Shengtai Pharmaceutical, Inc. Reports Financial Results for the Fiscal Year 2012

28 Sep, 2012, 20:54 ET from Shengtai Pharmaceutical, Inc.

WEIFANG, Shandong, China, Sept. 28, 2012 /PRNewswire/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (''Shengtai'' or ''the Company'' or "We" or "Us" or "Our"), a manufacturer and distributor in China of glucose and starch as pharmaceutical raw materials and other starch and glucose products, today reported financial results for the twelve months ended June 30, 2012.

"We are very glad that the Company has made some important improvements in the year ended June 30, 2012," stated Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc., "The Company developed a new product, corn germ meal, which can be used as animal feed. It immediately contributed to our product revenues. Other than maintaining our current domestic customers, we also developed new customers during the year ended June 30, 2012. Even though raw material costs increased, we still managed to maintain a strong market share in the domestic pharmaceutical glucose market in China."

Fiscal Year 2012 Result of Operations

Sales revenue for the fiscal year ended June 30, 2012 was $179,029,127, an increase of $7,311,260, or 4.26% compared with $171,717,866 in the corresponding period in 2011. The increase in sales revenue resulted from an increase in the average selling prices, offset by decreased sales quantity of corn starch products. The Company's average selling prices increased 3.87% for glucose products, 5.42% for cornstarch products, and 2.52% for other products, in the year ended June 30, 2012 compared to the year ended June 30, 2011. The Company's sales quantity increased by 1.48% for glucose products, decreased by 17.87% for cornstarch products, and increased by 6.29% for other products, for the year ended June 30, 2012 compared to the year ended June 30, 2011. Net sales quantities from exports for the year ended June 30, 2012 decreased approximately 1.69 %, or 1,395 tons compared to the year ended June 30, 2011. The decrease is mainly attributable to decreased sales of glucose products and cornstarch products, offset by increased exporting sales quantities of other products. The decrease in export sales quantity of glucose products is due to a decrease in demand resulting from a price decrease in sugar substitute products in the global market. The decreased export sales quantity of corn starch products is due to increased competition in the global cornstarch market. The increase in export sales of other products is due to increased orders from our regular customers and increased sales from our other newly developed products, including corn germ meal, which can be used as animal food. Domestic sales quantity for the year ended June 30, 2012 decreased by approximately 4.83% compared to the year ended June 30, 2011. The decrease was mainly attributable to increased domestic sales quantity of our glucose products, offset by decreased domestic sales quantity of cornstarch products and other products. The increase in domestic sales quantity of our glucose products is due to increased sales from new customers. The decrease in sales quantity of our cornstarch products and other products is due to increased competition.

Costs of sales for the year ended June 30, 2012 was $161,705,181, an increase of $13,111,135, or 8.82% as compared to $148,594,046 in the corresponding period in 2011. The increase of cost of sales is mainly due to an increase in corn prices.  Gross profit for the year ended June 30, 2012 was $17,323,946, a decrease of $5,799,874, or 25.08%, as compared to $23,123,820 for the year ended June 30, 2011.  Gross profit margin for the year ended June 30, 2012 was 9.68%, a decrease from 13.47% for the year ended June 30, 2011.  The decrease in gross profit margin is because the percentage increase in the cost of sales is greater than the percentage increase in net sales.

