TAIAN CITY, Shandong, China, Aug. 14 /Xinhua-PRNewswire-FirstCall/
-- China Biologic Products, Inc. (OTC:CBPO) (BULLETIN BOARD: CBPO)
("China Biologic," the "Company"), one of the leading plasma-based
pharmaceutical companies in the People's Republic of China ("PRC"),
today reported financial results for the second quarter ended June
30, 2008. Second Quarter 2008 Highlights -- Revenues increased
35.1% year-over-year to $11.9 million -- Gross profit increased
36.4% to $8.3 million over the second quarter 2007 -- Gross margin
improved to 69.5%, from 68.8% for the same period last year --
Operating income totaled $5.0 million, down 1.5% from the previous
year -- Net income totaled $2.0 million, or $0.09 per diluted share
-- Non-GAAP net income was $3.3 million, a 4.2% decline over 2007,
or $0.15 per diluted share* * Excludes Stock Based Compensation
("SBC"). See Table 1 for a reconciliation of Net Income and EPS to
exclude SBC. "We are pleased to report solid revenue and
profitability in the second quarter, primarily due to strong demand
and price increases for our plasma based products," said Mr. Chao
Ming Zhao, CEO of China Biologic Products, "During the quarter, we
received approvals from the SFDA to produce Cryoprecipitate and to
conduct clinical trials of Human Prothrombin Complex. We are now
one of the few producers offering the widest range of Human Albumin
products available in China. We also received approval during the
period to set up a new plasma collection station in Guangxi
Province due to the relocation of our Fang Cheng Plasma Collection
Station, which represents a significant milestone for our Company
and further secures our plasma supply." During the quarter, the
Company achieved the following milestones: -- Received approval for
the production of Cryoprecipitate and clinical trials of Human
Prothrombin Complex -- Began production and sales of Human Albumin
12.5g/vial (25%, 50 ml) -- Received approval to purchase excess
clinical plasma -- Received approval to set up a new plasma
collection station in Pu Bei County, Guangxi Province to replace
its Fang Cheng Plasma Collection Station Second Quarter 2008
Results Revenues for the second quarter of 2008 were $11.9 million,
up 35.1% compared to $8.8 million for the same period of 2007. The
increase in revenues is primarily attributable to a general
increase in prices of plasma based products together with foreign
exchange translation benefits. During the second quarter, plasma
based products experienced a price increase of approximately 51.2%,
weighted average, period to period, which was offset by a decrease
in the sales volume by four of the Company's products, including
human albumin. The decrease in sales volume is due primarily to the
Company stockpiling inventory to meet the expected demand for its
products during its month-long maintenance shut-down that commenced
in late July. Gross profit was up 36.4% to $8.3 million, while the
gross margin was 69.5% for the second quarter of 2008, compared
with approximately $6.1 million and 68.8% in the second quarter of
2007, respectively. The 0.7% increase in gross margin was mainly
due to the increased sales of higher margin products. Total
operating expenses for the second quarter of 2008 were $3.3
million, or 27.8% of revenue, up 221.2% from the same period in
2007. Selling expenses increased 149.2% to $0.51 million. The
increase in selling expense is primarily due to the increase in
compensation for sales personnel as the company restructured its
employee compensation companywide. General and administrative
("G&A") expenses were $1.3 million or 10.6% of revenue, an
increase of 67.3% from the same period last year. The increase in
G&A is mainly due to the increase in personnel cost, auditing,
and legal fees and costs associated with increased investor
relation activities. A non-cash employee compensation expense of
$1.3 million was created by the Company's adoption of the 2008
Equity Incentive Plan on May 2008. Research and development
expenses increased 290.1% to $0.28 million, or 2.3% of revenues,
compared to 0.8% of revenues in the same period last year. The
dollar and percentage increase was primarily due to the increase in
research activities and clinical trials of the Company's new
products. As a result of the increase in operating expenses, income
from operations decreased 1.5% to $5.0 million during the second
quarter of 2008, representing an operating margin of 41.7%, as
compared to $5.0 million and 57.1% in the same period 2007.
