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AGRIBUSINESS | Tony Chua, Hong Kong
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Pacific Andes second half revenue up 4.9% to HK$4.2bn

The company believes effects of El Nino and La Nina are have dissipated as it expects to be able to fully utilise its quota share.

Pacific Andes Resources Development Limited (“PARD” or the “Group”), a leading global frozen fish supplier with an integrated supply chain spanning industrial fishing, global sourcing and ocean transportation, on Thursday announced its second quarter (“2QFY2011”) and half year results (“1HFY2011”) for the financial year ending 28 September 2011.

In 1HFY2011, PARD recorded a 4.9% increase in revenue from HK$3,990.9 million to HK$4,188.1 million following higher revenues from both the frozen fish supply chain management (“frozen fish SCM”) division and the fishing division.

Revenue from the frozen fish SCM division, which accounted for 44.1% of total revenue, rose 0.3% from HK$1,841.8 million to HK$1,847.9 million on the back of higher sales volume, though this was partially offset by lower average selling price of products due to differences in product mix.

Revenue from the fishing division, which accounted for 55.9% of total revenue, increased by 8.9% from HK$2,149.1 million to HK$2,340.2 million. The increase was mainly attributable to increased revenue contributions from the North Pacific and South Pacific trawling operations, plus maiden contribution from Mauritania trawling operations that was partially offset by lower revenue contribution from the Peruvian fishmeal business. The drop in revenue from Peru was due primarily to lower sales volume resulted from lower inventories carried forward from 1QFY2011, following several discontinuous closure of fishing ground in the North of Peru from December 2010 to January 2011. This temporary closure of the fishing ground was a measure taken by the government to protect the juvenile fish in the sea so as to ensure the long term sustainability of the fish stock. Higher average selling price of fishmeal partially offset the lower sales volume.

Although sales in general has not been negatively affected by the earthquake and tsunami in Japan, the delivery of fish roe to Japan in March 2011 was delayed, resulting in sales of fish roe to Japan in March 2011 being recorded in the next quarter.

By markets, the PRC remained the Group’s largest market with sales of HK$2,866.2 million, accounting for 68.4% of total revenue. Sales to Europe amounted to HK$356.0 million, accounting for 8.5% of total revenue. Sales to East Asia amounted to HK$278.6 million, accounting for 6.7% of total revenue. Sales to other markets including Africa amounted to HK$687.3 million, accounting for the balance of 16.4% of total revenue.

In tandem with the higher revenue, gross profit increased by 4.2% from HK$956.8 million to HK$997.0 million though gross profit margin decreased slightly from 24.0% to 23.8% mainly due to higher vessel operating cost. EBITDA increased by 12.5% from HK$983.2 million to HK$1,105.7 million while net profit decreased by 5.8% from HK$624.3 million to HK$587.9 million. Net profit contribution from the fishing division was lowered as a result of the dilution effect after a share placement by China Fishery in July 2010, according to a Pacific ANdes .

Commenting on the Group’s outlook, Executive Director and Chairman, Mr Ng Joo Siang said: “Our fishing division is expected to benefit from higher catch volume in both North Pacific and Peru in 2HFY2011. In Peru, the total allowable catch limit of Peruvian anchovy has increased from 2.50 million tonnes to 3.68 million tonnes in the main fishing season that commenced in April 2011. With the Group’s daily catch volume in Peru averaging 3,400 tonnes / day since April 2011, as compared to approximately 930 tonnes / day in the last 2 quarters, we believe that the El Nino and La Nina effects are now behind us, and thus, barring unforeseen circumstances, we expect to be able to fully utilise our quota share.”

“The strategic investment in Tassal Group Limited was completed in February 2011. This investment represents an entirely new and exciting opportunity for the Group. It will provide PARD with a platform to venture into the fast growing salmon aquaculture business and to diversify our product portfolio, which will better position the Group for the next stage of growth.” Mr. Ng concluded.

On 3 May 2011, the Group submitted an application to the Taiwan Stock Exchange (“TWSE”) and the Taiwan Central Bank to issue Taiwan Depository Receipts (“TDRs”) on the TWSE. This proposal is designed to support the Group’s longer term growth ambitions and to achieve greater liquidity and exposure throughout the Asia Pacific region. In addition, it will also enable the Group to raise PARD’s profile in Taiwan, as well as offer an opportunity for investors in Taiwan to invest in PARD.

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