SHENZHEN, China, April 14, 2011 /PRNewswire-Asia/ -- Global Pharm Holdings Group, Inc. (OTC Bulletin Board: GPHG) ('Global Pharm" or the "Company"), a Shenzhen-based, leading vertically integrated pharmaceutical company engaged in pharmaceutical related products distribution business through its subsidiaries in Anhui, Jilin, and Shandong provinces, today reported financial results for the twelve months ended December 31, 2010.
Fiscal Year 2010 Highlights
"We are pleased to announce record financial results for 2010, which continues to validate our strategy of building a solid distribution capacity and growing to become a major rapid-growing and profitable pharmaceutical company," stated Mr. Yunlu Yin, Chief Executive Officer of Global Pharm.
Fiscal Year 2010 ResultsTotal Revenues for the twelve months ended December 31, 2010 increased by 61.7% to $140.3 million from $86.8 million in twelve months ended December 31, 2009.
The strong year-over-year revenue growth was mainly attributable to increased sales in the Company's pharmaceutical products distribution business segment, which grew 65.0% year-over-year, and the herbal cultivation and sales business segment, which grew 105.2% year-over year.
Below is a breakdown of sales per business segment for fiscal year 2010 and 2009:For the Years Ended December 31 – Revenuein USD except percentage
Change% of revenue% of revenue%Pharmaceutical products distribution
65.0TCM processing and distribution
51.3Herbal cultivation and sales
105.2Flower tea bags
61.7The sales growth of pharmaceutical products distribution, generated by the Company's subsidiaries Yaoyuan, was mainly due to the Company securing exclusive distribution rights from two pharmaceutical manufactures in Shandong province in early 2010, which granted Global Pharm the rights to sell a total of over 680 kinds of products exclusively in Shandong province.
The growth of the Company's TCM processing and distribution business, generated by its subsidiary Xuelingxian, was primarily due to the expansion of the product portfolio and the price volatility of TCM products, as well as the increased demand from hospitals, pharmacy shops and neighborhood clinics.
The growth in the herbal cultivation and sales segment, generated by the Company's subsidiaries Xuelingxian, was primarily due to the additional land leased for plantation, the growth in sales of herbs harvested in 2010, as well as the increase in prices of certain herbs in 2010.
The year-over-year decrease in sales of flower tea bags for 2010 was mainly due to increased competition in the market.
Gross Profit for the twelve months ended December 31, 2010 was $26.4 million, an increase of 64.5% from $16.1 million in the same period a year ago. Gross margin was 18.8% compared with 18.5% for the same period a year ago.
Operatingexpenses increased 88.7% to $1.5 million due to increased advertising and freight costs consistent with higher sale volume.
General and administrative expenses were $9.0 million for the twelve months ended December 31, 2010 compared with $1.1 million for the same period in 2009, which was primarily due to $6.0 million in non-cash expenses related to share-based compensation to Global Pharm's employees as well as merger costs of $0.8 million related to the Company's reverse takeover transaction in 2010. The employee-based stock expenses have been fully amortized in 2010 and will not affect Global Pharm's net income in the future. Excluding these non-cash expenses and taking into account the added expenses related to becoming a public company, which resulted in increased professional service fees, such as legal and accounting services, the increase in general and administrative expenses remains consistent with the increase in net revenue.
Operating income was $15.9 million compared with $14.2 million for the twelve months ended December 31, 2009.
Net income for the twelve months ended December 31, 2010 was $11.2 million, or $0.51 per diluted weighted average share, compared with net income of $10.9 million, or $0.57 per diluted share, for the same period a year ago. Excluding the impact of non-cash expenses related to share-based compensation for employees and the Company's reverse takeover, adjusted net income for the twelve months ended December 31, 2010 was $17.9 million, or $0.82 per weighted average diluted share.
Financial ConditionAs of December 31, 2010, the Company had $4.3 million in cash and $19.8 million in accounts receivable compared with $7.5 million and $11.7 million as of December 31, 2009. The Company's inventories increased to $16.1 million as of December 31, 2010 from $9.4 million as of December 31, 2009, mainly due to large quantity of unfulfilled sales orders placed by customers before year end and anticipated orders at the next year beginning, which is in line with the increased scale of sales during the year. Working capital was $17.4 million, compared with $10.0 million at the end of 2009. As of December 31, 2010, the Company had $2.0 million in short-term debt. Stockholders' equity totaled $17.6 million as of December 31, 2010, compared with $10.3 million at the end of 2009. For the year ended December 31, 2010, Global Pharm generated $8.9 million cash from operating activities, as compared to $10.2 million for 2009. The Company used $12.1 million in cash for financing activities for the twelve months ended December 31, 2010 compared with $7.8 million for the twelve months ended December 31, 2009, mainly due to dividends paid to the former stockholders of the Company's operating subsidiaries. The diluted weighted average number of shares outstanding was 21.8 million as of December 31, 2010.