Provision for income taxes increased 150.2% year over year to $2.1
million. The Company provisioned its income tax for the second
quarter of 2008 at the new PRC corporate income tax rate of 25%, as
compared with the 15% preferential tax rate during the fiscal year
2007. The Company is in the process of applying for status as a new
or high technology company in order to qualify for the favorable
tax rate of 15%. Net income for the second quarter of 2008
decreased 40.9% year over year, to $2.0 million or $0.09 per fully
diluted share. Net margin during the period was 17.1%, compared to
39.0% in the same quarter last year. The decrease in net income was
materially impacted by a one-time non-cash employee compensation
recognized pursuant to SFAS 123(R), and by the negative effect of
China's newly-implemented Unified Corporate Income Tax Law on the
Company's enterprise income tax. Non-GAAP net income in the second
quarter of 2008 was $3.3 million or $0.15 per fully diluted share,
a 4.2% decrease from non-GAAP net income of $3.4 million, or $0.16
per fully diluted share in the second quarter of 2007.* * Excludes
Stock Based Compensation ("SBC"). See Table 1 for a reconciliation
of Net Income and EPS to exclude SBC. Six Months Results For the
first six months of 2008, total revenue was $19.8 million, up 19.8%
from the first six months of 2007. Gross profit for the first six
months of 2008 was $14.2 million, up 35.2% from $10.5 million in
the comparable period a year ago. Gross margin was 71.7% compared
to 63.6% for the first six month of 2008 and 2007, respectively.
Income from operations for the period was $8.6 million, up 9.4%
from $7.8 million in the first six months of 2007. Net income for
the first six months of 2008 was $4.3 million, down 19.5% from $5.3
million in the first six months of 2007. Fully diluted earnings per
share were $0.20 for the first six months of 2008 compared to $0.25
in the first six months of 2007. The six-month net income was
impacted by non cash employee compensation and the
newly-implemented PRC enterprise income tax law. Financial
Condition As of June 30, 2008, the Company had $8.8 million in
cash, approximately $14.3 million in working capital and a current
ratio of 2.5. Shareholder's equity at the end of the second quarter
of 2008 stood at $29.8 million compared to $22.4 million at the end
of 2007. Recent Developments (1) The Company began operation of its
newly constructed plasma collection station in Qi He County,
Shandong Province. (2) The Company was honored with the Advanced
Technology Certification for Foreign-Funded Enterprises. (3) On
July 24, 2008, the Board of Directors of the Company appointed Mr.
Sean Shao, Dr. Jie Gan, and Dr. Tong-Jun Lin to serve on the Board
as "independent directors" of the Company (the "Independent
Directors"), as that term is defined by Rule 4200(a)(15) of the
Marketplace Rules of The Nasdaq Stock Market, Inc. On the same
date, the Board also established the Audit Committee, with all
three Independent Directors as the members, and adopted the Audit
Committee Charter. Mr. Sean Shao was appointed as the Chair of the
Audit Committee. (4) The Company began annual maintenance of its
production facilities on July 25, 2008. The maintenance period will
last for one month. During the required maintenance period, the
Company will conduct any required major maintenance of its
production equipment to ensure the efficiency and safety of
subsequent production. The Company will also take advantage of the
maintenance period to train its staff, and allow them to take
proper vacation time as required by Chinese labor laws. The Company
has sufficient product inventories on hand to meet market demand
during the maintenance period. In addition, operation of the
Company's plasma collection stations will continue as usual to
ensure that the manufacturing facilities can resume their normal
operations at the end of the maintenance period. (5) On August 7,
2008, the Board of Directors of the Company established a
Governance and Nominating Committee and a Compensation Committee
and appointed each of the Company's Independent Directors to each
committee. Dr. Lin was appointed to serve as the Chair of the
Governance and Nominating Committee and Dr. Gan was appointed to
serve as the Chair of the Compensation Committee. Business Outlook
For the most recent quarter, the Company received SFDA approval in
a variety of plasma-based products including the approval to supply
Cryoprecipitate to Green Cross China for the use in the production
