SHENZHEN, China, Aug. 12, 2011 /PRNewswire-Asia/ -- Global Pharm
Holdings Group, Inc. (OTCBB: GPHG) ("Global Pharm" or the
"Company"), a China-based growing
vertically integrated pharmaceutical company engaged in
pharmaceutical-related products distribution, and Traditional
Chinese Medicine ("TCM") herbs cultivation and processing business
through its subsidiaries in Anhui,
Jilin and Shandong provinces, today announced its
unaudited financial results for the second quarter ended
June 30, 2011.
Second Quarter 2011 Highlights
- Net revenues were $45.4 million,
an increase of 48.7% over the second quarter of 2010
- Gross profit was $7.4 million, an
increase of 33.2% over the second quarter of 2010, with gross
margin of 16.3%
- Operating income was $5.5
million, an increase of 55.4% over the second quarter of
2010
- Net income was $3.9 million, or
$0.15 per diluted share, an increase
of 72.6%, as compared to $2.3
million, or $0.12 per diluted
share, for the same period in 2010
- In April 2011, Global Pharm
established two TCM herbal plantation companies located in
Jinan city of Shandong province, and Bozhou city of
Anhui province
- In May 2011, the company
successfully acquired two city-level pharmaceutical distributors in
the cities of Zibo and Tai'an of Shandong province
"We are pleased that Global Pharm had a strong operating
performance during the second quarter of 2011, delivering solid
operating results, expanding our higher margin TCM herbal
cultivation business and strengthening our sales coverage in
Shandong province through
acquisitions of two city-level distributors. A significant synergy
is emerging through the integrated value chain extending to our
business units. We will stick to the selective acquisition strategy
to enhance our local market leadership by expanding our market
coverage and enlarging our sales channels," commented Mr.
Yunlu Yin, Chief Executive Officer
of Global Pharm.
Second Quarter 2011
Financial Summaries
(unaudited)
|
|
|
|
|
|
|
|
Three months
ended June 30
|
Change
|
|
(in millions
$, except
per-share data in $)
|
2011
|
2010
|
|
Net revenue
|
45.4
|
30.5
|
48.7%
|
|
Gross profit
|
7.4
|
5.5
|
33.2%
|
|
Income from
operation
|
5.5
|
3.5
|
55.4%
|
|
Income before income
taxes
|
5.4
|
3.5
|
54.0%
|
|
Net income
|
3.9
|
2.3
|
72.6%
|
|
Total comprehensive
income
|
4.3
|
2.3
|
84.8%
|
|
Basic and diluted earnings
per share
|
0.15
|
0.12
|
25.0%
|
|
|
|
|
|
|
|
|
|
|
Total net revenue was
$45.4 million for the three months
ended June 30, 2011, an increase of
48.7% compared with the same period in 2010. The increase in
revenue largely reflects strong sales of the Company's
pharmaceutical products distribution segment, which contributed
$39.7 million or 87.6% of the
Company's total sales in the quarter, compared with $24.3 million or 79.7% of the total revenue in
the corresponding quarter in 2010.
Below is a breakdown of sales per business segment for the three
months ended June 30, 2011 and 2010,
respectively:
|
|
For the
three months ended June 30 - Net revenue
|
|
in USD except
percentage
|
2011
|
2010
|
Change
|
|
|
|
% of
net
revenue
|
|
% of
net
revenue
|
|
%
|
|
Pharmaceutical
products
distribution
|
$39,738,572
|
87.6
|
$24,338,686
|
79.7
|
$15,399,886
|
63.3
|
|
TCM processing
and
distribution
|
5,647,763
|
12.4
|
4,314,919
|
14.1
|
1,332,844
|
30.9
|
|
Herbal cultivation
and
sales
|
-
|
-
|
-
|
-
|
-
|
NA
|
|
Flower tea bags
|
-
|
0.0
|
1,877,372
|
6.1
|
(1,877,372)
|
NA
|
|
Total
|
$45,386,335
|
100.0
|
$30,530,977
|
100.0
|
$14,855,358
|
48.7
|
|
|
|
|
|
|
|
|
|
|
Revenue from the pharmaceutical products distribution segment
increased by $15.4 million, or
approximately 63.3%, to $39.7 million
for the three months ended June 30,
2011, as compared to $24.3
million for the same period in 2010. The increase was
primarily due to a series of marketing activities to promote sales,
a broader product portfolio and improved efficiency in fulfilling
sales orders. Revenue from the Company's TCM processing and
distribution segment increased to $5.6
million for second quarter of 2011, compared to $4.3 million for the comparable period in 2010.
