SHENZHEN, China, Dec. 11 /Xinhua-PRNewswire/ -- Winner Medical Group Inc. (OTC Bulletin Board: WMDG), reported today the consolidated financial results for the fourth quarter and fiscal year ended September 30, 2007.
Fourth Quarter Results
Consolidated fourth quarter net sales in fiscal 2007 increased 29.27% to $21.51 million from $16.64 million in the fourth quarter of fiscal 2006. Consolidated fourth quarter gross profit increased 7.74% to $5.71 million from $5.30 million in the fourth quarter of fiscal 2006. The increase was mainly attributed to the increased sales orders from customers with large orders, especially from European customers.
Net income for the fourth quarter increased 15.5% to $1.49 million, or $0.033 per basic and diluted share, compared to net income of $1.29 million, or $0.030 per basic and diluted share, for the fourth quarter last year.
Fiscal Year Results
Net sales for fiscal year 2007 totaled approximately $70.28 million, representing approximately a 10.04% increase over net sales of approximately $63.87 million reported in the fiscal year 2006. Higher sales were generated from Europe, North America and China compared with the same period last year. Gross profit for the fiscal year 2007 decreased to $17.41 million, from $ 17.54 million for the fiscal year 2006. Gross margin in 2007 was affected by appreciation in the Chinese RMB against the U.S. dollar as well as increased labor, energy, and raw material costs.
Net income for fiscal year 2007 was approximately $5.62 million, or $0.13 per basic and diluted share, compared with net income of approximately $5.83 million, or $0.14 per basic and diluted share, in fiscal year 2006. Decrease in net profit is mainly due to increased marketing expenses on Winner Medical’s new products, and increased R&D expense.
The following table compares the sales revenues generated in fiscal year 2006 and 2007 in the major geographic areas in which Winner Medical sells its products. The table also provides the percentage of total revenues generated in each region.
(All amounts, other than percentages, in millions of U.S. dollars)
Year Ended Percentage of Year Ended Percentage of
on 9/30/07 Total Revenues on 9/30/06 Total Revenues
Europe $30.97 44.07% $25.01 39.16%
Japan $15.18 21.6% $16.65 26.06%
North America $8.82 12.55% $7.62 11.93%
China $8.53 12.13% $7.78 12.18%
Other $6.78 9.65% $6.81 10.67%
Total $70.28 100% $63.87 100.00%
As of September 30, 2007, Winner Medical had cash and cash equivalents of approximately $6.38 million with working capital of approximately $12.38 million and stockholders’ equity increasing to approximately $60.82 million.
Jianquan Li, Winner Medical’s chairman and chief executive officer, commented, “Winner continued profitable growth in fiscal year 2007. We are especially pleased with our achievements in sales and profits in the fourth fiscal quarter. These increases result primarily from increased orders from our large clients, especially in Europe. At the beginning of fiscal year 2007, we began gradually giving up certain lower margin products, and shifting our resources and services to larger clients. We faced some difficulties earlier in the year while implementing this strategy, but our operating results improved during the second half the year, and we believe our shift in strategy towards large clients and higher margin products will drive future expansion. Despite significant investment in research and development and the SAP ERP system, and the expenses associated with the marketing of new products and our listing in the U.S. capital markets, we continue to report positive bottom line results.
“Looking forward to fiscal year 2008, Winner Medical plans to continue to leverage our innovative technology and introduce new PurCotton(TM) products into the market. This product line has advantages similar to cotton gauze products -- it is absorbent, non-allergenic, and biodegradable, but eliminates many of the disadvantages -- microorganism attachment, fiber loss, shredding, and raw edges, etc. We currently have installed three manufacture lines to produce PurCotton products, also, the quality validation and marketing with certain customers will be completed; thus we are expecting to see increased sales from the PurCottonTM products in the coming year.
“In fiscal year 2008, we also plan to leverage the market expansion in China, US, and Europe,” concluded Mr. Li.
About Winner Medical
Winner Medical is a holding company comprised of eight wholly-owned operating subsidiaries and three joint venture factories. Winner Medical is primarily engaged in the development, manufacturing and distribution of high-quality cotton disposable medical dressings and disposable products. Winner Medical’s products include surgical dressings, dressing packs, wound care dressings, protective products, medical instruments, dental products and hygiene products for the institutional and home care markets. Winner Medical products are manufactured in China and sold domestically and abroad, in countries and areas such as Japan, Germany, Italy, the Netherlands, Australia, France, the United States, South America, Africa and the Middle East. Winner Medical is one of few Chinese companies licensed by the U.S. Food and Drug Administration to ship finished, sterilized products directly to the U.S. market. To learn more about Winner Medical, visit Winner Medical’s web site http://www.winnermedical.com .
