KUNMING, China, March 30, 2012 /PRNewswire/ -- China Shenghuo Pharmaceutical Holdings, Inc. (NYSE Alternext US: KUN) ("China Shenghuo" or the "Company"), today reported financial results for the year ended December 31, 2011.
Full Year 2011 Highlights
Full Year 2011 ResultsSales: Sales for the year ended December 31, 2011 were approximately $44.2 million, an increase of approximately $11.5 million, or 35%, from approximately $32.7 million for the year ended December 31, 2010. The increase in sales was primarily due to the Company's main product Xuesaitong's sales increasing in Tianjin City, Jiangsu, Guangdong and Yunnan Province as Xuesaitong was listed on the PIC list of Tianjin City since the second half year in 2010 and the Company strengthened sales promotion in the provinces and cities where Xuesaitong was listed on their PIC lists, especially Yunnan Province and Tianjin City. The OTC market also contributed part of increase of revenue as the Company also strengthened the OTC market development in 2011.
Cost of sales: Our cost of sales for the year ended December 31, 2011 was approximately $17.0 million, an increase of approximately $5.8 million, or 52%, from approximately $11.2 million for the year ended December 31, 2010. The increase in cost of sales was due to the increase of the sales volume and the purchase price of Sanqi which is the main raw material of our main product Xuesaitong. Although we have started to grow Sanqi within the Resort, we will not be able to harvest until 2014 because it has a three year growth cycle. In addition, the Zhonghuang Hotel began trial operation since January 2011 which has contributed $2.3 million to the increase of cost of sales.
Gross profit: Our gross profit for the year ended December 31, 2011 was approximately $27.2 million as compared with approximately $21.5 million for the year ended December 31, 2010. Gross profit as a percentage of revenues was approximately 61.5% for the year ended December 31, 2011, a decrease of 4.3% from 65.8 % for the year ended December 31, 2010. The decrease in gross profit percentage was primarily due to the increase of cost of sales set forth above.
Selling expenses: Selling expenses were approximately $19.8 million for the year ended December 31, 2011, an increase of approximately $4.1 million, or 26%, from approximately $15.7 million for the year ended December 31, 2010. The primary reason for the increase in selling expenses was due to increase of sales commission to sales representative in line with the sales increment.
We reimburse the sales representatives their selling and marketing expenses when they submit the appropriate documentation to be reimbursed. We reimburse the sales representatives their accrued selling expenses when related accounts receivable are collected.
General and administrative expenses: General and administrative expenses were approximately $5.0 million for the year ended December 31, 2011, an increase of approximately $1.4 million, or 38%, from approximately $3.6 million for the year ended December 31, 2010. The increase was primarily due to the increase of the management's traveling expenses and conference expenses for expanding our sales channel. In addition, Zhonghuang Hotel began trial operation since January 2011 which has contributed approximately $0.5 million to the increase of general and administrative expense.
Research and development expenses: Research and development expense for the year ended December 31, 2011 was approximately $0.71 million as compared to approximately $0.66 million for the year ended December 31, 2010. The increase was primarily due to the expenditures in 2011 for the Phase I clinical test of Sh1002 in America which amounted to $303,335.
Net other expense: Net other expense, which includes interest income, subsidy income, interest expense, other income and other expense, was approximately $1.5 million for the year ended December 31, 2011 as compared to approximately $0.1 million for the year ended December 31, 2010, an increase of approximately $1.4 million, or 1323%. The increase was mainly due to less subsidy income from provincial government as compared the same period in 2010 and more interest expenses in the 2011.
Income tax benefit (expense): Income tax benefit was $11,765 for the year ended December 31, 2011 as compared to income tax expense $105,764 for the year ended December 31, 2010. The tax benefit was mainly from medicine segment of the Company and the deferred tax assets benefit from accrued expenses and provisions for inventory.
