HONG KONG, Nov. 29, 2010 (GLOBE NEWSWIRE) -- HONG KONG, November 29, 2010 - 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 second fiscal quarter ended September 30, 2010. [1]

Highlights of the Quarter Ended September 30, 2010
  • Revenue increased by RMB 29.5 million, or 44.8%, from RMB 65.8 million for the three months ended September 30, 2009 to RMB 95.3 million (US$14.2 million) for the three months ended September 30, 2010.
  • Results from operating activities decreased by RMB 17.0 million, or 27.1%, from RMB 62.7 million for the three months ended September 30, 2009 to RMB 45.7 million (US$6.8 million) for the three months ended September 30, 2010.
  • Profit for the period decreased by RMB 15.8 million, or 25.3%, from RMB 62.4 million for the three months ended September 30, 2009 to RMB 46.6 million (US$7.0 million) for the three months ended September 30, 2010.
  • Adjusted profit for the period (Non-IFRS measure, defined as profit for the period before the net impact of biological assets fair value adjustments and excluding the effects of non-cash share-based compensation and the initial public offering expenses charged to the income statement) increased by RMB 12.1 million, or 45.3%, from RMB 26.7 million for the three months ended September 30, 2009 to RMB 38.8 million (US$5.8 million) for the three months ended September 30, 2010. 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 EBITDA (Non-IFRS measure, defined as EBITDA (earnings before net finance income (expense), income tax expense (benefit), depreciation and amortization), as further adjusted to exclude the effects of non-cash share-based compensation, the net impact of biological assets fair value adjustments and the initial public offering expenses charged to the income statement) increased by RMB 14.0 million, or 39.8%, from RMB 35.0 million for the three months ended September 30, 2009 to RMB 49.0 million (US$7.3 million) for the three months ended September 30, 2010. A reconciliation of the adjusted EBITDA to profit for the period determined in accordance with IFRS was set forth in Appendix VI.
  • Basic and diluted earnings per share was RMB 2.59 and 2.56 cents, respectively, for the three months ended September 30, 2010, representing a decrease of 30.4%, in each case, from the three months ended September 30, 2009.
  • Basic and diluted earnings per ADS [2] was RMB 129.5 and 128.0 cents, respectively, for the three months ended September 30, 2010, representing a decrease of 30.4%, in each case, from the three months ended September 30, 2009.
  • Cash generated from operating activities increased by RMB 2.9 million, or 7.9%, from RMB 37.5 million for the three months ended September 30, 2009 to RMB 40.4 million (US$6.0 million) for the three months ended September 30, 2010.
  • Total arable land as of September 30, 2010 remained the same at 18,850 mu (1,257 hectares) as compared to June 30, 2010, and increased by approximately 600 mu, as compared to September 30, 2009. 
  • Total greenhouse area as of September 30, 2010 was 4,907 mu (327 hectares), representing an increase of 966 mu compared to June 30, 2010 and an increase of 861 mu compared to September 30, 2009. As a result, greenhouse land area as a percentage of total arable land increased from 20.9% as of June 30, 2010 to 26.0% as of September 30, 2010.
  • Production output increased 39.6% from 22,971 metric tons for the three months ended September 30, 2009 to 32,064 metric tons for the three months ended September 30, 2010. Production yield (production output per mu) increased 31.7% from 1.3 metric tons for the three months ended September 30, 2009 to 1.7 metric tons per mu for the three months ended September 30, 2010. 
  • Revenue per mu increased 36.3% from RMB 3,701 for the three months ended September 30, 2009 to RMB 5,046 for the three months ended September 30, 2010.

Mr. Shing Yung Ma, chairman and chief executive officer of Le Gaga, commented, "We are very pleased with our performance in the second fiscal quarter as we achieved record total revenue, adjusted profit, revenue per mu and adjusted profit per mu. Our strong revenue growth and operational performance in the second fiscal quarter demonstrates the strength of our greenhouse vegetable cultivation business model and strong cultivation know-how." Mr. Ma further commented, "Our revenue growth was a direct result of our expanding greenhouse area, improving cultivation know-how, and ability to leverage our comprehensive information database. Following our successful IPO on the NASDAQ, we have continued to strengthen our brand and recognition among our customers and provide more high quality and safe vegetables to an increasing number of consumers. Going forward, we will continue to focus on expanding our greenhouse coverage and arable land area, invest in research and development to enhance our cultivation know-how, expand our sales, marketing and distribution network, strengthen our brand awareness across all of our sales channels and invest in the development of our farm managers." Mr. Auke Cnossen, chief financial officer of Le Gaga, added, "As demonstrated by our solid financial performance this quarter, we are excited about the large growth opportunities ahead of us. With our solid cash on hand and strong operating cash flows, we are confident that we have enough capital to execute our expansion plans. We will continue to expand our greenhouse area in Fujian and Guangdong Provinces while expanding our sales and distribution into the Yang Tze River Delta. We are on track to add the required greenhouse area and arable land to achieve our revenue and profit growth targets."