of Human Coagulation Factor VIII, an effort that leads the Company
to focus on research and development of Human Coagulation Factor
VIII. The Company also received approval to commence clinical trial
of its new Human Prothrombin Complex for the production and sale of
human albumin 12.5g/vial 925%, 50ml). The Company is currently one
of the few producers offering the widest range of Human Albumin
products available in the Chinese market. Management believes that
these approvals are a reflection of the Company's R&D efforts
to upgrade its product portfolio. Realizing that the supply of
human plasma is one of the keys to success in the industry, the
Company sought and obtained approval to relocate its Fang Cheng
plasma collection station to Pu Bei County, Guangxi Province, in an
effort to increase collection volumes. The Company also began
operations at its newly constructed Qi He station in July, which is
expected to greatly expand the Company's plasma supply. The station
has the capacity to collect human plasma from 1,000 donors daily,
the equivalent of 100 metric tons of plasma supply annually. The
Company began the annual maintenance of its production facilities
on July 25, 2008. The maintenance period is expected to last for
one month, during which production at the Company's manufacturing
facilities will be suspended. Annual maintenance allows the Company
to conduct any required major maintenance of its production
facilities and equipment to ensure the efficiency and safety of
subsequent production. The Company has sufficient product
inventories on hand to meet customer demands during the maintenance
period. In addition, operation of the Company's plasma collection
stations will continue as usual to ensure that the manufacturing
facilities can resume their normal operations at the end of the
maintenance period. Commencing July 1, 2008, the PRC government
imposed a new measure setting the quarantine period for blood
plasma used as materials for blood products. This new measure
required all blood plasma used to make blood products to be placed
in quarantine for a 90-day period, after which time the donors of
such plasma will be required to take a second screening test before
the plasma can be put into production. In preparation for this new
measure, the Company stocked its plasma inventory during the second
quarter and is expected to have sufficient supplies when its
production facilities reopen in late August 2008. In addition,
during the second quarter, the Company increased its inventory of
finished goods in order to meet the anticipated needs of its
customers during the third quarter of 2008. The foregoing measure
as well as the continued restriction on the importation of foreign
plasma based products have placed pressure on the already tightened
supply of plasma available for production. In addition, the overall
effect of these and other regulations has been to reduce
competition and increase the barriers to entry. In order to
maintain its favorable position in the industry, the Company is
focusing on its research and development efforts on securing plasma
supply and on the development and production of new high quality
plasma-based products. "We are pleased with our operational results
given the government's restriction on both the supply of human
plasma and the slow approval process of the plasma-based products
for sale earlier in the year," remarked Mr. Zhao. "Now that the
government approval process for plasma based finished goods has
returned to more normal levels, we are optimistic about our outlook
for the remainder of the year. We have made great efforts to secure
raw material inventories and finished products in order to better
serve our customers." *TABLE 1 CHINA BIOLOGIC PRODUCTS, INC. AND
SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007 Three
Months Ended Three Months Ended Adjusted Net Income June 30, 2008
June 30, 2007 Diluted Diluted Net Income (Loss) Diluted EPS Net
Income EPS Net Income EPS Adjusted Amount - Non GAAP $3,297,342
$0.15 $3,443,500 $0.16 Non-cash employee compensation (1)
$1,263,188 $0.06 -- -- Amount per consolidated statement $2,034,154
$0.09 $3,443,500 $0.16 of operations Adjusted Net Income Six Months
Ended Six Months Ended June 30, 2008 June 30, 2007 Net Income
(Loss) Diluted EPS Net Income Diluted Diluted EPS Net Income EPS
Adjusted Amount - Non GAAP $5,565,142 $0.26 $5,342,343 $0.25
Non-cash employee compensation (1) $1,263,188 $0.06 -- -- Amount
per consolidated statement $4,301,954 $0.20 $5,342,343 $0.25 of
operations (1) Non-cash compensation expense of $1,263,188 in
