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Global Pharm Holdings Group, Inc. Announces Second Quarter 2011 Financial Results
Date:8/12/2011

SHENZHEN, China, Aug. 12, 2011 /PRNewswire-Asia/ -- Global Pharm Holdings Group, Inc. (OTCBB: GPHG) ("Global Pharm" or the "Company"), a China-based growing vertically integrated pharmaceutical company engaged in pharmaceutical-related products distribution, and Traditional Chinese Medicine ("TCM") herbs cultivation and processing business through its subsidiaries in Anhui, Jilin and Shandong provinces, today announced its unaudited financial results for the second quarter ended June 30, 2011.

Second Quarter 2011 Highlights

  • Net revenues were $45.4 million, an increase of 48.7% over the second quarter of 2010
  • Gross profit was $7.4 million, an increase of 33.2% over the second quarter of 2010, with gross margin of 16.3%
  • Operating income was $5.5 million, an increase of 55.4% over the second quarter of 2010
  • Net income was $3.9 million, or $0.15 per diluted share, an increase of 72.6%, as compared to $2.3 million, or $0.12 per diluted share, for the same period in 2010
  • In April 2011, Global Pharm established two TCM herbal plantation companies located in Jinan city of Shandong province, and Bozhou city of Anhui province
  • In May 2011, the company successfully acquired two city-level pharmaceutical distributors in the cities of Zibo and Tai'an of Shandong province

  • "We are pleased that Global Pharm had a strong operating performance during the second quarter of 2011, delivering solid operating results, expanding our higher margin TCM herbal cultivation business and strengthening our sales coverage in Shandong province through acquisitions of two city-level distributors. A significant synergy is emerging through the integrated value chain extending to our business units. We will stick to the selective acquisition strategy to enhance our local market leadership by expanding our market coverage and enlarging our sales channels," commented Mr. Yunlu Yin, Chief Executive Officer of Global Pharm. Second Quarter 2011 Financial Summaries (unaudited) Three months ended June 30

    Change(in millions $, except per-share data in $)

    2011

    2010Net revenue

    45.4

    30.5

    48.7%Gross profit

    7.4

    5.5

    33.2%Income from operation

    5.5

    3.5

    55.4%Income before income taxes

    5.4

    3.5

    54.0%Net income

    3.9

    2.3

    72.6%Total comprehensive income

    4.3

    2.3

    84.8%Basic and diluted earnings per share

    0.15

    0.12

    25.0%Total net evenue was $45.4 million for the three months ended June 30, 2011, an increase of 48.7% compared with the same period in 2010. The increase in revenue largely reflects strong sales of the Company's pharmaceutical products distribution segment, which contributed $39.7 million or 87.6% of the Company's total sales in the quarter, compared with $24.3 million or 79.7% of the total revenue in the corresponding quarter in 2010.

    Below is a breakdown of sales per business segment for the three months ended June 30, 2011 and 2010, respectively:For the three months ended June 30 - Net revenuein USD except percentage

    2011

    2010

    Change 

     

    % of net

    revenue

     

    % of net

    revenue

     

    %Pharmaceutical products

    distribution

    $39,738,572

    87.6

    $24,338,686

    79.7

    $15,399,886

    63.3TCM processing and

    distribution

    5,647,763

    12.4

    4,314,919

    14.1

    1,332,844

    30.9Herbal cultivation and

    sales

    -

    -

    -

    -

    -

    NA Flower tea bags

    -

    0.0

    1,877,372

    6.1

    (1,877,372)

    NA Total

    $45,386,335

    100.0

    $30,530,977

    100.0

    $14,855,358

    48.7Revenue from the pharmaceutical products distribution segment increased by $15.4 million, or approximately 63.3%, to $39.7 million for the three months ended June 30, 2011, as compared to $24.3 million for the same period in 2010. The increase was primarily due to a series of marketing activities to promote sales, a broader product portfolio and improved efficiency in fulfilling sales orders. Revenue from the Company's TCM processing and distribution segment increased to $5.6 million for second quarter of 2011, compared to $4.3 million for the comparable period in 2010. Revenue from the herbal cultivation and sales segment was nil for both the second quarter of 2011 and 2010, due to the sale of the Company's entire herbal inventory in the first quarter of 2011 and at the end of 2009, and the fact that all of our herbs were at the cultivation stage for the second quarter of 2011.  The Company has suspended its flower tea bags business segment on April 25, 2011, so revenue was nil for the second quarter of 2011 from this segment.

