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Shengtai Pharmaceutical, Inc. Reports Second Quarter Fiscal Year 2013 Financial Results

February 14, 2013

WEIFANG, SHANDONG, China, Feb. 14, 2013 /PRNewswire/ — Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (”Shengtai” or ”the Company” or “We” or “Us” or “Our”), 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 three months ended December 31, 2012.

“We are glad to see the increase of sales revenue and increase of gross profit during the three months ended December 31, 2012 compared to the same period last year,” stated Qingtai Liu, CEO of Shengtai. “The Company has produced a positive cash flow from operating expense during the six months ended December 31, 2012.”

Second Quarter Fiscal Year 2013 operations results

Net sales for the three months ended December 31, 2012 were $64,103,621, an increase of $21,170,196 or 49.31%, compared with $42,933,425 for the same period in 2011. The increase in net sales primarily resulted from increased cornstarch and other products sales. For the three months ended December 31, 2012, the quantities of our glucose products, cornstarch products and other products sold were 33,228 tons, 55,115 tons, and 60,085 tons , respectively, increase/decrease of approximately (8.94%), 83.38%, and 93.31%, respectively. The increased sales quantities of cornstarch is due to a substantial increase of our Slurry sales, which increased approximately 6,848 tons or 687.03% for the three months ended December 31, 2012 compared to 996.74 tons for the same period in 2011. Net sales from exports for the three months ended December 31, 2012 were $16,214,168, an increase of approximately 115.79%, compared with $7,513,799 for the same period in 2011. The increase is mainly attributable to the increased exporting sales of corn germ meal during the three months ended December 31, 2012 compared to the same period last year, when the export of corn germ meal was nil.

Cost of sales for the three months ended December 31, 2012 was $58,114,822, an increase of $19,222,428 or 49.42%, compared with $38,892,394 for the same period in 2011. The increase in cost of sales was in line with increased sales.

Gross profit for the three months ended December 31, 2012 was $5,988,799, an increase of $1,947,768 or 48.20%, compared with $4,041,031 for the same period in 2011. The increase of gross profit is in line with the increased sales. Gross profit margin for the three months ended December 31, 2012 was 9.34%, a decrease by 0.07% as compared to the gross profit margin of 9.41% for the same period in 2011. The reason for the decrease of gross profit margin is mainly because the average sales prices decreased as compared to the same period last year.

For the three months ended December 31, 2012, selling, general and administrative expenses were $3,898,845, an increase of $872,383 or 28.83%, compared to $3,026,462 for the three months ended December 31, 2011. The increase of selling, general, and administrative expenses is caused by increased selling, general and administrative expenses in PRC, offset by decreased selling, general and administrative expenses in the United States. The Company’s selling, general and administrative expenses in the United States ended December 31, 2012 decreased by $49,086 compared to the same period in 2011. The decrease is mainly due to decreased salary expenses of $57,874. The selling, general and administrative expenses from our PRC operating entities increased by $123,106 for the three months ended December 31, 2012 compared to $3,702,602 for the same period in 2011. The selling expenses from our PRC operating entities increased by $1,198,829 or 73.39% in the quarter ended December 31, 2012 compared to the same period in 2011. The increase is mainly attributable to the increase in shipping and handing expenses of $1,225,986 and other expenses of $73,717 offset by decreased package expenses of $14,274, decreased commodity inspection fee of $6,619, decreased exhibition expenses of $5,930, and decreased carfares of $79,156. The general and administrative expenses incurred in PRC increased $248,639 in the quarter ended December 31, 2012 compared to $744,713 for the same period in 2011.

Net income for the three months ended December 31, 2012 was $261,216, an increase of $326,278 or 501.49%, compared with net loss $65,062 for the same period in 2011. The increase in net income was primarily attributable to the increased gross profit of $1,947,768, offset by increased selling, general and administrative expenses of $872,383 and by increased interest expenses of $518,770.

Financial Condition

As of December 31, 2012, Shengtai had cash and restricted cash totaling $7.65 million. The Company’s short-term loan totaled $77.13 million and long-term debt totaled $0 million. The Company’s total shareholders’ equity increased to $63.98 million.

