Posted by lvpierre > 2013-07-25 15:47 | Report Abuse

The following is a reply from Sino Grandness VP for Investor Relations >>

Few points to take note:

1.Sino Grandness business segments have some seasonality effect so it is more accurate to use full year figures to analyse the turnover days.

2. Trade receivable figures also include “non-trade” items hence the description “trade and other receivables”. The non-trade portion is quite sizeable, so need to deduct that portion when u calculate receivable turnover days.

This information is on pg 70 of the annual report which shows what are all these non-trade receivables eg value-added tax refund, export tax refund.

The refunds mainly relate to our export business because China government has tax incentive to support exporters of agriculture products.

In FY12, total receivables were RMB556.2m, of which RMB128.8m was non-trade ie about 23.2%. In you mistakenly include this non-trade figure when you calculate the turnover days, then it will give you a wrong indication.

Let’s use the annual report figures to calculate FY12 and FY11 turnover days.

FY12, average debtors are RMB427.3m+210.4m / 2 = RMB318.85m

FY12 revenue was RMB1.64b

So 318.85/1640 x 365 = 71 days (this is for FY12)

FY11 average debtors are RMB210.4m + RMB173.3m / 2 =191.85

FT12 revenue was RMB1.019b

So 191.85/1019x365 = 69 days (this is for FY11)

From the figure above, you can see that our turnover days increased by 2 days. This is in line with our credit policy of up to 90 days given to our customers.

We have been telling investors that for our export business, we usually give 60-day credit terms but for China consumer products selling into supermarkets, it is quite common to give credit terms of around 3 months ie 90 days. As we sell more juices compared to export products, it is natural for our average debtors turnover days to increase and move close to 90 days over time.