VANCOUVER, Dec. 3 /CNW/ - IND DairyTech Ltd. ("IND" or the "Company") (TSXV 'IND') today announced financial results for the quarter ended September 30, 2010. The unaudited interim financial statements along with management's discussion and analysis have been filed with SEDAR.
Revenues for the quarter were $13.9 million compared to $4.8 million in the third quarter of 2009. The increase in sales revenues was mainly due to 5,493 cows sold in the quarter. Net income for the quarter was $7.1 million or $0.06 per share as compared to a loss of $0.3 million in the third quarter of last year. A special investment gain of $7.4 million was reported in the quarter from change of the Company's interests in its subsidiary IND China, the details of which are set out in the financial statements filed on SEDAR. The current quarter's revenues include $2.2 million from raw milk sales, and $11.7 million from sales of cows. The sales of milk increased from $1.6 million from the third quarter of 2009, or a 36% growth, reflecting the increasing milking herd and increased milk price. For the first 9 months of 2010, the total revenues for milk sales were $5.7 million and $16.6 million for sales of cows, and the net income for the 9 months in 2010 was $6.7 million, compared to a loss of $3.3 million in the 9 months ended September 30, 2009. For the nine months in 2010, the gross margin of raw milk was a negative of 25%, due to the impact of a foot and mouth disease resulting into low milk production per cow in some farms affected. The margin for sales of cows was 23% for the 9 months. The Company expects the farms will recover from the disease, and milk production per cow will improve, and the sales from raw will continue to grow with an improving margin.
For the nine months in 2010, the Company raised approximately $23.5 million from the market, paid off $11 million debt, used $12 million in operating activities, and used $8.6 million in purchase of properties and cows.
At September 30, 2010, IND had a herd size of 14,540 (December 31, 2009: 12,858). The herd size was not increasing as fast as forecasted before due to sale of 5,493 cows during the period and an additional disposition of 3,224 cows during the nine month period ended September 30, 2010. Management remains dedicated to its strict quality control standards and cow herd monitoring. The Company reported $2.4 million loss from the disposal of cows in the nine months of 2010.
"The impact of foot and mouth disease continued into the third quarter of 2010 and the Company is still facing the challenges as milk productions in some farms are still affected and cows disposed," said Jesse Zhu, IND's CEO and Chairman. "However we have seen the impact of the disease stabilize and will recover late into the quarter. Management has been making efforts to control and reduce the loss. In the coming quarters, after the effects of the disease have been eliminated, we expect to see a positive operating income. The Company's management has been actively raising money for the Company from the Chinese domestic market and a net income reported in the quarter reflects the management's successful efforts in creating value for the shareholders."
The Company also announces that Ms. Kit Shum has been appointed as a director of the Company. Ms. Shum is a recognized Canadian expert in cow raising who is a consultant for the Canadian government in helping many countries in the world in raising cows. Ms. Shum will chair the audit committee of the Company.
About IND Dairytech Ltd.
IND, through its operating subsidiaries, is an emerging raw milk and Holsteins producer in China that is seeking to become a leading provider of high quality raw milk and Holsteins to the Chinese dairy industry. To meet China's increasing demand for dairy products, the Company is using Canadian cattle genetics and North American farming practices to establish and develop its dairy herd in China.
The Company plans to develop its herd in China through the use of advanced breeding techniques employing Canadian Holstein embryos that it intends to use to impregnate surrogate cows. These embryos have been created through in vitro fertilization using sexed semen to achieve an approximate 90% female birth rate. The use of these advanced breeding techniques is expected to allow the Company to rapidly expand its herd. The use of Canadian Holstein embryos also provides a practical solution to China's ban on the import of live Canadian cattle.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
FORWARD LOOKING INFORMATION
Certain information set out in this News Release constitutes forward-looking information, which may include information relating to estimates of sales and revenue of IND. Forward-looking statements (often, but not always, identified by the use of words such as "expect", "may", "could", "anticipate" or "will" and similar expressions) may describe expectations, opinions or guidance that are not statements of fact and which may be based upon information provided by third parties. Forward-looking statements are based upon the opinions, expectations and estimates of management of the Company as at the date the statements are made and are subject to a variety of known and unknown risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. In light of the risks and uncertainties associated with forward-looking statements, readers are cautioned not to place undue reliance upon forward-looking information. Although the Company believes that the expectations reflected in the forward-looking statements set out in this press release or incorporated herein by reference are reasonable, it can give no assurance that such expectations will prove to have been correct. The forward-looking statements of the Company contained in this press release, or incorporated herein by reference, are expressly qualified, in their entirety, by this cautionary statement.
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