Revenue from the herbal cultivation and sales segment was nil for
both the second quarter of 2011 and 2010, due to the sale of the
Company's entire herbal inventory in the first quarter of 2011 and
at the end of 2009, and the fact that all of our herbs were at the
cultivation stage for the second quarter of 2011. The Company
has suspended its flower tea bags business segment on April 25, 2011, so revenue was nil for the second
quarter of 2011 from this segment.
Gross profit and gross margin for the second quarter of
2011 - the Company's gross profit was $7.4
million, an increase of 33.2%, from $5.5 million in the same period in 2010. Gross
margin decreased to 16.3% for the second quarter of 2011, from
18.1%, for the comparable period in 2010, primarily attributable to
increased costs of TCM products and reduction of sales prices due
to competition for the second quarter of 2011.
Operating expenses for the second quarter of 2011 were
$0.9 million, increased by
$0.7 million from same period in
2010, primarily due to increased advertising, freight and labor
costs to support business growth and expansion.
Income from operation for the second quarter of 2011
increased 55.4% to $5.5 million, or
12.0%, of revenue, from $3.5 million,
or 11.4%, of revenue for the second quarter of 2010.
Net income for the second quarter of 2011 increased to
$3.9 million, or $0.15 per fully diluted share, compared to
$2.3 million, or $0.12 per fully diluted share, in the second
quarter of 2010, based on 26.0 million and 19.1 million weighted
average diluted shares outstanding, respectively. This increase
primarily reflects a shift in sales mix toward higher margin
prescription products and herbal products in the first quarter of
2011.
Six Months 2011 Financial
Summaries (unaudited)
|
|
|
|
|
Six months
ended June 30
|
Change
|
|
(in millions $, except
per-share data in $)
|
2011
|
2010
|
|
Net revenue
|
87.5
|
59.3
|
47.6%
|
|
Gross profit
|
15.2
|
10.6
|
43.1%
|
|
Income from
operation
|
12.1
|
8.1
|
49.9%
|
|
Income before income
taxes
|
12.1
|
8.1
|
49.2%
|
|
Net income
|
9.2
|
5.7
|
61.8%
|
|
Total comprehensive
income
|
9.7
|
5.7
|
69.5%
|
|
Basic and diluted earnings
per share
|
0.35
|
0.30
|
16.7%
|
|
|
|
|
|
|
|
|
|
|
Total net revenue was
$87.5 million for the six months
ended June 30, 2011, an increase of
47.6%, compared with the same period in 2010. The revenue increase
primarily reflects strong sales of the pharmaceutical products
distribution segment, which contributed $72.2 million or 82.5% of the Company's total
sales in the first half of 2011, compared to $47.4 million or 79.9% of the total revenue in
the corresponding period last year.