    Gross profit and gross margin for the second quarter of 2011 - the Company's gross profit was $7.4 million, an increase of 33.2%, from $5.5 million in the same period in 2010. Gross margin decreased to 16.3% for the second quarter of 2011, from 18.1%, for the comparable period in 2010, primarily attributable to increased costs of TCM products and reduction of sales prices due to competition for the second quarter of 2011.

    Operating expenses for the second quarter of 2011 were $0.9 million, increased by $0.7 million from same period in 2010, primarily due to increased advertising, freight and labor costs to support business growth and expansion.

    Income from operation for the second quarter of 2011 increased 55.4% to $5.5 million, or 12.0%, of revenue, from $3.5 million, or 11.4%, of revenue for the second quarter of 2010.

    Net income for the second quarter of 2011 increased to $3.9 million, or $0.15 per fully diluted share, compared to $2.3 million, or $0.12 per fully diluted share, in the second quarter of 2010, based on 26.0 million and 19.1 million weighted average diluted shares outstanding, respectively. This increase primarily reflects a shift in sales mix toward higher margin prescription products and herbal products in the first quarter of 2011.

    Six Months 2011 Financial Summaries (unaudited)Six months ended June 30

    Change(in millions $, except per-share data in $)

    2011

    2010Net revenue

    87.5

    59.3

    47.6%Gross profit

    15.2

    10.6

    43.1%Income from operation

    12.1

    8.1

    49.9%Income before income taxes

    12.1

    8.1

    49.2%Net income

    9.2

    5.7

    61.8%Total comprehensive income

    9.7

    5.7

    69.5%Basic and diluted earnings per share

    0.35

    0.30

    16.7%Total net evenue was $87.5 million for the six months ended June 30, 2011, an increase of 47.6%, compared with the same period in 2010. The revenue increase primarily reflects strong sales of the pharmaceutical products distribution segment, which contributed $72.2 million or 82.5% of the Company's total sales in the first half of 2011, compared to $47.4 million or 79.9% of the total revenue in the corresponding period last year.

    Below is a breakdown of sales per business segment for the six months ended June 30, 2011 and 2010, respectively:For the six months ended June 30 - Net revenuein USD except percentage

    2011

    2010

    Change 

     

    % of net

    revenue

     

    % of net

    revenue

     

    %Pharmaceutical products

    distribution

    $72,169,822

    82.5

    $47,360,171

    79.9

    $24,809,651

    52.4TCM processing and

    distribution

    10,365,812

    11.9

    9,000,270

    15.2

    1,365,542

    15.2Herbal cultivation and

    sales

    4,679,373

    5.3

    -

    -

    4,679,373

    NA Flower tea bags

    275,075

    0.3

    2,899,196

    4.9

    (2,624,121)

    (90.5)Total

    $87,490,082

    100.0

    $59,259,637

    100.0

    $28,230,445

    47.6Revenue from the pharmaceutical products distribution segment increased by $24.8 million, or approximately 52.4%, to $72.2 million for the six months ended June 30, 2011, as compared to $47.4 million for the same period in 2010. Revenue from the TCM processing and distribution segment increased by 15.2% to $10.4 million for the six months ended June 30, 2011, compared to $9.0 million for the same period last year. Revenue from the herbal cultivation and sales segment was $4.7 million for the first half of 2011, and nil for the comparable period in 2010, due to the sale of all of the Company's herbal products at the year ended December 31, 2009. The decrease of 90.5% of sales in the flower tea bags segment was due to the increasing competition during first quarter of 2011 and our decision to suspend the flower tea bags operation since April 25, 2011.

