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Shengtai Pharmaceutical, Inc. Reports Financial Results for the Fiscal Year 2011

posted on Oct 07, 11 08:11AM

WEIFANG, Shandong, China, Oct. 7, 2011 /PRNewswire via COMTEX/ -- Shengtai Pharmaceutical, Inc. SGTI +17.14% (''Shengtai'' or ''the Company'' or "We" or "Us"), a manufacturer and distributor in China of glucose and starch as pharmaceutical raw materials and other starch and glucose products, today reported financial results for the twelve months ended June 30, 2011.

"We are very glad that the Company has made tremendous progress in the year ended June 30, 2011." Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "Compared with last year, our sales increased $55,763,918, or 48.09% and our net income increased $4,452,070, or 139.17%. Our sales increased both domestically and internationally. Customer deposit also increased which shows a strong customer demand for our products. We also successfully expanded our corn storage from 36,000 tons 50,000 tons and our cornstarch annual production capacity from 300,000 tons to 400,000 tons. The storage expansion allowed us to lock in raw material prices by storing more raw material while the raw material prices are increasing. The expansion of cornstarch production line allows us to produce more cornstarch and related products to meet the increased demand for our cornstarch and related products, and provide more cornstarch as raw material for our glucose production."

Fiscal Year 2011 Result of Operations

Sales revenue for the fiscal year ended June 30, 2011 was $ 171,717,866, an increase of $55,763,918, or 48.09% compared with the corresponding period in 2010. The increase in sales revenue resulted from the increase of the Company's sales volume and average selling prices. Net sales from exports for the year ended June 30, 2011 increased approximately 60.06% compared with the same period in 2010. The increase is attributable to the upturn in the global economy and the Company's reorganization of its exporting department, resulting in an increase in international demand for the Company's glucose and corn meal products compared to the same period last year. Domestic sales for cornstarch and other products for the year ended June 30, 2011 increased approximately 60.02% compared with the same period last year. The increase in domestic sales was attributable to the higher demand for the Company's products and increase in unit sales prices.

Costs of sales for the year ended June 30, 2011 was $148,594,046, an increase of $50,317,857, or 51.20% compared with the corresponding period in 2010. The increase of cost of sales is due to an increase in corn prices and the increase in our sales. The percentage of increase in cost of sales was higher than the percentage of increase in net sales. Gross profit for the year ended June 30, 2011 was $23,123,820, an increase of $5,446,061, or 30.81%, compared with 17,677,759 the same period in 2010. Gross profit margin for the year ended June 30, 2011 was 13.47%, a decrease from 15.25% for the same period in 2010. The increase in gross profits is attributable to increased sales revenues, however gross profit margin decreased due to the percentage increase in the cost of sales being greater than the percentage increase in net sales.

Selling, general and administrative expenses were $9,805,044 for the year ended June 30, 2011, a decrease of $476,745, or 4.64% compared to $10,281,788 for the year ended June 30, 2010. The decrease of selling, general, and administrative expenses is mainly due to decreased expenses in the United States such as decreased option expenses. The Company's expenses in the United States decreased approximately $766,000 mainly due to decreased option expenses. The Company incurred $238,684 and $635,232 in non-cash stock option expenses for the year ended June 30, 2011 and 2010, which are included in selling, general and administrative expenses. The option expenses decreased because all options were fully amortized and forfeited during the year ended June 30, 2011. The Company does not expect any more option expenses for the year ended June 30, 2012. At the same time, the operating expenses related in China increased. The increased operating expenses in China, such as salaries and commission expenses, shipping and handling expenses, and other operating expenses, were incurred as a result of the expansion of the business and related to the increased sales in China.

Net income for the year ended June 30, 2011 was $7,651,051 or $0.80 per share, an increase of $4,452,070, or 139.17%, compared with a net income of $3,198,981 or $0.33 per share for the same period in 2010. The increase in net income was primarily due to the increase in the sales volume and prices of the Company's products.

Net cash provided by operating activities for fiscal year 2011 was $5,069,599, a decrease of $4,509,371, or 47.08%, compared to $9,578,970 provided by operating activities for fiscal year 2010. The decrease is due to increased payments to other receivable, accounts payable, and accrued liabilities, which were offset by increased customer deposit.

Net cash used in investing activities for fiscal 2011 was $6,083,012, a decrease of $10,493,481, or 63.30%, compared to $16,576,493 used in investing activities for fiscal year 2010. The decrease is due to reduced investment in property and equipment. In 2010, the Company invested more heavily in expanding cornstarch production and warehouse.