Selling, general and administrative expenses were $11,825,104 for the year ended June 30, 2012, an increase of $2,020,060 or 20.6%, as compared to $9,805,044 for the year ended June 30, 2011. The increase of selling, general, and administrative expenses is caused by increased selling, general and administrative expenses in the PRC, offset by decreased selling, general and administrative expenses in the United States. The Company's selling, general and administrative expenses in the United States in the year ended June 30, 2012 decreased by $389,447 compared to the year ended June 30, 2011. The decrease is mainly due to decreased salary expenses of $364,000 and decreased option expenses of $211,082 offset by increased taxation expense expenses of $46,088. The salary expenses from the US entity decreased because during the year ended June 30, 2012 the Company's CEO agreed to give up his accrued salaries of $210,000 since April 2010 and the Company's CFO agreed to give up his accrued salaries of $154,000 since March 2010. The total accrued salary expense of $364,000 was reversed by increasing additional paid in capital in the year ended June 30, 2012. The Company incurred non-cash stock option expenses of $27,602 and $238,684 for the year ended June 30, 2012 and 2011, respectively. The selling, general and administrative expenses from our PRC operating entities increased by $2,020,060 for the year ended June 30, 2012 compared to the year ended June 30, 2011.  The selling expenses from our PRC operating entities increased by $1,451,470 in the year ended June 30, 2012 compared to the same period in 2011. The increase in selling expenses is mainly attributable to the  increase in shipping and handling expenses of $1,455,994 as a result of increased gas cost. The general and administrative expenses incurred in PRC increased $568,590 in the year ended June 30, 2012 compared to the year ended June 30, 2011. The increase is mainly attributable to the increase in depreciation expenses of $183,051 and workers' insurance expenses of $108,654.

Net income for the year ended June 30, 2012 was $1,072,594, a decrease of $6,578,457 or 85.98%, as compared to net income of $7,651,051 for the same period in 2011. The decrease in net income was primarily due to the decrease in gross profit, increase in selling and general and administrative expenses, and increase in interest expenses.

Net cash used in operating activities for the fiscal year ended June 30, 2012 was $23,737,700, a decrease of $28,807,300 or 568.24%, compared to $5,069,599 net cash provided by operating activities for the fiscal year ended June 30, 2011. The decrease is due to decreased net income, increased accounts receivables, increased payments to acquire inventories, increased payments to pay back accounts payables, and decreased customer deposit, offset by decreased other receivable, decreased prepayments and other assets, and increased deprecation during the year ended June 30, 2012 as compared to the year ended June 30, 2011.  

Net cash used in investing activities for fiscal year ended June 30, 2012 was $1,655,433, a decrease of $6,442,584 or 79.56%, compared to $8,098,017 used in investing activities for the year ended June 30, 2011.  The decrease is due to reduced investment in construction in progress during the year ended June 30, 2012 compared to the year ended June 30, 2011.

Net cash provided by financing activities for the fiscal year ended June 30, 2012 was $26,099,389, a decrease of $26,283,774 or 14,254.82%, as compared to $184,385 used in financing activities for the same period in 2011. The decrease is mainly due to increased short term bank loans, increased notes payables, less payments of notes payable, offset by increased restricted cash, more payments of short term bank loans, and less payment of capital lease during the year ended June 30, 2012 compared to the year ended June 30, 2011.

Management Comments

Looking forward, Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "Raw material costs show no sign of decline in the near future, so the Company will focus on other strategies to increase gross profit, including developing new product lines, keeping storage of raw materials to lock in lower cost, and sticking to a strict and more profitable pricing policy."

"We believe that our sound reputation, good quality products, and outstanding customer service will help us to maintain our market share and profits in the coming years," concluded Mr. Liu.

About Shengtai Pharmaceutical, Inc.

Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. (SHI), and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a manufacturer and distributor in china of glucose and starch products as pharmaceutical raw materials, other starch products and other glucose products such as corn meals, food and beverage glucose and dextrin. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com.

Forward Looking Statements

Certain statements in this press release and oral statements made by the Company constitute forward-looking statements concerning the Company's business and products. These statements include, without limitation, statements regarding our ability to prepare the Company for growth, the Company's planned capacity expansion and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs, but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the pharmaceutical industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large-scale implementation of the Company's business plan, the ability to attract new customers, ability to increase its product's applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

For more information, please contact:

Shengtai Pharmaceutical, Inc. Ms. Yukie Ying Gao Investor Relations Manager Tel: +86-536-2188831 Email: ir-yukie@shengtaipharmaceutical.com

 

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED  BALANCE SHEETS

June 30,

2012

2011

ASSETS

CURRENT ASSETS:

Cash & cash equivalents

$

4,903,303

$

4,051,349

Restricted cash

13,084,586

8,972,600

Accounts receivable, net of allowance for doubtful accounts of $1,603,051 and $1,506,470

