XI'AN, China, Feb. 15 /Xinhua-PRNewswire/ -- China Green Agriculture, Inc. (OTC Bulletin Board: CGAG) ("China Green Agriculture" or "the Company"), a leading producer and distributor of humic acid ("HA") based liquid compound fertilizer through its wholly owned subsidiary, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., today announced its financial results for the second quarter of fiscal year 2008 ended on December 31, 2007.
Second Quarter 2008 Highlights
-- Net revenues totaled $3.8 million, up 80.5% year-over-year
-- Gross profit was $2.1 million, up 81.2% year-over-year
-- Net income was $0.7 million, down 10.5% year-over-year
Recent Highlights
-- Completed share exchange to become public company
-- Raised $20.5 million in private placement financing
"We achieved double-digit growth in revenues in the second quarter of fiscal year 2008 due in large part to our focus on launching new fertilizer products and through growth in sales from our extended distribution networks. The agricultural industry in China is experiencing significant expansion which has resulted in a dramatic increase in demand for Grade AA green fertilizers like those produced by our Company," said Mr. Tao Li, Chairman and CEO of China Green Agriculture. "We are particularly pleased that we were able to maintain our gross margins for the most recent quarter which reached 57%," he added.
Second Quarter of 2008 Results
Net revenues for the second quarter of fiscal 2008 totaled $3.8 million, up 80.5% from $2.1 million in the same quarter of fiscal year 2007. The increase in revenues was primarily due to increase in sales volume due to expansion of the Company's sales network, the launch of new products and the addition of the Company's newly acquired greenhouse facility which contributed approximately $1,012,578 of sales over the same period.
Gross profit for the second quarter of fiscal year 2008 totaled $2.1 million, an increase of 81.2% from $1.2 million in the same quarter of 2006. Gross profit margin was 56.8% for the second quarter of fiscal year 2008, remaining relatively unchanged from 56.6% a year earlier.
Operating expenses for the second quarter of 2008 were $1.3 million, up from $0.2 million in the same quarter of 2006. This significant increase was primarily due to higher general and administrative expenses associated with becoming a public company. Selling expenses also increased in support of the Company's growth. Operating expenses were 35.8% of net revenues in the second quarter of fiscal year 2008, up from 10.7% of net revenues in the corresponding quarter of fiscal year 2007.
Operating income for the second quarter of fiscal year 2008 was $0.8 million, down from $1.0 million in the second quarter of fiscal year 2007. Operating margin was 21.1%, compared to 45.9% in the same quarter of 2007.
Net income for the second quarter of fiscal year 2008 was $0.7 million, down 10.5% from net income of $0.8 million in the second quarter of fiscal year 2007.
Six Month Results
In the six months ended December 31, 2007, net revenues were $10.9 million, up 58% from $6.9 million in the same period of the prior year. Gross profit was $6.6 million, up 57.1% from $4.2 million in the same period of the prior year. Gross margin was 59.9%, down from 60.9% in the year ago period. Operating income rose 38.8% to $4.9 million, and operating margin was 44.8%, compared to 51.5% during the same period a year ago. Net income increased 53.3% to $4.8 million compared to $3.1 million a year ago.
Financial Condition
As of December 31, 2007, the Company had $9.7 million in cash and cash equivalents, as well as $4.3 million in restricted cash, working capital of $10.1 million and a current ratio of 2.1:1. The Company has $28.4 million in shareholders' equity compared to $8.8 million in the last quarter. The Company generated $5.3 million in cash flows from operating activities in the six months ended December 31, 2007.
In December 2007, the Company completed a private placement financing generating $18.6 million in net proceeds which will be used to upgrade R&D facilities, buy capital equipment, and expand the production line in order to enlarge the Company's market share and distribution network.
Business Outlook
China Green Agriculture is positioning itself to be a leading developer, manufacturer and distributor of humic acid based liquid compound fertilizer and related agricultural products in China in connection with the rapidly rising awareness of green food consumption in China. The Company plans to increase its production capacity from 10,000 tons per year to 50,000 tons per year using proceeds raised from its private placement. Furthermore, China Green Agriculture will increase its distribution network to increase its market share in various provinces across China, as well as to launch new products to the agriculture industry based on market trends and demands.
"We are pleased to have completed our transition to become a public company and are now focusing our attention on our growth strategy. In the coming year, we plan to capitalize on our modern research and development facility to continue producing and launching more new fertilizer products to the market," said Mr. Li. "Given our extensive experience manufacturing humic acid organic compound fertilizer, our state-of-the-art production and R&D facilities, we believe we are well positioned to succeed in China's rapidly developing fertilizer industry."
About China Green Agriculture, Inc.
China Green Agriculture, Inc. produces and distributes humic acid ("HA") based liquid compound fertilizer through its wholly owned subsidiary, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., ("TechTeam"). TechTeam produces and sells approximately 10,000 metric tons of over 100 different kinds of fertilizer products per year. All of TechTeam's fertilizer products are certified by the PRC government as green products and suitable for growing Grade AA "green" foods, also known as green products that contain little or no chemical materials, as stated by the China Green Food Research Center. TechTeam's fertilizers are highly concentrated liquids which require an application of approximately 120 ml per mu per application. Its average customer has approximately four mu of land (one mu = .165 acres).
China Green Agriculture currently markets its fertilizer products to private wholesalers and retailers of agricultural farm products in 27 provinces in the PRC. The leading five provinces by revenue for the fiscal year ended June 30, 2007 include Heilongjiang (9.99%), Guangdong (7.81%), Xinjiang (6.59%), Shandong (5.81%), and Henan (5.80%).