Net cash used in financing activities for fiscal 2011 was $184,385, a decrease of $9,886,466, or 101.90%, compared to $9,702,081 provided by financing activities for fiscal year 2010. The decrease is mainly due to decreased restricted cash because the Company has fewer notes payable.

Management Comments

Looking forward, Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "Our Company strives to keep our sales growth in the coming year by providing competitive pricing as well as super customer satisfaction. Most importantly, our company will take a few steps to keep our gross profit stable. We will continue to store more raw material corn inventory when the corn prices are increasing. At the same time, we will enhance our sales policy in monitoring pricing."

"The Company has sufficient cash for our operation for the coming year. The Company has no plan for large construction or project in the coming year. We will closely monitor our cash reserve to make sure we will have sufficient funding for our operation. We also are continually looking for new high technology products that will bring higher profit to the Company. Going forward we are confident for bring a successful year!" concluded Mr. Liu.

About Shengtai Pharmaceutical, Inc.

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

Forward Looking Statements

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

For more information, please contact:

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

                          SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 2011 AND 2010
                          A S S E T S
                                                                                                                                                                           2011          2010
                                                                                                                                                                           -----------   -----------
                          CURRENT ASSETS:
                                     Cash & cash equivalents                                                                                                             $ 4,051,349   $ 4,121,541
                                     Restricted cash                                                                                                                       8,972,600     16,556,904
                                     Accounts receivable, net of allowance for doubtful accounts of $1,506,470 and $1,306,268 as of June 30, 2011 and 2010, respectively   8,580,973     8,365,822
                                     Notes receivable                                                                                                                      2,815,726     2,410,512
                                     Other receivables                                                                                                                     8,359,103     450,284
                                     Inventories                                                                                                                           13,016,399    11,072,170
                                     Prepayments and other assets                                                                                                          2,296,982     545,590
                                                                                                                                                                           -----------   -----------
                                                                                 Total current assets                                                                      48,093,131    43,522,824
                                                                                                                                                                           -----------   -----------
                          PLANT AND EQUIPMENT, net                                                                                                                         77,029,157    64,840,768
                          CONSTRUCTION IN PROGRESS                                                                                                                         4,693,018     10,533,083
                          OTHER ASSETS:
                                     Investment in Changle Shengshi Redian Co., Ltd.                                                                                       9,132,725     6,372,294
                                     Advances for construction                                                                                                             2,039,929     2,334,748
                                     Intangible assets - land use right, net of accumulated amortization                                                                   3,251,214     3,150,894
                                                                                                                                                                           -----------   -----------
                                                                                 Total other assets                                                                        14,423,868    11,857,936
                                                                                                                                                                           -----------   -----------
                                                                                                                             Total assets                                $ 144,239,174 $ 130,754,611
                          L I A B I L I T I E S    A N D    S T O C K H O L D E R S'   E Q U I T Y
                          CURRENT LIABILITIES:
                                     Accounts payable                                                                                                                    $ 9,508,512   $ 9,508,631
                                     Accounts payable and accrued liabilities - related party                                                                              943,779       252,017
                                     Notes payable - banks                                                                                                                 11,447,800    17,823,300
                                     Short term loans                                                                                                                      48,094,740    40,153,980
                                     Accrued liabilities                                                                                                                   917,464       412,555
                                     Other payable                                                                                                                         2,642,598     1,315,797
                                     Employee loans                                                                                                                        261,938       396,404
                                     Other payable - officer                                                                                                               36,285        515,856
                                     Customer deposit                                                                                                                      8,954,841     4,162,046
                                     Taxes payable                                                                                                                         1,809,093     1,456,474
                                     Long term loan-current                                                                                                                -             2,314,983
                                                                                                                                                                           -----------   -----------
                                                                                 Total current liabilities                                                                 84,617,050    78,312,043
                                                                                                                                                                           -----------   -----------
                          LONG TERM LIABILITIES
                                     Other payable - noncurrent                                                                                                            (0)           3,346,336
                                                                                                                                                                           -----------   -----------
                                                                                 Total long term liabilities                                                               (0)           3,346,336
                                                                                                                                                                           -----------   -----------
                                                                                 Total liabilities                                                                         84,617,050    81,658,379
                                                                                                                                                                           -----------   -----------
                          COMMITMENTS AND CONTINGENCIES
                          STOCKRHOLDERS' EQUITY:
                                     Preferred stock, $0.001 par value, 2,500,000 shares authorized,
                                                                                 no shares issued and outstanding                                                          -             -
                                     Common stock, $0.001 par value, 50,000,000 shares authorized,
                                                                                 9,584,912 shares issued and outstanding                                                   9,585         9,585
                                     Additional paid-in capital                                                                                                            21,553,499    21,314,815
                                     Statutory reserves                                                                                                                    4,068,822     3,214,800
                                     Retained earnings                                                                                                                     26,148,801    19,351,772
                                     Accumulated other comprehensive income                                                                                                7,841,417     5,205,259
                                                                                                                                                                           -----------   -----------
                                                                                 Total stockholders' equity                                                                59,622,125    49,096,231
                                                                                                                                                                           -----------   -----------
                                                                                                                             Total liabilities and stockholders' equity  $ 144,239,174 $ 130,754,611
                          The accompanying notes are an integral part of these consolidated financial statements.
                          
