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
- Total revenue was approximately $44.2
million, an increase of 35% from approximately $32.7 million for the year 2010.
- Gross profit as a percentage of revenues was approximately
61.5%, as compared to 65.8 % in 2010.
- Net income attributable to stockholders was approximately
$0.1 million, as compared to
approximately $1.2 million for the
year ended December 31, 2010.
- The stockholder's equity was approximately $2.1 million as of December 31, 2011.
Full Year 2011 Results
Sales: 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 Shenghuo
Founded 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 Statement
This 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.
|
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Company Contact:
|
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China Shenghuo Pharmaceutical
Holdings, Inc.
|
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Ms. Shujuan
Wang
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Secretary of Board of
Directors
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+86-871-7282698
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|
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CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(Amounts in
USD, except shares)
|
|
|
|
|
December
31,
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,247,230
|
|
$
|
1,669,387
|
|
Restricted
cash
|
|
|
794,115
|
|
|
-
|
|
Accounts and notes
receivable, net
|
|
|
18,076,050
|
|
|
11,531,027
|
|
Other receivables,
net
|
|
|
4,084,102
|
|
|
4,111,315
|
|
Advances to
suppliers, net
|
|
|
542,153
|
|
|
580,168
|
|
Inventories
|
|
|
2,695,388
|
|
|
2,599,351
|
|
Amounts
due from
related parties
|
|
|
574,899
|
|
|
190,614
|
|
Current deferred tax
assets
|
|
|
1,394,101
|
|
|
833,568
|
|
Other current
assets
|
|
|
199,929
|
|
|
208,111
|
|
Total current
assets
|
|
|
29,607,967
|
|
|
21,723,541
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
25,873,670
|
|
|
21,069,139
|
|
Intangible assets,
net
|
|
|
1,473,074
|
|
|
1,432,736
|
|
Deposits for
long-live assets
|
|
|
1,078,846
|
|
|
754,979
|
|
Non-current
deferred tax assets
|
|
|
275,677
|
|
|
366,478
|
|
Total assets
|
|
$
|
58,309,234
|
|
$
|
45,346,873
|
|
|
|
|
|
|
|
|
|
|
CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS (CONT'D)
|
|
(Amounts in
USD, except shares)
|
|
|
|
|
December
31,
|
|
|
2011
|
|
2010
|
|
Liabilities and
Equity:
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
9,395,483
|
$
|
8,964,404
|
|
Other payables and
accrued expenses
|
|
|
11,819,179
|
|
9,699,857
|
|
Sales
representative deposits
|
|
|
6,106,287
|
|
4,936,429
|
|
Amounts
due to related
parties
|
|
|
18,414
|
|
79,864
|
|
Short-term
borrowings
|
|
|
15,858,895
|
|
5,289,178
|
|
Advances from
customers
|
|
|
1,090,668
|
|
1,158,649
|
|
Taxes and related
payables
|
|
|
2,255,322
|
|
881,506
|
|
Current portion of
long-term borrowings
|
|
|
6,253,075
|
|
6,039,833
|
|
Total current
liabilities
|
|
|
52,797,323
|
|
37,049,720
|
|
Long-term
borrowings
|
|
|
-
|
|
6,251,227
|
|
Total liabilities
|
|
|
52,797,323
|
|
43,300,947
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Common
stock, $0.0001 par value, 100,000,000 shares
authorized and 19,679,400
shares issued and
outstanding
|
|
|
1,968
|
|
1,968
|
|
Additional paid-in
capital
|
|
|
6,014,688
|
|
6,193,927
|
|
Appropriated
retained earnings
|
|
|
147,023
|
|
147,023
|
|
Accumulated
deficit
|
|
|
(5,790,759)
|
|
(5,940,439)
|
|
Accumulated other
comprehensive income
|
|
|
1,743,393
|
|
1,638,109
|
|
Total stockholder's
equity
|
|
|
2,116,313
|
|
2,040,588
|
|
Non-controlling
interest
|
|
|
3,395,598
|
|
5,338
|
|
Total equity
|
|
|
5,511,911
|
|
2,045,926
|
|
Total liabilities and
equity
|
|
$
|
58,309,234
|
$
|
45,346,873
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
AND
COMPREHENSIVE INCOME (LOSS)
|
|
(Amounts in
USD, except shares)
|
|
|
|
|
|
|
|
|
|
|
|
Years ended
December 31,
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
44,158,182
|
|
$
|
32,697,195
|
|
Cost of
