omniture

China Botanic Pharmaceutical Reports Second-Quarter Fiscal Year 2011 Results

2011-06-15 07:26 2233

Sales grew 56.1% year-over-year to $18.9 million

Net Income rose 107.1% year-over-year to a record $7.1 million

Reaffirm Net Income Guidance for FY 2011


HARBIN, China, June 15, 2011 /PRNewswire-Asia/ -- China Botanic Pharmaceutical Inc. (AMEX: CBP) (formerly Renhuang Pharmaceutical, Inc.) ("China Botanic" or the "Company"), a developer, manufacturer and distributor of botanical products, bio-pharmaceuticals and traditional Chinese medicines ("TCM") in China, today announced financial results for the three months ended April 30, 2011.

Second-Quarter 2011 Highlights and Recent Events

  • Net sales increased 56.1% year-over-year to $18.9 million
  • Gross profit increased 79.3% to $11.1 million from $6.2 million in the second quarter of fiscal year 2010
  • Gross margin increased to 59.0% from 51.4% a year ago
  • Net income rose 107.1% to $7.1 million or $0.19 per diluted share
  • The Company's wholly owned subsidiary, Harbin Renhuang Pharmaceutical Co., Ltd received official approval to produce water-based mixtures.
  • The Company successfully completed research of the chromatographic fingerprints for its Siberian Ginseng series products, utilizing a state-of-the-art analysis method which identifies the chemical characteristics of the designated medicine.
  • The Company successfully completed a feasibility study to analyze the benefits of using straw pellets, a renewable bio-fuel, for its production operations and plans to put the new fuel into use by October, 2011.

"During the second fiscal quarter of 2011, we continued to benefit from our strong market position, customer loyalty and well-accepted increases in selling prices, resulting in nearly 56% year-over-year growth in revenue and more than 100% year-over-year growth in net income. We are pleased to report strong financial performance during the quarter and remain optimistic about the future," said Mr. Shaoming Li, Chairman and Chief Executive Officer of China Botanic. "In addition, our four new products, namely Qing Re Jie Du Oral Liquid, Compound Schizandra Tablets, Ginseng and Venison Extract, and Badger Oil have been well accepted in the market and contributed 19% of the quarter's total sales revenue up from 15% in the first fiscal quarter of 2011."

Second-Quarter Fiscal 2011 Results

During the three months ended April 30, 2011, net sales increased 56.1% to $18.9 million, from $12.1 million during the same period in 2010. The rise was mainly attributable to year-over-year increase in average selling prices of the Company's products and the growing market acceptance of the Company's new products introduced in the second half of 2010. Sales declined compared to the first quarter fiscal 2011 due to normal seasonality. April to August is typically the company's slowest period of the year.

Gross profit increased 79.3% to $11.1 million compared to $6.2 million in the second quarter of fiscal 2010. Gross margin increased to 59.0% as compared to 51.4% in the same period of 2010. The growth in gross profit was mainly driven by price increases across all of the Company's products, somewhat mitigated by modest increases in raw material prices.

Operating expenses for the second quarter of fiscal 2011 were $3.1 million, as compared to $2.8 million in the same period last year. Sales and distribution expenses rose to $1.5 million from $1.3 million a year ago. The spending increase reflected the Company's efforts to expand its distribution network, market share, and awareness of its premium quality products. General and administrative expenses decreased 12.6% to $0.9 million. Research and development expenses were $0.7 million, up from $0.6 million in the year ago period, reflecting the Company's continued commitment to build a strong pipeline of new products.

Operating income in the second quarter was $8.0 million, compared to $3.4 million in the second quarter of 2010. Operating margin increased year-over-year to 42.5% from 28.1%.

The Company incurred income tax expenses $1.0 million in the second quarter of fiscal 2011, compared to no taxes paid for the first quarter 2010, due to the 15% tax rate imposed effective January 1, 2011. For the second quarter ended April 30, 2011, net income increased 107.1% to $7.1 million, or $0.19 per diluted share, from $3.4 million, or $0.09 per diluted share for the same period a year ago.

Six Month Results

Total revenue for the six month period ended April 30, 2011 was $41.5 million, an increase of 42.0% from $29.2 million for the first six months of fiscal 2010. Gross profit in the first half of fiscal 2011 rose 59.0% to $25.0 million, representing a gross margin of 60.1% as compared to 53.7% in the first half of fiscal 2010. Operating income grew 82.6% year-over-year to $19.7 million. In the first six months of fiscal 2011, net income was $18.0 million or $0.48 per diluted share, up from $10.8 million or $0.29 per diluted share in the first six months of fiscal 2010.