Cautionary Statement
This press release contains forward-looking statements concerning the Company's business, products and financial results. The Company's actual results may differ materially from those anticipated in the forward-looking statements depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, and various other factors beyond the Company's control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. China Green Agriculture undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
-- Financial tables follow --
CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2007 AND
2006
(UNAUDITED)
Six Months Ended December 31,
2007 2006
Net sales $10,947,163 $6,872,356
Cost of goods sold 4,394,981 2,684,381
Gross profit 6,552,182 4,187,976
Operating expenses
Selling expenses 471,838 372,680
Operating and administrative
expenses 1,173,962 279,353
Total operating expenses 1,645,800 652,033
Income from operations 4,906,382 3,535,943
Other income (expense)
Other income 38,992 (2,971)
Interest income 15,526 20,437
Interest expense (197,600) (180,361)
Bank charges (1,504) (362)
Total other income (expense) (144,585) (163,257)
Income before income taxes 4,761,797 3,372,685
Provision for income taxes -- 266,006
Net income 4,761,797 3,106,680
Other comprehensive income
Foreign currency translation gain 553,997 10,576
Comprehensive income $5,315,794 $3,117,256
Basic and diluted weighted average
shares outstanding 10,201,325 10,770,669
Basic and diluted net earnings per
share $0.47 $0.29
Three Months Ended December 31,
2007 2006
Net sales $3,756,142 $2,081,043
Cost of goods sold 1,621,220 903,090
Gross profit 2,134,923 1,177,954
Operating expenses
Selling expenses 320,133 162,999
Operating and administrative
expenses 1,023,345 60,228
Total operating expenses 1,343,478 223,227
Income from operations 791,445 954,727
Other income (expense)
Other income 29,691 (4,273)
Interest income 15,402 20,437
Interest expense (105,031) (88,992)
Bank charges (1,482) (268)
Total other income (expense) (61,420) (73,096)
Income before income taxes 730,025 881,631
Provision for income taxes -- 66,126
Net income 730,025 815,505
Other comprehensive income
Foreign currency translation gain 379,536 (24,690)
Comprehensive income $1,109,561 $790,815
Basic and diluted weighted average
shares outstanding 9,625,724 10,770,669
Basic and diluted net earnings per
share $0.08 $0.08
CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 AND 2006
(UNAUDITED)
2007 2006
Cash flows from operating activities
Net income $4,761,797 $3,106,680
Adjustments to reconcile net
income to net cash
provided by operating
activities
Share capital contribution -
rental and interest paid by
shareholders 32,177 31,222
Depreciation 402,782 68,033
Amortization 48,909 42,556
Decrease / (Increase) in
current assets --
Accounts receivable 766,758 1,138,280
Inventories (1,718,529) 783,829
Advances to suppliers 131,916 106,674
Other assets (731,007) 137,565
(Decrease) / Increase in
current liabilities
Accounts payable 74,928 (214,100)
Unearned revenue 174,534 (15,493)
Tax payables 1,067,900 685,413
Advances from unrelated
parties 762,443 --
Accrued expenses and other
payables (456,671) (75,566)
Net cash provided by operating
activities 5,317,938 5,795,094
Cash flows from investing
activities
Acquisation of plant,
property, and equipment (247) (965)
Advances for construction in
progress (5,178,555) --
Additions to construction in
progress (20,352) (9,634,028)
Cash to be paid to china
operation's ex-shareholders (4,096,100) --
Net cash used in investing
activities (9,295,255) (9,634,994)
Cash flows from financing
activities
Repayment of loan (133,411) (189,527)
Proceeds from private
placement 18,602,720 --
Restricted cash put in escrow (4,250,000) --
(Payments)/proceeds to/from
related parties (632,926) 4,022,875
Net cash provided by
financing activities 13,586,384 3,833,348
Effect of exchange rate change
on cash and cash equivalents 34,411 10,576
Net increase in cash and cash
equivalents 9,643,478 4,025
Cash and cash equivalents,
beginning balance 81,716 45,623
Cash and cash equivalents,
ending balance $9,725,194 $49,648
Supplement disclosure of cash
flow information
Interest expense paid $(178,095) $(202,714)
Income taxes paid $ $ --
CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2007
(UNAUDITED)
ASSETS
Current Assets
Cash and cash equivalents $9,725,194
Restricted cash 4,250,000
Accounts receivable, net 1,134,238
Inventories 3,616,871
Other assets 89,556
Due from related parties 663,327
Advances to suppliers 176,843
Total Current Assets 19,656,029
Plant, Property and Equipment, net 11,855,864
Advances for construction In Progress 5,225,969
Construction In Progress 65,479
Intangible Assets, net 1,163,424
Total Assets $37,966,765
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $372,849
Unearned revenue 275,262
Accrued expenses and other payables 372,960
Advances from other unrelated companies 762,443
Amount due to related parties 1,300
Taxes payable 3,473,108
Short term loans 4,290,845
Total Current Liabilities 9,548,767
Commitment --
Stockholders' Equity
Preferred Stock, $.001 par value, 20,000,000 shares
authorized, Zero shares issued and outstanding --
Common stock, $.001 par value, 780,000,000 shares
authorized, 18,314,017 shares issued and outstanding 18,314
Additional paid-in capital 17,160,211
Subscription receivable (188,388)
Retained earning 10,630,146
Accumulated other comprehensive income 797,715
Total Stockholders' Equity 28,417,998
Total Liabilities and Stockholders' Equity $37,966,765