connection with adoption of the equity incentive plan granting
share options on the Company's common stock to employees and
directors Use of Non-GAAP Financial Measures GAAP results for the
three months ended June 30, 2008 include non-cash stock based
compensation charges. To supplement the Company's condensed
consolidated financial statements presented on a GAAP basis, the
Company has provided non-GAAP financial information excluding the
impact of this item in this release. The Company's management
believes that this non-GAAP measure provides investors with a
better understanding of how the results relate to the Company's
historical performance. A reconciliation of the adjustments to GAAP
results appears in the table accompanying this press release. This
additional non-GAAP information is not meant to be considered in
isolation or as a substitute for GAAP financials. The non-GAAP
financial information that the Company provides also may differ
from the non-GAAP information provided by other companies. About
China Biologic Products, Inc. China Biologic Products, Inc.,
through its indirect majority-owned subsidiary Shandong Taibang, is
currently the only plasma-based biopharmaceutical company approved
by the government of Shandong Province, the second largest province
with a population of 93 million. The company is engaged primarily
in research, manufacturing, and sale of plasma-based
biopharmaceutical products to hospitals and other health care
facilities in China. Plasma-based Human Albumin is used mainly to
increase blood volume while Immunoglobulin is used for disease
prevention and treatment. Safe Harbor Statement This release may
contain certain "forward-looking statements" relating to the
business of China Biologic Products, Inc. and its subsidiary
companies. All statements, other than statements of historical fact
included herein are "forward-looking statements," including
statements regarding: the ability of the Company to achieve its
commercial objectives; the business strategy, plans and objectives
of the Company and its subsidiaries; and any other 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 the Company 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. Investors should
not place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. The Company'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 the Company's periodic
reports that are filed with the Securities and Exchange Commission
and available on its website ( http://www.sec.gov/ ). All
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking
statements. For more information, please contact: Company Contact:
Mr. Y. Tristan Kuo, CFO China Biologic Products, Inc. Tel:
+86-538-620-2206 Email: Web site: http://www.chinabiologic.com/
Investor Relations Contact: Mr. Crocker Coulson, President CCG
Investor Relations Tel: +1-646-213-1915 (NY office) Email: Web
site: http://www.ccgir.com/ CHINA BIOLOGIC PRODUCTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE
30, 2008 AND 2007 (Unaudited) Three months ended June 30, Six
months ended June 30, 2008 2007 2008 2007 REVENUES $11,925,842
$8,826,059 $19,774,849 $16,503,911 COST OF SALES 3,638,128
2,750,972 5,587,026 6,012,348 GROSS PROFIT 8,287,714 6,075,087
14,187,823 10,491,563 OPERATING EXPENSES Selling expenses 510,565
204,855 1,005,094 702,468 General and administrative expenses
1,266,592 757,016 2,858,666 1,708,341 Research and development
expenses 279,833 71,728 463,615 221,635 Compensation expense
1,263,188 1,263,188 TOTAL OPERATING EXPENSES 3,320,178 1,033,599
5,590,563 2,632,444 INCOME FROM OPERATIONS 4,967,536 5,041,488
8,597,260 7,859,119 OTHER EXPENSES Interest income (19,601) (4,386)
(30,490) (17,113) Interest expense 18,755 18,692 44,672 63,337
Other income (364) (23) (567) (4,093) Other expense 52,405 15,400
53,019 27,135 TOTAL OTHER EXPENSES 51,195 29,683 66,634 69,266
INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST
4,916,341 5,011,805 8,530,626 7,789,853 PROVISION FOR INCOME TAXES
2,123,843 848,852 2,864,325 1,298,962 NET INCOME BEFORE MINORITY
INTEREST 2,792,498 4,162,953 5,666,301 6,490,891 LESS MINORITY
INTEREST 758,344 719,453 1,364,347 1,148,548 NET INCOME 2,034,154
3,443,500 4,301,954 5,342,343 FOREIGN CURRENCY TRANSLATION GAIN
747,767 370,319 1,871,125 463,092 OTHER COMPREHENSIVE INCOME
$2,781,921 $3,813,819 $6,173,079 $5,805,435 BASIC EARNINGS PER
SHARE Weighted average number of shares 21,434,942 21,434,942
21,434,942 21,434,942 Earnings per share $0.09 $0.16 $0.20 $0.25
DILUTED EARNINGS PER SHARE Weighted average number of shares