Net income attributable to stockholders: We achieved a net income attributable to stockholders of approximately $0.1 million for the year ended December 31, 2011 as compared to approximately $1.2 million for the year ended December 31, 2010. The decrease in net income attributable to stockholders was primarily due to the decrease of subsidy income and increase of interest expense.
About China ShenghuoFounded in 1995, China Shenghuo is primarily engaged in the research, development, manufacture, and marketing of Sanchi-based medicinal and pharmaceutical, nutritional supplement and cosmetic products. Through its subsidiary, Kunming Shenghuo Pharmaceutical (Group) Co., Ltd., it owns thirty SFDA (State Food and Drug Administration) approved medicines, including the flagship product Xuesaitong Soft Capsules, which is currently being listed in the 2010 Provincial Insurance Catalogue of sixteen provinces around China. At present, China Shenghuo incorporates a sales network of agencies and representatives throughout China, which markets Sanchi-based traditional Chinese medicine to hospitals and drug stores as prescription and OTC drugs primarily for the treatment of cardiovascular, cerebrovascular and peptic ulcer disease. The Company also exports medicinal products to Asian countries such as Indonesia, Singapore, Japan, Malaysia, and Thailand and to European countries such as the United Kingdom, Tajikistan, Russia and Kyrgyzstan.
With the substantial completion of Shenghuo Plaza at the end of 2010, China Shenghuo entered into a new business -- the hotel and hospitality business. Two floors of Shenghuo Plaza are designed to be utilized as 12 Ways Chinese Herbal Beauty Demonstration Center. The balance of Shenghuo Plaza is used as a business hotel -- Zhonghuang Hotel, restaurant and banquet facilities and an entertainment venue.
China Shenghuo is also expanding into the businesses of wellness tourism. For more information, please visit http://www.shenghuo.com.cn.
Safe Harbor StatementThis press release may contain certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, risks of litigation and governmental or other regulatory proceedings arising out of or related to any of the matters described in recent press releases, including arising out of the restatement of the Company's financial statements; the Company's ability to refinance or repay loans received; the Company's uncertain business condition; the Company's continuing ability to satisfy any requirements which may be prescribed by the Exchange for continued listing on the Exchange; risks arising from potential weaknesses or deficiencies in the Company's internal controls over financial reporting; the Company's reliance on one supplier for Sanchi; the possible effect of adverse publicity on the Company's business, including possible contract cancellation; the Company's ability to develop and market new products; the Company's ability to establish and maintain a strong brand; the Company's continued ability to obtain and maintain all certificates, permits and licenses required to open and operate retail specialty counters to offer its cosmetic products and conduct business in China; protection of the Company's intellectual property rights; market acceptance of the Company's products; changes in the laws of the People's Republic of China that affect the Company's operations; cost to the Company of complying with current and future governmental regulations; the impact of any changes in governmental regulations on the Company's operations; general economic conditions; and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.Company Contact:China Shenghuo Pharmaceutical Holdings, Inc.Ms. Shujuan WangSecretary of Board of Directors +86-871-7282698CHINA SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Amounts in USD, except shares)December 31,20112010Assets:Current assets: Cash and cash equivalents$
1,669,387 Restricted cash794,115- Accounts and notes receivable, net18,076,05011,531,027 Other receivables, net4,084,1024,111,315 Advances to suppliers, net542,153580,168 Inventories2,695,3882,599,351 Amounts due from related parties574,899190,614 Current deferred tax assets1,394,101833,568 Other current assets199,929208,111Total current assets29,607,96721,723,541 Property, plant and equipment, net 25,873,67021,069,139 Intangible assets, net 1,473,0741,432,736 Deposits for long-live assets1,078,846754,979 Non-current deferred tax assets275,677366,478Total assets$