Management Comments

Looking forward, Qingtai Liu, CEO of Shengtai stated, “We see a good demand of our products from the market during the past six months ended December 31, 2012. We will continue in focusing on providing good service to fulfill these demand as well as controlling our gross profit rate at current level.”

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: shengtai_IR@163.com

                                                                                                                                                             SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
                                                                                                                                                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                                                                               Unaudited

                                                                                                                                                                                                                                                                                                   December 31,                                       June 30,
                                                                                                                                                                                                                                                                                                                       2012                                          2012

                                                                                                                                                                                 ASSETS
    CURRENT ASSETS:
                      Cash & cash equivalents                                                                                                                                                                                                                            $11,147,724                                          $4,903,303
                      Restricted cash                                                                                                                                                                                                                                      7,648,641                                          13,084,586
                       Accounts receivable, net of allowance for doubtful accounts of $1,124,954
                       and $1,603,051,respectively                                                                                                                                                                                                                        12,033,935                                          12,099,625
                      Notes receivable                                                                                                                                                                                                                                     3,142,795                                           4,590,758
                      Other receivables                                                                                                                                                                                                                                    3,972,063                                           8,862,789
                      Inventories                                                                                                                                                                                                                                         35,844,802                                          29,457,981
                      Prepayments and other assets                                                                                                                                                                                                                         1,918,666                                           1,023,154
                      Total current assets                                                                                                                                                                                                                                75,708,626                                          74,022,195
                                                                                                                                                                                                                                                                          ----------                                          ----------

    PLANT AND EQUIPMENT, net                                                                                                                                                                                                                                                                                     83,556,022                                    80,185,228

    CONSTRUCTION IN PROGRESS                                                                                                                                                                                                                                                                                        368,759                                     1,213,540

    EQUITY INVESTMENT                                                                                                                                                                                                                                                                                            12,845,149                                    11,704,050

    ADVANCE FOR CONSTRUCTION                                                                                                                                                                                                                                                                                      1,486,961                                     2,188,892

    INTANGIBLE ASSETS, NET                                                                                                                                                                                                                                                                                        3,347,968                                     3,271,147

                                                                                                  Total assets                                                                                                                                                                                                 $177,313,485                                  $172,585,052
                                                                                                                                                                                                                                                                                                               ============                                  ============

                                                                                                                                                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                                                                                                                                                                                                                                   $10,464,735                                          $5,432,615
                      Accounts payable and accrued liabilities - related party                                                                                                                                                                                               719,793                                             405,926
                      Notes payable - banks                                                                                                                                                                                                                               12,463,973                                          17,835,706
                      Short term bank loans                                                                                                                                                                                                                               77,132,764                                          73,483,997
                      Accrued liabilities                                                                                                                                                                                                                                    560,086                                             479,593
                      Other payable                                                                                                                                                                                                                                        2,440,584                                           1,672,805
                      Employee loans                                                                                                                                                                                                                                         358,244                                             295,076
                      Other payable - officer                                                                                                                                                                                                                                 37,460                                              37,027
                      Customer deposit                                                                                                                                                                                                                                     8,831,607                                           9,610,252
                      Taxes payable                                                                                                                                                                                                                                          322,588                                             997,529
                      Total current liabilities                                                                                                                                                                                                                          113,331,834                                         110,250,526
                                                                                                                                                                                                                                                                         -----------                                         -----------

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY:
                      Preferred stock, $0.001 par value, 2,500,000 shares authorized,
                       no shares issued and outstanding as of December 31, 2012 and June 30,
                       2012                                                                                                                                                                                                                                                        -                                                   -
                      Common stock, $0.001 par value, 50,000,000 shares authorized,
                       9,584,912 shares issued and outstanding as of December 31, 2012 and June
                       30, 2012                                                                                                                                                                                                                                                9,585                                               9,585
                      Additional paid-in capital                                                                                                                                                                                                                          21,945,101                                          21,945,101
                      Statutory reserves                                                                                                                                                                                                                                   4,290,884                                           4,226,125
                      Retained earnings                                                                                                                                                                                                                                   27,456,850                                          27,064,092
                      Accumulated other comprehensive income                                                                                                                                                                                                              10,279,230                                           9,089,623
                      Total stockholders' equity                                                                                                                                                                                                                          63,981,651                                          62,334,526
                                                                                                                                                                                                                                                                          ----------                                          ----------