Below is a breakdown of sales per business segment for the six
months ended June 30, 2011 and 2010,
respectively:
|
|
For the six
months ended June 30 - Net revenue
|
|
in USD except
percentage
|
2011
|
2010
|
Change
|
|
|
|
% of
net
revenue
|
|
% of
net
revenue
|
|
%
|
|
Pharmaceutical
products
distribution
|
$72,169,822
|
82.5
|
$47,360,171
|
79.9
|
$24,809,651
|
52.4
|
|
TCM processing
and
distribution
|
10,365,812
|
11.9
|
9,000,270
|
15.2
|
1,365,542
|
15.2
|
|
Herbal cultivation
and
sales
|
4,679,373
|
5.3
|
-
|
-
|
4,679,373
|
NA
|
|
Flower tea bags
|
275,075
|
0.3
|
2,899,196
|
4.9
|
(2,624,121)
|
(90.5)
|
|
Total
|
$87,490,082
|
100.0
|
$59,259,637
|
100.0
|
$28,230,445
|
47.6
|
|
|
|
|
|
|
|
|
|
|
Revenue from the pharmaceutical products distribution segment
increased by $24.8 million, or
approximately 52.4%, to $72.2 million
for the six months ended June 30,
2011, as compared to $47.4
million for the same period in 2010. Revenue from the TCM
processing and distribution segment increased by 15.2% to
$10.4 million for the six months
ended June 30, 2011, compared to
$9.0 million for the same period last
year. Revenue from the herbal cultivation and sales segment was
$4.7 million for the first half of
2011, and nil for the comparable period in 2010, due to the sale of
all of the Company's herbal products at the year ended December 31, 2009. The decrease of 90.5% of sales
in the flower tea bags segment was due to the increasing
competition during first quarter of 2011 and our decision to
suspend the flower tea bags operation since April 25, 2011.
Gross profit and gross margin
for first half of 2011 - our gross profit was $15.2 million, an increase of 43.1%, from
$10.6 million for the same period in
2010. Gross margins decreased to 17.4% for the first half of 2011,
from 17.9% for the comparable period in 2010, primarily due to
increased costs of TCM products and reduction of sales prices due
to competition for the first half of 2011.
Operating expenses for the first half of 2011 were
$1.4 million, an increase of
$1.0 million in the same period in
2010, primarily due to increased advertising, freight and labor
costs to support business growth and expansion.
Income from operation for the first half of 2011
increased 50.0% to $12.1 million or
13.9% of revenue, from $8.1 million
or 13.6% of revenue for the first half of 2010.
Net income for the first half of 2011 increased to
$9.2 million, or $0.35 per fully diluted share, compared to
$5.7 million, or $0.30 per fully diluted share, in the first half
of 2010, based on 26.0 million and 19.1 million weighted average
diluted shares outstanding, respectively. This increase primarily
reflects a shift in sales mix toward higher margin prescription
products and herbal products in the first half of 2011.
Financial Condition
As of June 30, 2011, the Company
had $9.1 million in cash and
$24.9 million in accounts receivable
compared with $4.3 million and
$19.8 million as of December 31, 2010, respectively. The increase was
consistent with increased sales. Net working capital was
$26.3 million, compared with
$17.4 million as of December 31, 2010. As of June 30, 2011, the Company had $0.5 million in short-term debt compared with
$2.0 million as of December 31, 2010. Stockholders' equity totaled
$27.7 million as of June 30, 2011, compared with $17.6 million at the end of 2010.
For the six months ended June 30,
2011, the Company generated $5.3
million cash from operating activities, having no
significant variance as compared to $5.8
million for the comparable period in 2010. The Company used
$0.9 million in investing activities
for the six months ended June 30,
2011 compared to $9,000 for
the comparable period in 2010, primarily as a result of increased
expenditures relating to purchases of new subsidiaries and
equipment. Net cash provided by financing activities was
$0.3 million for the six months ended
June 30, 2011, as compared to
$3.0 million used for the comparable
period in 2010. After an offset between a bank loan repayment and
the credit from bank acceptance, the $0.3
million contribution of financing activity in six months
ended June 30, 2011 was from the
non-controlling interest.