45,346,873CHINA SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (CONT'D)(Amounts in USD, except shares)December 31,20112010Liabilities and Equity:Current liabilities: Accounts payable$9,395,483
8,964,404 Other payables and accrued expenses11,819,1799,699,857 Sales representative deposits6,106,2874,936,429 Amounts due to related parties18,41479,864 Short-term borrowings15,858,8955,289,178 Advances from customers1,090,6681,158,649 Taxes and related payables2,255,322881,506 Current portion of long-term borrowings6,253,0756,039,833Total current liabilities52,797,32337,049,720Long-term borrowings-6,251,227Total liabilities52,797,32343,300,947Commitments and ContingenciesEquity: Common stock, $0.0001 par value, 100,000,000 sharesauthorized and 19,679,400 shares issued and outstanding1,9681,968 Additional paid-in capital6,014,6886,193,927 Appropriated retained earnings147,023147,023 Accumulated deficit(5,790,759)(5,940,439) Accumulated other comprehensive income1,743,3931,638,109Total stockholder's equity2,116,3132,040,588Non-controlling interest3,395,5985,338Total equity5,511,9112,045,926Total liabilities and equity$
45,346,873CHINA SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME (LOSS)(Amounts in USD, except shares)Years ended December 31,20112010Sales $
32,697,195Cost of goods sold16,980,00611,198,736Gross profit27,178,17621,498,459Operating expenses: Selling expenses19,838,58215,715,325 General and administrative expenses5,015,5343,638,445 Research and development expense710,361656,22525,564,47720,009,995Income from operations1,613,6991,488,464Other income (expenses): Interest income11,8108,325 Subsidy income536,013786,916 Interest expense(1,714,887)(842,560) Other income82,712247,536 Other expenses(409,405)(305,185)(1,493,757)(104,968)Income before income tax119,9421,383,496Income tax benefit (expense) 11,765(105,764)Net income before allocation to non-controlling interests131,7071,277,732Less: net (loss) income attributable to non-controlling interests(17,973)60,878Net income attributable to stockholders$149,680$1,216,854Comprehensive income:Net income 131,7071,277,732 Foreign currency translation adjustment187,15051,517Comprehensive income $318,857$1,329,249Comprehensive income attributable to non-controlling interests63,89363,333Comprehensive income attributable to stockholders254,9641,265,916Basic and diluted earnings per share$
0.06Weighted-average number of shares outstanding - basic and diluted19,679,40019,679,400CHINA SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in USD)Years ended December 31,20112010Cash Flows from Operating Activities:Net income
1,277,732Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax(398,459)58,362 Depreciation and amortization1,494,985755,380 Bad debt provision and allowance and inventories write off380,8251,786,315 Gain on disposal of fixed assets-(103,140)Change in working capital: Accounts and notes receivable(5,980,478)799,195 Other receivables233,5851,234,888 Amounts due from/to related parties(365,393)313,278 Advances to suppliers(88,842)(168,759) Inventories(22,393)1,164,966 Other current assets18,351(186,754) Accounts payable(26,097)1,935,119 Other payables and accrued expenses1,584,229(713,701) Advances from customers(124,047)207,968 Sales representative deposits895,308(2,277,841) Taxes and related payables1,296,310(242,273)Net Cash (Used in) Provided by Operating Activities(970,409)5,840,735Cash Flows from Investing Activities:Purchase of long-lived assets(2,299,690)(8,354,461)Proceeds from disposal of long-lived assets4,753317,679Net Cash Used in Investing Activities(2,294,937)(8,036,782)Cash Flows from Financing Activities:Increase in restricted cash(794,115)-Contribution from non-controlling interests-29,539Proceeds from borrowings25,897,07629,582,155Payments on borrowings(22,352,041)(27,791,252)Net Cash Provided by Financing Activities 2,750,9201,820,442Effect of exchange rate fluctuation on cash and cash equivalents92,26958,452Net decrease in cash and cash equivalents(422,157)(317,153)Cash and cash equivalents at beginning of year1,669,3871,986,540Cash and cash equivalents at end of year$
1,669,387Supplemental Information:Cash paid for interest
967,686Cash paid for income tax
130,229Non-cash activity:Contribution from non-controlling interests3,199,273-
|SOURCE China Shenghuo Pharmaceutical|
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