Dear Super Sceptic
You recent attacks on the company and directors is totally unwarranted and is on the edge of defamatory. The results have been nothing but outstanding of the past years . It is not a overnight sensation. Your attacks appear to be one of those desperately short. This forum is not one where directors can or ought to defend themselves.
For your further information I copy and paste only some off the particulars from the recent Pattersons report who has stated to me he has several conferences with the company.
If you want the full report say so I will load it up to dropbox.
BACKGROUND
DFM was incorporated in Australia on 10 March 2015, and is the holding company of the Group. The main operating company is Ganzhou Chinese Modern Agriculture Co. Ltd, which is wholly owned by Hong Kong incorporated Worldwide Network Investments Group Limited, which in turn is wholly owned by DFM.
Ganzhou Chinese was established in 2005 as a trading company, and expanded its scope of business to include citrus cultivation in December 2008. In 2011, Ganzhou Chinese acquired the leases over 2,187 hectares of camellia orchards of which 60% were generating revenue. In 2012, the Company acquired a further 60 hectares of camellia plantations, and leased over 1,367 hectares of tangerine, and 840 hectares of pomelo plantations. In 2013, the Company acquired 45 hectares of navel orange plantations and took leases over 593 hectares of pomelo plantations, and a further 2,380 hectares of tangerine plantations. In 2014, the Company acquired 497 hectares of orange plantations, and in 2015, the Company acquired 400 hectares of tangerine plantations, and leased a further 267 hectares of tangerine plantations. Finally, in October 2015, the Company entered into an agreement to acquire two further camellia plantations measuring 853 hectares in total.
Tangerines
Tangerines (mandarins) are one of the most popular fruits in China. In 2015, tangerine production made up the largest contribution to the Company in terms of Volume (59%), Revenue (63%) and Gross Profit (64%). The Company operates seven plantations, totalling 4,417 hectares, with remaining lease durations all exceeding 11 years (Figure 4).
DFM’s tangerine production has increased annually since 2012, growing from around 32kt to 142kt in 2015 (Figure 5). The 2015 harvest (September to November) represented a 35% growth on 2014. With an average selling price of RMB4.15/kg, and average production costs of RMB2.20/kg, the Company was able to achieve a Gross Profit Margin of 47%.
The average age of the trees across the seven tangerine plantations is between 10-12 years. Tangerine trees usually reach maximum yield by age nine years, and can maintain that yield until age 30 following a gradual decline until age 38. The Company manages the orchards with appropriate use of both fertiliser and pesticides to maximise production while simultaneously achieving a safe product which is able to attract a premium price
For all practical purposes $1AUD=5RMB
FINANCIALS AND CORPORATE
DFM produced a strong first set of financial results since listing, for the period to end 31 December 2015. Revenue of A$199.1m was 26% up on 2014 (A$158m). Tight cost management saw cost of sales of A$107.7m result in a cost to sales ratio of 54.1%, down from 55.9% in 2014.
In order to promote the growth of agricultural investment in China, the government has incentivised the industry by zero rating both income tax and VAT on all upstream agricultural concerns. The operating company therefore pays no tax at present. This would change if the government amended legislation, and if the Company follows through on its expansion plans into downstream processing in the camellia market segment.
The Company produced a total comprehensive income for the period of A$83.6m, and Earnings per share of 23.2c, fully diluted. The Board declared a 5c per share dividend. The Company is subject to a 10% withholding tax on all dividends paid out from the PRC to Hong Kong.
As at 31 December 2015, the Company had cash of A$134.7m and remains well funded for its operations and its planned acquisition of additional tangerine plantations. Should the Company decide to acquire a downstream processing plant for camellia products, or pursue an Australian acquisition, it may need to raise further capital. DFM remains debt free.
BOARD & MANAGEMENT
Hongwei Cai – Executive Chairman
Mr Cai has extensive experience in management, marketing and business development of agricultural enterprises and public relations.
Mr Cai is responsible for the overall strategic management, investment planning and business development of the Group.
Chiu (Charles) So – Chief Executive Officer
Mr So is a Certified Practicing Accountant (Australia) and has a Bachelor degree in Commerce (Accounting) from Macquarie University in Sydney.
Mr So is responsible for the overall operation of the Group. He was previously the CFO of the Company, overseeing the IPO process on the ASX in October 2015. Prior to joining DFM, Mr So was an executive director of China Packaging Group Company Limited, an investment holding company listed on the main board of the Hong Kong Stock Exchange. The principal business activities of China Packaging Group Company Limited and its subsidiaries are the manufacture and sale of tinplate cans for the packaging of beverages in Shanxi, PRC.
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