Yanglin Soybean, Inc. Reports 2009 Annual Financial Results

April 16, 2010

HEILONGJIANG, China, April 16 /PRNewswire-Asia-FirstCall/ — Yanglin
Soybean, Inc. (OTC Bulletin Board: YSYB) (“Yanglin” or the “Company”), one of
the leading domestic processors of soybean products in China, yesterday
reported audited financial results for the year ended December 31, 2009.

Mr. Shulin Liu, Chief Executive Officer of Yanglin, commented, “During
2009, we experienced certain difficulties caused by the unfavorable pricing
environment for our raw materials as well as for our end products, as a result
of the Chinese government’s strategic reserve purchase of domestic soybeans,
which offered farmers a price materially higher than normal market price. In
addition, large imports of soybean into China reached 42.5 million tons in
2009, a significant increase over 37.4 million tons in 2008 and 30.8 million
tons in 2007, at lower price. Despite these difficulties, we held a large cash
balance of $34.8 million at the end of 2009 and a credit line of approximately
$105 million. We believe that, as one of the largest domestic soybean
processors in Northeast China, with an annual production capacity of 520,000
metric tons, that we are well positioned in China’s domestic soybean industry,
which still receives strong support from the Chinese government and, which we
believe, has promising prospects in the long term, considering the huge and
ever-growing demand of the country.”

Mr. Lu continued, “In addition to the implementation of cost saving
measures, we are closely monitoring new government policy announcements.
During its strategic reserve purchase that ended in June 2009, the Chinese
government purchased over 7 million metric tons of soybeans in total and held
about 14 auctions since July 2009. However, only about 1% of the reserves
found buyers at break even price levels. In late 2009, after lobbying efforts
of the domestic soybean industry, the Chinese government announced that it
would grant subsidies to soybean processors who purchased domestic non-GM
soybeans from farmers at a government-guided price. We believe that this
measure may help domestic soybean processors, including Yanglin, to improve
profit margin. More importantly, we believe that this measure is a signal by
the government of its willingness to render further, strong support to our
industry. In the meantime, we intend to continue to focus on making our
operations more efficient and on providing the same high-quality products and
service our customers expect.”

Year 2009 Results

Total revenues for the year 2009 were $161.6 million, compared to $250.7
recorded for the year 2008. Sales decreased during the year 2009 as
the combination of demand softness brought by the economic crisis and an
oversupply of imported soybeans causing a decline in selling prices of the
Company’s products. The Company also voluntarily reduced the production volume,
and hence sales volume, in response to high costs of raw materials, which had
material negative effects on margin.

    Net sales
    (in thousand US$)
                                    The Year Ended
                                     December, 31
                                 2009           2008     % Change

    Soybean Meal           $101,609.0     $154,526.9       -34.2%
    Soybean Oil             $43,008.8      $70,374.1       -38.9%
    Salad Oil                $8,057.0      $25,827.7       -68.8%
    Squeezed Oil             $1,077.1             $0          NA
    Soy Protein
     Concentrate             $1,552.7             $0          NA
    Low-temp Soy Meal        $6,329.4             $0          NA
    Total Net Sales        $161,634.0     $250,728.7       -35.5%

Gross loss for the year 2009 was about $10.0 million, as compared to a
gross profit of $20.9 million for the year 2008. To alleviate the impact from
cheaper imported soybeans on the farmers, the Chinese government offered to
buy soybeans at higher-than-market prices, causing significantly higher raw
material costs for soybean processors such as Yanglin, thus negatively
affecting their gross margin. Yanglin has undertaken a series of initiatives
to reduce costs, such as buying soybeans with higher water content (which may
be cheaper), lowering production levels and idling workers by granting unpaid

Total operating expenses for the year 2009 decreased to $4.4 million, from
$5.8 million in the year 2008. Selling expenses for the year 2009 decreased to
$247,301 slightly lower from $249,812 for the year 2008. General and
administrative expenses for the year 2009 were $3,314,592, as compared to
$5,552,223 for the year 2008. The reduction in these expenses was the result
of the strict cost saving measures in items such as business entertainment and
travel. The operating expenses in the year 2009 included a charge of $584,718,
as the Company has found the value in use of the salad oil line in Plant 1 had
been impaired, because it was technically outdated.