Business OutlookMr. Yin concluded, "We believe that the National Health Program will further drive the reform and consolidation of China's pharmaceutical industry in the next several years. This consolidation will bring historical opportunities for Global Pharm to acquire more distribution units to underline perspective sustainable growth. In 2011, we will focus on a series of acquisition of several targeting pioneer city-level distributors to build a solid comprehensive sale network in Shandong Province. We believe the formation of this broad local distribution network will smooth a pipeline between the pharmaceutical manufacturers and distributors, as well as to effectively alleviate incumbent multiple layers in the distribution channel and lower the price mark-up for pharmaceuticals. Moreover, the growing distribution channels will help us to create a significant competitive edge in the market by getting more preferential price and products from numerous prestigious domestic pharmaceutical manufacturers. Beyond this, with the support of Bozhou Municipal Government, we will continue to commit to the investment in Chinese herbal plantation business, to a great extent, and to reduce negative impact from ongoing higher price inflation of Chinese Herbs and achieve a stable supply of quality TCM materials. Next, we'll directly offer those quality TCM materials to our own distribution business units for the further distribution. Through the integration of upstream and downstream operations and the establishment of a broader regional sales network, we expect to create a significant synergy, to empower Global Pharm to gain more market share and to enhance the overall profitability of our business. We look forward to continuously strengthen our market leadership position in 2011 and beyond."
Use of Adjusted Financial MeasuresGAAP results for the twelve months ended December 31, 2010 include non-cash items related to management share-based compensation expenses and expenses related to the reverse takeover in 2010. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided adjusted financial information excluding the impact of these items in this release. It is a departure of U.S. GAAP; however, the Company's management believes that these adjusted measures provide investors with a better understanding of how the results of the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional adjusted information is not meant to be considered in isolation or as a substitute for GAAP financials.Twelve months ended December 3120102009Net income11,152,14210,901,402Non-cash share compensation expenses5,968,4000Non-cash merger costs750,0000Adjusted net income17,870,54210,901,402Earnings per weighted average share of common stock0.510.57Non-cash share compensation expenses – per weighted average share0.27-Non-cash merger costs - per weighted average share0.03-Adjusted earnings per weighted average share of common stock0.820.57Outstanding weighted average shares21,780,71819,094,000About Global Pharm HoldingsGlobal Pharm Holdings Group, Inc. operates as a pharmaceutical distribution business in the People's Republic of China. Through its three subsidiaries, Shandong Global Pharm Co., Ltd., Tonghua Tongdetang Pharmaceutical & Medicinal Material Co., Ltd., and Anhui Xuelingxian Pharmaceutical Co., Ltd., the Group focuses on pharmaceutical related products distribution. In order to alleviate the impact on price inflation and maintain the supply stability of Traditional Chinese Medicine (TCM) raw materials, the Group also engages in the cultivation and processing of TCM herbs. Currently, Global Pharm owns GSP-certified, modern logistics distribution centers totally occupying 237,600 square feet and manages over 13,000 inventory products; and its sales network covers Shandong, Jilin, and Liaoning provinces, as well as other developed provinces in China. The Group intends to establish an integrated value chain in the pharmaceutical industry through strategic acquisitions within pharmaceutical production, distribution, and retail sectors. Global Pharm will achieve a solid distribution capacity and grow to be a major rapid-growing and profitable pharmaceutical company. For further information, please visit the Company's corporate website at http://www.globalpharmholdings.com.
Forward-looking Statements Certain statements set forth in this press release contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. Such statements reflect the current view of our management with respect to future events and are subject to risks, uncertainties, assumptions and other factors as they relate to our industry, our operations and results of operations, plans for future facilities, capital-expenditure plans, and any businesses that we may acquire. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the U.S. federal securities laws, we do not intend to update any of the forward-looking statements to conform them to actual results.
