2015 Annual Results Highlights:
Gross profit increased RMB251 millionyear-on-year to RMB1.67 billion.
Revenue was RMB 26.12billion, a 7.74% decrease compared to last year.
Profit attributable to owners of the Company was RMB221 million.
The Board recommended the payment of a final dividend of HK$[0.0097] per share (equivalent to approximately RMB[0.0081] per share),
The cost-to-income ratio, cash flow from operating activities, current assets turnover and capital structure wereall in good condition.
(31March 2016, Hong Kong) 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 12months ended December 31, 2015 (the “Period”).
During the Period, the world economy remained sluggish and the Chinese economy was obviously sliding downwards,. The oversupply situation in domestic fertilizer industry remained the same. While the value-added tax on fertilizer sales was re-introduced and the RMB was faced with depreciation,the profit margin in the fertilizer industry had been largely squeezed. Against this background,the Group unswervingly promoted strategic agendas put forward at the beginning of the year,actively took measures,made great efforts to mitigate the impact of unfavourable factors and achieved a relatively good result.For the twelve months ended December 31 2015, the Group’s revenue amounted to RMB26.12 billion, decreased by 7.74% year on yearyear-on-year. Gross profit of the Group amounted to RMB1.67 billion, increased by RMB251 million year on yearyear-on-year. Profit attributable to owners of the Company wasRMB221 million, decreased by 3.49% year on yearyear-on-year.The basic earnings per share wereRMB0.0314.
Key operating indicators in good condition
During the Period, the cost to income ratio,cash flow from operating activities, current assets turnover and capital structure were all in good condition.. The company was rated BBB+ by Fitch Ratings in March 2015.
The Group undertook different strategies for different products. In terms of potash, through strengthening strategic partnership with core domestic and overseas suppliers, securing constant and steady supply of competitive products, steadily strengthening the channel marketing of potash for agriculture, the gross profit increased by 8% year on yearyear-on-year; in terms of phosphate, the gross profit increased by 59% year on yearyear-on-year through grasping the market opportunity accurately, strengthening the management of suppliers and production-marketing docking, consolidating industrial and agricultural customer relations, and improving customer loyalty; in terms of compound fertilizer, the gross profit increased by 51% year on yearyear-on-year, by relying on the production supply of upstream subsidiaries, associates and joint ventures and the core supplier system construction, using the downstream distribution network to expand and optimize the product structure, taking advantage of the integration of production supply and marketing; in terms of nitrogen, the Group strictly controlled risks and moderately operated the business, but the gross profit still declined by 37% compared to 2014 as the selling price of nitrogen stayed low in 2015.
In summary, in the sluggish fertilizer market, the Group steadily promoted marketing transformation, enhanced internal operating efficiency, optimized the supply chain management, and reinforced the basic management, which led to a steady increase in gross profit over last year.
Optimizing innovative business model to consolidate positioning of China's largest fertilizer distributor and service provider
During the Period, the Group, taking into consideration the characteristics of China’s agriculture and through system reform and mode innovation, the Group continuouslyinnovation, continuously consolidated the operation foundation., continued to optimize the existing distribution network and consolidated the customer base. so as toIt also continued to optimize the product structure, strengthen the service providing capacity for customers and improve the profitability of the distribution network.,and achieved excellent performances in Potash, Nitrogen, Phosphate, Compound Fertilizer and MCP/MDCP. The product sales for the year 2015 reached 13.04 million tons. The Group continued to promote the marketing transformation of the branches, centred on compound fertilizers and potash for agriculture, strengthened the professional team building in branches, improved the marketing and promotion capacities of the business personnel and built a professional marketing team that knew well about both technology and marketing. Besides, the Group continued to maintain its strategic cooperation with the Planting Industry Management Department, Ministry of Agriculture, jointly carried out scientific fertilization and explored innovative in operation models that took root among modern agriculture through formula fertilizer, packages of seed, fertilizer and pesticide as well as combination of agricultural machinery and agronomy, etc.
Mobilizing resources to achieve excellent results
During the Period, SinochemYunlong explored total phosphate of 442,000 tons. For mine construction, it set up the Mo Zu Shao capacity connection project, ensuring the sustainable utilization of resources. In terms of mine establishment, prospecting work of Dawan mine basically ended, and the value contribution of phosphate rock resources increased continuously.In 2015, the group acquired 15.01% equity interest in Qinghai Salt Lake Industry Group Co., Ltd. (“Qinghai Salt Lake”) from Sinochem Corporation, a controlling shareholder of the Group. At the end of 2015, Qinghai Salt Lake issued new shares to certain minority shareholders and the transaction resulted in the dilution of the Group’s interest in Qinghai Salt Lake to 20.52%. In addition, the Group also paid close attention to investment and acquisition opportunities in fertilizer-related resources and new type fertilizers.
In 2015,the total annual fertilizer production capacity of the Group’s subsidiaries, associates and joint ventures exceeded 15 million tons, continually to promote basic work, carry out cost management, lean management, promote technical reform and scientific innovation, implement cost reduction and efficiency increase, further tap the potential of the existing devices, annual volumes production and sales for subsidiaries all grew and business efficiency and operation level further enhanced. “Sinochem Fuling” optimized raw proportioning, paid close attention to process control, promoted technological progress, integrated divisional function, improved operation efficiency,produced 1.33 million tons of phosphate, compound fertilizers and other products in 2015. “SinochemChangshan” produced 295,000 tons of urea in 2015,and became one of first 200 enterprises that passed the certification of implementing the standards regarding the integration of information technology and industrialization promoted by the Ministry of Industry and Information Technology,and the production capacity will continue to be released in 2016. “SinochemYunlong” produced 290,000 tons of Monocalcium (MCP)/Monodicalcium Phosphate (MDCP) in 2015, and improved management skills, carried out information technology construction and strengthened quality control so that the product quality reached the international leading level.
2016 is the first year of the 13th Five-Year Plan Period (2016-2020) and the most crucial year to further promote structural reform. The reform of the supply front is a major deployment made on the basis of the actual conditions after the development of China’s economy entered the new normal phase. Excess production capacity will be reduced and zombie enterprises will be dealt with. At the same time, the Chinese government attaches high importance to agricultural development. The No. 1 Document issued by the Central Committee of the Communist Party of China and the State Council on Jan. 27, 2016 highlighted that the development of modern agriculture should be quickened with a new concept and the focus should be the reform of the supply front of agriculture, which will bring new opportunities to the Group in respect of transformation and upgrading as well as innovative development.
Background of Sinofert Holdings Limited
Sinofert Holdings Limited (HKEx: 297.HK, hereafter known as “Sinofert” or the “Group”) is China's largest fertilizer distributor and supplier of imported fertilizer products and one of the largest fertilizer producers in China.Focusing on distribution, Sinofert operates an integrated model with both upstream and downstream of the industry chain to produce and market fertilizer products including nitrogen, phosphate, potash and compoundfertilizer, covering the widest categories of fertilizer products in China. Sinofert has the largest agriculture products distribution network in China and a complete agrochemical service system. Sinofert is the exclusive distributor of various international fertilizer products in China through strategic partnerships with many international suppliers. The Company owns Phosphate resources which ranking in the forefront in China, and feeding calcium production scale ranks first in Asia.As a flagship company of Sinochem Corporation, Sinofert was listed on the Hong Kong Exchanges and Clearing Limited, or HKEx, on 28 July 2005. Sinochem Corporation was established in 1950 and is one of the largest state-owned enterprises in China in terms of turnover. It is China’s earliest entrant in Fortune Global 500 and has entered the list for 25 times, ranking 105th in 2015.