Yanglin Soybean, Inc. Reports 2009 Annual Financial Results
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 $250.7 million recorded for the year 2008. Sales decreased during the year 2009 as the combination of demand softness brought by the economic crisis and an oversupply of imported soybeans causing a decline in selling prices of the Company's products. The Company also voluntarily reduced the production volume, and hence sales volume, in response to high costs of raw materials, which had material negative effects on margin.
Net sales
(in thousand US$)
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 vacations.
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: [email protected]
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
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2009, AND DECEMBER 31, 2008
(Stated in US Dollars) (audited)
2009 2008
ASSETS
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
LIABILITIES AND STOCKHOLDERS' EQUITY
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
STOCKHOLDERS' EQUITY
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.
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