Forward-Looking Statements
This press release contains certain statements that may include "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding Winner Medical and its subsidiary companies’ business strategy, plans and objective and statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although Winner Medical believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Winner Medical’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Winner Medical’s periodic reports that are filed with and available from the Securities and Exchange Commission. All forward- looking statements attributable to Winner Medical or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Winner Medical does not assume a duty to update these forward-looking statements.
WINNER MEDICAL GROUP INC.
WINNER MEDICAL GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months ended Year ended
September 30 September 30
(Unudited) (Audited)
2007 2006 2007 2006
US$ US$ US$ US$
Net sales 21,510,103 16,636,783 70,280,960 63,873,058
Cost of sales (15,797,463) (11,341,626)(52,869,597) (46,335,354)
Gross profit 5,712,639 5,295,157 17,411,363 17,537,704
Other operating
income, net 103,666 82,183 366,992 283,337
Selling, general and
administrative
expenses (4,237,144) (3,973,495)(11,959,184) (11,335,006)
Income from operations 1,579,162 1,403,845 5,819,171 6,486,035
Gain on disposal of a
subsidiary -- -- -- --
Interest income 56,986 27,858 72,650 54,772
Interest expenses (117,371) (51,632) (408,123) (266,934)
Equity in earnings of
50 percent or less
owned persons 42,944 42,199 178,693 52,817
Income before income
taxes and minority
interests 1,561,721 1,422,270 5,662,391 6,326,690
Income taxes (87,750) (135,453) 15,015 (516,635)
Income before minority
interests 1,473,971 1,286,817 5,677,406 5,810,055
-- --
Minority interests 13,276 2,607 (52,552) 19,239
Net income 1,487,247 1,289,424 5,624,854 5,829,294
Other comprehensive
income
Foreign currency
translation difference 765,344 530,980 2,907,981 857,313
-- --
Comprehensive income 2,252,591 1,820,404 8,532,835 6,686,607
Net income per stock
- basic 0.03 0.03 0.13 0.14
- diluted 0.03 0.03 0.13 0.14
Weighted average common
stock outstanding
- basic 44,677,171 43,053,212 44,677,171 43,053,212
- diluted 44,677,171 43,061,546 44,677,171 43,061,546
WINNER MEDICAL GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Audited)
September 30,
2007 2006
US$ US$
ASSETS
Current assets:
Cash and cash equivalents 6,377,488 4,319,579
Accounts receivable, less allowances
for doubtful accounts of US$36,832
and US$20,347 at September 30, 2007
and 2006 respectively 11,279,810 7,513,013
Amounts due from affiliated companies 405,919 480,900
Inventories 11,483,442 11,329,520
Prepaid expenses and other current
assets 6,631,492 6,182,472
Income taxes recoverable 94,698 7,533
Deferred tax assets 192,088 187,089
Total current assets 36,464,937 30,020,106
Property, plant and equipment, net 46,827,013 35,800,530
Investments in equity investees 1,425,550 1,062,135
Intangible assets, net 130,513 38,731
Prepaid expenses 246,578 224,391
Deferred tax assets 26,744 25,818
Total assets 85,121,335 67,171,711
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term bank loans 12,781,595 5,437,050
Accounts payable 7,305,581 4,196,874
Accrued payroll and employee benefits 1,299,342 1,184,779
Customer deposits 362,900 269,965
Other accrued liabilities 1,990,871 2,379,849
Amount due to a shareholder -- 1,556
Amounts due to affiliated companies 41,809 203,999
Dividend payable -- 504,317
Income taxes payable 303,592 556,647
Total current liabilities 24,085,690 14,735,036
Deferred tax liabilities 22,857 21,707
Total liabilities 24,108,547 14,756,743
Commitments and contingencies
Minority interests 191,131 149,496
Stockholders' equity:
Common stock, par value $0.001 per share;
authorized 495,000,000 issued and
outstanding September 30, 2007 -
44,677,171 shares; 44,677 44,677
September 30, 2006 - 44,677,171 shares
Additional paid-in capital 30,260,547 30,237,197
Retained earnings 24,116,054 19,182,866
Statutory reserves 1,914,344 1,222,678
Accumulated other comprehensive income 4,486,035 1,578,054
Total stockholders' equity 60,821,657 52,265,472
Total liabilities and
stockholders' equity 85,121,335 67,171,711