                                                                                                  Total liabilities and stockholders' equity                                                                                                                                                                   $177,313,485                                  $172,585,052
                                                                                                                                                                                                                                                                                                               ============                                  ============

                                                                                                                                      The accompanying notes are an integral part of these unaudited condensed consolidated financial
                                                                                                                                                                                statements.
                                                                                SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
                                                                       CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                                                                                                  Unaudited

                                                            THREE MONTHS ENDED DECEMBER 31,                                    SIX MONTHS ENDED DECEMBER 31,
                                                                                                                         2012                                       2011          2012         2011

    NET SALES                                                                                                     $64,103,621                                $42,933,425  $112,848,264  $82,988,873

    COST OF SALES                                                                                                 $58,114,822                                $38,892,394  $101,801,487  $75,562,795
                                                                                                                  -----------                                -----------  ------------  -----------

    GROSS PROFIT                                                                                                    5,988,799                                  4,041,031    11,046,777    7,426,078

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                                                    3,898,845                                  3,026,462     7,188,542    5,179,077
                                                                                                                    ---------                                  ---------     ---------    ---------

    INCOME FROM OPERATIONS                                                                                          2,089,954                                  1,014,569     3,858,235    2,247,001

    OTHER INCOME (EXPENSE) :
      Earnings on equity investment                                                                                   291,815                                     32,977       530,824      306,890
      Non-operating income                                                                                             36,998                                    161,516        39,989      752,983
      Non-operating expense                                                                                          (240,241)                                    (6,244)     (401,028)     (13,725)
      Interest expense and other charges                                                                           (1,910,036)                                (1,391,266)   (3,592,031)  (2,234,377)
      Interest income                                                                                                 112,265                                    139,465       237,392      144,191
                                                                                                                      -------
        Other income (expense) , net                                                                               (1,709,199)                                (1,063,552)   (3,184,853)  (1,044,038)

    INCOME BEFORE PROVISION FOR INCOME TAXES                                                                          380,755                                    (48,983)      673,382    1,202,963

    PROVISION FOR INCOME TAXES                                                                                        119,539                                     16,079       215,865      384,468
                                                                                                                      -------                                     ------       -------      -------

    NET INCOME                                                                                                        261,216                                    (65,062)      457,517      818,495

    OTHER COMPREHENSIVE ITEMS:
        Foreign currency translation adjustments                                                                    1,310,479                                    405,636     1,189,607      879,511
                                                                                                                    ---------                                    -------     ---------      -------

    COMPREHENSIVE INCOME                                                                                            1,571,695                                   $340,574     1,647,124   $1,698,006
                                                                                                                    =========                                   ========     =========   ==========

    EARNINGS PER SHARE
    Basic and diluted                                                                                                   $0.03                                     $(0.01)        $0.05        $0.09
                                                                                                                        =====                                     ======         =====        =====

    WEIGHTED AVERAGE NUMBER OF SHARES
    Basic and diluted                                                                                               9,584,912                                  9,584,912     9,584,912    9,584,912
                                                                                                                    =========                                  =========     =========    =========

                                                 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
                                                                                                                      SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
                                                                                                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                        Unaudited
                                                                                                                                                                                                                                                               SIX MONTHS ENDED DECEMBER 31,
                                                                                                                                                                                                                                                                         2012                          2011