[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 RMB6.6905 to US$1.00, the effective noon buying rate as of September 30, 2010 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] American depositary shares, which are traded on the NASDAQ Global Select Market, each represents 50 ordinary shares of the Company.
Summary of Operating Data          
    As of  
Selected Operating Data   September 30, 2009 June 30, 2010 September 30, 2010  
Total arable land (1)   18,251 mu 18,850 mu 18,850 mu  
    (1,217 hectares) (1,257 hectares) (1,257 hectares)  
Total greenhouse area    4,046 mu 3,941 mu 4,907 mu  
    (270 hectares) (263 hectares) (327 hectares)  
Greenhouse area as a percentage of total arable land   22.2% 20.9% 26.0%  
           
    Three Months Ended September 30, Six Months Ended September 30,
Selected Operating Data   2009 2010 2009 2010
           
Total production output (metric tons)   22,971 32,064 43,624 61,331
Production yield (metric tons per mu)   1.3 1.7 2.5 3.2
Revenue per mu (RMB) (2)   3,701 5,046 6,873 9,460
           
(1)  Total arable land area excludes land that we used on a temporary basis.
(2)  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.

Financial Results for the Three Months Ended September 30, 2009 and 2010

Revenue increased by RMB 29.5 million, or 44.8%, from RMB 65.8 million for the three months ended September 30, 2009 to RMB 95.3 million (US$14.2 million) for the three months ended September 30, 2010. The increase in revenue was primarily attributable to an increase in revenue per mu from RMB 3,701 per mu for the three months ended September 30, 2009 to RMB 5,046 per mu for the three months ended September 30, 2010, which was primarily driven by an increase in production yield from 1.3 metric tons per mu for the three months ended September 30, 2009 to 1.7 metric tons per mu for the three months ended September 30, 2010, which in turn was a result of increasing greenhouse coverage and improving cultivation know-how.

Cost of inventories sold increased by RMB 28.6 million, or 51.8%, from RMB 55.2 million for the three months ended September 30, 2009 to RMB 83.8 million (US$12.5 million) for the three months ended September 30, 2010. 

Adjusted cost of inventories sold (Non-IFRS measure, defined as cost of inventories sold before biological assets fair value adjustments, with the reconciliation to costs of inventories sold determined in accordance with IFRS as set forth in Appendix IV) increased by RMB 13.0 million, or 61.6%, from RMB 21.0 million for the three months ended September 30, 2009 to RMB 34.0 million (US$5.1 million) for the three months ended September 30, 2010. Adjusted cost of inventories sold as a percentage of revenue increased from 32.0% for the three months ended September 30, 2009 to 35.7% for the three months ended September 30, 2010. The increase of our adjusted cost of inventories sold was primarily due to (1) an RMB 6.0 million increase in the direct labor cost related to the cultivation activities, (2) an RMB 3.6 million increase in costs of raw materials consumed, (3) an RMB 2.7 million increase in manufacturing expenses primarily due to the increase of depreciation expense arising from more greenhouses and the corresponding facilities, and (4) an RMB 701,000 increase in the purchase of certain vegetables we did not produce from third parties to fulfill the diverse demand of the customers of our supermarket sales points in Hong Kong.  