    Gross profit and gross margin for first half of 2011 - our gross profit was $15.2 million, an increase of 43.1%, from $10.6 million for the same period in 2010. Gross margins decreased to 17.4% for the first half of 2011, from 17.9% for the comparable period in 2010, primarily due to increased costs of TCM products and reduction of sales prices due to competition for the first half of 2011.

    Operating expenses for the first half of 2011 were $1.4 million, an increase of $1.0 million in the same period in 2010, primarily due to increased advertising, freight and labor costs to support business growth and expansion. Income from operation for the first half of 2011 increased 50.0% to $12.1 million or 13.9% of revenue, from $8.1 million or 13.6% of revenue for the first half of 2010.

    Net income for the first half of 2011 increased to $9.2 million, or $0.35 per fully diluted share, compared to $5.7 million, or $0.30 per fully diluted share, in the first half of 2010, based on 26.0 million and 19.1 million weighted average diluted shares outstanding, respectively. This increase primarily reflects a shift in sales mix toward higher margin prescription products and herbal products in the first half of 2011.

    Financial ConditionAs of June 30, 2011, the Company had $9.1 million in cash and $24.9 million in accounts receivable compared with $4.3 million and $19.8 million as of December 31, 2010, respectively. The increase was consistent with increased sales. Net working capital was $26.3 million, compared with $17.4 million as of December 31, 2010. As of June 30, 2011, the Company had $0.5 million in short-term debt compared with $2.0 million as of December 31, 2010. Stockholders' equity totaled $27.7 million as of June 30, 2011, compared with $17.6 million at the end of 2010.

    For the six months ended June 30, 2011, the Company generated $5.3 million cash from operating activities, having no significant variance as compared to $5.8 million for the comparable period in 2010. The Company used $0.9 million in investing activities for the six months ended June 30, 2011 compared to $9,000 for the comparable period in 2010, primarily as a result of increased expenditures relating to purchases of new subsidiaries and equipment. Net cash provided by financing activities was $0.3 million for the six months ended June 30, 2011, as compared to $3.0 million used for the comparable period in 2010. After an offset between a bank loan repayment and the credit from bank acceptance, the $0.3 million contribution of financing activity in six months ended June 30, 2011 was from the non-controlling interest.  

    Subsequent EventsOn July 5, 2011, the Company completed the acquisition of 100% equity interest of Bozhou Xinghe Pharmaceutical Co., Ltd, a TCM herb processing manufacturer in Bozhou city of Anhui province (for more information about the Bozhou Xinghe acquisition, please refer to the Form 8-K filed with the Securities and Exchange Commission (the "SEC") and press release issued, each on July 8, 2011).

    On August 1, 2011, the Company completed the acquisition of Pacific Asia Pharm Investment Group Co., Limited ("Pacific Asia"). After the completion of this acquisition, the Company indirectly manages Guangdong Guo Yao Pharmaceutical Franchises Co., Ltd. ("GDGY") through a serious of contractual arrangements. GDGY is a pharmaceutical-related products distributor who manages and supplies to a chain of 1,234 drug stores in Guangdong province. (For more information about the Pacific Asia acquisition, please refer to the 8-K filed with the SEC and press release issued, each on August 4, 2011).

    On August 3, 2011, the Company completed the acquisition of Quantum Magic Integrator Fund Co., Limited ("Quantum"). After the completion of this acquisition, Shandong Hua Wei Pharmaceutical Co., Ltd., a city-level pharmaceutical distributor in Weifang city of Shandong province, becomes a wholly owned subsidiary of the Company. (For more information about the Quantum acquisition, please refer to the Form 8-K filed with the SEC and press release issued, each on August 3, 2011)

    Business Outlook"For the first half of 2011, with our focus in the Shandong province market, we are very pleased with the performance of our distribution business and the expansion of our sales network," said Mr. Yunlu Yin, Chief Executive Officer of Global Pharm. "For the six months ended June 30, 2011, we sold approximately 11,800 different types of products, had more than 4,250 clients and expanded our distribution coverage into the cities of Zibo and Tai'an of Shandong province. The Company effectively utilized its developing intensive purchase power in Shandong province for more attractive procurement prices and valued-added services from pharmaceutical manufacturers."

