HONG KONG, March 24 /PRNewswire-Asia/ -- The board (the "Board") of Sinofert Holdings Limited ("Sinofert" or the "Company", stock code: 0297.HK) is pleased to announce the audited annual results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2008 ("2008" or "Reporting Period").
The Group generated sales volume of 16.22 million tons for the Reporting Period, an increase of 7.94% year-on-year. It maintained and further strengthened its role as China's largest fertilizer distributor. Sales volume of imported fertilizers totaled 4.17 million tons, accounting for 26% of the total sales volume of the Group; sales volume of domestically produced fertilizers was 11.33 million tons, accounting for 70% of total sales volume of the Group. Despite the difficult operating environment, the Group made strides in promoting sales of domestically produced fertilizers, with its proportion of sales volume increasing by 15 percentage points over 2007.
Turnover of the Group in 2008 was RMB 45,393 million, a 59.94% increase year-on-year. As the average selling price of fertilizers edged up 48.18% year-on-year, the growth rate of turnover was higher than that of its sales volume.
Revenue from the Group's investments amounted to RMB 336 million, up RMB 282 million from RMB 54 million in 2007. Qinghai Salt Lake Potash and Sinochem Changshan contributed a larger portion to revenue in this. Investment income from Qinghai Salt Lake Potash amounted to RMB 104 million, discount on the acquisition of Sinochem Changshan was RMB 214 million and the share of profit from jointly controlled entities was RMB 18 million.
Net profit attributable to shareholders for 2008 was RMB 1,913 million, an increase of 198.30% year-on-year. Excluding the change in fair value of the derivative component of the convertible loan notes, net profit attributable to shareholders was RMB 1,749 million, a gain of 29.12% over RMB 1,355 million in 2007. The increase was primarily attributable to the following factors: the rising price of fertilizers, an increase of 7.94% in sales volume, an increase of 24.11% in gross profit, a higher growth rate in income from investments and a lower growth rate in expenditures relative to turnover.
The Board recommends a final dividend of HK cents 4.64 per share for the financial year 2008, up 68.12% year-on-year.
Mr. Du Keping, Chief Executive Officer of Sinofert, commented, "The fertilizer market in China was very volatile in 2008 amid the worsening global financial crisis. Under the leadership and support of the Board, we managed to overcome the difficulties and continued to push forward our strategy of 'centering on marketing and distribution, expanding into both production and network distribution'. The Group took various measures to further expand business scale and to strengthen its distribution network. As a result, the distribution network grew bigger and better and distribution capabilities were further enhanced. We made achievements in carrying out our strategy, posted satisfactory operating results and maintained our leading role in China's market."
Production
In 2008, the Group acquired a 75% equity interest in Sinochem Pingyuan Chemicals Co., Ltd. It also completed the acquisition of Sinochem Changshan Chemicals Co., Ltd. and holds a 90.81% equity interest of the restructured company. The acquisitions of Qinghai Salt Lake Potash Company Limited, Tianji Sinochem Gaoping Chemical Engineering Company Limited and Sinochem Shandong Fertilizer Company Limited were also completed. The Group possesses a full range of production lines consisting of nitrogen fertilizers, phosphate fertilizers, potash fertilizers and compound fertilizers. Total fertilizer production capacity reached 1,016 million tons, making the Group one of the largest fertilizer producers in China and enabling it to secure a stable supply for distribution network.
Distribution Network
In 2008, the Group continued to push ahead with its established strategy. Huge efforts were made to expand distribution centers and to standardize the operations of the distribution network for improved operational efficiency. It stepped up efforts in building distribution centers in agricultural counties to further strengthen the network for end-users.
During the year, 338 distribution centers were newly added, bringing the total number to 2,010. The Group's distribution network covers major agricultural counties in 26 provinces of China or 90% of the country's arable land area, further enhancing the Group's competitive edge in distribution. Sales volume of fertilizer through the network increased to 11.33 million tons, up 15.77% year-on-year. The Group recorded a great achievement in building its customer base, with the number of customers increasing to 32,000, laying a solid foundation for serving customers and enlarging market share.
In 2008, the Group realized a sales volume of 4.03 million tons of potash, a decrease of 29% from 2007 and accounting for about a 55% share of the potash market in China. Sales volume of nitrogen fertilizers rose by 29.4% year on year to 6.0 million tons, making this segment the largest contributor to the Group by sales volume. Sales volume of phosphate fertilizers and compound fertilizers reached 2.94 million tons and 2.53 million tons, up 36% and 30% year-on-year, respectively.
Outlook and Strategy
In 2009, the Group will face increasing challenges posed by the financial crisis as it exerts a greater impact on the global economy. On the other hand, China's economy will continue to grow at a steady and relatively fast pace. The Chinese government will persist in beefing up efforts in promoting the development of agriculture. In recent years, public expenditure on the "three rural issues" (agriculture, the rural areas and farmers) has been continuously increased, resulting in phenomenal growth of agricultural production. At the same time, the population of China is still increasing along with food consumption, leading to increasing demand for fertilizers. These developments create a fertile environment for the growth of the fertilizer industry and the Group.
Mr. Liu Deshu, Chairman of Sinofert, said, "Faced with challenges and opportunities in 2009, the Group will continue to push forward the strategy of 'centering on marketing and distribution and expanding into both production and network distribution' for synergic growth. We will further optimize internal control, consolidate our industrial base, improve supply systems, enhance the quality of our distribution network and strive to fulfill our business goals set for 2009. The Group is committed to creating higher returns for our shareholders and wealth for society, and to playing an important role in ensuring food security for the country."
Background of Sinofert Holdings Limited
Listed on the Stock Exchange of Hong Kong Limited on 28 July 2005, Sinofert Holdings Limited specialised in businesses of agriculture related products including fertilizer. As the largest fertilizer enterprise integrating production, supply and sales in China, Sinofert Holdings Limited's operating fields extends through the whole industry chain of fertilizer including R&D, production, import & export, distribution and retail as well as agrochemical service of the products through the growth strategy of "centering on marketing and distribution and expanding into both production and network distribution". Sinofert is the flagship company of Sinochem Corporation. Established in 1950, Sinochem Corporation is one of the largest state-owned enterprises in the PRC in terms of turnover. Sinochem Corporation is also one of Fortune 500 enterprises, globally dealing in business in petroleum, fertilizer and chemicals.
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