Sinovac Reports Unaudited Fourth Quarter and Full Year 2012 Financial Results

- Conference call scheduled for Thursday, April 18, 2013 at 8:00 AM EDT -

18 Apr, 2013, 08:02 ET from Sinovac Biotech Ltd.

BEIJING, April 18, 2013 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of vaccines in China, announced today its unaudited fourth quarter and full year financial results for the period ended December 31, 2012.

Financial Highlights

  • Total sales were $19.0 million for the fourth quarter of 2012, a decrease of 10.4% from $21.1 million in the same period of 2011. Excluding sales of Panflu and Panflu.1 under the government stockpiling program in the fourth quarter of 2011, total sales in the fourth quarter of 2012 increased by 166.9% from $7.1 million in the same period of 2011. 2012 full year sales were $48.6 million, a decrease of 14.5% from $56.8 million in 2011. Excluding sales of Panflu and Panflu.1 under the government stockpiling program in 2011, the regular sales, including Healive, Bilive and Anflu, mumps vaccine and RabEnd, increased by 38.6% to $48.6 million in 2012.
  • Net loss attributable to common stockholders in the fourth quarter of 2012 was $5.4 million, or $0.10 per basic and diluted share. Full year 2012 net loss attributable to common stockholders was $15.7 million, or $0.29 per basic and diluted share. The operating expense for the fourth quarter and full year included a $1.5 million impairment charge on long-lived assets related to the production of animal vaccine.
  • Cash and cash equivalents totaled $90.9 million as of December 31, 2012, compared to $104.3 million as of December 31, 2011.

Recent Business Highlights

  • In March 2013, Sinovac announced preliminary top-line data from its phase III clinical trial assessing the efficacy, immunogenicity and safety of the Company's proprietary enterovirus 71 ("EV71") vaccine against hand, foot and mouth disease ("HFMD"). The primary objective of the study was to evaluate the efficacy of the EV71 vaccine in the prevention of HFMD caused by EV71 in infants of between 6 to 35 months of age.  The preliminary phase III data showed that Sinovac's EV71 vaccine was 95% efficacious against HFMD caused by EV71.
  • In April 2013, Fengcai Zhu, Deputy Director of the Jiangsu Provincial Center for Disease Prevention and Control, and co-principal investigator of Sinovac's phase III trial on EV71 vaccine, presented data regarding the efficacy and safety of the Company's proprietary EV71 vaccine against HFMD at the 13th Annual World Vaccine Congress & Expo. 
  • Also in April, 2013, we were granted a license from COFEPRIS, the regulatory authority of Mexico's Ministry of Health, to sell Anflu in Mexico.

Dr. Weidong Yin, Chairman, President and CEO, commented, "2012 was a transformative year for Sinovac as we focused on continuing to advance our vaccine development pipeline. We invested significantly in research and development this year for our lead candidate, our proprietary EV71 vaccine against HFMD. We are well positioned for medium- to long-term growth as this vaccine progresses through the regulatory process and approaches launch."

Dr. Yin continued, "EV71 represents a significant unmet medical need in China with over 2.16 million cases reported in 2012, from which 560 fatalities were reported, Most of serve cases of EV71 infection were seen in children under 5 years old, which totaled approximately 80 million in China. Unfortunately, no EV71-specific treatment and prevention method currently exists. With knowledge of this unmet need, we commenced development of an EV71 vaccine in 2008, and recently concluded the phase III efficacy trial for this candidate. In March 2013, the unblinded top-line results from the phase III clinical trial for the vaccine demonstrated a 95% efficacy rate against HFMD caused by EV71. We expect our EV71 vaccine, once commercialized, will provide a solution to this unmet medical need in China."

Dr. Yin concluded, "I am also very pleased with the 38.6% increase in regular vaccine sales for 2012. Growth was achieved across all three of our market segments: private pay market, public market and international market. Sinovac's core products, inclusive of Healive, Bilive, and Anflu, contributed to our sales growth, with Bilive and Healive sales in the private market in China being the primary contributors to both the rate and magnitude of the sales increase. Our financial results benefited from a successful price increase for both of these products, as well as higher volume. Our well-trained, experienced sales team continues to drive growth in our commercialized vaccine products, but also has taken significant strides to increase efficacy in our sales and marketing infrastructure, positioning us well for future vaccine product launches, such as the EV71 vaccine."

