Sunora Foods Q2 Financial Statements with MD&A
Price: $0.125
Common Shares: 42,254,332
Insider Holdings: 71% Total - 52% held by CEO , 19% by Chinese Company
Financials
Assets
Cash: $2,589,380
Receivable: $1,097,463
Inventory: $706,287
Prepaid Expenses: $18,375
Tax Recoverable: $73,804
Deferred Tax asset: $147,974
Total Assets: $4,633,283 (Q1 was $4,744,888)
Liabilities
Accounts Payable: $849,782
Deposits: $7000
Total Liabilities: $856,782 (Q1 was $1,048,682)
Profit Breakdown
Net Income in Q1/Q2 2016: $80,586
Net Income for 2015: $502,182
Net Income for 2014: $189,073
Cash added over last 10 quarters: $771,841
**NOTE** Keep in mind that a packer problem has caused issues spanning from Q4 2015 until mid Q2 2016. These have since been resolved.
MD&A Highlights
At June 30, 2016, the Working Capital Ratio was 5.2:1 compared to 7.4:1 at December 31, 2015. The Company's business has been consistently managed with a strong working capital position which has enabled the Company to operate without debt. Additionally, the current nature of Sunora's operations has enabled it to expand without making capital investments. Therefore, the Company believes it is in a very favourable position to expand in the future.
Sunora had lower sales for the six-month period ended June 30, 2016 than the comparative six month period. Sales were somewhat adversely impacted by lower commodity prices for food oil. The $80,586 of net income and comprehensive income in the six months ended June 30, 2016 was lower than the same period of 2015. This was partly a result of a foreign exchange loss of $53,337, as opposed to a foreign exchange gain of $102,603 in the comparative period. In addition, sales were 7.6% lower, and the gross margin declined from 10.1% to 8.2%. Gross margin was impacted by internal issues at a co-packer.
Accounts payable increased by $381,556 since December 31, 2015, due to increased bulk oil purchases at the end of this quarter. Nevertheless, Sunora is committed to its policy to manage its trade payables on a current basis and maintain its excellent credit standing.
Sunora's sales to the United States have recently trended higher in proportion of sales in Canada. Although overseas markets are generally continuing to grow, international sales were adversely impacted in the six months ended June 30, 2016 by short term conditions. Sales in Canada declined in this six month period compared to the same period last year due to reduced bulk oil shipments in Canada. The growth of sales in emerging markets is due to a trend in greater awareness of healthy food choices in an expanding middle class.
Outlook
Sunora maintains good relationships with customers in North America and overseas. These relationships continue to drive demand for food oil products from Canada, with Sunora well positioned to meet existing and additional demand. Management has focused on increasing visibility in emerging markets, with a specific focus on the economies in Asia, with a view to meet this increased demand for Canadian manufactured food oil products. Sunora’s operations are impacted by geopolitical situations that may hold up deliveries as was experienced in recent quarters. As the middle class in these emerging economies demands higher quality and healthier foods, Sunora is well positioned to meet additional demand.
Management is actively identifying and analyzing operations that might increase gross margins for the Company. Prospective businesses considered include packagers and suppliers in the food oil industry. With each operation identified, a detailed review and analysis is undertaken by management. Specific focus is currently on packagers with operations in Canada that are looking for a strategic partner to expand international operations. Management is also actively considering possible new products that may benefit from new domestic and international markets.
With the continuing positive momentum in the United States economy and new customers being added in Asia Sunora is well placed for the future. |
