TORONTO, ONTARIO--(Marketwired - Jun 30, 2014) - Migao Corporation (TSX:MGO), a China-based specialty potash fertilizer producer, today reported financial results for the three and twelve-month periods ended March 31, 2014.

Revenues were $369.3 million for the year ended March 31, 2014, representing $85 million (29.9%) increase from $284.3 million for the year ended March 31, 2013. The revenue increase for the year ended March 31, 2014 is mainly due to increased sales of potassium sulphate, compound fertilizers and potassium chloride (direct sale) primarily as a result of higher quantities sold during the year. Migao also sold $25.8 million of NK compound fertilizers (direct sale) during fiscal 2014 while there were no NK compound fertilizers sold during fiscal 2013. The sales increase, however was partly offset by decreases in sales of potassium nitrate and ammonium chloride during the year ended March 31, 2014 as compared with the year ended March 31, 2013.

Revenues for the quarter ended March 31, 2014 were $233.9 million compared with $188.8 million for the quarter ended March 31, 2013. The increase in revenue for the quarter is primarily a result of increased sales volumes of potassium sulphate, potassium chloride and value added potassium chloride as well as NK compound fertilizers (direct sale) during the quarter ended March 31, 2014. The effects of higher sales volume were partially offset by lower average selling price in all core products and co-products except for potassium sulphate, which was sold at a price level comparable with the same period one year ago.

Migao had gross profit of $0.3 million and gross loss of $9.6 million for the quarter and the year ended March 31, 2014, compared with gross profit of $1.2 million and $3.6 million for the same periods one year ago. The lower level of gross profit registered during the year ended March 31, 2014 was mainly due to lower average selling prices for all of Migao's products as a result of slowdown of the Chinese economy and market volatilities in global potash markets triggered by the breakup of JSC Belarusian Potash Company (BPC) in July 2013.

As a result of the above, Migao performed impairment assessments for its PRC operating subsidiaries. The review led to the recognition of an impairment loss of $15.7 million primarily related to the production assets of Migao's PRC operating subsidiaries for the year ended March 31, 2014. The impact of this impairment charge was loss of $0.30 per basic share. During the year ended March 31, 2013 Migao recorded an impairment loss of $18.4 million related to assets primarily used in the production of potassium sulphate and hydrochloric acid as a result of ongoing weak market condition for hydrochloric acid and related reduced production of potassium sulphate.

For the quarter and the year ended March 31, 2014 Migao reported a net loss of $ 22.6 million or $(0.43) per basic share and net loss of $58.2 million or $(1.11) per basic share respectively, as compared with net loss of $22.3 million or $(0.43) per basic share and net loss of $38.8 million or $(0.74) per basic share for the same periods last year.

For the quarter ended March 31, 2014 average selling price for potassium nitrate was RMB 3,841 ($694) per tonne, RMB3,021 ($546) per tonne for potassium sulphate and RMB2,208 ($399) per tonne for potassium chloride, as compared with RMB 4,611 ($741) per tonne for potassium nitrate, RMB 2,985 ($480) per tonne for potassium sulphate and RMB3,060 ($492) per tonne for potassium chloride same period one year ago. During the year ended March 31, 2014 Migao sold 86,748 tonnes of potassium nitrate, 214,548 tonnes of potassium sulphate, 345,594 tonnes of potassium chloride and value added potassium chloride as well as 83,661 tonnes of compound fertilizers. During the year ended March 31, 2013, sales volumes were 103,264 tonnes for potassium nitrate, 133,231 tonnes for potassium sulphate, 200,335 tonnes for potassium chloride and value added potassium chloride and 78,052 for compound fertilizers.

At March 31, 2014, Migao reported cash and restricted cash of $152.8 million and working capital of $148.3 million.

At the end of the year, Migao had $58.0 million of inventory, which included $39.6 million (105,922 tonnes) of potassium chloride inventory with an average delivered price of $374 per tonne, and $6.7 million of various raw materials for compound fertilizers. Also included in inventory was $10.8 (70,715 tonnes) of finished goods inventory on hand, including co- products. During the fourth quarter of fiscal 2014, the Migao sold 23,203 tonnes of potassium nitrate, 114,313 tonnes of potassium sulphate, 279,645 tonnes of potassium chloride and value added potassium chloride, as well as 55,255 of specialty compound fertilizers.

Cash and cash equivalents was $13.8 million as at March 31, 2014, compared with $10.2 million as at March 31, 2013. The increase in cash and cash equivalents were mainly combined results of $10.1 million use of cash in operations, a $21.9 million cash outflow from investing activities as a result of payments of $9.7 million for plant and equipment, $2.3 million for land use rights, $5.7 million for deposits for plant, equipment and land use rights, as well as capital contribution of $4.2 million to SQM joint venture and Eurochem Migao joint venture. These cash outflows were offset by cash inflows of $34.4 million from net additions in new loans during the year ended March 31, 2014.