Financial Review for Unaudited Fourth Quarter Ended December 31, 2012

An analysis of sales and gross profit is as follows: 

In USD

2012Q4

% of Sales

2011Q4

% of Sales

Fluctuation %

Healive-hepatitis A

10,037,198

53.0%

2,970,802

14.1%

237.9%

Bilive-hepatitis A&B

3,784,668

20.0%

605,624

2.9%

524.9%

Anflu- influenza

5,091,076

26.8%

3,523,452

16.7%

44.5%

Core sales

18,912,942

99.8%

7,099,878

33.7%

166.4%

Mumps 

23,925

0.1%

Rabend (Animal)

14,634

0.1%

Regular Sales

18,951,501

7,099,878

166.9%

Panflu.1 -H1N1

14,004,653

66.2%

Panflu-H5N1

38,873

0.1%

Total sales

18,951,501

21,143,404

-10.4%

Cost of Sales

8,698,009

8,031,758

Gross profit

10,253,492

54.1%

13,111,646

62.0%

-21.8%

Total revenue for the fourth quarter of 2012 was $19.0 million, a decrease of 10.4% from $21.1 million in the same period of 2011. Fourth quarter 2012 sales of our regular products, Healive, Bilive, Anflu, mumps vaccine and RabEnd, increased by 166.9% to $19.0 million from $7.1 million in the same period of 2011. The significant increase in sales of core products in the fourth quarter was driven by: 1) expansion of Healive to a new territory of Jiangsu Province in the fourth quarter; 2) the successful implementation of a new sales strategy to achieve both volume growth and average selling price increase for hepatitis vaccines; and 3) higher Anflu sales in the fourth quarter compared to other regular years due to a later start of the Anflu sales season in 2012. 2011 sales included recognition of approximately $14 million revenue from Panflu and Panflu.1 vaccines stockpiled by the Chinese government in 2010. These two products are not for regular sales, since they were produced upon government order and subject to the government decision of using the vaccines within its shelf life if there was any flu pandemic caused by H1N1 and/or H5N1. The Company's revenue recognition requirements were not met until the fourth quarter of 2011. And in 2012, there was no revenue recognized for either Panflu or Panflu.1.

Compared with the fourth quarter of 2011, the gross profit margin for the fourth quarter of 2012 decreased from 62.0% to 54.1%. The higher gross margin in the fourth quarter of 2011 was due to the recognition of $14 million revenue from H1N1 vaccine stockpiling, which has a higher gross profit margin than other vaccines.

Selling, general and administrative expenses for the fourth quarter of 2012 were $12.8 million, compared to $5.9 million in the same period of 2011. The increase in SG&A was largely due to an increase in G&A, although both selling expense and general and administration expense increased. The increase of G&A expense was resulted from the increased expenses incurred for validation, commissioning, and trial production for the dedicated production facility for our EV71 vaccine at the Changping site, Beijing, and the preparation for GMP inspection by the government authorities of our existing manufacturing facilities in both the Changping and Shangdi sites in Beijing for compliance with China's 2010 GMP guidelines.

The R&D expense for the fourth quarter of 2012 was $1.3 million, a $1 million decrease from $2.3 million for the same period in 2011, due to lower EV71 clinical trial expense as the trial approaching its end.

Depreciation of property, plant and equipment and amortization of licenses and permits for the fourth quarter of 2012 was $0.5 million, compared to $0.4 million for the same period in 2011.

For the fourth quarter of 2012, an impairment charge of $1.5 million on the long-lived assets including plant and building, machinery and equipments related to the animal vaccine production was made.

Net loss attributable to stockholders for the fourth quarter of 2012 was $5.4 million, or $0.10 per basic and diluted share, compared to a net income of $2.8 million, or $0.05 per basic and diluted share, for the same period in 2011.

Financial Review for Unaudited Full Year Results Ended December 31, 2012

An analysis of sales and gross profit of full year 2012 is as follows:      

In USD

2012

% of Sales

2011

%of Sales

Fluctuation %

Healive-hepatitis A

20,141,416

41.5%

14,217,393

25.0%

41.7%

Bilive-hepatitis A&B

19,417,940

40.0%

12,721,993

22.4%

52.6%

Anflu-influenza

8,943,937

18.4%

8,112,279

14.3%

10.3%

Core sales

48,503,293

99.9%

35,051,665

61.7%

38.4%

Mumps

23,925

0.0%

Rabend (Animal)

49,482

0.1%

Regular Sales

48,576,700

100.0%

35,051,665

61.7%

38.6%

Panflu.1 -H1N1

14,008,225

24.6%

Panflu-H5N1

7,782,002

13.7%

Total Sales

48,576,700

56,841,892

100.0%

-14.5%

Cost of goods sold

19,099,927

21,127,410

Gross profit

29,476,773

60.7%

35,714,482

62.8%

-17.5%

Total revenue for the fiscal year ended December 31, 2012 was $48.6 million, a decrease of 14.5% from $56.8 million reported in 2011. Excluding the revenue recognized on the government stockpiling of Panflu and Panflu.1 in 2010, sales of our regular products, Healive, Bilive and Anflu, mumps vaccine and RabEnd, increased by 38.6% to $48.6 million in 2012 from $35.1 million in 2011.