Subsequent Events
On July 5, 2011, the Company
completed the acquisition of 100% equity interest of Bozhou Xinghe
Pharmaceutical Co., Ltd, a TCM herb processing manufacturer in
Bozhou city of Anhui province (for
more information about the Bozhou Xinghe acquisition, please refer
to the Form 8-K filed with the Securities and Exchange Commission
(the "SEC") and press release issued, each on July 8, 2011).
On August 1, 2011, the Company
completed the acquisition of Pacific Asia Pharm Investment Group
Co., Limited ("Pacific Asia"). After the completion of this
acquisition, the Company indirectly manages Guangdong Guo Yao
Pharmaceutical Franchises Co., Ltd. ("GDGY") through a serious of
contractual arrangements. GDGY is a pharmaceutical-related products
distributor who manages and supplies to a chain of 1,234 drug
stores in Guangdong province. (For
more information about the Pacific Asia acquisition, please refer
to the 8-K filed with the SEC and press release issued, each on
August 4, 2011).
On August 3, 2011, the Company
completed the acquisition of Quantum Magic Integrator Fund Co.,
Limited ("Quantum"). After the completion of this acquisition,
Shandong Hua Wei Pharmaceutical Co., Ltd., a city-level
pharmaceutical distributor in Weifang city of Shandong province, becomes a wholly owned
subsidiary of the Company. (For more information about the Quantum
acquisition, please refer to the Form 8-K filed with the SEC and
press release issued, each on August 3,
2011)
Business Outlook
"For the first half of 2011, with our focus in the Shandong province market, we are very pleased
with the performance of our distribution business and the expansion
of our sales network," said Mr. Yunlu
Yin, Chief Executive Officer of Global Pharm. "For the six
months ended June 30, 2011, we sold
approximately 11,800 different types of products, had more than
4,250 clients and expanded our distribution coverage into the
cities of Zibo and Tai'an of Shandong province. The Company effectively
utilized its developing intensive purchase power in Shandong province for more attractive
procurement prices and valued-added services from pharmaceutical
manufacturers."
Subsequent to the second quarter of 2011, the Company completed
acquisitions of a TCM herbal pieces processing plant in Bozhou city
of Anhui province and a city-level
distributor in Weifang city of Shandong province and, through various
contractual arrangements, the Company indirectly manages a
distributor in Guangdong province,
who supplies to more than 1,200 local chain drugstores. For the
remaining six months of 2011, the Company expects to focus its
efforts on consolidating the newly acquired units, in order to
deliberately integrate its value chain vertically. The Company's
consolidation goals are to enrich its product portfolio, leverage
its aggregate sales by upgrading the effectiveness of its sales
channel and intensify its purchasing power for obtaining more
profit-enhancing products. With the proven track record of the
Company's acquisition capability, it will continue to selectively
acquire more distributors who will offer outstanding complementary
benefits to its business.
About Global Pharm
Global Pharm Holdings Group, Inc., a growing integrated
pharmaceutical company, is engaged in the pharmaceutical
distribution, Traditional Chinese Medicine (TCM) herb plantation
and herbal pieces processing business in China. The Company focuses on building
regional distribution channels, as well as local capillary sales
network with high-margin products portfolio. Currently, its sales
network covers Shandong,
Guangdong, Jilin and Anhui provinces, as well as other developed
provinces in China. Global Pharm
intends to establish an integrated value chain in the
pharmaceutical industry through strategic acquisitions within TCM
production, pharmaceutical distribution and retail sectors. Global
Pharm anticipates it will achieve a solid distribution capacity and
develop into a major rapid-growing and profitable pharmaceutical
company. For further information, please visit the Company's
corporate website at http://www.globalpharmholdings.com.
Forward-looking Statements
Certain statements set forth in this press release contain or
may contain forward-looking statements and information that are
based upon beliefs of, and information currently available to, our
management as well as estimates and assumptions made by our
management. Such statements reflect the current view of our
management with respect to future events and are subject to risks,
uncertainties, assumptions and other factors as they relate to our
industry, our operations and results of operations, plans for
future facilities, capital-expenditure plans and any businesses
that we may acquire. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the
U.S. federal securities laws, we do not intend to update any of the
forward-looking statements to conform them to actual results.