Changes in fair value less costs to sell of biological assets increased by RMB 2.9 million, or 4.0%, from RMB 71.3 million for the three month ended September 30, 2009 to RMB 74.2 million (US$11.1 million) for the three months ended September 30, 2010.
  Three Months Ended September 30, Six Months Ended September 30,
  2009 2010 2009 2010
  RMB RMB US$ RMB RMB US$
  In thousands
Biological assets fair value adjustment included in cost of inventories sold (34,190) (49,820) (7,446) (57,305) (99,277) (14,839)
Changes in fair value less costs to sell of biological assets 71,318 74,153 11,083 106,965 121,723 18,193
             
Net impact of biological assets fair value adjustment 37,128 24,333 3,637 49,660 22,446 3,354

The net impact of the biological assets fair value adjustment, representing the net increase or decrease in the gain in fair value less cost to sell of crops on our farming land at the current reporting period end compared to the immediately preceding reporting period end, was lower in 2010 compared to 2009. This was primarily a result of changes in our production methods, as we have shortened the plantation cycles and increased the number of plantation cycles for Solanaceous products. Therefore, the volume and the value of Solanaceous products on a given area of land at a given point in time are significantly lower compared to the longer production cycles used in previous years. As a result, the net gain arising from biological asset fair value adjustment recognized, for the three months ended September 30, 2010, was RMB 12.8 million lower as compared to the net gain recognized for the three months ended September 30, 2009. 

The net impact of biological assets fair value adjustment of RMB 24.3 million for the three months ended September 30, 2010 primarily arose from the plantation of Solanaceous products during the months of August and September. These products are the primary focus of our plantation during the winter months. The higher value and longer growing cycle of Solanaceous products compared to leafy vegetables, grown primarily during the summer months, results in a higher fair value of the crops on the field for the three months ended September 30, 2010 as compared to the three months ended June 30, 2010 and thus resulted in a positive net impact.

Our packing expenses increased by RMB 1.2 million, or 25.3%, from RMB 4.6 million for the three months ended September 30, 2009 to RMB 5.8 million (US$870,000) for the three months ended September 30, 2010, primarily as a result of an RMB 1.7 million increase in the packing material consumed in line with the increase of our revenue, which was partially offset by a slight decrease in rental and depreciation expenses.

Our land preparation costs decreased by RMB 313,000, or 11.0%, from RMB 2.8 million for the three months ended September 30, 2009 to RMB 2.5 million (US$379,000) for the three months ended September 30, 2010, which was primarily a result of an improvement in the utilization of the land and corresponding facilities. 

Other income for the period decreased by RMB 35,000, or 79.5%, from RMB 44,000 for the three months ended September 30, 2009 to RMB 9,000 (US$1,000) for the three months ended September 30, 2010.

Our research and development expenses increased by RMB 337,000, or 20.5%, from RMB 1.6 million for the three months ended September 30, 2009 to RMB 2.0 million (US$295,000) for the three months ended September 30, 2010.

Our selling and distribution expenses increased by RMB 1.4 million, or 35.2%, from RMB 4.1 million for the three months ended September 30, 2009 to RMB 5.5 million (US$821,000) for the three months ended September 30, 2010, which was primarily due to an increase in the transportation costs of RMB 1.1 million in line with our increase in revenue.

Our administrative expenses increased by RMB 17.1 million, or 296.7%, from RMB 5.7 million for the three months ended September 30, 2009 to RMB 22.8 million (US$3.4 million) for the three months ended September 30, 2010. Administrative expenses increased primarily due to (1) IPO expenses which were accrued at RMB 11.8 million (including regulatory fees, legal, accounting and other professional advisors fees, and printing costs), (2) an increase in non-cash share-based compensation at RMB 3.2 million, (3) an RMB 841,000 million increase of audit, legal and other professional service fees, (4) an RMB 769,000 increase in salary for the management employees in line with both increasing head counts and salary adjustment for existing employees, and (5) an RMB 164,000 increase in office rent in line with our headquarter office capacity expansion. 

Our other expenses increased by RMB 1.0 million, or 326.8%, from RMB 302,000 for the three months ended September 30, 2009 to RMB 1.3 million (US$192,000) for the three months ended September 30, 2010, which was primarily due to an RMB 765,000 increase in the fixed assets disposal loss arising from the replacement of certain bamboo-made greenhouses with steel-made greenhouses.

We had a net finance income of RMB 862,000 (US$129,000) for the three months ended September 30, 2010, as compared to a net finance cost of RMB 363,000 for the three months ended September 30, 2009, primarily due to an exchange gain of RMB 978,000 incurred in the three months ended September 30, 2010. 

We did not record any income tax expenses in the three months ended September 30, 2009 and 2010 as all of our PRC subsidiaries were exempt from enterprise income tax during these periods and our Hong Kong subsidiaries did not record any taxable income. 

