Company Reports $30.0 Million Revenue, $2.5 Million Net Income and EPS of $0.03 for Q2 2009
SHENZHEN, China, Aug. 17 /PRNewswire-Asia-FirstCall/ -- China Organic Agriculture, Inc. (BULLETIN BOARD: CNOA) ("China Organic Agriculture" or the "Company"), a global diversified food products company engaged in the trading and distribution of agricultural products headquartered in the Liaoning province in China, today announced its financial results for the three and six months ended June 30, 2009.
Financial Highlights of the Second Quarter -- Sales revenue was $30.0 million, a year-over-year increase of over 800%. -- Gross profit was $6.9 million, a year-over-year increase of 650%. -- Net income allocable to CNOA shareholders was $2.5 million, or $0.03 per diluted share, compared to a net loss of $121,000 recorded in the second quarter of 2008. -- Cash on hand totaled $9.0 million as of June 30, 2009. -- Selling, general and administrative expense decreased 16% compared to a year ago.
Revenue for the second quarter 2009 reached $30.0 million, a substantial increase compared to $3.3 million for the same period last year. The increase in sales was attributable to the sales volume of Dalian Huiming, in which the Company acquired a 60% ownership interest in October, 2008 for a purchase price of $10.6 million. Dalian Huiming is mainly involved in trading and distribution of agriculture products, primarily rice and soybeans throughout China.
Net income allocable to CNOA shareholders was $2.5 million for the second quarter of 2009, compared to a net loss of $121,000 for the same period last year. A former operating subsidiary of the Company, Ermapao, was sold in the second half of 2008 and thus its results are now classified as a discontinued operation in the attached schedules. As the Company owns 60% of Dalian Huiming, 40% of the total net income from Dalian Huiming was recorded as income attributed to noncontrolling interest. The Company's net income significantly in the second quarter benefited from the second quarter's gross profit, which was $6.9 million as compared to last year's gross profit of $0.9 million. The selling, general and administrative expenses for the 2nd quarter were lower than the prior year period's level due to reduced professional fees and other cost control measures.
Financial Highlights for the First Half
The Company's revenues for the first six months of 2009 were $66.7 million, up nearly 800% from revenues of $7.5 million recorded during the first six months of 2008. The gross profit for the first six months was $15.3 million, up from $1.8 million recorded in the prior year's comparable period. Net income allocable to CNOA shareholders for the first six months of 2009 was $6.4 million, compared to a net income of $0.9 million for the same period last year. Net income for the first half of 2008 included net income of $0.8 million from discontinued operations.
Financial Conditions
At June 30, 2009, cash and cash equivalents of the Company were $9.0 million, current assets totaled $110.6 million and current liabilities were $58.6 million, resulting in working capital level of $52 million, and a current ratio of 189%.
During the six months ended June 30, 2009, the Company had negative cash flow from operating activities of $9.2 million, primarily attributable to the increase in accounts receivable which was largely due to increased revenue levels. The Company also recorded investments of $37 million in restricted cash and $47.9 million of cash flows from financing activities.
Business Developments
On September 30, 2008, the Company sold all of the shares of its subsidiary, Jilin Songyuan City ErMaPao Green Rice Limited to Bothven Investments Limited for a non-interest bearing note receivable from Bothven at the amount of $8,700,000.
In October 2008, the Company acquired 60% of the outstanding shares of Dalian Huiming Industry Ltd. ("Dalian Huiming") for a payment equivalent to $10,642,609.
About China Organic Agriculture
China Organic Agriculture is based in China and is primarily engaged in the acquisition, trading and distribution of agricultural products.
The Company sells to a limited number of distributors in China, which it will seek to leverage for increased market penetration in agricultural, food and related premium products. For more information, please visit: http://www.chinaorganicagriculture.com/ .
FORWARD-LOOKING STATEMENTS:
This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning future acquisitions, estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of China Organic Agriculture's products and other statements which are not historical facts. When used in this document, the words such as "could," "plan," "estimate," "expect," "intend," "may," and similar expressions denote forward-looking statements. Although China Organic Agriculture Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include, but are not limited to, those set forth in our reports filed with the Securities and Exchange Commission, together with the risks discussed in our press releases and other communications to shareholders issued by us from time to time, such as our ability to raise capital as and when required, the availability of raw products and other supplies, competition, the costs of goods, government regulations, and political and economic factors in the People's Republic of China in which our subsidiaries operate.