Gross profit margin was 60.7% in 2012, a decline from 62.8% in 2011. Excluding the impact to sales and cost of sales in both years by of Panflu and Panflu.1, the gross margin of regular vaccine products increased to 63.7% in 2012 from 57.7% in 2011.

Selling, general and administrative expenses in 2012 were $31.7 million, compared to $22.4 million in 2011. The increase in SG&A was largely due to an increase in G&A, although both selling expense and general and administration expense increased. The increase of G&A expense was due to the increased cost incurred on the validation of the new facilities in Changping site and preparation for new GMP compliance inspection of our existing manufacturing facilities in both Changping and Shangdi sites.

Research and development expenses in 2012 increased to $17.0 million from $9.0 million in 2011. The increase was mainly due to expense incurred in 2012 in connection with the EV71 phase III clinical trial.

Depreciation of property, plant and equipment and amortization of licenses and permits in 2012 was $1.6 million, compared to $1.4 million in 2011. The higher depreciation in 2012 was mainly due to the additional depreciation on property, plant and equipment of the Changping site.

The Company recorded loss on disposal and impairment of property, plant and equipment of $2.2 million as operating expense, in which $1.5 million was for animal vaccine production related assets and $0.5 million was for human vaccine production related assets.

Net loss attributable to stockholders in 2012 was $15.7 million, or $0.29 per basic and diluted share, compared to a net loss of $0.8 million, or $0.02 per basic and diluted share in 2011.

As of December 31, 2012, cash and cash equivalents totaled $90.9 million, compared to $104.3 million as of December 31, 2011. Net cash used in operating activities was $16.6 million in 2012, which primarily resulted from payment made for EV71 clinical trial and validation of the new facilities in Changping, Beijing and new GMP inspection preparation expenses. Net cash used in investing activities was $16.2 million, which primarily resulted from payment for the purchase of property, plant and equipment for the Changping site. Net cash provided by financing activities was $17.3 million in 2012. The Company maintained a strong cash balance despite significant expenditure on the phase III clinical trial of EV71 vaccine candidate and investment in its production facilities. In order to commercialize other pipeline products, the Company may continue to explore new sources of financing when appropriate.

Correction of Unaudited Financials in Prior Quarterly Release

In the second quarter of 2012, the Company assessed there was reasonable assurance that the conditions attached to several government grants were fulfilled and recognized $1.4 million and $1.5 million of government grants as income for the three and six months periods ended June, 30, 2012, respectively. In the fourth quarter of 2012, the Company determined that government grants of $0.98 million (RMB 6.2 million) related to the purchase of equipment that should have been recorded as deferred government grants with the balance applied to reduce depreciation expense of the related equipment over their remaining useful lives. As a result, the amount of government grants recognized as income should be reduced by $0.98 million for the three and six months periods ended June 30, 2012, and $0.98 million for the nine months periods ended September 30, 2012, respectively. The depreciation expense should also be reduced by $11,679 and $11,679 for the three and six months periods ended June 30, 2012, and $36,646 and $46,636 for the three and nine months periods ended September 30, 2012, respectively. Net cash used from operating activities remained unchanged, because the adjustments on net loss, depreciation of property, plant and equipment and amortization of licenses and permits, and the recognized government grant income in operating activities did not affect cash. Corresponding corrections were made for both the unaudited fourth quarter and full year 2012 financial statements. The corrections to earning releases that were issued in the affected quarters in 2012 are presented in the tables below. Investors should no longer rely upon the previously released unaudited financial statements for the periods and any earnings releases or other communications relating to these periods.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):