As a result of the foregoing factors, profit for the three months ended September 30, 2010 decreased by RMB 15.8 million, or 25.3%, from RMB 62.4 million for the three months ended September 30, 2009 to RMB 46.6 million (US$7.0 million) for the three months ended September 30, 2010. 

Our adjusted profit for the period increased by RMB 12.1 million or 45.3% from RMB 26.7 million for the three months ended September 30, 2009 to RMB 38.8 million (US$5.8 million) for the three months ended September 30, 2010.

Our adjusted EBITDA increased by RMB 14.0 million, or 39.8%, from RMB 35.0 million for the three months ended September 30, 2009 to RMB 49.0 million (US$7.3 million) for the three months ended September 30, 2010.

Basic and diluted earnings per share was RMB 2.59 and 2.56 cents, respectively, for the three months ended September 30, 2010, representing a decrease of 30.4%, in each case, from the three months ended September 30, 2009. Basic and diluted earnings per ADS was RMB 129.5 and 128.0 cents, respectively, for the three months ended September 30, 2010, representing a decrease of 30.4%, in each case, from the three months ended September 30, 2009.

Our operating cash flow increased by RMB 2.9 million, or 7.9%, from RMB 37.5 million for the three months ended September 30, 2009 to RMB 40.4 million (US$6.0 million) for the three months ended September 30, 2010. 

Cash used in investing activities increased by RMB 14.1 million, or 23.3%, from RMB 60.8 million for the three months ended September 30, 2009 to RMB 74.9 million (US$11.2 million) for the three months ended September 30, 2010. The cash outflow from the investing activities of RMB 74.9 million for the three months ended September 30, 2010 was in line with our payment for the construction in progress of RMB 81.4 million which mainly consisted of (1) payment for construction of greenhouses of RMB 50.6 million, (2) payment of RMB 17.1 million for agricultural infrastructure which included electricity and water supply set up, road and drainage construction, etc., (3) payment for land quality improvement of RMB 7.5 million, and (4) payment for construction of irrigation systems of RMB 5.2 million.

Business Outlook for the fiscal quarter ended December 31, 2010

The Company estimates that its revenue for the third fiscal quarter will be between RMB 98 million and RMB 108 million, representing a year over year growth rate of approximately 33.5% to 47.1%.  

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 29 November, 2010 (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)
  • + 400 681 6949 (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 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. Through its subsidiary China Linong International Limited, 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. In particular, the Company supplies vegetables to supermarkets, such as Walmart in China and Wellcome, ParknShop and Vanguard in Hong Kong.

The Company currently operates 16 farms with an aggregate area of 1,257 hectares 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.

The Le Gaga Holdings Limited logo is available at: http://www.globenewswire.com/newsroom/prs/?pkgid=8233

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 statements relating to the Company's expected progress on greenhouse and arable land expansion may 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.  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 adjustments (defined as "adjusted profit for the period" in our prospectus dated October 28, 2010) and further excludes the effects of non-cash share-based compensation and initial public offering expenses 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 and initial public offering expenses 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 (benefit), depreciation and amortization), as further adjusted to exclude the effects of non-cash share-based compensation, the net impact of biological assets fair value adjustments (defined as "adjusted EBITDA" in our prospectus dated October 28, 2010) and further excludes the initial public offering expenses for the current quarterly period 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.
Appendix I            
Le Gaga Holdings Limited
Unaudited Condensed Consolidated Income Statements
For the three and six months ended September 30, 2009 and 2010
             
  Three Months Ended September 30, Six Months Ended September 30,
  2009 2010 2009 2010
  RMB RMB US$ RMB RMB US$
             