    Subsequent to the second quarter of 2011, the Company completed acquisitions of a TCM herbal pieces processing plant in Bozhou city of Anhui province and a city-level distributor in Weifang city of Shandong province and, through various contractual arrangements, the Company indirectly manages a distributor in Guangdong province, who supplies to more than 1,200 local chain drugstores. For the remaining six months of 2011, the Company expects to focus its efforts on consolidating the newly acquired units, in order to deliberately integrate its value chain vertically. The Company's consolidation goals are to enrich its product portfolio, leverage its aggregate sales by upgrading the effectiveness of its sales channel and intensify its purchasing power for obtaining more profit-enhancing products. With the proven track record of the Company's acquisition capability, it will continue to selectively acquire more distributors who will offer outstanding complementary benefits to its business.

    About Global PharmGlobal Pharm Holdings Group, Inc., a growing integrated pharmaceutical company, is engaged in the pharmaceutical distribution, Traditional Chinese Medicine (TCM) herb plantation and herbal pieces processing business in China. The Company focuses on building regional distribution channels, as well as local capillary sales network with high-margin products portfolio. Currently, its sales network covers Shandong, Guangdong, Jilin and Anhui provinces, as well as other developed provinces in China. Global Pharm intends to establish an integrated value chain in the pharmaceutical industry through strategic acquisitions within TCM production, pharmaceutical distribution and retail sectors. Global Pharm anticipates it will achieve a solid distribution capacity and develop into 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 StatementsCertain 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.

    For Additional Information Contact
    Global Pharm Holdings Group, Inc.
    Ms. Susan Liu
    Phone: +86-755-3693-9373
    Email: susanliu@globalpharmholdings.com

    –FINANCIAL TABLES FOLLOW—GLOBAL PHARM HOLDINGS GROUP, INC.CONDENSED CONSOLIDATED BALANCE SHEETS  

    June 30, 2011ASSETS(Unaudited)December 31, 2010Current assets:Cash and cash equivalents

    $
    9,144,834

    $
    4,271,498Accounts receivable

    24,918,594

    19,771,619Inventories

    18,980,396

    16,058,760Restricted cash

    1,213,714

    1,538,251Other current assets

    1,978,407

    1,326,660Total current assets

    56,235,945

    42,966,788Property, plant and equipment, net

    676,529

    210,665Intangible assets, net

    297,874

    -Goodwill

    374,143

    -Total assets

    $
    57,584,491$
    43,177,453LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Short-term loans

    $
    464,145

    $
    ,972,150Bank acceptance

    1,528,560

    21,212Accounts payable and accrued expenses

    22,023,372

    20,944,923Income and other taxes payable

    2,076,102

    1,728,499Due to related parties

    3,813,329

    882,505Total current liabilities

    29,905,508

    25,549,289Stockholders' equity:Common stock, par value, $0.001 per share, 100,000,000

    shares authorized, 26,000,000 issued and outstanding.

    26,000

    26,000Additional paid-in capital

    9,200,623

    9,200,623Statutory surplus reserves

    1,310,701

    1,310,701Retained earnings

    15,764,962

    6,546,406Accumulated other comprehensive income

    1,032,115

    544,434 Total shareholders' equity - Global Pharm Holdings Group, Inc.

    27,334,401

    17,628,164Non-controlling interests

    344,582

    -Total stockholders' equity

    27,678,983

    17,628,164Total liabilities and stockholders' equity

    $
    57,584,491$
    43,177,453GLOBAL PHARM HOLDINGS GROUP, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(Unaudited)    

     

     

     

      

    Three months ended June 30, 

    Six months ended June 30, 

    2011 

    2010 

    2011 

    2010Revenues, net$45,386,335

     

    $30,530,977

     

    $87,490,082

     

    $59,259,637Cost of goods sold38,003,386

     

    24,989,792

     

    72,279,229

     

    48,632,162Gross profit7,382,949

     

    5,541,185

     

    15,210,853

     

    10,627,475Expenses:  

      

      

     Operating expenses

    936,732

     

    233,371

     

    1,352,645

     

    364,999General and administrative

    987,391

     

    1,794,759

     