SUMMARY FINANCIAL RESULTS
In $'000 except per share data
3 months ended3 months endedYTDYTD
March
31, 2014		March
31, 2013		fiscal
2014		fiscal
2013
Revenue 233,934 188,800 369,312 284,340
Gross (loss) profit 269 1,241 (9,567) 3,610
Gross (loss ) profit (% of revenue) 0.1% 0.7% (2.6%) 1.3%
Net loss (22,642) (22,312) (58,223) (38,843)
EBITDA (14,277) (18,953) (42,434) (26,493)
(loss) earnings per share (basic and diluted) (0.43) (0.43) (1.11) (0.74)
Weighted average number of shares
(in millions of shares)
Basic 52.5 52.5 52.5 52.5
Diluted 52.5 52.5 52.5 52.5
Balance Sheet Highlights
In $'000 except ratio
March 31, 2014March 31, 2013
Current ratio 1.41:1 1.80:1
Cash, cash equivalents and restricted cash 152,832 77,040
Working capital 148,287 183,037
Total assets 647,169 542,804
Total liabilities 364,785 234,363
Total equity 282,384 308,441
Long term debt to equity ratio 0.01:1 0.01:1

Comparative figures for the periods ended March 31, 2013 were restated due to Migao's adoption of IFRS 11 for the first time effective from April 1, 2013. Refer to note 2 of Migao's March 31, 2014 Consolidated Financial Statements for detailed analysis of the impact from application of IFRS 11.

Migao's financial statements and MD&A have been filed on SEDAR and will be available at www.sedar.com

Recent developments

In February 2014, Migao and a subsidiary of Eurochem jointly incorporated Eurochem Migao Ltd ("Eurochem Migao"), a joint venture holding company based in Hong Kong. Eurochem Migao intends to acquire Yunnan Migao under applicable regulatory approvals. On May 20, 2014, Eurochem Migao obtained approval from the Minister of Commerce of the People's Republic of China to conduct business in China. As at June 30, 2014, Eurochem Migao's acquisition of Yunnan Migao's share from Sichuan Migao and Guangdong Migao is still under process.

In May 2014, Sichuan Ruigao Logistic Co., Ltd ("Ruigao"), which Migao owned 25% interest of as at March 31, 2014, was dissolved under relevant PRC regulations. Migao received refund of its share of the net assets of Ruigao upon the dissolution.

About Migao

Migao Corporation, through its wholly owned subsidiaries, owns and operates fertilizer production plants in various strategic locations across China for the production and sale of specialty potash fertilizer (potassium nitrate and potassium sulphate) to China's agricultural market. Migao Corporation is subject to, and complies with strict government regulations that govern safety, quality and environmental protection. Migao's Sichuan facility, Guangdong facility, Liaoning facility, Changchun facility, Zunyi facility and Sichuan SQM Migao joint venture are ISO 14001 certified, an international environmental management standard. Please visit www.migaocorp.com for further information.

USE OF NON-GAAP MEASURES

Certain non-GAAP measures referenced in this news release have no standardized meaning under International Financial Reporting Standards ("IFRS") and, therefore, are unlikely to be comparable to similar measures presented by other issuers. Where we reference non-GAAP measures, we provide definitions. For example, EBITDA is commonly defined as earnings before interest, taxes, depreciation and amortization. EBITDA is most directly comparable to the GAAP measure operating income or loss, except that depreciation and amortization of plant assets are included in measuring operating income or loss, but depreciation and amortization expenses are excluded in measuring EBITDA. In Migao's earnings releases, consolidated financial statements and MD&As, unless otherwise noted, all financial data is prepared in accordance with IFRS.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release may include forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and other provincial securities laws in Canada. These forward-looking statements include, among others, statements with respect to our objectives and goals, and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", and "continue" (or the negative or grammatical variations thereof), and words and expressions of similar meaning, are intended to identify forward- looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results, performance or achievements may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on forward-looking statements as a number of important factors, many of which are beyond our control, could cause actual results, performance or achievements to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors that relate to our company include, but are not limited to: risks related to raw materials; execution of the business plan; expansion plans; dependence on key personnel; key relationships; dependence on key customers; dependence on key suppliers; competition; market factors and volatility of commodity prices; environmental risks and hazards; operating risks; proprietary rights; infrastructure; future capital requirements; technical substitution; exchange rate fluctuations; insurance; foreign operations; tobacco industry considerations; weather conditions and natural disasters; control by management; seasonality; dividends; conflicts of interest; global financial conditions; and the implementation of the Labour Contract Law in the People's Republic of China in 2008. In addition to the foregoing risk factors, there are also risks related to doing business in China which include, but are not limited to: state ownership; government sector intervention; foreign investment; repatriation of profit and currency conversion; tax; shareholders' rights and enforcement of judgements; developing legal system; protection of intellectual property rights; permits and business licenses; appropriation; and availability of land. Should one or more of these factors materialize, or should our estimates or underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described in forward-looking statements.

We caution that the foregoing list of important factors that may affect our future results, performance or achievements is not exhaustive. When reviewing our forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found under the "Risk Factors" sections in our Annual Information Form and annual MD&A and elsewhere in our filings with Canadian securities regulatory authorities. Except as required by Canadian securities laws, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. We cannot assure readers that actual results, performance and achievements will be consistent with these forward-looking statements, and the differences may be material. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.

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