                  
                  
                  
                          SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
                          CONSOLIDATE STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                          FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
                                                                          2011                2010
                                                                          -----------------   -------------------
                          NET SALES                                     $ 171,717,866       $ 115,953,948
                          COST OF SALES                                   148,594,046         98,276,190
                                                                          -----------------   -------------------
                          GROSS PROFIT                                    23,123,820          17,677,759
                          SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES   9,805,044           10,281,788
                                                                          -----------------   -------------------
                          INCOME FROM OPERATIONS                          13,318,776          7,395,970
                                                                          -----------------   -------------------
                          OTHER (EXPENSE) INCOME:
                          Earnings on equity investment                   872,630             727,804
                          Non-operating income                            228,746             291,203
                          Non-operating expense                           (74,165)            (263,812)
                          Loss on equipment disposal                      (238,387)           -
                          Interest expense and other charges              (3,729,444)         (3,660,474)
                          Interest income                                 119,636             306,994
                          Other (expense) income, net                     (2,820,984)         (2,598,285)
                                                                          -----------------   -------------------
                          INCOME BEFORE PROVISION FOR INCOME TAXES        10,497,792          4,797,685
                          PROVISION FOR INCOME TAXES                      2,846,741           1,598,704
                                                                          -----------------   -------------------
                          NET INCOME                                      7,651,051           3,198,981
                          OTHER COMPREHENSIVE ITEMS:
                          Foreign currency translation adjustments        2,636,158           262,776
                                                                          -----------------   -------------------
                          COMPREHENSIVE INCOME                          $ 10,287,210        $ 3,461,757
                          EARNINGS PER SHARE
                          Basic                                         $ 0.80              $ 0.33
                          Diluted                                       $ 0.80              $ 0.33
                          WEIGHTED AVERAGE NUMBER OF SHARES
                          Basic                                           9,584,912           9,584,912
                          Diluted                                         9,584,912           9,584,912
                          The accompanying notes are an integral part of these consolidated financial statements.
                          
                  
                  