Financial Condition

As of April 30, 2011, the Company had cash and cash equivalents of approximately $27.6 million and total current assets of approximately $54.6 million. As of April 30, 2011, China Botanic had working capital of approximately $42.4 million as compared to $47.1 million for the fiscal year ended October 31, 2010.  The Company had no long-term debt on its balance sheet as of April 30, 2011. Shareholders' equity stood at $90.0 million, compared with $69.8 million as of October 31, 2010. Net cash flow from operating activities for the six months ended April 30, 2011 was $16.1 million compared to $19.3 million for the same period of 2010.

Business Outlook

"We anticipate continued growth in revenue and net income in the coming years driven by our established market presence, strong customer loyalty, ability to introduce new market-oriented products and aggressive sales and marketing efforts. We are confident that we will achieve our goals for fiscal 2011 and meet our financial guidance for revenue in the range of $70.6 million to $71.7 million and our raised after-tax net income guidance of approximately $25.5 million," said Mr. Li. "The recent government levied price controls in the TCM industry do not result in a margin squeeze for China Botanic as our product prices are significantly lower than the government price ceilings and the prices of our competitors. We enjoy a strong pricing advantage even after our recent price increases and our customers are satisfied with the high-quality of our products. In addition, our research team continues to work on several other promising products and we hope to announce new product introductions in the coming quarters, which will strengthen our market position and enhance our longer term growth."

Conference Call

China Botanic will host a conference call at 9:00 a.m. Eastern Time on Wednesday, June 15, 2011, to discuss financial results for the second quarter of fiscal year 2011, ended April 30, 2011. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-394-2209. International callers should dial +1 706-758-1481. The conference ID number for the call is 74659602.

If you are unable to participate in the call at this time, a replay will be available on Wednesday, June 15, 2011 at 12:00 noon Eastern Time, through Wednesday, June 29, 2011. To access the replay, dial 800-642-1687. International callers should dial +1 706-645-9291. The conference ID number for the replay is 74659602.

ABOUT CHINA BOTANIC PHARMACEUTICAL INC.

China Botanic Pharmaceutical Inc. is engaged in the research, development, manufacturing, and distribution of botanical products, bio-pharmaceutical products, and traditional Chinese medicines ("TCM"), in the People's Republic of China. All of the Company's products are produced at its three GMP-certified production facilities in Ah City, Dongfanghong and Qingyang. The Company distributes its botanical anti-depression and nerve-regulation products, biopharmaceutical products, and botanical antibiotic and OTC TCMs through its network of over 3,000 distributors and over 70 sales centers across 24 provinces in China. For more information, please visit www.renhuang.com.

Safe Harbor Statement

This press release contains certain statements that may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's beliefs, assumptions and expectations of the Company's future operations and financial performance, taking into account the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known that may cause actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition expressed or implied in any forward-looking statements. These forward-looking statements are based on current plans and expectations and are subject to a number of uncertainties including, but not limited to, the Company's ability to manage expansion of its operations effectively, and other factors detailed in the Company's annual report on Form 10-K and other filings with the Securities and Exchange Commission.  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. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented herein.

Company Contact:

 

CCG Investor Relations:

 
 

China Botanic Pharmaceutical Inc.

 

Mr. Mark Collinson, Partner

 
 

Ms. Portia Tan, IR Contact

 

Phone: +1-310-954-1343 (Los Angeles)

 
 

Tel: 86-451-8260-2162

 

Email: mark.collinson@ccgir.com

 
 

Email: ir@renhuang.com

 

Website: www.ccgirasia.com

 
 

 

 
 

 

Mr. Crocker Coulson, President

 
 

 

Phone: +1-646-213-1915 (New York)

 
 

 

Email: crocker.coulson@ccgir.com

 
 
   


- Financial Tables Follow-



 
 

CHINA BOTANIC PHARMACEUTICAL INC.

 
 

CONDENSED CONSOLIDATED BALANCE SHEETS

 
 

 

 

 

 

 

April 30, 2011

 

 

October 31, 2010

 
 

 

 

 

 

 

(Unaudited)

 

 

 

(Audited)

 
 

ASSETS

 

 

 

 

 

 

 

 

 
 

Current assets:

 

 

 

 

 

 

 

 

 
 

Cash and cash equivalents

 

 

 

 

 

$

 

27,627,143

 

 

 

$

 

27,826,142

 
 

Trade receivables, net

 

 

 

 

 

 

20,547,326

 

 

 

 

19,814,438

 
 

Due from related parties

 

 

 

 

 

 

68,707

 

 

 

 

28,877

 
 

Inventory, net

 

 

 

 

 

 

6,088,032

 

 

 

 

2,645,616

 
 

Other receivables, net

 

 

 

 

 

 

268,307

 

 

 

 

200,994

 
 

Total current assets

 

 

 

 

 

$

 

54,599,515

 

 

 

$

 

50,516,067

 
 

 

 

 

 

 

 

 

 

 

 

 
 

Property and equipment, net

 

 

