 Operational and Financial Highlights

  • Record revenue of $8.9 million, an increase of approximately 9.3% over $8.2 million in Q1 2011

  • Record EBITDA of $3.8 million, up 41% from $2.7 million in Q1 2011

  • Record profit of $2.5 million, up 32% from $1.9 million in Q1 2011

Review of Financial Results

Green Star's principal sources of revenue are from the sale of canned food and fresh agricultural produce. The canned food division mainly consists of canned food processing which includes the manufacturing of canned tomato paste, canned boiled bamboo shoots, canned oranges, canned yellow peaches, canned grapes and various other types of fruit. The agricultural produce division consists of the cultivation and harvesting of agricultural produce such as fresh oranges and bamboo shoots for sale directly as fresh produce or through various distribution channels as processed and canned product.

Green Star reported record consolidated revenue of $8.9 million for the first quarter ended March 31, 2012, up approximately 9.3% from $8.2 million for the same period in the prior year. The revenue growth was primarily due to the overall increase in selling prices for both canned products and the agricultural produce.

Revenue from the canned food division increased 9.5% in the first quarter of 2012 compared to the same period of 2011 while revenue from the agricultural produce division increased 8.2% in the first three months of 2012 versus the same period in 2011.

The growth in the canned food division was primarily due to a $395,000 increase in canned tomato paste sale, a $127,000 increase in canned oranges and a $106,000 increase in canned bamboo shoots sale compared to the same period in 2011. The average increase in selling price of canned food was 4.6% compared to the first quarter of 2011. Canned food sales quantity slightly decreased by 0.9% as compared to the first quarter of 2011.

The growth in the agricultural produce division was primarily due to a 9.8% average increase in the selling price of fresh orange and bamboo shoots less the effect of a 3.5% decrease in sales quantity compared to the first quarter of 2011 caused by seasonality of the bamboo shoots produce.

The revenue mix for the first three months ended March 31, 2012 was 80.5% canned foods and 19.5% agricultural produce compared to 80.3% canned foods and 19.7% agricultural produce for same period of 2011.

Gross profit increased to $3.9 million in the first quarter of 2012 from $3.0 million in same period of 2011, an increase of 28.7%. Gross profit as a percentage of sales increased to 43.1% in first quarter of 2012, compared to 36.6% for same period of 2011, with improvements for both the agricultural produce division and the canned food division. The agricultural produce division's gross profit improved to 64.14% in first quarter of 2012 compared to 61.8% in same period of 2011 and was the result of a general increase in the selling price of agricultural produce. The canned food division's gross profit margin improved to 37.9% in the first quarter of 2012 compared to 30.4% in the same period of 2011, a reflection of increased selling price and improved efficiency.

Green Star generated net profit of $2.5 million in the first quarter of 2012, up 32% from $1.9 million in the same period of 2011. The Company's basic and diluted earnings per share were $0.17 and $0.08, respectively, in the first three months of 2012 compared to $0.15 in the same period of 2011.

At March 31, 2012, Green Star held cash of $9.1 million and working capital of $22.8 million compared to $7.6 million and $20.4 million, respectively as at December 31, 2011. The increase in both cash and working capital was a result of improved operating results.

Outlook

"We again achieved strong financial results and look forward to continue building on that success in the current fiscal year." said Mr. Guan.

About Green Star

Green Star operates two main divisions, agricultural and food processing. The agricultural division is involved in the cultivation and harvesting of agricultural products such as fresh fruit and vegetables, for sale either directly as fresh fruit and vegetables or canned, and sold overseas and domestically. The food processing division is primarily involved in the manufacturing of canned food which includes canned tomato paste, canned boiled bamboo shoots, canned oranges, canned peaches and various other types of fruits and vegetables.

The Company has been operating for over 18 years, and has focused on maintaining product and reputational excellence and a high standard of food quality, through the application of science and technology in production, quality control and assurance, business operations and management. Key assets include a well established management team, modern production facilities, and a close partnership with local farmers.

China Green Star Agricultural Corp. is listed on the TSX Venture Exchange under the symbol "GRE".

For more information on the Company, please visit our web site at www.cgsac.com.

Caution Regarding Forward-Looking Information:

Certain statements in this press release may constitute "forward looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this press release, such statements may use such words as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this press release. These forward looking statements involve a number of risks and uncertainties. Some of the factors that could cause actual results to differ materially from those expressed in or underlying such forward looking statements are the effects of, as well as changes in: international, national and local business and economic conditions; political or economic instability in the Company's markets; competition; legislation and governmental regulation; and accounting policies and practices. The foregoing list of factors is not exhaustive. Please see the Company's annual MD&A dated April 30, 2011, available on www.sedar.com, for a more detailed description of the risk factors. The Company undertakes no obligation to update publicly or revise any forward looking information, whether a result of new information, future results or otherwise, except as required by law.

The TSX Venture Exchange has neither approved nor disapproved of the contents of this press release and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Green Star Agricultural Corporation
    Michael Lam
    Chief Financial Officer
    416 849 3858
    www.cgsac.com