-FINANCIAL TABLES FOLLOW-GLOBAL PHARM HOLDINGS GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2010 AND 200920102009Revenues, net$
86,784,002Cost of goods sold113,932,84570,725,013Gross profit26,409,93316,058,989Expenses:Operating expenses1,495,344792,295General and administrative8,995,5511,096,333Income from operations15,919,03814,170,361Interest income27,10521,052Miscellaneous income (expense)(12,797)8,266Income before income taxes15,933,34614,199,679Provision for income taxes4,781,2043,298,277Net income11,152,14210,901,402Other comprehensive incomeForeign currency translation adjustment310,437(42,248)Total comprehensive income$
10,859,154Earnings per share of common stock:Basic and diluted earnings per share$
0.57Basic and diluted weighted average shares21,780,71819,094,000GLOBAL PHARM HOLDINGS GROUP, INC.CONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2010 AND 200920102009ASSETSCurrent assets:Cash and cash equivalents$
7,455,147Accounts receivable19,771,61911,707,848Inventories16,058,7609,373,762Prepaid expenses1,157,409-Other receivable169,251-Due from related parties-74,568Restricted cash1,538,251-Total current assets42,966,78828,611,325Property, plant and equipment, net210,665229,587Total assets$43,177,453$28,840,912LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Short term loans$
219,751Bank acceptance21,212219,751Accounts payable20,013,15713,598,744Accrued salary568,887218,546Income taxes payable1,177,439944,143Other taxes payable551,060552,560Other accrued liabilities362,879161,825Due to related party882,5052,665,768Total current liabilities25,549,28918,581,088Stockholders' equity:Common stock, par value, $ 0.001 per share, 100,000,000 shares authorized, 26,000,000 and 19,094,000 issued and outstanding in 2010 and 2009, respectively.26,00019,094Additional paid-in capital9,200,6232,489,129Statutory surplus reserves1,310,7011,310,701Retained earnings6,546,4066,206,903Accumulated other comprehensive income544,434233,997Total stockholders' equity17,628,16410,259,824Total liabilities and stockholders' equity$43,177,453$28,840,912GLOBAL PHARM HOLDINGS GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFOR YEARS ENDED DECEMBER 31, 2010 AND 200920102009Cash flows from operating activitiesNet Income$
10,901,402Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization68,16850,392Loss on disposal of property, plant and equipment4,711-Stock-based compensation5,968,400-Merger cost750,000-Changes in operating assets and liabilities:Accounts receivable(7,447,036)(3,145,877)Other receivables(164,805)(22,781)Prepaid expenses(1,127,002)-Inventories(6,185,205)(2,195,407)Accounts payable5,775,6312,526,380Accrued payroll333,57970,527Other accrued liabilities190,175138,725Income taxes payable194,516236,928Other taxes payable(20,569)139,620Due to related party908,0571,463,979Restricted cash(1,497,838)-Net cash provided by operating activities8,902,92410,163,888Cash flows from investing activitiesPurchases of property, plant and equipment(107,952)(155,971)Proceeds on sale of property, plant, and equipment61,436-Net cash used in investing activities(46,516)(155,971)Cash flows from financing activities:Short term loan borrowing1,920,338219,597Short term loan repayments(221,578)-Bank acceptance(200,923)219,597Dividend paid to the former shareholders(13,577,086)(8,190,085)Net cash used in financing activities(12,079,249)(7,750,891)Net (decrease) increase in cash and cash equivalents(3,222,841)2,257,026Effect of exchange rate changes on cash and cash equivalents39,1929,534Cash and cash equivalent - beginning of year7,455,1475,188,587Cash and cash equivalent - end of year$
7,455,147Supplemental disclosure of cash flow information:Cash paid for interest$
2,490Cash paid for income taxes$
3,061,337GLOBAL PHARM HOLDINGS GROUP, INC AND SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL DATA
Net IncomeDiluted EPSNet IncomeDiluted EPS
Twelve Months Ended December 31,
2009GAAP amount per consolidated statement of income
$11,152,142$10,901,402Non-cash employee compensation expense
$10,901,402Adjusted basic and diluted earnings per outstanding shareWeighted average shares – basic and diluted
19,094,000Adjusted diluted earnings per weighted average share$0.79$0.57For Additional Information ContactGlobal Pharm Holdings Group, Inc.Ms. Susan LiuPhone: +86-755-3693-9373 (Shenzhen, China)Email: firstname.lastname@example.orgCCG Investor Relations, Inc.Ms. Linda Salo, Account ManagerPhone: +1-646-922-0894 (New York, USA)Email:email@example.com
|SOURCE Global Pharm Holdings Group, Inc.|
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