 

 

 

$

 

1,938,890

 

 

 

$

 

2,069,460

 
 

Intangible Assets

 

 

 

 

 

 

17,197,278

 

 

 

 

1,953,617

 
 

Construction in progress

 

 

 

 

 

 

1,901,258

 

 

 

 

 
 

Deposits

 

 

 

 

 

 

26,423,769

 

 

 

 

18,605,935

 
 

Deferred tax assets

 

 

 

 

 

 

136,650

 

 

 

 

-

 
 

 

 

 

 

 

 

 

 

 

 

 
 

Total assets

 

 

 

 

 

$

 

102,197,360

 

 

 

$

 

73,145,079

 
 

 

 

 

 

 

 

 

 

 

 

 
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 
 

Liabilities

 

 

 

 

 

 

 

 

 

 

 
 

Accounts payable

 

 

 

 

 

$

 

7,861,148

 

 

 

$

 

333,555

 
 

Tax payable

 

 

 

 

 

 

2,268,240

 

 

 

 

1,064,066

 
 

Accrued employee benefits

 

 

 

 

 

 

1,977,605

 

 

 

 

1,645,192

 
 

Warrant Liabilities

 

 

 

 

 

 

64,848

 

 

 

 

342,770

 
 

Total liabilities

 

 

 

 

 

$

 

12,171,841

 

 

 

$

 

3,385,583

 
 

 

 

 

 

 

 

 

 

 

 

 
 

Shareholders' equity

 

 

 

 

 

 

 

 

 

 

 
 

Preferred stock (no par value, 1,000,000 shares authorized; none issued and outstanding as of April 30,2011 and October 31, 2010,respectively)

 

 

 

 

 

 

 

 

 

 

 
 

Common stock ($0.001 par value, 100,000,000 shares, authorized; 37,239,536  issued and outstanding as of April 30,2011 and October 31, 2010, respectively)

 

 

 

 

 

$

 

37,240

 

 

 

$

 

37,240

 
 

Additional paid-in capital

 

 

 

 

 

 

7,688,785

 

 

 

 

7,627,987

 
 

Common stock warrants

 

 

 

 

 

 

496,732

 

 

 

 

496,732

 
 

Reserves

 

 

 

 

 

 

3,372,697

 

 

 

 

3,372,697

 
 

Accumulated other comprehensive income

 

 

 

 

 

 

6,944,667

 

 

 

 

4,768,793

 
 

Retained earnings

 

 

 

 

 

 

71,485,398

 

 

 

 

53,456,047

 
 

Total shareholders' equity

 

 

 

 

 

 

90,025,519

 

 

 

 

69,759,496

 
 

 

 

 

 

 

 

 

 

 

 

 
 

Total liabilities and shareholders' equity

 

 

 

 

 

$

 

102,197,360

 

 

 

$

 

73,145,079

 
 

 
 

 
 
                     



CHINA BOTANIC PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

 

 

 

 

For the three months

 

 

 

For the six months

 

 
 

 

 

 

 

ended April 30,

 

 

 

 ended April 30,

 

 
 

 

 

 

 

2011

 

 

 

2010

 

 

 

2011

 

 

2010

 

 
 

 

 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 
 

Sales, net

 

 

 

 

$

 

18,873,689

 

 

$

 

 

12,092,506

 

 

$

 

41,498,749

 

 

$

 

29,225,120

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Cost of goods sold

 

 

 

 

 

7,733,630

 

 

 

 

5,877,856

 

 

 

16,541,417

 

 

 

13,530,494

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Gross profit

 

 

 

 

 

11,140,059

 

 

 

 

6,214,650

 

 

 

24,957,332

 

 

 

15,694,626

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Operating and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

  Sales and distribution

 

 

 

 

 

1,541,011

 

 

 

 

1,265,319

 

 

 

2,870,190

 

 

 

2,404,300

 

 
 

  General and administrative

 

 

 

 

 

851,762

 

 

 

 

974,825

 

 

 

1,511,644

 

 

 

1,791,794

 

 
 

  Research and development

 

 

 

 

 

718,512

 

 

 

 

570,557

 

 

 

899,186

 

 

 

722,921

 

 
 

Total operating expenses

 

 

 

 

 

3,111,285

 

 

 

 

2,810,701

 

 

 

5,281,020

 

 

 

4,919,015

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Income from operations

 

 

 

 

 

8,028,774

 

 

 

 

3,403,949

 

 

 

19,676,312

 

 

 

10,775,611

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

  Interest income

 

 

 

 

 

22,953

 

 

 

 

15,699

 

 

 

47,142

 

 

 

27,166

 

 
 

Other income net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Income before income tax expenses

 

 

 

 

 

8,051,727

 

 

 

 

3,419,648

 

 

 

19,723,454

 

 

 

10,802,777

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Income tax expenses

 