    CASH FLOWS FROM OPERATING ACTIVITIES:
                                                        Net income                                                                                                                                                                                  $457,517                      $818,495
                                                        Adjustments to reconcile net income to cash (used in)
                                                        provided by operating activities:
                                                                           Depreciation                                                                                                                                                             4,826,303                     3,866,186
                                                                           Amortization                                                                                                                                                                37,718                        29,541
                                                                           Bad debt reduction                                                                                                                                                        (494,367)                     (290,232)
                                                                           Share based compensation to employees                                                                                                                                                           -                             -
                                                                           Earnings on equity investment                                                                                                                                             (530,824)                     (306,890)
                                                                           Loss on equipment disposal                                                                                                                                                                      -                             -
                                                        Change in operating assets and liabilities:
                                                                           Accounts receivable                                                                                                                                                        721,109                        58,328
                                                                           Notes receivable                                                                                                                                                         1,493,704                      (688,958)
                                                                           Other receivables                                                                                                                                                        4,954,330                     1,273,594
                                                                           Inventories                                                                                                                                                             (5,998,907)                   (4,294,968)
                                                                           Prepayments and other assets                                                                                                                                            (2,343,071)                    1,884,620
                                                                           Accounts payable and accrued liabilities                                                                                                                                (1,189,862)                   (4,089,919)
                                                                            Accounts payable and accrued liabilities -related
                                                                            party                                                                                                                                                                     193,812                      (617,404)
                                                                           Other payable                                                                                                                                                              737,260                    (1,069,555)
                                                                           Customer deposit                                                                                                                                                          (898,719)                   (5,731,010)
                                                                           Taxes payable                                                                                                                                                             (680,990)                     (381,549)
                                                                                                                               Net cash provided by (used in) operating activities                                                                                  1,285,014                    (9,539,722)
                                                                                                                                                                                                                                                                    ---------                    ----------

    CASH FLOWS FROM INVESTING ACTIVITIES:
                                                        Increase in equity investment                                                                                                                                                               (317,556)                   (1,254,400)
                                                        Purchase of plant and equipment                                                                                                                                                               (4,259)                       (1,221)
                                                        Additions to construction in progress                                                                                                                                                              0                       (78,432)
                                                        Increase in land use right                                                                                                                                                                   (69,977)                       (2,486)
                                                        Advances for construction                                                                                                                                                                  2,194,522                     1,342,590
                                                        Loan to related party - non-current                                                                                                                                                                               -                             -
                                                                                                                               Net cash provided by (used in) investing activities                                                                                  1,802,731                         6,051
                                                                                                                                                                                                                                                                    ---------                         -----

    CASH FLOWS FROM FINANCING ACTIVITIES:
                                                        Decrease in restricted cash                                                                                                                                                                5,435,944                     7,121,261
                                                        Borrowings on notes payable - banks                                                                                                                                                       12,329,401                     1,844,282
                                                        Principal payments on notes payable - banks                                                                                                                                             (17,881,583)                  (13,171,200)
                                                        Borrowings on short term loans                                                                                                                                                            49,625,257                    36,443,550
                                                        Principal payments on short term loans                                                                                                                                                  (46,998,301)                  (22,483,610)
                                                        Borrowings on employee loans                                                                                                                                                                  60,336                        31,360
                                                        Principal payments on employee loans                                                                                                                                                          (1,794)                       (3,136)

                                                                                                                               Net cash (used in) provided byfinancing activities                                                                                   2,569,259                     9,782,506
                                                                                                                                                                                                                                                                    ---------                     ---------

    EFFECTS OF EXCHANGE RATE CHANGE IN CASH                                                                                                                                                                                                                           587,417                        30,995
                                                                                                                                                                                                                                                                      -------                        ------

    INCREASE (DECREASE) IN CASH & CASH EQUIVELENTS                                                                                                                                                                                                                  6,244,420                       279,831

    CASH & CASH EQUIVALENTS, beginning of year                                                                                                                                                                                                                      4,903,303                     4,051,349
                                                                                                                                                                                                                                                                    ---------                     ---------

    CASH & CASH EQUIVALENTS, end of year                                                                                                                                                                                                                          $11,147,723                    $4,331,179
                                                                                                                                                                                                                                                                  ===========

    SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the year for:
    Interest Paid                                                                                                                                                                                                                                                  $2,474,288                    $1,899,711
                                                                                                                                                                                                                                                                   ==========                    ==========
    Income taxes                                                                                                                                                                                                                                                       $1,799                      $705,945
                                                                                                                                                                                                                                                                       ======                      ========

    SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
    Decrease of other receivable for acquisition of plant and equipment                                                                                                                                                                                                $2,078                       $20,651

    Transfers of construction in progress-related inventory to plant and equipment                                                                                                                                                                                   $202,334                       $79,217

    Acquisition of plant and equipment and construction in progress on credit                                                                                                                                                                                      $6,081,083                    $3,557,333

    Completion of construction-in-progress (transferred to plant and equipment)                                                                                                                                                                                    $7,044,153                    $7,415,903

                                                                                       The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SOURCE Shengtai Pharmaceutical, Inc.


Source: PR Newswire