For Additional Information Contact
Global Pharm Holdings Group, Inc.
Ms. Susan Liu
Phone: +86-755-3693-9373
Email: susanliu@globalpharmholdings.com
–FINANCIAL TABLES FOLLOW—
|
|
GLOBAL PHARM
HOLDINGS GROUP, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
June 30,
2011
|
|
|
ASSETS
|
(Unaudited)
|
December 31,
2010
|
|
Current assets:
|
|
|
|
Cash and cash
equivalents
|
$
9,144,834
|
$
4,271,498
|
|
Accounts receivable
|
24,918,594
|
19,771,619
|
|
Inventories
|
18,980,396
|
16,058,760
|
|
Restricted cash
|
1,213,714
|
1,538,251
|
|
Other current assets
|
1,978,407
|
1,326,660
|
|
Total current assets
|
56,235,945
|
42,966,788
|
|
Property, plant and
equipment, net
|
676,529
|
210,665
|
|
Intangible assets,
net
|
297,874
|
-
|
|
Goodwill
|
374,143
|
-
|
|
Total assets
|
$
57,584,491
|
$
43,177,453
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term loans
|
$
464,145
|
$
1,972,150
|
|
Bank acceptance
|
1,528,560
|
21,212
|
|
Accounts payable and accrued
expenses
|
22,023,372
|
20,944,923
|
|
Income and other taxes
payable
|
2,076,102
|
1,728,499
|
|
Due to related
parties
|
3,813,329
|
882,505
|
|
Total current
liabilities
|
29,905,508
|
25,549,289
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, par value, $0.001
per share, 100,000,000
shares authorized, 26,000,000
issued and outstanding.
|
26,000
|
26,000
|
|
Additional paid-in
capital
|
9,200,623
|
9,200,623
|
|
Statutory surplus
reserves
|
1,310,701
|
1,310,701
|
|
Retained earnings
|
15,764,962
|
6,546,406
|
|
Accumulated other comprehensive
income
|
1,032,115
|
544,434
|
|
Total shareholders' equity -
Global Pharm Holdings Group, Inc.
|
27,334,401
|
17,628,164
|
|
Non-controlling
interests
|
344,582
|
-
|
|
Total stockholders'
equity
|
27,678,983
|
17,628,164
|
|
Total liabilities and
stockholders' equity
|
$
57,584,491
|
$
43,177,453
|
|
|
|
|
|
|
|
|
GLOBAL PHARM
HOLDINGS GROUP, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June 30,
|
|
Six months
ended June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Revenues,
net
|
$45,386,335
|
|
$30,530,977
|
|
$87,490,082
|
|
$59,259,637
|
|
Cost of
goods sold
|
38,003,386
|
|
24,989,792
|
|
72,279,229
|
|
48,632,162
|
|
Gross
profit
|
7,382,949
|
|
5,541,185
|
|
15,210,853
|
|
10,627,475
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Operating expenses
|
936,732
|
|
233,371
|
|
1,352,645
|
|
364,999
|
|
General and
administrative
|
987,391
|
|
1,794,759
|
|
1,720,080
|
|
2,165,148
|
|
Income from
operations
|
5,458,826
|
|
3,513,055
|
|
12,138,128
|
|
8,097,328
|
|
Interest income
(expense)
|
843
|
|
13,226
|
|
(3,381)
|
|
17,874
|
|
Miscellaneous expense
|
28,418
|
|
-
|
|
30,239
|
|
-
|
|
Income
before income taxes
|
5,431,251
|
|
3,526,281
|
|
12,104,508
|
|
8,115,202
|
|
Provision for income
taxes
|
1,513,005
|
|
1,255,682
|
|
2,887,305
|
|
2,419,451
|
|
Net income –
including non-controlling interest
|
3,918,246
|
|
2,270,599
|
|
9,217,203
|
|
5,695,751
|
|
Net loss –
non-controlling interests
|
1,361
|
|
-
|
|
1,353
|
|
-
|
|
Net income -
Global Pharm Holdings Group, Inc.
