WEIFANG, Shandong, China, Sept. 28 /PRNewswire-Asia-FirstCall/ --
Shengtai Pharmaceutical, Inc. (OTC:SGTI) (BULLETIN BOARD: SGTI)
("Shengtai Pharmaceutical" or "the Company"), a leading
manufacturer and distributor of high-quality, pharmaceutical grade
glucose products in China, today reported financial results for the
fourth quarter and the fiscal year ended June 30, 2009. "Fiscal
year 2009 had been challenging. The world economic crisis had
impacted our operation. Our cornstarch and its by products had
generated lower sales volume and lower average selling prices
("ASP")," Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO, said.
"However, we are glad to see that our key business glucose had
generated higher sales volume and higher sales revenue. We are also
seeing market recovery for the cornstarch and its by products." Mr.
Liu continued, "As the economic environment is improving, we have
initiated a series of measures to embrace coming opportunities. We
will focus on gaining higher glucose market share, controlling
cost, and putting more focus in developing higher value added corn
starch based products." Fiscal Fourth Quarter 2009 Financial
Results For the fiscal 2009 fourth quarter, sales revenue was
$24.10 million, a 7% decrease as compared with $25.84 million for
the same period in 2008. Gross profit for the fourth quarter of
fiscal 2009 was $1.32 million, a decrease of 75% as compared with
$5.31 million in the same period in 2008. Gross margin was 5.5% for
the 2009 fourth quarter as compared with 20.6% for the same period
in 2008. Operating loss for the fiscal 2009 fourth quarter was
$1.58 million, a decrease of 152% as compared with $3.04 million
operating income for the same quarter a year ago. The operating
margin reached 6.56% in the fourth quarter of 2009 as compared to
11.8% for the same period in 2008. Net loss was $2.16 million, a
decrease of 169% as compared with net income of $3.14 million in
the fourth quarter last year. The fully diluted loss per share were
$ 0.11, a 171% decrease as compared to earnings per share $ 0.16
for the same quarter a year ago. Fiscal Year 2009 Results For the
fiscal year 2009 ended June 30th, net revenues decreased 19% to
$73.32 million from $90.87 million in fiscal year 2008. The
decrease in sales was largely due to lower sales units and lower
averaging selling prices of cornstarch and other products including
fibers, dextrin, corn embryo, protein powders, and phytin. Glucose
sales revenue increased slightly in FY09. Glucose products
accounted for 50.31% of the total net revenues in FY09. Revenue
from exports accounted for approximately 14% of total revenue in
FY09. Gross profit in fiscal year 2009 was $7.52 million, a
decrease of 63% from $20.26 million a year ago. Gross profit margin
was 10.3%, a decline from 22.3% for fiscal year 2008. The gross
margin decline was mainly due to lower averaging selling prices
("ASP") and higher unit costs due to idle capacity. Selling,
general and administrative (SG&A) expenses for the fiscal year
ended June 30, 2009 were $8.61 million, an increase of $1.22
million, or 16% compared with fiscal year 2008. The increase in our
selling, general and administrative expenses was the result of the
higher worker insurance requirements related expenditures. The
increased expenses of expanding our sales network also contributed
to the higher general and administrative expenses. In addition, the
Company also recorded a non-cash stock option expense totaling
$635,272 during FY2009. Research and development expenses for the
fiscal year ended June 30, 2009 were $0.37 million. We did not have
such expenses in the year ended June 30, 2008. The expenses relate
to our effort to develop high valued added products. Currently we
have not successfully completed our development but we will focus
on developing high value added products to increase our gross
margin. Operating income decreased 111% to $1.45 million from
$12.87 million in the prior year. The tax rate for Shengtai's China
operations in FY09 was 12%, same as in the FY08. As a Sino-foreign
joint venture, Shengtai Pharmaceutical enjoyed the 2 year tax
holiday and 3 year 50% tax reduction. For FY09, Shengtai was in the
fifth year of tax benefit program granted by the government. The
prevailing corporate income tax rate in China is now 25%. Net
income decreased 126% to a loss of $2.66 million and fully diluted
losses per share were $0.14, compared with net income of $10.41
million, or fully diluted earnings per share of $0.52 in fiscal
year 2008. The weighted average number of shares on a fully diluted
basis decreased by 4% to 19,139,394 shares in fiscal year 2009
versus 19,874,486 shares in fiscal year 2008. Financial Condition
As of June 30, 2009, Shengtai Pharmaceutical had cash and
restricted cash totaled $33.51 million. In fiscal year 2009, the
Company used $1.29 million in cash flow for operations as compared
to $5.50 million generated by the operations in the same period in
FY08. DSO as of FY09 was 36 days as compared to 30 days for FY08.