Operating loss for the year 2009 was $14.3 million, as compared with an
operating profit of $15.0 million for the year 2008. Yanglin has been
recognized as a “Key Leading Enterprise” in the industrial sector of the
important agriculture industry by the Chinese government. The Company
continued to benefit from its income tax exempt status during the entire
fiscal year 2009.

During 2009, the Company adopted the provisions of FASB ASC Topic 815,
“Derivatives and Hedging” (“ASC 815″) (previously ElTF 07-5, “Determining
Whether an instrument (or an Embedded Feature) is Indexed to an Entity’s Own
Stock”). As a result, it incurred non-cash income of $59.4 million resulting
from the change in fair value of warrants issued to investors in conjunction
with the Company’s Series A Convertible Preferred Stock in October 2007. The
accounting treatment of the warrants resulted from an anti-dilution provision
to the warrant holders.

The Company has also restated the financial statements of 2008 with the
following adjustment. As a result of the Company’s failure to achieve listing
on a National Stock Exchange, the Company’s majority shareholder, Winner State
Investments Limited, committed to transfer 1,000,000 shares of common stock of
the Company to the purchasers of shares of Series A Convertible Preferred
Stock. The Company has accounted for this as a contribution of capital by its
majority stockholder and recorded a stock exchange listing expense in the
amount of $4,480,000 for the year ended December 31, 2008 based on the closing
market price of $4.48 per share on December 31, 2008.

Net income for the year 2009, after including the change in fair value of
warrants, totaled $44.9 million, or $1.42 per diluted share, compared with net
income of $9.9 million, after restatement with the above mentioned stock
exchange listing expense, or $0.26 per diluted share for the year 2008.

Cash Positions

The Company’s balance sheet as of December 31, 2009 included cash and cash
equivalents of $34.8 million, compared with $30.4 million at December 31, 2008.
The Company had net working capital of $26.5 million as of December 31, 2009.
Total shareholders’ equity was $30.9 million as of December 31, 2009.

For the year 2009, the Company used an amount of $7,906,192 of net cash in
its operating activities.

Business Update

Mr. Liu concluded, “Over the last few months of 2009, we have been pleased
to see some positive signs coming on the horizon, including news that the
Chinese government will grant a subsidy to domestic soybean processors for the
soybeans they purchase from local farmers. We see this policy as the start of
a series of potential further supports to the domestic non-GM soybean industry,
which we believe will be favorable to our operations. We are still confident
in the long-term prosperity of China’s soybean market and business, and we
believe that we will see a recovery of our operations and profitability soon.”

Conference Call

The Company will host a conference call on Wednesday, April 21, 2010 at
9:00 A.M. Eastern Time / 9:00 P.M. Beijing Time. A question and answer session
will follow management’s presentation.

To participate, please call the following numbers 10 minutes before the
call start time and ask to be connected to the Yanglin Soybean conference call:

Telephone (North America): 1-877-407-0782

Telephone (International): 1-210-689-8567

A replay of the call will be available through April 30, 2010 until 11:59
PM Eastern Standard 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:              348345

About Yanglin

Yanglin is one of the leading domestic soybean processors in China. The
Company manufactures soybean oil, salad oil and soybean meal with an annual
processing capacity of 520,000 metric tons in 2009. The Company’s products are
sold directly to its customers or through distributors. The majority of
Yanglin’s customers are located in Northern China.

