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PGG Wrightson parent Agria posts wider first-half loss on land use impairments

Friday 15th March 2013

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Agria Corp, the Chinese parent of PGG Wrightson, posted a wider first-half loss after taking an impairment against rent it had paid on un-used farmland it leases from village collectives.

The net loss was 374.8 million yuan (US$60.2 million) in the six months ended Dec. 31, from a loss of 45.6 million yuan a year earlier, the New York stock exchange-listed company said in an SEC filing. Sales fell about 15 percent to about 3.05 billion yuan.

Agria completed its acquisition of 50.2 percent of Wrightson, New Zealand's biggest rural services company, in 2011. It also operates a Chinese seeds business and part of its strategy is to leverage Wrightson's proprietary seeds technology and research to "tap the opportunities in the fast-expending seed market in China," its report says.

Agriculture is coming more into focus in China because the modernisation of agriculture is included in that nation's 12th Five-Year Plan, Agria says.

Its first-half results include an impairment provision of 357.3 million yuan (US$57.3 million) against its prepayment of rent under leases for about 13,500 acres of land.

The company got an independent valuation of the land rights last month, after several years of grass plantation trials indicated large scale, commercial plantations on the land wouldn't be commercially viable.

The land had been used for sheep breeding, which ceased following Agria's 2010 sale of Taiyuan Primalights III Agricultural development, or P3A, which was formerly the company's main operating entity.

While the company will retain its rights to the land, "we do not anticipate to derive significant future economic benefit from the land parcels in the foreseeable future," it said.

The company is also exiting a 49 percent stake in Wuwei Ganxin Seeds, which has proprietary rights to a field corn seed that was sold through Agria's distribution network. That transaction, for 40.7 million yuan, is expected to settle in the second half though a charge of 13 million yuan has been recognised in the first-half accounts for the loss on the sale, it said.

Agria's NYSE-listed depositary receipts last traded at US$1.10, giving it a market capitalisation of US$59.8 million. It paid $144 million for its half stake in Wrightson.

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