China Organic Agriculture, Inc. Consolidated Statement of Operations For Three and Six Months Ended June 30, 2009 and 2008 (Unaudited) THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2009 2008 2009 2008 Sales $30,018,428 $3,268,668 $66,745,736 $7,459,225 Cost of sales (23,089,593) (2,341,174) (51,431,107) (5,655,331) Gross profit $6,928,835 $927,494 $15,314,629 $1,803,894 Selling, general and administrative expenses (477,413) (569,688) (842,149) (1,040,029) Income from operations $6,451,422 $357,806 $14,472,480 $763,865 Other income 68,514 -- 683,067 -- Interest expense, net (398,283) (300,852) (565,574) (300,852) Income from Continuing operations before income taxes $6,121,653 $56,954 $14,589,973 $463,013 Provision for income taxes (1,652,726) (228,797) (3,724,242) (448,755) Net income (loss) from Continuing operations $4,468,927 $(171,843) $10,865,731 $14,258 Discontinued operations: Income from ErMaPao, net of tax -- 50,651 -- 840,156 Net Income (loss) $4,468,927 $(121,192) $10,865,731 $854,414 Less Income attributed to noncontrolling interest (1,987,837) -- (4,459,450) -- Net Income attributable to CNOA $2,481,090 $(121,192) $6,406,281 $854,414 Basic and diluted weighted average shares 73,157,232 51,548,776 73,157,232 51,548,776 Basic and Diluted Earnings per Share: Income from Continuing operations attributable to CNOA shareholders $0.03 $0.00 $0.09 $0.00 Income from Discontinued operations attributable to CNOA shareholders -- 0.00 -- 0.02 Total Basic and Diluted Earnings Per Share $0.03 $0.00 $0.09 $0.02 China Organic Agriculture, Inc. Consolidated Balance Sheet AS OF JUNE 30, 2009 AND DECEMBER 31, 2008 06/30/2009 12/31/2008 Assets (Unaudited)(Audited & Restated) Current Assets Cash and cash equivalents $9,000,459 $7,338,817 Restricted cash 37,045,331 -- Accounts receivable, net 40,705,914 26,448,294 Inventory 2,848,503 4,492,892 Acquisition deposit 2,617,952 2,617,952 Consideration receivable 6,700,000 8,700,000 Trade deposits 7,743,622 2,832,507 Advances 1,860,161 1,846,041 Other receivables and prepayments 2,104,855 126,296 Total Current Assets 110,626,797 54,402,799 Goodwill 1,602,134 1,602,134 Property, plant & equipment, net 14,418,446 14,521,452 Mortgage costs - net 140,038 143,788 Intangibles, net 968,000 1,056,000 Total Assets $127,755,415 $71,726,173 Liabilities and Stockholders' Equity Current Liabilities Mortgage payable - current $206,633 $198,854 Notes payable - related party 37,324,902 -- Short term loan 14,637,217 1,170,515 Accounts payable and accrued expenses 4,079,801 5,048,054 Due to related party 694,894 3,630,842 Taxes payable 1,652,459 3,335,751 Total Current Liabilities 58,595,906 13,384,016 Mortgage payable - long term 8,056,406 8,161,705 Total Liabilities $66,652,312 $21,545,721 Stockholders' Equity Preferred stock, par value, $0.001 per share 20,000,000 shares authorized, none outstanding -- -- Common stock, no par value, 1,000,000,000 shares authorized, 73,157,232 issued and outstanding at June 30, 2009 and December 31, 2008 7,648,410 7,648,410 Additional paid in capital 638,831 597,209 Statutory reserves 1,423,933 1,423,933 Other comprehensive income 2,827,215 2,814,743 Retained earnings 39,418,003 33,011,722 CNOA Stockholders' Equity $51,956,392 $45,496,017 Noncontrolling interest 9,146,711 4,684,435 Total Stockholders' Equity $61,103,103 $50,180,452 Total Liabilities and Stockholders' Equity $127,755,415 $71,726,173 China Organic Agriculture, Inc. Statement of Cash Flows FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (UNAUDITED) SIX MONTHS ENDED JUNE 30, 2009 2008 CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES Net income from Continued operations $6,406,281 $14,258 Adjustments to reconcile net income to net cash provided by operating activities: Net income from Discontinued operations -- 840,156 Stock based compensation 41,622 263,543 Noncontrolling interest 4,459,450 -- Depreciation and amortization 195,432 181,306 Effect of changes in assets and liabilities: Accounts receivables (14,244,344) (3,631,323) Inventory 1,645,827 1,839,981 Trade deposits (4,908,990) 42,420 Acquisition deposit -- (13,260,561) Consideration receivable 2,000,000 -- Advances (13,388) -- Other receivable and prepayment (1,977,933) (595,569) Accounts payable and accrued expenses (969,737) 3,050,927 Due to related party (135,948) 867,975 Taxes payable (1,684,597) 85,675 Net cash used by Operating Activities $(9,186,325) $(10,301,212) CASH FLOWS USED BY INVESTING ACTIVITIES Restricted cash (37,045,331) -- Purchase of property & equipment (676) (14,598,802) Net cash used by Investing Activities $(37,046,007) $(14,598,802) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of notes payables 37,324,902 -- Proceeds of short term loan 14,637,217 -- Proceeds from mortgage payable, net of costs -- 8,515,000 Proceeds from related parties -- 7,016,000 Repayment of notes payable (2,800,000) -- Repayment of loan (1,170,515) -- Repayment of mortgage payable (97,520) (210,632) Net cash from Financing Activities $47,894,084 $15,320,368 Effect of exchange rate changes on cash and cash equivalents (110) 560,098 Net change in cash and cash equivalents $1,661,642 $(9,019,548) Cash and cash equivalents, beginning balance $7,338,817 $9,697,793 Cash and cash equivalents, ending balance $9,000,459 $678,245 For further information, please contact: China Organic Agriculture, Inc. Hans Shen Tel: +1-707-709-2321 Email: IR@cnoainc.com
China Organic Agriculture, Inc.
CONTACT: China Organic Agriculture, Inc., Hans Shen, +1-707-709-2321, or
IR@cnoainc.com