At June 30, 2009, the Company had short-term bank debt totaling
$25.64 million and $5.65 million of long-term debt outstanding. The
Company's total shareholders' equity decreased to $44.95 million
from $46.76 million at June 30, 2008. Business Outlook Ms. Yiru
Shi, Chief Financial Officer of Shengtai Pharmaceutical, commented,
"In FY 2009, we have completed the vertical integration of our
business and expanded our glucose production capacity. Our new
glucose factory started operations. Our glucose business remained
stable in the world economic crisis. We are not planning any in
house projects in fiscal year 2010 that will require additional
large capital expenditures. As a result, our day-to-day operating
cash flows and liquidity positions should improve considerably."
"The China healthcare reform is designed to expand basic healthcare
coverage to many people currently without healthcare. Increased
government investment in building new hospitals and clinics should
bring additional sales opportunities for our high-quality glucose
products. In FY 2010, we will focus on capturing larger market
share in the growing market for pharmaceutical grade glucose
products in China. With the starting of our new glucose factory, we
are very well positioned for our goal," stated Mr. Qingtai Liu,
Shengtai Pharmaceutical's CEO. "At the same time, we will focus on
improving our products structure by developing higher value added
cornstarch based products to improve our competitive position and
gross margin. We will also focus heavily on cost control to ensure
our profitability. We believe these strategic steps will help us
improve our business as we enter fiscal year 2010." Conference Call
The Company will host a conference call and webcast on Tuesday
September 29, 2009 at 9:00 A.M. Eastern Daylight Time / 9:00 P.M.
Beijing Time. A question and answer session will follow
management's presentation. Ms. Yiru Melody Shi (Chief Financial
Officer), and Ms. Haining Michelle Wang (Investor Relations
Manager) will be the primary speakers on the call. To participate,
please call the following numbers ten minutes before the call start
time: Phone Number + 1 (877) 407-8035 (North America) Phone Number
+ 1 (201) 689-8035 (International) A replay of the call will be
available through Tuesday, October 6, 2009, at 11:59 P.M. Eastern
Daylight Time/ Wednesday, October 7, 2009, 11:59 A.M. Beijing Time.
For the replay, please call: Phone Number +1 (877) 660-6853 (North
America) Phone Number +1 (201) 612-7415 (International) Account
Number: 286 Conference ID Number: 333940 About Shengtai
Pharmaceutical, Inc. Shengtai Pharmaceutical, Inc. through its
wholly owned subsidiary, Shengtai Holding, Inc. (SHI), a New Jersey
corporation, and the Chinese operating company of Weifang Shengtai
Pharmaceutical Co., Ltd., is a leading manufacturer and supplier of
pharmaceutical grade glucose used for medical purposes. It also
manufactures and supplies glucose and cornstarch products to the
food, beverage and industrial production industries in China. 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 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. Yiru
Shi Chief Financial Officer Tel: +1-949-468-7078 Email: Shengtai
Pharmaceutical, Inc. Haining Michelle Wang Investor Relations
Manger Tel: +86-536-629-5802 Email: Shengtai Pharmaceutical, Inc.