Revenue 65,822 95,289 14,243 119,660 178,606 26,695
Cost of inventories sold (55,236) (83,836) (12,531) (99,012) (163,087) (24,376)
Changes in fair value less costs to sell related to            
Crops harvested during the period 11,567 20,657 3,088 42,795 67,112 10,031
Growing crops on the farmland at the period end 59,751 53,496 7,995 64,170 54,611 8,162
Total changes in fair value less costs to sell of biological assets 71,318 74,153 11,083 106,965 121,723 18,193
Packing expenses (4,641) (5,813) (870) (8,533) (10,751) (1,607)
Land preparation costs (2,848) (2,535) (379) (5,502) (7,619) (1,139)
Other income 44 9 1 60 114 17
Research and development expenses (1,642) (1,979) (295) (2,562) (3,313) (495)
Selling and distribution expenses (4,064) (5,493) (821) (8,051) (9,764) (1,459)
Administrative expenses (5,738) (22,765) (3,402) (11,559) (33,001) (4,933)
Other expenses  (302) (1,289) (192) (306) (3,616) (540)
Results from operating activities 62,713 45,741 6,837 91,160 69,292 10,356
Finance income 35 952 142 66 1,011 151
Finance costs (398) (90) (13) (579) (205) (30)
Net finance income/(costs) (363) 862 129 (513) 806 121
Profit before taxation 62,350 46,603 6,966 90,647 70,098 10,477
Income tax expense  --   --   --   --   --   -- 
Profit for the period  62,350 46,603 6,966 90,647 70,098 10,477
Earnings per ordinary/preferred share (in RMB cents)            
Basic 3.72 2.59 0.39 5.41 3.95 0.59
Diluted 3.68 2.56 0.38 5.35 3.89 0.58
Appendix II      
Le Gaga Holdings Limited
Unaudited Condensed Consolidated Balance Sheets
As of March 31 and September 30, 2010
       
  March 31, 2010 September 30, 2010
  RMB RMB US$
  In thousand
Assets      
Property, plant and equipment 357,862 441,761 66,028
Construction in progress 17,402 47,128 7,044
Lease prepayments 2,516 2,464 368
Long-term deposits and prepayments 31,559 27,852 4,163
Biological assets 5,186 5,480 819
Total non-current assets 414,525 524,685 78,422
       
Biological assets 45,005 69,652 10,411
Inventories 2,938 7,874 1,177
Trade and other receivables 36,779 39,507 5,906
Cash 139,207 163,309 24,409
       
Total current assets 223,929 280,342 41,903
       
Total assets 638,454 805,027 120,325
       
Equity      
Capital 307,689 141,022 21,078
Reserves 272,355 538,280 80,454
Total equity 580,044 679,302 101,532
       
Liabilities      
Bank loan 34,290 80,823 12,080
Loan from municipal government 1,410 1,410 211
Total non-current liabilities 35,700 82,233 12,291
       
Bank loan -- 6,000 897
Trade and other payables 18,628 33,410 4,995
Current taxation 4,082 4,082 610
Total current liabilities 22,710 43,492 6,502
       
Total liabilities 58,410 125,725 18,793
       
Total equity and liabilities 638,454 805,027 120,325
Appendix III            
Le Gaga Holdings Limited
Unaudited Condensed Consolidated Statements of Cash Flow
For the three months and six months ended September 30, 2009 and 2010
             
  Three Months Ended September 30, Six Months Ended September 30,
  2009 2010 2009 2010
  RMB RMB US$ RMB RMB US$
  In thousands
Operating activities            
Profit before taxation 62,350 46,603 6,966 90,647 70,098 10,477
Adjustments for:            
Amortization of lease prepayments 26 26 4 52 52 8
Depreciation 7,956 11,055 1,652 15,265 21,555 3,222
Equity settled share-based transactions 1,481 4,696 702 2,747 8,757 1,309
Changes in fair value less costs to sell of biological assets (71,318) (74,153) (11,083) (106,965) (121,723) (18,193)
Interest income (35) (54) (8) (66) (113) (17)
Interest expense  --  163 24  --  171 26
Net loss on disposal of property, plant and equipment 268 1,033 154 269 2,990 447
Foreign exchange gain (65) (681) (102) (90) (1,536) (230)
  663 (11,312) (1,691) 1,859 (19,749) (2,951)
Changes in current biological assets due to plantations (24,451) (38,643) (5,776) (46,141) (60,963) (9,113)
Changes in inventories, net of effect of harvested crops transferred to inventories 52,426 77,380 11,566 93,392 153,555 22,951
Increase in trade and other receivables 5,582 (9,382) (1,402) (4,606) (8,814) (1,317)
Decrease in long-term deposits and prepayments (233) 5,119 765 392 3,707 554
Increase in trade and other payables 3,473 17,272 2,582 6,344 17,486 2,614
Cash generated from operations 37,460 40,434 6,044 51,240 85,222 12,738
Income tax paid  --   --   --   --   --   -- 
             
Cash generated from operating activities 37,460 40,434 6,044 51,240 85,222 12,718
Appendix III            
Le Gaga Holdings Limited
Unaudited Condensed Consolidated Statements of Cash Flow (Continued)
For the three months and six months ended September 30, 2009 and 2010
             