Forward Looking Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: Certain statements in this press release and oral statements made by
the Company constitute forward-looking statements for purposes of the safe
harbor provisions under The Private Securities Litigation Reform Act of 1995.
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, pricing and demand trends
for the Company’s products, changes to government regulations, risk associated
with operation of the Company’s 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 acceptance, 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:

     Yanglin Soybean, Inc.
     Mr. Bode Xu
     Chief Financial Officer
     Email: cfo@yanglinsoybean.com

    Consolidated Statement of Operations and Comprehensive (Loss) Income
    (Stated in US Dollars) (audited)

                                                    2009             2008

    Net sales                                  $161,633,950     $250,728,674

    Cost of sales                              (171,588,089)    (229,838,842)

    Gross (loss) profit                          (9,954,139)      20,889,832

    Operating Expenses

    Selling expenses                               (247,301)        (249,812)
      General and administrative expenses        (3,314,592)      (5,552,223)
      Impairment loss of long-lived assets         (584,718)              --
      Loss on disposal of property, plant
       and equipment                               (230,104)         (31,113)

    Total operating expenses                     (4,376,715)      (5,833,148)

    (Loss) income from operations               (14,330,854)      15,056,684

      Stock exchange listing expense                     --       (4,480,000)
      Interest expenses                            (481,626)        (822,355)
      Interest income                               233,110          145,340
      Other income                                   11,557              797
      Changes in fair value of
       warrants                                  59,477,401               --

    Income before income taxes                   44,909,588        9,900,466

      Income tax                                         --               --

    Net income                                   44,909,588        9,900,466

      Foreign currency translation
       adjustment                                   172,382        3,803,214
    Comprehensive (loss) income                 $45,081,970      $13,703,680

    Earnings per share
    Basic                                             $2.23            $0.50
    Diluted                                           $1.42            $0.26

    Weighted average shares outstanding
    Basic                                        20,178,404       20,000,003
    Diluted                                      31,642,380       37,757,827

    AS AT DECEMBER 31, 2009, AND DECEMBER 31, 2008
    (Stated in US Dollars) (audited)

                                                       2009          2008
      Current assets
      Cash                                         $34,811,611   $30,365,413
      Cash-restricted                                1,740,605       484,000
      Trade receivables, net                               332         8,043
      Inventories                                    8,356,345     3,896,334
      Advances to suppliers                             12,451    10,597,701
      Prepaid VAT and other taxes                    4,917,250       920,083
      Other receivables and prepaid expenses           108,200       114,990

    Total current assets                            49,946,794    46,386,564

      Property, plant and equipment, net            27,297,365    31,529,936
      Assets held for sale                             570,409            --
      Intangible assets, net                         4,415,908     4,619,716
      Prepaid deposits for equipment and
       construction                                         --        13,021

    TOTAL ASSETS                                   $82,230,476   $82,549,237


    Current liabilities
      Short-term bank loans                        $20,476,218    $6,711,214
      Loans from related parties - current              53,676        55,149
      Accounts payable                                  20,866        13,753
      Other payables                                   824,424       683,403
      Customers deposits                             1,395,524     1,187,582
      Accrued liabilities                              635,474       591,979

    Total current liabilities                       23,406,182     9,243,080

      Long-term liabilities
      Loan from related parties - non-current          314,191       434,678
      Warrant liability                             27,573,698            --

    TOTAL LIABILITIES                               51,294,071     9,677,758

    Convertible preferred stock:
      Series A $0.001 par value, 50,000,000
       shares authorized; 9,534,883 and
       9,999,999 shares issued and outstanding
       as of December 31, 2009 and 2008,
       respectively                                      9,535        10,000
      Series B $0.001 par value, 10,000,000
       shares authorized; no shares issued
       and outstanding                                      --            --
    Common stock:
      $0.001 par value, 100,000,000 shares
       authorized; 20,465,119 and
       20,000,003 shares issued and outstanding
       as of December 31, 2009 and 2008,
       respectively                                     20,465        20,000
    Additional paid-in capital                      27,899,749    42,869,635
    Statutory reserves                               5,628,636     5,628,636
    (Accumulated deficit) retained earnings         (9,953,046)   17,184,524
    Accumulated other comprehensive income           7,331,066     7,158,684

    Total stockholders' equity                      30,936,405    72,871,479

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $82,230,476   $82,549,237

SOURCE Yanglin Soybean, Inc.

Source: newswire

comments powered by Disqus