Hanfeng Evergreen Announces Fourth Quarter and Full Year 2011 Audited Financial Results

Hanfeng Evergreen Inc. (TSX:HF) ("Hanfeng" or the "Company") today reported its
financial results for the fourth quarter and year ended June 30, 2011. All
amounts are in Canadian dollars unless otherwise noted. 




Summary Financial Results                                                   
                                                                            
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(in thousands in $Cdn except                                                
 per share data and average                                                 
 gross profit per metric ton  For the 3 month period For the 12 month period
 ("MT")                                ended June 30           ended June 30
                            ------------------------------------------------
                                    2011        2010        2011        2010
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Sales                            $53,733     $83,923    $246,800    $270,405
Gross profit                       6,961      12,214      30,699      41,765
EBITDA(1)                          4,720      11,847      25,964      38,708
Net Income                         2,328       9,598      12,404      29,305
Basic EPS                          $0.04       $0.15       $0.20       $0.47
Diluted EPS                        $0.04       $0.15       $0.20       $0.47
Non-GAAP EPS(2)                    $0.05       $0.15       $0.28       $0.49
Avg. gross profit per MT in                                                 
 RMB-SCR(3)                      yen 477     yen 430     yen 417     yen 435
Avg. gross profit per MT in                                                 
 RMB-NE(3)                       yen 191     yen 207     yen 145     yen 202
                                                                            
(1) Earnings before interest, taxes, depreciation, and amortization         
    ("EBITDA") is a non-GAAP financial measure, which the Company believes  
    is meaningful information for purposes of performance evaluation and it 
    allows for comparisons of the Company's performance to the industry as  
    it eliminates the impact of financing decisions, capital structure and  
    the cost basis of assets. Hanfeng calculates it by adding (1) net       
    income, (2) interest expense reported on the income statements (or      
    deducting interest income), (3) amortization expense reported as part of
    cost of goods sold on the income statements, (4) amortization expense   
    reported as a line item on the income statements; (5) income tax expense
    reported on the income statements, (6) Property, plant and equipment and
    intangibles write-down and (7) and by deducting foreign exchange gain   
    (loss). This might not be the same definition used by other companies.  
(2) Non-GAAP EPS is calculated by adding back the net of tax impact of non- 
    cash, fixed asset and intangible write-downs to basic earnings per share
    ("EPS").                                                                
(3) Excludes the gross profit per metric ton for the Indonesian joint       
    venture operations. RMB refers to the Renminbi of the People's Republic 
    of China. SCR refers to Slow and Controlled Release fertilizer products.
    NE refers to Nitrogen Enhanced Coated Urea.                             



Sales for the quarter ended June 30, 2011 decreased to $53.7 million from $83.9
million for the same quarter of fiscal 2010. The decrease from the comparative
period in 2010 is primarily attributable to the negative impact on production
(resulting in lower sales volumes) from the Heilongjiang maintenance turnaround
which began in the fourth quarter of fiscal 2011, as well as the permanent
shut-down of the NPK prill tower at the Company's Jiangsu facility in the second
quarter of fiscal 2011, which were slightly offset by an 11 percent increase in
the average selling price for Hanfeng's slow and controlled release fertilizer
("SCR") and an 18 percent increase in the average selling price of its nitrogen
enhancer ("NE") product in RMB. 


Gross margin per metric ton for SCR was RMB 477, an increase of RMB 47 per
metric ton or 11 percent from the comparative period last year and consistent
with those reported in the third quarter of fiscal 2011. Gross margin per metric
ton for NE products was RMB 191 in the fourth quarter of fiscal 2011, up RMB 27
per metric ton or 16 percent from RMB 164 in the third quarter of fiscal 2011
due to lower nitrogen enhancer material costs and an improvement in selling
prices. 


EBITDA in the fourth quarter of fiscal 2011 was $4.7 million versus $11.8
million in the fourth quarter of fiscal 2010 due to lower sales revenue, as
explained above, the costs of and lost production due to the Heilongjiang
maintenance turnaround, as well as increased general and administrative expenses
related to the new Indonesia joint venture which is currently in its ramp up
phase and not yet operating at normal capacity. Net income in the fourth quarter
of fiscal 2011 was $2.3 million as compared to $9.6 million during the same
quarter in fiscal 2010. As a result, EPS is $0.04 per share for the fourth
quarter of fiscal 2011, compared to $0.15 for the same quarter during fiscal
2010. Non-GAAP EPS was $0.05 per share for the fourth quarter of fiscal 2011.


Sales revenue in fiscal 2011 was $246.8 million compared to $270.4 million in
the year ended June 30, 2010. The decrease is primarily the result of a shift in
sales mix during the year ended June 30, 2011 from higher-priced SCR products to
lower-priced NE products, as well as a reduction in total tons sold, and
slightly offset by a higher selling price per metric ton for both SCR (4% higher
in fiscal 2011 versus fiscal 2010 in RMB) and NE products (11% higher in fiscal
2011 versus fiscal 2010 in RMB), as well as the negative impact of the
maintenance turnaround at Heilongjiang. 