Unaudited Three-month and six-month period ended June 30, 2012

 Three months ended 'June 30 2012 

 Six months ended 'June 30 2012 

 Previously Reported 

 Adjustment 

 Corrected Report 

 Previously Reported 

 Adjustment 

 Corrected Report 

 Sales 

9,364,632

-

9,364,632

15,338,099

-

15,338,099

 Cost of sales 

1,375,917

-

1,375,917

3,631,206

-

3,631,206

 Gross profit 

7,988,715

-

7,988,715

11,706,893

-

11,706,893

 Selling, general and administrative expenses  

6,700,526

-

6,700,526

11,020,815

-

11,020,815

 Research and development expenses - net of  

4,676,703

-

4,676,703

12,018,875

-

12,018,875

 Depreciation of property, plant and equipment  and amortization of  licenses and permits 

324,944

(11,679)

313,265

632,387

(11,679)

620,708

 Loss of disposal and impairment of property, plant and equipment  

0

-

0

0

-

0

 Provision for doubtful debts 

-

-

-

-

-

-

 Government grants recognized in income 

(1,386,126)

981,044

(405,082)

(1,457,330)

981,044

(476,286)

 Total operating expenses 

10,316,047

969,365

11,285,412

22,214,747

969,365

23,184,112

 Operating income (loss) 

(2,327,332)

(969,365)

(3,296,697)

(10,507,854)

(969,365)

(11,477,219)

 Interest income 

498,856

-

498,856

1,096,527

-

1,096,527

 Interest and financing expenses 

(232,078)

-

(232,078)

(446,398)

-

(446,398)

 Other income (Expenses) 

14,635

-

14,635

132,713

-

132,713

 Income (loss)  before income taxes and non- controlling interests 

(2,045,919)

(969,365)

(3,015,284)

(9,725,012)

(969,365)

(10,694,377)

 Income tax recovery (expenses) 

797,462

-

797,462

800,364

-

800,364

 Consolidated net income (loss) 

(1,248,457)

(969,365)

(2,217,822)

(8,924,648)

(969,365)

(9,894,013)

 Less: income (loss) attributable to non-controlling interests 

(326,828)

(260,856)

(587,684)

(2,389,964)

(260,856)

(2,650,820)

 Net income (loss) attributable to stockholders 

(921,629)

(708,509)

(1,630,138)

(6,534,684)

(708,509)

(7,243,193)

 Net income (loss) 

(1,248,457)

(969,365)

(2,217,822)

(8,924,648)

(969,365)

(9,894,013)

 Other comprehensive income (loss) 

 Foreign currency translation adjustment 

(474,801)

5,067

(469,734)

171,982

5,067

177,049

 Total comprehensive income (loss) 

(1,723,258)

(964,298)

(2,687,556)

(8,752,666)

(964,298)

(9,716,964)

 Less: comprehensive income (loss) attributable to non-controlling interests 

(373,994)

(259,492)

(633,486)

(2,353,583)

(259,492)

(2,613,075)

 Comprehensive income(loss) attributable to stockholders 

(1,349,264)

(704,806)

(2,054,070)

(6,399,083)

(704,806)

(7,103,889)

 Basic and diluted earnings (loss) per share  

(0.02)

(0.01)

(0.03)

(0.12)

(0.01)

(0.13)

 Weighted average number of shares 

 of common stock outstanding  

 - Basic 

54,804,498

54,804,498

54,804,498

54,784,801

54,784,801

54,784,801

 - Diluted 

54,804,498

54,804,498

54,804,498

54,784,801

54,784,801

54,784,801

Unaudited Three-month and six-month period ended September 30, 2012

Three months ended 'September 30 2012

Nine months ended 'September 30 2012

 Previously Reported 

 Adjustment 

 Corrected Report 

 Previously Reported 

 Adjustment 

 Corrected Report 

Sales

14,287,100

-

14,287,100

29,625,199

-

29,625,199

Cost of sales

6,770,712

-

6,770,712

10,401,918

-

10,401,918

Gross profit

7,516,388

-

7,516,388

19,223,281

-

19,223,281

Selling, general and administrative expenses 

7,844,861

-

7,844,861

18,865,676

-

18,865,676

Research and development expenses - net of 

3,773,625

-

3,773,625

15,792,500

-

15,792,500

Depreciation of property, plant and equipment  and amortization of  licenses and permits

471,242

(36,646)

434,596

1,103,629

(46,636)

1,056,993

Loss of disposal and impairment of property, plant and equipment 

-

-

-

-

-

-

Provision for doubtful debts

97,067

-

97,067

97,067

-

97,067

Government grants recognized in income

(78,053)

-

(78,053)

(1,535,383)

979,355

(556,028)

Total operating expenses

12,108,742

(36,646)

12,072,096

34,323,489

932,719

35,256,208

Operating income (loss)