                  
                          SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
                                                                                                                                                                2011           2010
                                                                                                                                                                ------------   ------------
                          CASH FLOWS FROM OPERATING ACTIVITIES:
                                        Net income                                                                                                            $ 7,651,051    $ 3,198,981
                                        Adjustments to reconcile net income to cash
                                                      provided by operating activities:
                                                                     Depreciation                                                                               7,153,155      7,993,751
                                                                     Amortization                                                                               56,632         307,195
                                                                     Bad debt provision                                                                         131,463        1,300,681
                                                                     Share based compensation to employees                                                      238,684        681,575
                                                                     Loss on equipment disposal                                                                 238,387        -
                                                                     Gain on disposal of land use right                                                         -              (738)
                                                                     Earnings on equity investment                                                              (872,630)      (727,804)
                                                                     Amortization of discount on installment payment for purchase of equipment                  -              354,546
                                                                     Amortization of discount on capital lease obligation                                       -              1,037,393
                                                      Change in operating assets and liabilities:
                                                                     Accounts receivable                                                                        68,917         (1,752,404)
                                                                     Notes receivable                                                                           (202,150)      (1,324,945)
                                                                     Other receivables                                                                          (8,127,790)    (190,006)
                                                                     Inventories                                                                                (181,050)      (4,801,895)
                                                                     Prepayments and other assets                                                               (1,684,476)    (331,299)
                                                                     Accounts payable and accrued liabilities                                                   (5,913,394)    4,903,309
                                                                     Accounts payable and accrued liabilities - related party                                   663,386        (186,681)
                                                                     Other payable                                                                              1,098,802      (2,574,855)
                                                                     Customer deposit                                                                           4,477,630      2,235,856
                                                                     Taxes payable                                                                              272,983        (543,691)
                                                                                                                                                                ------------   ------------
                                                                                                          Net cash provided by operating activities             5,069,599      9,578,970
                                                                                                                                                                ------------   ------------
                          CASH FLOWS FROM INVESTING ACTIVITIES:
                                        Increase in equity investment                                                                                           (1,511,200)    (1,466,700)
                                        Purchase plant and equipment                                                                                            (3,019)        (2,967,898)
                                        Additions to construction in progress                                                                                   (3,626,806)    -
                                        Advances for construction                                                                                               (941,986)      (10,488,033)
                                        Acquisition of land use right                                                                                           -              (43,425)
                                        Loan to related party - non-current                                                                                     -              440,010
                                        Lease payments for equipment purchase                                                                                   -              (2,050,447)
                                                                                                                                                                ------------   ------------
                                                                                                          Net cash used in investing activities                 (6,083,012)    (16,576,493)
                                                                                                                                                                ------------   ------------
                          CASH FLOWS FROM FINANCING ACTIVITIES:
                                        Decrease in restricted cash                                                                                             7,584,304      15,279,992
                                        Borrowings on notes payable - banks                                                                                     15,263,120     13,346,970
                                        Principal payments on notes payable - banks                                                                             (22,365,760)   (30,859,368)
                                        Borrowings on short term loans                                                                                          56,895,225     41,008,932
                                        Principal payments on short term loans                                                                                  (51,108,784)   (26,693,940)
                                        Borrowings on employee loans                                                                                            107,673        -
                                        Principal payments on employee loans                                                                                    (258,482)      (336,641)
                                        Payments to other payable - officer                                                                                     (493,544)      -
                                        Principal payments on third party loan                                                                                  -              (248,624)
                                        Borrowings on long term loans                                                                                           4,841,583      -
                                        Payments on long term loans                                                                                             (4,841,583)    -
                                        Payment on capital lease obligation                                                                                     (5,808,137)    (1,795,241)
                                                                                                                                                                ------------   ------------
                                                                                                          Net cash provided by (used in) financing activities   (184,385)      9,702,081
                                                                                                                                                                ------------   ------------
                          EFFECTS OF EXCHANGE RATE CHANGE IN CASH                                                                                               1,127,605      (362,493)
                                                                                                                                                                ------------   ------------
                          INCREASE /(DECREASE) IN CASH & CASH EQUIVALENTS                                                                                       (70,192)       2,342,065
                          CASH & CASH EQUIVALENTS, beginning of year                                                                                            4,121,541      1,779,476
                                                                                                                                                                ------------   ------------
                          CASH & CASH EQUIVALENTS, end of year                                                                                                $ 4,051,349    $ 4,121,541
                          SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                          Cash paid during the year for:
                          Interest paid                                                                                                                       $ 2,995,844    $ 2,752,591
                          Income taxes                                                                                                                        $ 2,098,145    $ 1,673,702
                          SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
                          Non-cash advances for construction                                                                                                  $ 1,344,561    $ 1,673,702
                          Accounts payable for acquisition of plant and equipment                                                                             $ 5,717,226    $ -
                          Completion of construction-in-progress                                                                                              $ 15,392,980   $ -
                          The accompanying notes are an integral part of these consolidated financial statements.
                          
                  
                  
                  
                          SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                          FOR THE TWELVE MONTHS ENDED JUNE 30, 2011 AND  2010
                                                                                                                     Retained earnings            Accumulated other
                                                                                                                     ------------------------
                                                                         Common stock                 Paid-in        Statutory                    comprehensive
                                                                         ------------------------
                                                                         Shares         Par value     capital        reserves    Unrestricted     income                Totals
                                                                         ---------      ---------     ----------     ---------   ------------     -----------------     ----------
                          BALANCE, June 30, 2009                         9,584,912 $    9,585     $   20,633,240 $   2,894,902 $ 16,472,689   $   4,942,483         $   44,952,899
                                Net income                               -              -             -              -           3,198,981        -                     3,198,981
                                Option issued to employees               -              -             681,575        -           -                -                     681,575
                                Adjustment to statutory reserve          -              -             -              319,898     (319,898)        -                     -
                                Foreign currency translation adjustments -              -             -              -           -                262,776               262,776
                          BALANCE, JUNE 30, 2010                         9,584,912      9,585         21,314,815     3,214,800   19,351,772       5,205,259             49,096,231
                                Net income                               -              -             -              -           7,651,051        -                     7,651,051
                                Option issued to employees               -              -             238,684        -           -                -                     238,684
                                Adjustment to statutory reserve          -              -             -              854,022     (854,022)        -                     -
                                Foreign currency translation adjustments -              -             -              -           -                2,636,158             2,636,158
                          BALANCE, JUNE 30, 2011                         9,584,912 $    9,585     $   21,553,499 $   4,068,822 $ 26,148,801   $   7,841,417         $   59,622,124
                          The accompanying notes are an integral part of this statement.
                          
                  
                  
                  

SOURCE Shengtai Pharmaceutical, Inc.

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