  Three Months Ended September 30, Six Months Ended September 30,
  2009 2010 2009 2010
  RMB RMB US$ RMB RMB US$
  In thousands
Investing activities            
Interest received 35 54 8 66 113 17
Plantations of non-current biological assets (243) (316) (47) (464) (746) (112)
Payment for the purchase of property, plant and equipment (1,800) (3,138) (469) (1,989) (4,999) (747)
Payment for construction in progress (59,529) (81,415) (12,169) (87,234) (136,601) (20,417)
Proceeds from disposal of property, plant and equipment 773 9,917 1,482 822 10,570 1,580
Cash used in investing activities (60,764) (74,898) (11,195) (88,799) (131,663) (19,679)
             
Financing activities            
Repayment to a director  --  (40) (6)  --  (40) (6)
Proceeds from municipal government loan 410  --   --  410  --   -- 
Interest paid  --  (2,785) (416)  --  (3,899) (583)
Proceeds from bank loans  --   --   --   --  53,632 8,016
Proceeds from exercise of share options  --  22,245 3,325  --  22,245 3,325
Cash generated from financing activities 410 19,420 2,903 410 71,938 10,752
             
Net (decrease)/increase in cash (22,894) (15,044) (2,248) (37,149) 25,497 3,811
Cash at beginning of the period 93,648 179,268 26,794 107,939 139,207 20,807
Effect of foreign exchange rate changes (49) (915) (137) (85) (1,395) (209)
Cash at September 30 70,705 163,309 24,409 70,705 163,309 24,409
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 six months ended September 30, 2009 and 2010
             
  Three Months Ended September 30, Six Months Ended September 30,
  2009 2010 2009 2010
  RMB RMB US$ RMB RMB US$
  (In thousands, except per share data or otherwise specified)
Cost of inventories sold (55,236) (83,836) (12,531) (99,012) (163,087) (24,336)
Less: biological assets fair value adjustment 34,190 49,820 7,446 57,305 99,277 14,839
             
Adjusted cost of inventories sold (21,046) (34,016) (5,084) (41,707) (63,810) (9,537)
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 six months ended September 30, 2009 and 2010
             
  Three Months Ended September 30, Six Months Ended September 30,
  2009 2010 2009 2010
  RMB RMB US$ RMB RMB US$
  (In thousands, except per share data or otherwise specified)
Profit for the period 62,350 46,603 6,966 90,647 70,098 10,477
             
Add:             
Non-cash share-based compensation 1,481 4,696 702 2,747 8,757 1,309
IPO expenses  --  11,823 1,767  --  11,823 1,767
Less:             
Net impact of biological assets fair value adjustment (37,128) (24,333) (3,637) (49,660) (22,446) (3,354)
             
Adjusted profit for the period 26,703 38,789 5,798 43,734 68,232 10,199
Appendix VI            
Le Gaga Holdings Limited
Reconciliation of Non-IFRS adjusted EBITDA to profit for the period
For the three months and six months ended September 30, 2009 and 2010
             
  Three Months Ended September 30, Six Months Ended September 30,
  2009 2010 2009 2010
  RMB RMB US$ RMB RMB US$
  (In thousands, except per share data or otherwise specified)
Profit for the period 62,350 46,603 6,966 90,647 70,098 10,477
Add:            
Amortization of lease prepayments 26 26 4 52 52 8
Depreciation 7,956 11,055 1,652 15,265 21,555 3,222
Finance costs 398 90 13 579 205 31
Income tax expense  --   --   --   --   --   -- 
Non-cash share-based compensation  1,481 4,696 702 2,747 8,757 1,309
Biological assets fair value adjustment included in cost of inventories sold 34,190 49,820 7,446 57,305 99,277 14,839
IPO expenses  --  11,823 1,767  --  11,823 1,767
Less:            
Finance income (35) (952) (142) (66) (1,011) (151)
Changes in fair value less costs to sell of biological assets (71,318) (74,153) (11,083) (106,965) (121,723) (18,193)
             
Adjusted EBITDA 35,048 49,008 7,325 59,564 89,033 13,309
CONTACT:  PRChina          Jane Liu            (852) 2522 1838            jliu@prchina.com.hk          Henry Chik            (852) 2522 1368            hchik@prchina.com.hk

Le Gaga Holdings Logo