And Subsidiaries Consolidated Statements of Income and Other
Comprehensive Income For years ended June 30, 2009 and 2008 2009
2008 SALES REVENUE, net $ 73,321,862 $ 90,871,223 COST OF SALES
65,799,486 70,613,757 GROSS PROFIT 7,522,376 20,257,466 RESEARCH
AND DEVELOPMENT EXPENSE 365,689 -- SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 8,607,560 7,390,623 INCOME (LOSS) FROM
OPERATIONS (1,450,873) 12,866,843 OTHER (EXPENSE) INCOME: Equity in
income of unconsolidated affiliate 251,539 272,239 Other income
695,728 584,749 Other expense (357,407) (391,858) Interest expense
and other charges (1,945,778) (2,447,608) Interest income 142,903
171,948 Other expense, net (1,213,015) (1,810,530) INCOME (LOSS)
BEFORE PROVISION FOR INCOME TAXES (2,663,888) 11,056,313 PROVISION
FOR INCOME TAXES -- 645,988 NET INCOME (LOSS) (2,663,888)
10,410,325 OTHER COMPREHENSIVE INCOME: Foreign currency translation
adjustments 225,362 3,890,123 COMPREHENSIVE INCOME (LOSS) $
(2,438,526) $ 14,300,448 EARNINGS (LOSS) PER SHARE Basic $ (0.14) $
0.55 Diluted $ (0.14) $ 0.52 WEIGHTED AVERAGE NUMBER OF SHARES
Basic 19,139,394 18,993,789 Diluted 19,139,394 19,874,486 Shengtai
Pharmaceutical, Inc. And Subsidiaries Consolidated Balance Sheets
As of June 30, 2009 and June 30, 2008 ASSETS 2009 2008 CURRENT
ASSETS: Cash and cash equivalents $ 1,779,476 $ 3,405,606
Restricted cash 31,730,382 6,763,500 Accounts receivable, net of
allowance for doubtful accounts of $946,207 and $440,701 as of June
30, 2009 and 2008, respectively 6,922,982 7,614,236 Notes
receivable 1,074,011 458,630 Other receivables 79,598 691,215 Loan
to related party 439,500 -- Inventories 6,215,707 5,039,278
Prepayments 211,793 310,381 Total current assets 48,453,449
24,282,846 PLANT AND EQUIPMENT, net 69,380,016 69,943,021 OTHER
ASSETS: Investment in unconsolidated affiliate 3,952,310 3,607,912
Loan to related party - non-current -- 437,700 Intangible assets,
net 3,145,590 3,042,183 Total other assets 7,097,900 7,087,795
Total assets $ 124,931,365 $ 101,313,662 LIABILITIES AND
SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $
4,737,156 $ 7,669,728 Accounts payable - related party 437,112
714,776 Short term bank loans 25,637,500 22,658,270 Notes payable -
banks 35,218,600 10,942,500 Accrued liabilities 233,110 261,187
Other payable 424,341 317,058 Employee loans 730,502 1,382,287
Employee loan - officer 248,415 53,605 Third party loan 248,336
640,228 Customer deposits 1,906,177 1,229,322 Taxes payable
2,066,878 4,631,252 Long term loan - current maturities 2,447,783
1,404,051 Total current liabilities 74,335,910 51,904,264 Other
payable - noncurrent 5,642,556 2,653,995 Total liabilities
79,978,466 54,558,259 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS'
EQUITY: Preferred stock, $0.001 par value, 5,000,000 shares
authorized, no shares issued and outstanding -- -- Common stock,
$0.001 par value, 100,000,000 shares authorized, 19,169,805 and
19,094,805 shares issued and outstanding as of June 30, 2009 and
2008, respectively 19,170 19,095 Paid-in capital 20,623,655
19,987,708 Statutory reserves 2,894,902 2,894,902 Retained earnings
16,472,689 19,136,577 Accumulated other comprehensive income
4,942,483 4,717,121 Total shareholders' equity 44,952,899
46,755,403 Total liabilities and shareholders' equity $ 124,931,365
$ 101,313,662 Shengtai Pharmaceutical, Inc. And Subsidiaries
Consolidated Statements of Cash Flows For the years ended June 30,
2009 and 2008 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income (loss) $ (2,663,888) $ 10,410,325 Adjustments to reconcile