12,099,625

8,580,973

Notes receivable

4,590,758

2,815,726

Other receivables 

8,862,789

8,359,103

Inventories

29,457,981

13,016,399

Prepayments and other assets

1,023,154

2,296,982

Total current assets

74,022,195

48,093,131

PLANT AND EQUIPMENT, net

80,185,228

77,029,157

CONSTRUCTION IN PROGRESS

1,213,540

4,693,018

EQUITY INVESTMENT

11,704,050

9,132,725

ADVANCE FOR CONSTRUCTION

2,188,892

2,039,929

INTANGIBLE ASSETS, NET

3,271,147

3,251,214

Total assets

$

172,585,052

$

144,239,174

L I A B I L I T I E S    A N D    S T O C K H O L D E R S'   E Q U I T Y

CURRENT LIABILITIES:

Accounts payable 

$

5,432,615

$

9,508,512

Accounts payable and accrued liabilities - related party

405,926

943,779

Notes payable - banks

17,835,706

11,447,800

Short term loans

73,483,997

48,094,740

Accrued liabilities

479,593

917,464

Other payable

1,672,805

2,642,598

Employee loans

295,076

261,938

Other payable - officer

37,027

36,285

Customer deposit

9,610,252

8,954,841

Taxes payable

997,529

1,809,093

Total current liabilities

110,250,526

84,617,050

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Preferred stock, $0.001 par value, 2,500,000 shares authorized,

no shares issued and outstanding as of June 30, 2012 and June 30, 2011

-

-

Common stock, $0.001 par value, 50,000,000 shares authorized,

9,584,912 shares issued and outstanding as of June 30, 2012 and June 30, 2011

9,585

9,585

Additional paid-in capital

21,945,101

21,553,499

Statutory reserves

4,226,125

4,068,822

Retained earnings

27,064,092

26,148,801

Accumulated other comprehensive income

9,089,623

7,841,417

Total stockholders' equity

62,334,526

59,622,124

Total liabilities and stockholders' equity

$

172,585,052

$

144,239,174

The accompanying notes are an integral part of these consolidated financial statements.

 

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME 

 Ended June 30

2012

2011

NET SALES

$

179,029,127

$

171,717,866

COST OF SALES

161,705,181

148,594,046

GROSS PROFIT     

17,323,946

23,123,820

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES         

11,825,104

9,805,044

INCOME FROM OPERATIONS

5,498,842

13,318,776

OTHER INCOME (EXPENSE) :

  Earnings on equity investment

921,730

872,630

  Non-operating income 

766,287

228,746

  Non-operating expense

(191,790)

(312,552)

  Interest expense and other charges

(6,115,809)

(3,729,444)

  Interest income

192,347

119,636

    Other income (expense) , net

(4,427,235)

(2,820,984)

INCOME BEFORE PROVISION FOR INCOME TAXES

1,071,607

10,497,792

PROVISION FOR INCOME TAXES

(988)

2,846,741

NET INCOME 

1,072,594

7,651,051

OTHER COMPREHENSIVE ITEMS:

    Foreign currency translation adjustments

1,248,206

2,636,158

COMPREHENSIVE INCOME

2,320,800

$

10,287,210

EARNINGS PER SHARE

Basic and diluted

$

0.11

$

0.80

WEIGHTED AVERAGE NUMBER OF SHARES

Basic and diluted

9,584,912

9,584,912

The accompanying notes are an integral part of these consolidated financial statements.

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Ended June 30

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income 

$

1,072,594

$

7,651,051

Adjustments to reconcile net income to cash (used in)

provided by operating activities:

Depreciation

8,001,930

7,153,155

Amortization

59,368

56,632

Bad debt (reduction) provision

60,476

131,463

Share based compensation to employees

27,602

238,684

Earnings on equity investment

(921,730)

(872,630)

Loss on equipment disposal

-

238,387

Change in operating assets and liabilities:

Accounts receivable

(3,355,898)

68,917

Notes receivable

(1,698,109)

(202,150)

Other receivables

(329,985)

(8,127,790)

Inventories

(16,087,045)

(181,050)

Prepayments and other assets

1,320,468

(1,684,476)

Accounts payable 

(9,799,190)

(5,913,395)