21,664,429 21,434,942 21,808,852 21,434,942 Earnings per share
$0.09 $0.16 $0.20 $0.25 CHINA BIOLOGIC PRODUCTS, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2008 AND
DECEMBER 31, 2007 A S S E T S June 30, December 31, 2008 2007
(Unaudited) CURRENT ASSETS: Cash $8,775,242 $5,010,033 Accounts
receivable, net of allowance for doubtful accounts of $1,202,838
and $1,238,772 as of June 30, 2008 and December 31, 2007,
respectively 939,406 316,869 Notes receivable 68,142 41,130 Other
receivables 659,799 425,163 Other receivable- related party 307,481
290,307 Inventories 12,759,906 9,505,074 Prepayments and deferred
expense 395,949 138,756 Total current assets 23,905,925 15,727,332
PLANT AND EQUIPMENT, net 18,132,745 15,434,124 OTHER ASSETS:
Advances on equipment purchases 791,014 711,459 Long term
prepayment - related party 549,605 516,456 Intangible assets, net
929,738 915,874 Total other assets 2,270,357 2,143,789 Total assets
$44,309,027 $33,305,245 L I A B I L I T I E S A N D S H A R E H O L
D E R S' E Q U I T Y CURRENT LIABILITIES: Accounts payable
$2,546,739 $2,677,587 Short term loans - bank -- 685,500 Short term
loan - minority shareholder 769,060 722,674 Other payables and
accrued liabilities 1,980,188 1,200,068 Other payable - land use
right 324,411 305,571 Dividend payable 643,842 506,626 Customer
deposits 696,966 398,794 Taxes payable 2,604,880 384,788 Total
current liabilities 9,566,086 6,881,608 COMMITMENT AND
CONTINGENCIES 40,899 142,120 MINORITY INTEREST 4,870,150 3,885,892
SHAREHOLDERS' EQUITY: Common stock, $0.0001 par value, 100,000,000
shares authorized, 21,434,942 shares issued and outstanding at June
30, 2008 and December 31, 2007, respectively 2,143 2,143
Paid-in-capital 10,651,493 9,388,305 Statutory reserves 5,334,520
4,513,077 Retained earnings 9,363,817 5,883,306 Accumulated other
comprehensive income 4,479,919 2,608,794 Total shareholders' equity
29,831,892 22,395,625 Total liabilities and shareholders' equity
$44,309,027 $33,305,245 CHINA BIOLOGIC PRODUCTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX
MONTHS ENDED JUNE 30, 2008 AND 2007 (UNAUDITED) 2008 2007 CASH
FLOWS FROM OPERATING ACTIVITIES: Net income $4,301,954 $5,342,343
Adjustments to reconcile net income to cash provided by operating
activities: Recovery of bad debt previously reserved (107,583) --
Minority Interest 1,364,347 1,148,548 Depreciation 579,754 417,406
Amortization 53,192 23,686 Loss on disposal of equipment 1,900
4,064 Stock-based compensation 1,263,188 -- Change in operating
assets and liabilities: Accounts receivable (477,858) 458,758 Notes
receivable (23,694) 57,721 Other receivables (201,576) (1,317,291)
Other receivables - shareholders 1,419 (146,149) Inventories
(2,571,137) (989,274) Prepayments and deferred expenses (241,377)
187,928 Accounts payable (294,290) 36,733 Other payables and
accrued liabilities 683,527 298,787 Other payable - land use right
(752) -- Customer deposits 264,990 1,239,099 Taxes payable
2,134,302 547,273 Contingent liability (107,273) -- Net cash
provided by operating activities 6,623,033 7,309,632 CASH FLOWS
FROM INVESTING ACTIVITIES: Additions to plant and equipment
(2,245,627) (3,830,236) Additions to construction in progress --
9,393 Additions to intangible assets (9,517) (46,213) Proceeds from
sale of equipment 3,546 -- Advances on building, equipment and
intangible assets purchases (32,945) (5,672) Net cash used in
investing activities (2,284,543) (3,872,728) CASH FLOWS FINANCING
ACTIVITIES: Restricted cash -- (65,750) Proceeds from short term
loans - bank -- 1,297,100 Payments on short term loans - bank
(709,200) (2,511,400) Proceeds from employee loans -- 752,750
Payments on long term debt -- (194,565) Dividends paid to minority
shareholders (283,680) (476,597) Net cash (used in) provided by
financing activities (992,880) (1,198,462) EFFECTS OF EXCHANGE RATE
CHANGE IN CASH 419,599 41,654 INCREASE IN CASH 3,765,209 2,280,096
CASH, beginning of period 5,010,033 4,268,220 CASH, end of period
$8,775,242 $6,548,316 SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION Income taxes paid $850,605 $743,113 Interest paid (net
of capitalized interest) $29,901 $55,714 DATASOURCE: China Biologic
Products, Inc. CONTACT: Company Contact, Mr. Y. Tristan Kuo, CFO,
of China Biologic Products, Inc., +86-538-620-2206, or ; or
Investor Relations Contact, Mr. Crocker Coulson, President of CCG
Investor Relations for China Biologic Products, Inc.,
+1-646-213-1915 (NY office), or Web site:
http://www.chinabiologic.com/ http://www.ccgir.com/
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