Agria Corporation (GRO)

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Agria Corporation (GRO)

Q1 2008 Earnings Call

June 26, 2008 8:00 am ET


David Pasquale, Senior Vice President

Kenneth Huang, Chief Executive Officer

Gary Yeung, Chief Financial Officer.

Frank Xue, President of P3A


Brian Millberg – Piper Jaffray

Unknown Analyst – Credit Suisse

Bill Gilchrist – West Coast Capital Management

Bill Nasgovitz – Heartland Funds



Welcome to the Agria Corporation financial results conference call (Operator Instructions). It is now my pleasure to introduce your host, David Pasquale, Senior Vice President of Agria Corporation.

David Pasquale

We will be covering financial results for Q4 in FY2007 and Q1 ’08. We will have time for questions after a brief review of our results and outlook. Joining us today from the company are Mr. Kenneth Huang, CEO; Mr. Gary Yeung, CFO; and Mr. Frank Xue, President of P3A.

Before we begin the formal remarks, the company’s attorneys advise that today’s conference call contains forward-looking statements. These statements are made under the "Safe Harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995.

These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things the business outlook and quotations from management on the call as well as the company’s strategic and operational plans contain forward-looking statements.

Agria may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors, or employees to third parties.

Statements that are not historical facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.

Potential risks and uncertainties include, but are not limited to Agria’s limited operating history which makes it difficult to evaluate our future prospects and results of operation; natural or man-made disasters could damage our seed production, which would cause us to suffer production losses and a material reduction of our revenues; outbreaks of disease in livestock and/or food scares in China which materially and adversely affect our sheep-breeding business.

We primarily rely on arrangements with village collectives to produce our corn seed products, and if we are unable to continue these arrangements or enter into new arrangements with other village collectives to increase our production, our total land acreage devoted to corn seed production may decrease, and our growth may be inhibited.

Our growth prospects may be materially and adversely affected if we are unable to continue to develop or acquire products to meet the demands of Chinese farmers or to produce our existing products in sufficient quantities; and one or more of our distributors may engage in activities that are harmful to our brand and to our business, and other risks outlined in Agria’s filings with the U.S. Securities and Exchange Commission, including its Form F-1/A filed on November 2, 2007.

All information provided on this call is as of the date of the call, and we undertake no obligation to update any forward-looking statement, except as required under applicable law.

In addition, several non-GAAP financial measures will be mentioned on the call. Information relating to the corresponding GAAP measures and a reconciliation of the non-GAAP and GAAP measures can be found in today’s press release on our website at

At this time, I would like to now turn the call over to CEO, Kenneth Huang.

Kenneth Huang

I want to thank all of you for your participation and support over the past few months. Our management team and the board spent a lot of time in the first part of the year on a couple of issues. With the recently announced resolution, we are moving ahead with considerable energy. Our strong Q4 and the full year 2007 results demonstrate the potential of our business.

Our core business segments remain very healthy, and Agria remains positioned to capitalize on growth opportunities in front of us. As part of our efforts, to sharpen our focus and improve corporate governance, we recently announced management changes. I am now the CEO overseeing day-to-day operations. Guanglin Lai who previously served as co-CEO and the Chairman will now serve solely as the Chairman. He will now focus on M&A efforts.

Finally, Frank Xue, who resigned as the COO of Agria in April, will continue to serve as the President of our important P3 subsidiary, and the agreement we have recently announced. Our management team and the Board are pleased to have this issue resolved.

Let me turn the call over now to the CFO, Gary Yeung, for a review of the financials.

Gary Yeung

I will try to provide highlights as our release provides detailed GAAP and non-GAAP tables for Q4 and full year 2007 and for Q1 2008. All numbers cited we will in RMB unless otherwise stated. Finally, you will note in our press release the impact of deferred income tax expense at the rate of 25%. This started in fourth quarter due to a change in the past law of our Beijing office initially having a six-year tax holiday as a classified high-technology enterprise. Three years at full extension and three years at half extension, but we lost the third extension status from 2008 due to a change in the past law.

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