goods sold
|
|
|
16,980,006
|
|
|
11,198,736
|
|
Gross
profit
|
|
|
27,178,176
|
|
|
21,498,459
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
19,838,582
|
|
|
15,715,325
|
|
General and
administrative expenses
|
|
|
5,015,534
|
|
|
3,638,445
|
|
Research and
development expense
|
|
|
710,361
|
|
|
656,225
|
|
|
|
|
25,564,477
|
|
|
20,009,995
|
|
Income from
operations
|
|
|
1,613,699
|
|
|
1,488,464
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
Interest
income
|
|
|
11,810
|
|
|
8,325
|
|
Subsidy
income
|
|
|
536,013
|
|
|
786,916
|
|
Interest
expense
|
|
|
(1,714,887)
|
|
|
(842,560)
|
|
Other
income
|
|
|
82,712
|
|
|
247,536
|
|
Other
expenses
|
|
|
(409,405)
|
|
|
(305,185)
|
|
|
|
|
(1,493,757)
|
|
|
(104,968)
|
|
Income
before income tax
|
|
|
119,942
|
|
|
1,383,496
|
|
Income tax benefit
(expense)
|
|
|
11,765
|
|
|
(105,764)
|
|
Net income before allocation to
non-controlling interests
|
|
|
131,707
|
|
|
1,277,732
|
|
Less: net (loss) income
attributable to non-controlling interests
|
|
|
(17,973)
|
|
|
60,878
|
|
Net income
attributable to stockholders
|
|
$
|
149,680
|
|
$
|
1,216,854
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
Net income
|
|
|
131,707
|
|
|
1,277,732
|
|
Foreign currency
translation adjustment
|
|
|
187,150
|
|
|
51,517
|
|
Comprehensive
income
|
|
$
|
318,857
|
|
$
|
1,329,249
|
|
Comprehensive income
attributable to
non-controlling interests
|
|
|
63,893
|
|
|
63,333
|
|
Comprehensive income
attributable to stockholders
|
|
|
254,964
|
|
|
1,265,916
|
|
Basic and
diluted earnings per share
|
|
$
|
0.01
|
|
$
|
0.06
|
|
Weighted-average number of
shares outstanding
- basic and
diluted
|
|
|
19,679,400
|
|
|
19,679,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Amounts in
USD)
|
|
|
|
Years ended
December 31,
|
|
|
2011
|
|
2010
|
|
Cash Flows from Operating
Activities:
|
|
|
|
|
|
|
Net income
|
$
|
131,707
|
|
$
|
1,277,732
|
|
Adjustments to reconcile
net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
Deferred income
tax
|
|
(398,459)
|
|
|
58,362
|
|
Depreciation and
amortization
|
|
1,494,985
|
|
|
755,380
|
|
Bad debt provision and
allowance and inventories write off
|
|
380,825
|
|
|
1,786,315
|
|
Gain on disposal of fixed
assets
|
|
-
|
|
|
(103,140)
|
|
Change in working
capital:
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
(5,980,478)
|
|
|
799,195
|
|
Other
receivables
|
|
233,585
|
|
|
1,234,888
|
|
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
assets
|
|
18,351
|
|
|
(186,754)
|
|
Accounts
payable
|
|
(26,097)
|
|
|
1,935,119
|
|
Other
payables and
accrued expenses
|
|
1,584,229
|
|
|
(713,701)
|
|
Advances from
customers
|
|
(124,047)
|
|
|
207,968
|
|
Sales representative
deposits
|
|
895,308
|
|
|
(2,277,841)
|
|
Taxes and related
payables
|
|
1,296,310
|
|
|
(242,273)
|
|
Net Cash
(Used in)
Provided by Operating
Activities
|
|
(970,409)
|
|
|
5,840,735
|
|
|
|
|
|
|
|
|
Cash Flows from Investing
Activities:
|
|
|
|
|
|
|
Purchase of long-lived
assets
|
|
(2,299,690)
|
|
|
(8,354,461)
|
|
Proceeds from disposal of
long-lived assets
|
|
4,753
|
|
|
317,679
|
|
Net 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
|
|
-
|
|
|
29,539
|
|
Proceeds from
borrowings
|
|
25,897,076
|
|
|
29,582,155
|
|
Payments on borrowings
|
|
(22,352,041)
|
|
|
(27,791,252)
|
|
Net Cash Provided by Financing
Activities
|
|
2,750,920
|
|
|
1,820,442
|
|
|
|
|
|
|
|
|
Effect of exchange rate
fluctuation on cash and
cash equivalents
|
|
92,269
|
|
|
58,452
|
|
Net decrease in cash and cash
equivalents
|
|
(422,157)
|
|
|
(317,153)
|
|
Cash and cash equivalents at
beginning of year
|
|
1,669,387
|
|
|
1,986,540
|
|
Cash and cash equivalents at end
of year
|
$
|
1,247,230
|
|
$
|
1,669,387
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
Cash paid for
interest
|
$
|
1,540,896
|
|
$
|
967,686
|
|
Cash paid for income
tax
|
$
|
71,503
|
|
$
|
130,229
|
|
|
|
|
|
|
|
|
Non-cash
activity:
|
|
|
|
|
|
|
Contribution from
non-controlling interests
|
|
3,199,273
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Shenghuo Pharmaceutical