EBITDA for the year ended June 30, 2011 was $26.0 million compared to $38.7
million in the year ended June 30, 2010. The decrease in EBITDA is mainly due to
reduced gross margins caused by the large volume of discounted product sold to a
new customer in the second quarter of fiscal 2011, and increased general and
administrative expenses related to the new Indonesia joint venture, as well as
the maintenance turnaround at the Heilongjiang plant. Net income decreased to
$12.4 million and EPS was $0.20 for the year ended June 30, 2011 versus $29.3
million and $0.47 for fiscal 2010. Non-GAAP EPS was $0.28 per share for fiscal
2011.


Cash was $65.5 million as at June 30, 2011, compared to $49.0 million as at June
30, 2010 and $40.6 million as at March 31, 2011. Additionally, the Company,
through its subsidiaries based in China, has two undrawn lines of credit with
Chinese banks totaling $98.5 million. As at June 30, 2011, Hanfeng reported a
total of $10.5 million in debt related to its pro rata share (34%) of a working
capital loan for the Indonesia joint venture facility.




Liquidity and Capital Resources                                             
                                                                            
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In thousands of Canadian dollars except for                                 
 ratios                                          June 30, 2011 June 30, 2010
----------------------------------------------------------------------------
Current ratio(1)                                        28.2:1        41.8:1
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Cash                                                    65,517        49,037
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Working capital                                        185,128       166,695
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Total assets                                           297,638       286,781
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Total debt(2)                                           10,527           nil
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Total equity                                           280,190       282,596
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Total debt / Total equity                                 3.8%           n/a
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Notes:                                                                      
     (1) Current ratio = Current Assets / Current Liabilities               
     (2) Total debt does not include accounts payable, accrued liabilities, 
         advances from customers, income tax payable and future income tax  
         liability.                                                         



The Company will hold a conference call to discuss the financial results on
Tuesday, September 27, 2011 at 10:00 a.m. Eastern Daylight Time (EDT). Mr. Niral
Merchant, CFO and Mr. Loudon Owen, Non-Executive Chairman of the Board of
Directors will host the call, and invite analysts and investors to participate
in the conference call.




Date:                      Tuesday, September 27, 2011                      
Time:                      10:00 am, Eastern Daylight Time                  
Dial in Number:            1-888-298-3451 or 1-719-457-2657                 
Taped Replay:              1-877-870-5176 or 1-858-384-5517                 
Taped Replay Pass Code:    4337214                                          
Webcast Presentation Link: http://viavid.net/dce.aspx?sid=00008CE0          



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


About Hanfeng Evergreen Inc.

Hanfeng is a leading producer and supplier of value-added fertilizer solutions
in emerging markets. It is the largest producer of slow and controlled release
fertilizer in two of world's most significant agricultural markets: the People's
Republic of China ("China") and the Republic of Indonesia. As the first company
to introduce slow and controlled release fertilizers into China's agriculture
market, Hanfeng has established itself both as a market leader and innovator. A
Canadian Company, Hanfeng is headquartered in Toronto, Ontario and its shares
trade on the Toronto Stock Exchange under the ticker HF.
www.hanfengevergreen.com. 


This press release contains forward-looking statements based on current
expectations. Forward looking statements include, without limitation, statements
evaluating market and general economic conditions, and statements regarding
growth strategy and future-oriented projected revenue, costs and expenditures.
Actual results could differ materially from those projected and should not be
relied upon as a prediction of future events. A variety of inherent risks,
uncertainties and factors, many of which are beyond Hanfeng's control, affect
the operations, performance and results of Hanfeng and its business, and could
cause actual results to differ materially from current expectations of estimated
or anticipated events or results. Some of these risks, uncertainties and factors
include the impact or unanticipated impact of: current, pending and proposed
legislative or regulatory developments in the jurisdictions where Hanfeng
operates, in particular in China and the Republic of Indonesia; changes in tax
laws; political conditions and developments; intensifying competition from
established competitors and new entrants in the fertilizer industries;
technological change; currency value fluctuation and changes in foreign exchange
restrictions; changes in Chinese government support or restrictions on foreign
investment; general economic conditions worldwide, as well as in China and South
East Asia; Hanfeng's success in developing and introducing new products and
services, constructing and operating new manufacturing facilities, expanding
existing distribution channels, developing new distribution channels and
realizing increased revenue from these channels. This list is not exhaustive of
the factors that may affect any of Hanfeng's forward-looking statements. Risks
and uncertainties about Hanfeng's business are more fully discussed in the
Company's disclosure materials, including its annual information form and MD&A,
filed with the securities regulatory authorities in Canada. Hanfeng undertakes
no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made, or to reflect the
occurrence of unanticipated events, whether as a result of new information,
future events or results or for any other reason. Readers are cautioned not to
put undue reliance on forward-looking statements.