    1,720,080

     

    2,165,148Income from operations5,458,826

     

    3,513,055

     

    12,138,128

     

    8,097,328Interest income (expense)

    843

     

    13,226

     

    (3,381)

     

    17,874Miscellaneous expense

    28,418

     

    -

     

    30,239

     

    -Income before income taxes5,431,251

     

    3,526,281

     

    12,104,508

     

    8,115,202Provision for income taxes

    1,513,005

     

    1,255,682

     

    2,887,305

     

    2,419,451Net income – including non-controlling interest3,918,246

     

    2,270,599

     

    9,217,203

     

    5,695,751Net loss – non-controlling interests1,361

     

    -

     

    1,353

     

    -Net income - Global Pharm Holdings Group, Inc.3,919,607

     

    2,270,599

     

    9,218,556

     

    5,695,751Other comprehensive income 

     

     

     

     

     

        Foreign currency translation adjustment

    338,623

     

    33,092

     

    487,681

     

    32,226Total comprehensive income$4,258,230

     

    $2,303,691

     

    $9,706,237

     

    $5,727,977Earnings per share of common stock: 

     

     

     

     

     

     Basic and diluted earnings per share

    $0.15

     

    $0.12

     

    $0.35

     

    $0.30Basic and diluted weighted average shares26,000,000

     

    19,094,000

     

    26,000,000

     

    19,094,000GLOBAL PHARM HOLDINGS GROUP, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) 

     Six Months Ended June 30,  

     

    2011 2010Cash flows from operating activities 

     

     

     Net income- including non-controlling interest

     

    $
    9,217,203

     

    $
    5,695,751Adjustments to reconcile net income to net cash provided by operating activities:

     

     

     

     Stock-based compensation

     

    -

     

    1,492,100Depreciation and amortization

     

    56,018

     

    29,169Changes in operating assets and liabilities: 

     

     

     Accounts receivable

     

    (4,214,512)

     

    (1,431,800)Inventories

     

    (1,550,865)

     

    (5,409,249)Restricted cash

     

    329,540

     

    -Other current assets

     

    473,282

     

    (1,304,551)Accounts payable and other accrued liabilities

     

    (232,917)

     

    7,380,555Income and other taxes payable

     

    305,186

     

    (776,305)Due from related party

     

    -

     

    (33,983)Due to related parties

     

    875,411

     

    132,940Net cash provided by operating activities 

    5,258,346

     

    5,774,627 

     

     

     

     Cash flows from investing activities 

     

     

     Purchase of property, plant and equipment

     

    (302,718)

     

    (9,063)Acquisition of subsidiaries, net of cash acquired

     

    (567,391)

     

    -Net cash used in investing activities 

    (870,109)

     

    (9,063) 

     

     

     

     Cash flows from financing activities: 

     

     

     Short-term loan borrowing

     

    -

     

    365,001Short-term loan repayments

     

    (1,529,073)

     

    -Bank acceptance

     

    1,483,968

     

    (219,000)Dividend paid to the former shareholders

     

    -

     

    (3,208,521)Due from shareholders

     

    -

     

    24,484Contribution from non-controlling interest

     

    344,835

     

    -Net cash provided by (used in) financing activities 

    299,730

     

    (3,038,036) 

     

     

     

     Net increase in cash and cash equivalents 

    4,687,967

     

    2,727,528Effect of exchange rate changes on cash and cash equivalents 

    185,369

     

    (12,852)Cash and cash equivalents - beginning of period 

    4,271,498

     

    7,455,147Cash and cash equivalents - end of period 

    $
    9,144,834

     

    $
    ,169,823 

     

     

     

     Supplemental disclosure of cash flow information: 

     

     

     Cash paid for interest

     

    $
    20,662

     

    $
    2,908  Cash paid for income taxes

     

    2,549,041

     

    2,743,066     Supplemental disclosure of non-cash financing activities:Accrued purchase price in due to related parties  

     $
    ,639,978

     

    $
    -
    '/>"/>

    SOURCE Global Pharm Holdings Group, Inc.
    Copyright©2010 PR Newswire.
    All rights reserved


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