(4,592,354)

36,646

(4,555,708)

(15,100,208)

(932,719)

(16,032,927)

Interest income

464,512

-

464,512

1,561,039

1,561,039

Interest and financing expenses

302,846

-

302,846

(143,552)

-

(143,552)

Other income (Expenses)

(47,283)

-

(47,283)

85,430

85,430

Income (loss)  before income taxes and non- controlling interests

(3,872,279)

36,646

(3,835,633)

(13,597,291)

(932,719)

(14,530,010)

Income tax recovery (expenses)

(5,958)

-

(5,958)

794,406

-

794,406

Consolidated net income (loss)

(3,878,237)

36,646

(3,841,591)

(12,802,885)

(932,719)

(13,735,604)

Less: income (loss) attributable to non-controlling interests

(849,619)

9,861

(839,758)

(3,239,583)

(250,995)

(3,490,578)

Net income (loss) attributable to stockholders

(3,028,618)

26,785

(3,001,833)

(9,563,302)

(681,724)

(10,245,026)

Net income (loss)

(3,878,237)

36,646

(3,841,591)

(12,802,885)

(932,719)

(13,735,604)

Other comprehensive income (loss)

Foreign currency translation adjustment

890,063

(11,880)

878,183

1,062,045

(6,813)

1,055,232

Total comprehensive income (loss)

(2,988,174)

24,766

(2,963,408)

(11,740,840)

(939,532)

(12,680,372)

Less: comprehensive income (loss) attributable to non-controlling interests

(744,732)

6,664

(738,068)

(3,098,315)

(252,828)

(3,351,143)

Comprehensive income(loss) attributable to stockholders

(2,243,442)

18,102

(2,225,340)

(8,642,525)

(686,704)

(9,329,229)

 Basic and diluted earnings (loss) per share  

(0.06)

0.01

(0.05)

(0.17)

(0.02)

(0.19)

Weighted average number of shares

of common stock outstanding 

- Basic

55,023,070

55,023,070

55,023,070

54,881,874

54,881,874

54,881,874

- Diluted

55,023,070

55,023,070

55,023,070

54,881,874

54,881,874

54,881,874

 

Unaudited Consolidated Balance Sheet:

 June 30 2012 

 September 30 2012 

 Previously Reported

 Adjustment 

 Corrected Report

 Previously Reported

 Adjustment

 Corrected Report 

ASSETS

Current assets

  Cash and cash equivalents

89,440,373

-

89,440,373

81,962,420

-

81,962,420

  Accounts receivable – net 

18,533,886

-

18,533,886

25,316,304

-

25,316,304

  Inventories

14,226,557

-

14,226,557

14,099,902

-

14,099,902

  Prepaid expenses and deposits

1,408,762

-

1,408,762

905,437

-

905,437

Total current assets

123,609,578

-

123,609,578

122,284,063

-

122,284,063

Property, plant and equipment 

80,961,440

-

80,961,440

82,994,261

-

82,994,261

Long-term inventories

3,974,552

-

3,974,552

2,227,196

-

2,227,196

Long-term prepaid expenses 

343,374

-

343,374

311,079

-

311,079

Prepayments for acquisition of equipment

452,144

-

452,144

525,972

-

525,972

Deferred tax assets 

353,903

-

353,903

351,627

-

351,627

Licenses and permits

1,278,421

-

1,278,421

1,261,820

-

1,261,820

Total assets

210,973,412

-

210,973,412

209,956,018

-

209,956,018

LIABILITIES AND EQUITY

Current liabilities

  Loans payable 

4,722,178

-

4,722,178

4,773,422

-

4,773,422

  Accounts payable and accrued liabilities 

28,698,963

-

28,698,963

27,529,207

-

27,529,207

  Income tax payable

234,156

-

234,156

236,697

-

236,697

  Deferred revenue

3,794,136

-

3,794,136

8,108,669

-

8,108,669

  Dividends payable

0

-

0

-

-

-

  Deferred government grants 

100,897

345,471

446,368

101,992

349,222

451,214

Total current liabilities

37,550,330

345,471

37,895,801

40,749,987

349,222

41,099,209

Deferred government grants

2,805,528

618,827

3,424,355

2,761,758

590,310

3,352,068

Loans payable 

23,330,072

-

23,330,072

24,670,318

-

24,670,318

Due to related party 

3,167,008

-

3,167,008

3,201,375

-

3,201,375

Deferred revenue

6,925,862

-

6,925,862

4,194,246

-

4,194,246

Total long term liabilities

36,228,470

618,827

36,847,297

34,827,697

590,310

35,418,007

Total liabilities

73,778,800

964,298

74,743,098

75,577,684

939,532

76,517,216

Commitments and contingencies 

EQUITY

Preferred stock

-

-

-

-

-

-

  Authorized 50,000,000 shares at par value of

-

-

 $0.001 each  Issued and outstanding: nil

-

-

Common stock 

55,020

55,020

55,024

-

55,024

Additional paid-in capital

106,032,906

106,032,906

106,204,800

-

106,204,800

Accumulated other comprehensive income

10,113,926

5,067

10,118,993

10,899,102

(6,813)

10,892,289

Statutory surplus reserves

11,808,271

11,808,271

11,808,271

-

11,808,271

Retained earnings(accumulated deficit) 

(3,838,457)

(708,509)

(4,546,966)

(6,867,075)

(681,724)

(7,548,799)

Total stockholders' equity

124,171,666

(703,442)

123,468,224

122,100,122

(688,537)

121,411,585

Non-controlling interests 

13,022,946

(260,856)

12,762,090

12,278,212

(250,995)

12,027,217

Total equity

137,194,612

(964,298)

136,230,314

134,378,334

(939,532)

133,438,802

Total liabilities and equity

210,973,412

-

210,973,412

209,956,018

-

209,956,018

Conference Call Details

The Company will host a conference call on Thursday, April 18, 2013, at 8:00 a.m. EDT (April 18, 2013, at 8:00 p.m. China Standard Time) to review the Company's financial results and provide an update on recent corporate developments.

To access the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (International).  A replay of the call will be available from 11 a.m. EDT on April 18, 2013 to May 2, 2013 at midnight.  To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 411774.

A live audio webcast of the call will also be available from the investors section on the corporate web site at www.sinovac.com.  A webcast replay can be accessed on the corporate website beginning April 18, 2013, and the replay will remain available for 30 days.

Statement Regarding Unaudited Financial Information

The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company's year-end financial statements, which could result in significant differences from this unaudited financial information. The Company expects to file final audited results with the SEC shortly.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu) and mumps, as well as animal rabies vaccine for canines.  The Company recently concluded the phase III clinical trial for enterovirus 71 (against hand, foot and mouth disease).  In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, Panflu.1, and has manufactured it for the Chinese Central Government, pursuant to the government-stockpiling program.  The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government-stockpiling program.  Sinovac is developing a number of new pipeline vaccines including vaccines for pneumococcal polysaccharides, pneumococcal conjugate, varicella and rubella.  Sinovac sells its vaccines mainly in China and exports selected vaccines to Mongolia, Nepal, and the Philippines. Sinovac was also granted a license to commercialize seasonal flu vaccine in Mexico.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Helen Yang Sinovac Biotech Ltd. Tel:  +86-10-8279-9871 Fax:  +86-10-6296-6910 Email: ir@sinovac.com

Investors: Stephanie Carrington The Ruth Group Tel:  +1-646-536-7017 Email: scarrington@theruthgroup.com

Media: Aaron Estrada The Ruth Group Tel:  +1-646-536-7028 Email: vaguiar@theruthgroup.com

SINOVAC BIOTECH LTD.

Incorporated in Antigua and Barbuda

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

Years ended December 31, 2012 and 2011

(Unaudited)

Three months ended

Twelve months ended

(Expressed in U.S. Dollars)

31-Dec

31-Dec

2012

2011

2012

2011

Sales

$

18,951,501

$

21,143,404

$

48,576,700

$

56,841,892

Cost of sales-(exclusive of depreciation of land use right and amortization of licenses and permits of $126,998 (2011- $33,507) for three months and $234,768  (2011 -$290,526) for twelve months. 

8,698,009

8,031,758

19,099,927

21,127,410

Gross profit

10,253,492

13,111,646

29,476,773

35,714,482

Selling, general and administrative expenses

12,819,508

5,909,584

31,685,185

22,372,095

Provision for (recovery of) doubtful accounts

-971,287

-1,661,581

-874,220

-166,865

Research and development expenses - net of $Nil (2011-$470,827) in government research grants for three months and $125,222 (2010-$686,258) for twelve months. 