|
3,919,607
|
|
2,270,599
|
|
9,218,556
|
|
5,695,751
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
338,623
|
|
33,092
|
|
487,681
|
|
32,226
|
|
Total
comprehensive income
|
$4,258,230
|
|
$2,303,691
|
|
$9,706,237
|
|
$5,727,977
|
|
Earnings per
share of common stock:
|
|
|
|
|
|
|
|
|
Basic and
diluted earnings per share
|
$0.15
|
|
$0.12
|
|
$0.35
|
|
$0.30
|
|
Basic and
diluted weighted average shares
|
26,000,000
|
|
19,094,000
|
|
26,000,000
|
|
19,094,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GLOBAL PHARM
HOLDINGS GROUP, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
|
Six Months
Ended June 30,
|
|
|
|
2011
|
|
2010
|
|
Cash flows
from operating activities
|
|
|
|
|
|
Net income- including
non-controlling
interest
|
|
$
9,217,203
|
|
$
5,695,751
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
Stock-based
compensation
|
|
-
|
|
1,492,100
|
|
Depreciation and
amortization
|
|
56,018
|
|
29,169
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
(4,214,512)
|
|
(1,431,800)
|
|
Inventories
|
|
(1,550,865)
|
|
(5,409,249)
|
|
Restricted cash
|
|
329,540
|
|
-
|
|
Other current assets
|
|
473,282
|
|
(1,304,551)
|
|
Accounts payable and other
accrued liabilities
|
|
(232,917)
|
|
7,380,555
|
|
Income and other taxes
payable
|
|
305,186
|
|
(776,305)
|
|
Due from related
party
|
|
-
|
|
(33,983)
|
|
Due to related
parties
|
|
875,411
|
|
132,940
|
|
Net cash
provided by operating activities
|
|
5,258,346
|
|
5,774,627
|
|
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(302,718)
|
|
(9,063)
|
|
Acquisition of subsidiaries, net
of cash acquired
|
|
(567,391)
|
|
-
|
|
Net cash
used in investing activities
|
|
(870,109)
|
|
(9,063)
|
|
|
|
|
|
|
|
Cash flows
from financing activities:
|
|
|
|
|
|
Short-term loan
borrowing
|
|
-
|
|
365,001
|
|
Short-term loan
repayments
|
|
(1,529,073)
|
|
-
|
|
Bank acceptance
|
|
1,483,968
|
|
(219,000)
|
|
Dividend paid to the former
shareholders
|
|
-
|
|
(3,208,521)
|
|
Due from shareholders
|
|
-
|
|
24,484
|
|
Contribution from
non-controlling
interest
|
|
344,835
|
|
-
|
|
Net cash
provided by (used in) financing activities
|
|
299,730
|
|
(3,038,036)
|
|
|
|
|
|
|
|
Net increase
in cash and cash equivalents
|
|
4,687,967
|
|
2,727,528
|
|
Effect of
exchange rate changes on cash and cash equivalents
|
|
185,369
|
|
(12,852)
|
|
Cash and
cash equivalents - beginning of period
|
|
4,271,498
|
|
7,455,147
|
|
Cash and
cash equivalents - end of period
|
|
$
9,144,834
|
|
$
10,169,823
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
20,662
|
|
$
12,908
|
|
Cash paid for income
taxes
|
|
2,549,041
|
|
2,743,066
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash financing activities:
|
|
|
|
|
|
Accrued purchase price in
due to related parties
|
|
$
1,639,978
|
|
$
-
|
|
|
|
|
|
|
|
|
SOURCE Global Pharm Holdings Group, Inc.