net income (loss) to cash provided by (used in) operating
activities: Depreciation 5,588,306 2,964,678 Amortization 53,963
57,254 Bad debt expense 824,796 93,557 Stock option expense 635,272
317,636 (Gain) loss on building and equipment disposal 160,233
(169,726) Gain on disposal of land use right (530,509) -- Equity in
income of unconsolidated investment (329,562) (603,261)
Amortization of discount on Installment payment for purchase of
equipment 638,245 822,102 Amortization of discount on capital lease
obligation 530,864 -- Changes in operating assets and liabilities:
Accounts receivable (102,229) (1,127,048) Notes receivable
(613,496) (2,274,840) Other receivables 614,460 1,994,157
Inventories (1,155,705) (304,476) Prepayments 99,428 (165,981)
Accounts payable (2,964,113) (7,730,549) Accounts payable - related
party (280,603) (320,156) Accrued liabilities (28,923) (781,690)
Other payable 148,284 185,488 Customer deposit 671,213 (74,646)
Taxes payable (2,583,421) 2,201,518 Net cash (used in) provided by
operating activities (1,287,385) 5,494,342 CASH FLOWS FROM
INVESTING ACTIVITIES: Proceeds from building and equipment disposal
5,173,910 139,163 Acquisition of plant and equipment (4,944,308)
(14,517,157) Proceeds from disposal of land use right 879,000 --
Acquisition of intangible assets (493,350) (296,893) Repayments on
loan to related party -- 4,590,136 Installment payment on equipment
purchase (2,048,070) (1,913,875) Net cash used in investing
activities (1,432,818) (11,998,626) CASH FLOWS FROM FINANCING
ACTIVITIES: Increase in restricted cash (24,939,882) (524,140)
Borrowings on notes payable - banks 43,276,100 11,703,650 Principal
payments on notes payable - banks (19,045,000) (10,739,820)
Borrowings on short term loans 27,102,500 21,383,257 Principal
payments on short term loans (24,216,450) (19,758,515) Borrowings
on employee loans 35,772 1,458,353 Principal payments on employee
loans (693,242) (778,444) Borrowings on employee loan - officer
194,611 53,605 Borrowings on third party loan 38,179 3,139,855
Principal payments on third party loan (432,704) (2,868,909)
Principal payments on long term loan -- (399,301) Proceeds from
issuance of common stock -- 506,743 Cash proceeds from warrants
exercised 750 -- Payment on capital lease obligation (232,935) --
Net cash provided by financing activities 1,087,699 3,176,334
EFFECTS OF EXCHANGE RATE CHANGE IN CASH 6,374 313,117 DECREASE IN
CASH (1,626,130) (3,014,833) CASH, beginning of year 3,405,606
6,420,439 CASH, end of year $ 1,779,476 $ 3,405,606 SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION Cash paid for Interest, net of
capitalized interest $ 1,674,768 $ 1,901,531 Cash paid for Income
taxes $ 1,134,656 $ 14,809 Non-cash investing and financing
Activities: Acquisition of land use right in exchange for other
receivable $ -- $ 692,304 Acquisition of plant and equipment
through assets other than plant and equipments $ -- $ 3,366,350
Reclassification of advances on equipment purchase to plant and
equipment upon receipt of purchase $ -- $ 7,793,173 Acquisition of
plant and equipment through liabilities $ -- $ 12,141,833
Acquisition of equipment through capital lease $ 5,127,500 $ --
DATASOURCE: Shengtai Pharmaceutical, Inc. CONTACT: Ms. Yiru Shi,
Chief Financial Officer, +1-949-468-7078, , or Haining Michelle
Wang, Investor Relations Manger, +86-536-629-5802, , both of
Shengtai Pharmaceutical, Inc. Web site:
http://www.shengtaipharmaceutical.com/
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