1,251,065

2,261,688

17,043,565

9,006,550

Depreciation of property, plant and equipment  and amortization of  licenses and permits

539,672

365,391

1,594,976

1,436,944

Loss of disposal and impairment of property, plant and equipment 

2,190,504

259,464

2,190,504

454,973

Government grant recognised as income

181,486

-556,169

-372,853

-763,677

Total operating expenses

16,010,948

-

6,578,377

51,267,157

-

32,340,020

Operating income (loss)

-5,757,456

-

6,533,269

-21,790,384

-

3,374,462

Interest and financing expenses –net of $485,317 (2010-$nil) in government grants for three months and $595,883 (2010-$147,520) for twelve months. 

-630,824

61,756

-774,376

-384,560

Interest income

449,745

555,375

2,010,784

1,397,141

Other income (expenses)

-162,627

122,452

-77,197

279,866

Loss on disposal and write down of equipment

Income (loss)  before income taxes and non-controlling interests

-6,101,162

-

7,272,852

-20,631,173

-

4,666,909

Income tax recovery (expenses) 

89,491

-3,009,880

883,897

-5,066,603

Consolidated net income (loss)

-6,011,671

-

4,262,972

-19,747,276

-

-399,694

Less: income (loss) attributable to non-controlling interests

-577,578

1,494,118

-4,068,156

445,002

Net income (loss) attributable to stockholders

$

-5,434,093

$

2,768,854

$

-15,679,120

$

-844,696

Net income (loss)

$

-6,011,671

$

4,262,972

$

-19,747,276

$

-399,694

Other comprehensive income 

Foreign currency translation adjustment

960,352

789,653

2,015,584

3,639,992

Total comprehensive income (loss)

-5,051,319

5,052,625

-17,731,692

3,240,298

Less: comprehensive income (loss) attributable to non-controlling interests 

-488,125

1,595,969

-3,839,268

973,562

Comprehensive income (loss) attributable to stockholders

$

-4,563,194

$

3,456,656

$

-13,892,424

$

2,266,736

Earnings (loss) per share              – basic

$

-0.10

$

0.05

$

-0.29

$

-0.02

                                                             – diluted

$

-0.10

$

0.05

$

-0.29

$

-0.02

Weighted average number of shares of common stock outstanding

      – Basic 

55,037,264

54,766,428

54,926,440

54,608,919

– Diluted

55,037,264

54,946,194

54,926,440

54,608,919

SINOVAC BIOTECH LTD.

Incorporated in Antigua and Barbuda

Consolidated Balance Sheets

December 31, 2012 and 2011

(Unaudited)

(Expressed in U.S. Dollars)

December 31,

December 31, 

2012

2011

ASSETS

Current assets

  Cash and cash equivalents

$

90,881,970

$

104,286,695

  Accounts receivable – net

23,440,135

17,834,407

  Inventories

10,529,476

8,113,428

  Prepaid expenses and deposits

1,072,076

1,804,555

Total current assets

125,923,657

132,039,085

Property, plant and equipment 

80,083,383

75,627,881

Long-term inventories

28,692

5,248,237

Long-term prepaid expenses 

289,766

408,656

Prepayments for acquisition of equipment

483,278

828,902

Deferred tax assets 

445,589

419,114

Licenses and permits

1,149,914

1,336,254

Total assets

$

208,404,279

$

215,908,129

LIABILITIES AND EQUITY

Current liabilities

  Loans payable

$

3,328,590

$

4,713,498

  Accounts payable and accrued liabilities 

25,425,498

29,522,495

Income tax payable 

238,775

3,351,127

Deferred revenue

11,972,155

429,416

  Dividends payable

-

795,106

  Deferred government grants 

431,097

719,081

Total current liabilities

41,396,115

39,530,723

Deferred government grants 

4,068,602

3,388,913

Loans payable 

31,181,235

17,321,327

Due to related party 

3,230,125

-

Deferred revenue

99,517

10,369,695

Total long term liabilities

38,579,479

31,079,935

Total liabilities

79,975,594

70,610,658

Commitments and contingencies 

EQUITY

Preferred stock

-

-

  Authorized 50,000,000 shares at par value of $0.001 each

  Issued and outstanding: nil

Common stock 

55,092

54,774

  Authorized: 100,000,000 shares at par value of $0.001 each

  Issued and outstanding:  55,091,561 (2011 – 54,773,961)

Additional paid-in capital

106,245,934

105,383,346

Accumulated other comprehensive income

11,765,021

9,978,325

Statutory surplus reserves

11,808,271

11,808,271

Retained earnings (accumulated deficit) 

-12,982,893

2,696,227

Total stockholders' equity

116,891,425

129,920,943

Non-controlling interests 

11,537,260

15,376,528

Total equity

128,428,685

145,297,471

Total liabilities and equity

$

208,404,279

$

215,908,129

SINOVAC BIOTECH LTD.