Accounts payable-related party

(556,931)

-

Accrued liabilities

(96,020)

-

Accrued liabilities - related party

-

663,386

Other payable

(1,026,110)

1,098,802

Customer deposit

440,311

4,477,630

Taxes payable

(849,432)

272,983

Net cash (used in) provided by operating activities

(23,737,700)

5,069,599

CASH FLOWS FROM INVESTING ACTIVITIES:

Increase in equity investment

(1,418,958)

(1,511,200)

Purchase of plant and equipment

(1,226)

(2,018,025)

Additions to construction in progress

(132,788)

(3,626,806)

Increase in land use right

(2,496)

-

Advances for construction 

(99,965)

(941,986)

Net cash used in investing activities

(1,655,433)

(8,098,017)

CASH FLOWS FROM FINANCING ACTIVITIES:

Decrease in restricted cash

(4,111,986)

7,584,304

Borrowings on notes payable - banks

19,581,857

15,263,120

Principal payments on notes payable - banks

(13,501,787)

(22,365,760)

Borrowings on short term loans 

97,832,239

56,895,225

Principal payments on short term loans 

(73,727,699)

(51,108,784)

Borrowings on employee loans

31,487

107,673

Principal payments on employee loans

(4,723)

(258,482)

Borrowings on long term loans

-

(493,544)

Payments on long term loans

-

4,841,583

Borrowings on third party loan

-

(4,841,583)

Payment on capital lease obligation

-

(5,808,137)

Net cash provided by (used in) financing activities

26,099,389

(184,385)

EFFECTS OF EXCHANGE RATE CHANGE IN CASH

145,699

1,127,605

INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS

851,954

(2,085,198)

CASH & CASH EQUIVALENTS, beginning of year

4,051,349

4,121,541

CASH & CASH EQUIVALENTS, end of year

$

4,903,303

$

2,036,343

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the year for: 

Interest Paid

$

4,087,384

$

2,995,844

Income taxes

$

727,685

$

2,098,145

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Decrease of other receivable for acquisition of plant and equipment

$

26,449

$

-

Transfers of construction in progress-related inventory to plant and equipment

$

250,877

$

-

Acquisition of plant and equipment on credit

$

5,523,141

$

5,717,226

Non-cash advances for construction 

$

-

$

1,344,561

Completion of construction-in-progress (transferred to plant and equipment)

$

8,883,222

$

15,392,980

The accompanying notes are an integral part of these consolidated financial statements.

 

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 

FOR THE YEARS ENDED JUNE 30, 2012 AND 2011

Retained earnings

Accumulated other

Common stock

 Paid-in 

Statutory

comprehensive 

Shares

Par value

capital

Reserves

Unrestricted

income

 Totals 

BALANCE, JUNE 30, 2010

9,584,912

$

9,585

$

21,314,815

$

3,214,800

$

19,351,772

$

5,205,259

$

49,096,231

 Net income 

-

-

-

-

7,651,051

-

7,651,051

 Option issued to employees  

-

-

238,684

-

-

-

238,684

 Adjustment to statutory reserve  

-

-

-

854,022

(854,022)

-

-

 Foreign currency translation adjustments 

-

-

-

-

-

2,636,158

2,636,158

BALANCE, JUNE 30, 2011

9,584,912

9,585

21,553,499

4,068,822

26,148,801

7,841,417

59,622,124

  Net income 

-

-

-

-

1,072,594

-

1,072,594

  Option issued to employees  

-

-

27,602

-

-

-

27,602

  Forgiveness of officer's compensation 

-

364,000

-

-

-

364,000

  Adjustment to statutory reserve  

-

-

-

157,303

(157,303)

-

-

  Foreign currency translation adjustments 

-

-

-

-

-

1,248,206

1,248,206

BALANCE, JUNE 30, 2012

9,584,912

$

9,585

$

21,945,101

$

4,226,125

$

27,064,092

$

9,089,623

$

62,334,526

The accompanying notes are an integral part of these consolidated financial statements.

SOURCE Shengtai Pharmaceutical, Inc.



RELATED LINKS

http://www.shengtaipharmaceutical.com