 

 

 

 

970,671

 

 

 

 

 

 

 

1,694,103

 

 

 

 

 
 

Net income

 

 

 

 

$

 

7,081,056

 

 

 

$

 

3,419,648

 

 

$

 

18,029,351

 

 

$

 

10,802,777

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Cumulative currency translation adjustments

 

 

 

 

 

1,511,453

 

 

 

 

(162,404)

 

 

 

2,175,874

 

 

 

(159,889)

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Total comprehensive income

 

 

 

 

 

8,592,509

 

 

 

 

3,257,244

 

 

 

20,205,225

 

 

 

10,642,888

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Earnings per common stock- Basic

 

 

 

 

$

 

0.19

 

 

 

$

 

0.09

 

 

$

 

0.48

 

 

$

 

0.29

 

 
 

Earnings per common stock - Diluted

 

 

 

 

$

 

0.19

 

 

 

$

 

0.09

 

 

$

 

0.48

 

 

$

 

0.29

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Weighted average common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

Basic

 

 

 

 

 

37,239,536

 

 

 

 

37,239,536

 

 

 

37,239,536

 

 

 

37,239,536

 

 
 

Diluted

 

 

 

 

 

37,759,494

 

 

 

 

37,917,140

 

 

 

37,827,717

 

 

 

37,724,214

 

 
 

 
 
                                 




 
 

CHINA BOTANIC PHARMACEUTICAL INC.

 
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
 

 

 

For the six months ended April 30,

 

 
 

 

 

2011

 

 

 

2010

 

 
 

 

 

US$

 

 

 

US$

 

 
 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

 
 

Cash flows from operating activities:

 

 

 

 

 

 

 
 

Net income

 

 

 

$   18,029,351

 

 

 

 

$  10,802,777

 

 
 

Adjustments to reconcile net income to operating activities:

 

 

 

 

 

 

 

 

 
 

Depreciation

 

 

 

189,667

 

 

 

 

181,076

 

 
 

Amortization

 

 

 

201,006

 

 

 

 

 

 
 

Warrants issued for service

 

 

 

(277,922)

 

 

 

 

342,770

 

 
 

Share Compensation

 

 

 

60,799

 

 

 

 

16,594

 

 
 

Noncash rental expenses

 

 

 

379,029

 

 

 

 

 

 
 

Deferred tax assets

 

 

 

(134,576)

 

 

 

 

 

 
 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 
 

(Increase)Decrease in trade receivables

 

 

 

(192,743)

 

 

 

 

8,238,225

 

 
 

(Increase)Decrease in due from related parties

 

 

 

(38,455)

 

 

 

 

129,841

 

 
 

(Increase)Decrease in inventory, net

 

 

 

(3,319,538)

 

 

 

 

80,613

 

 
 

Decrease in prepayments

 

 

 

 

 

 

 

89,036

 

 
 

(Decrease) in other receivables, net

 

 

 

(60,925)

 

 

 

 

(62,244)

 

 
 

(Decrease) in accounts payable

 

 

 

(176,136)

 

 

 

 

(89,235)

 

 
 

Increase(Decrease) in tax payable

 

 

 

1,157,489

 

 

 

 

(685,259)

 

 
 

Increase in accrued employee benefits

 

 

 

283,444

 

 

 

 

206,296

 

 
 

Net cash provided by operating activities

 

 

 

$16,100,490

 

 

 

 

$19,250,490

 

 
 

 

 

 

 

 

 

 

 

 
 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 
 

Deposits for land use right and properties

 

 

 

$(15,161,164)

 

 

 

 

$(3,928,614)

 

 
 

Increase in construction in progress

 

 

 

(1,872,404)

 

 

 

 

 

 
 

Purchase of property and equipment

 

 

 

(5,826)

 

 

 

 

 

 
 

Net cash used in investing activities

 

 

 

$(17,039,394)

 

 

 

 

$(3,928,614)

 

 
 

 

 

 

 

 

 

 

 

 
 

Effect of exchange rate changes on cash

 

 

 

739,905

 

 

 

 

(41,781)

 

 
 

 

 

 

 

 

 

 

 

 
 

Net increase (decrease) in cash and cash equivalents

 

 

 

(198,999)

 

 

 

 

15,280,095

 

 
 

Cash and cash equivalents, beginning of year

 

 

 

27,826,142

 

 

 

 

8,111,514

 

 
 

Cash and cash equivalents, end of year

 

 

 

27,627,143

 

 

 

 

23,391,609

 

 
 

 

 

 

 

 

 

 

 

 
 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 
 

Cash paid during the year for income taxes

 

 

 

 

 

 

 

 

 
 

Interest paid during the year

 

 

 

 

 

 

 

 

 
 

 
 

 
 
                 


Source: China Botanic Pharmaceutical Inc.
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