Incorporated in Antigua and Barbuda

Consolidated Statements of Cash Flows

Years ended December 31, 2012 and 2011

(Unaudited)

(Expressed in U.S. Dollars)

Three months ended

Twelve months ended

31-Dec

31-Dec

2012

2011

2012

2011

Cash flows from (used in) operating activities

  Net income (loss)

$

-6,011,671

4,262,972

$

-19,747,276

$

-399,694

  Adjustments to reconcile net income to net cash

  provided by operating activities:

 - deferred income taxes

-89,491

788,472

-17,204

2,845,195

 - stock-based compensation

-40,878

41,909

347,226

206,301

 - inventory provision

2,113,825

2,735,822

3,479,453

4,034,169

 - Provision for (recovery of)  doubtful accounts

-971,287

-1,661,581

-874,220

-166,865

 Loss of disposal and impairment of property,  plant  and equipment 

2,184,576

259,464

2,190,504

454,973

  - research and development expenditures qualified for government grant

-46,242

-470,827

-125,222

-686,258

 - depreciation of property, plant and equipment

   and amortization of licenses and permits

814,252

1,213,428

4,487,411

4,825,613

 - deferred government grant recognized in income 

109,340

-225,035

-358,230

-432,543

 accretion expenses

49,608

86,780

234,957

377,410

Changes in:

 - accounts receivable

3,016,814

6,014,109

-4,285,669

5,474,602

 - inventories

3,715,070

-108,988

-425,853

-1,915,078

 - income tax payable 

-4,841

1,863,729

-3,129,693

1,339,812

 - prepaid expenses and deposits

-135,558

-107,276

913,084

-530,715

 - deferred revenue 

-330,322.00

-1,190,534

1,026,283

-2,695,943

 - accounts payable and accrued liabilities

3,451,254

3,075,574

-328,062

1,204,647

Net cash (used in) provided by operating activities

7,824,449

16,578,018

-16,612,511

13,935,626

Cash flows from financing activities

- Loan proceeds

9,489,001

7,399,314

16,787,057

11,391,836

- Loan repayment

-4,755,262

-9,275,502

-4,755,262

-10,658,840

   net of share issuance costs

108,960

6,400

508,160

748,800

- Proceeds from shares subscribed 

-26,880.00

-

7,520

3,360

- Dividends paid to non-controlling shareholder 

of Sinovac Beijing

-2775

-

-802,151

-5,862,676

- Government grants received 

2,154,186.00

1,585,289

2,394,766

1,592,925

- Repayment from (loan to) non-controlling shareholder of  Sinovac  Beijing 

11666

-

3,397,522

Repayment from (loan to) non-controlling shareholder of  Sinovac  Dalian

-

-

3,189,830

Net cash provided by financing activities

6,978,896

-284,499

17,329,920

612,927

Cash flows used in investing activities

 - Restricted cash 

-

-

-

-

 - Proceeds from disposal of equipment

5,375

4,797

5,375

122,089

- Proceeds from redemption of short-term investments

-

-

0

1,544,759

- Purchase of short-term investments

-

-

-

-

  - Prepayments for acquisition of equipment

254,966

-467,183

254,966

-467,183

 - Acquisition of property, plant and equipment

-5,469,802

-6,346,012

-16,411,576

-14,989,876

Net cash provided (used) in investing activities

-5,209,461

-6,808,398

-16,151,235

-13,790,211

Exchange gain on cash and cash equivalents

674,334

602,319

2,029,101

1,942,863

Increase in cash and cash equivalents

8,919,550

10,087,440

-13,404,725

2,701,205

Cash and cash equivalents, beginning of period

81,962,420

94,199,255

104,286,695

101,585,490

Cash and cash equivalents, end of period

$

90,881,970

$

104,286,695

$

90,881,970

$

104,286,695

Supplemental disclosure of cash flow information:

Cash paid for interest,net of amounts capitalized

$

256,256

$

242,504

$

749,500

$

455,851

Cash paid for income taxes

$

0

$

167,883

$

2,264,593

$

881,596

Supplemental schedule of non-cash activities:

 Acquisition of property, plant and equipment included in accounts payable and accrued liabilities

$

3,788,804

$

9,124,751

$

3,788,004

$

9,124,751

SOURCE Sinovac Biotech Ltd.



RELATED LINKS

http://www.sinovac.com