CHINA BIOLOGIC PRODUCTS INC 
By TAIAN CITY,
Second Quarter 2008 Highlights
-- Revenues increased 35.1% year-over-year to $11.9 million
-- Gross profit increased 36.4% to $8.3 million over the second quarter
2007
-- Gross margin improved to 69.5%, from 68.8% for the same period last
year
-- Operating income totaled $5.0 million, down 1.5% from the previous year
-- Net income totaled $2.0 million, or $0.09 per diluted share
-- Non-GAAP net income was $3.3 million, a 4.2% decline over 2007, or
$0.15 per diluted share*
* Excludes Stock Based Compensation ("SBC"). See Table 1 for a
reconciliation of Net Income and EPS to exclude SBC.
"We are pleased to report solid revenue and profitability in the second
quarter, primarily due to strong demand and price increases for our plasma
based products," said Mr.
During the quarter, the Company achieved the following milestones:
-- Received approval for the production of Cryoprecipitate and clinical
trials of Human Prothrombin Complex
-- Began production and sales of Human Albumin 12.5g/vial (25%, 50 ml)
-- Received approval to purchase excess clinical plasma
-- Received approval to set up a new plasma collection station in Pu Bei
County, Guangxi Province to replace its Fang Cheng Plasma Collection
Station
Second Quarter 2008 Results
Revenues for the second quarter of 2008 were
Gross profit was up 36.4% to
Total operating expenses for the second quarter of 2008 were
As a result of the increase in operating expenses, income from operations
decreased 1.5% to
Provision for income taxes increased 150.2% year over year to
Net income for the second quarter of 2008 decreased 40.9% year over year,
to
Non-GAAP net income in the second quarter of 2008 was
* Excludes Stock Based Compensation ("SBC"). See Table 1 for a
reconciliation of Net Income and EPS to exclude SBC.
Six Months Results
For the first six months of 2008, total revenue was
Financial Condition
As of
Recent Developments
(1) The Company began operation of its newly constructed plasma collection
station in Qi He County,
(2) The Company was honored with the Advanced Technology Certification for Foreign-Funded Enterprises.
(3) On
(4) The Company began annual maintenance of its production facilities on
(5) On
Business Outlook
For the most recent quarter, the Company received SFDA approval in a variety of plasma-based products including the approval to supply Cryoprecipitate to Green Cross China for the use in the production of Human Coagulation Factor VIII, an effort that leads the Company to focus on research and development of Human Coagulation Factor VIII. The Company also received approval to commence clinical trial of its new Human Prothrombin Complex for the production and sale of human albumin 12.5g/vial 925%, 50ml). The Company is currently one of the few producers offering the widest range of Human Albumin products available in the Chinese market. Management believes that these approvals are a reflection of the Company's R&D efforts to upgrade its product portfolio.
Realizing that the supply of human plasma is one of the keys to success in
the industry, the Company sought and obtained approval to relocate its Fang
Cheng plasma collection station to Pu Bei County,
The Company began the annual maintenance of its production facilities on
Commencing
The foregoing measure as well as the continued restriction on the importation of foreign plasma based products have placed pressure on the already tightened supply of plasma available for production. In addition, the overall effect of these and other regulations has been to reduce competition and increase the barriers to entry. In order to maintain its favorable position in the industry, the Company is focusing on its research and development efforts on securing plasma supply and on the development and production of new high quality plasma-based products.
"We are pleased with our operational results given the government's restriction on both the supply of human plasma and the slow approval process of the plasma-based products for sale earlier in the year," remarked Mr. Zhao. "Now that the government approval process for plasma based finished goods has returned to more normal levels, we are optimistic about our outlook for the remainder of the year. We have made great efforts to secure raw material inventories and finished products in order to better serve our customers."
*TABLE 1
CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
Three Months Ended Three Months Ended
Adjusted Net Income June 30, 2008 June 30, 2007
Diluted Diluted
Net Income (Loss) Diluted EPS Net Income EPS Net Income EPS
Adjusted Amount - Non GAAP $3,297,342 $0.15 $3,443,500 $0.16
Non-cash employee compensation (1) $1,263,188 $0.06 -- --
Amount per consolidated statement $2,034,154 $0.09 $3,443,500 $0.16
of operations
Adjusted Net Income Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
Net Income (Loss) Diluted EPS Net Income Diluted Diluted
EPS Net Income EPS
Adjusted Amount - Non GAAP $5,565,142 $0.26 $5,342,343 $0.25
Non-cash employee compensation (1) $1,263,188 $0.06 -- --
Amount per consolidated statement $4,301,954 $0.20 $5,342,343 $0.25
of operations
(1) Non-cash compensation expense of $1,263,188 in connection with
adoption of the equity incentive plan granting share options on the
Company's common stock to employees and directors
Use of Non-GAAP Financial Measures
GAAP results for the three months ended
About China Biologic Products, Inc.
China Biologic Products, Inc., through its indirect majority-owned
subsidiary Shandong Taibang, is currently the only plasma-based
biopharmaceutical company approved by the government of
Safe Harbor Statement
This release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
Company Contact:
Mr. Y. Tristan Kuo, CFO
China Biologic Products, Inc.
Tel: +86-538-620-2206
Email: IR@chinabiologic.com
Web site: http://www.chinabiologic.com
Investor Relations Contact:
Mr. Crocker Coulson, President
CCG Investor Relations
Tel: +1-646-213-1915 (NY office)
Email: crocker.coulson@ccgir.com
Web site: http://www.ccgir.com
CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(Unaudited)
Three months ended June 30, Six months ended June
30,
2008 2007 2008 2007
REVENUES $11,925,842 $8,826,059 $19,774,849 $16,503,911
COST OF SALES 3,638,128 2,750,972 5,587,026 6,012,348
GROSS PROFIT 8,287,714 6,075,087 14,187,823 10,491,563
OPERATING EXPENSES
Selling expenses 510,565 204,855 1,005,094 702,468
General and
administrative
expenses 1,266,592 757,016 2,858,666 1,708,341
Research and
development expenses 279,833 71,728 463,615 221,635
Compensation expense 1,263,188 1,263,188
TOTAL OPERATING
EXPENSES 3,320,178 1,033,599 5,590,563 2,632,444
INCOME FROM OPERATIONS 4,967,536 5,041,488 8,597,260 7,859,119
OTHER EXPENSES
Interest income (19,601) (4,386) (30,490) (17,113)
Interest expense 18,755 18,692 44,672 63,337
Other income (364) (23) (567) (4,093)
Other expense 52,405 15,400 53,019 27,135
TOTAL OTHER EXPENSES 51,195 29,683 66,634 69,266
INCOME BEFORE PROVISION
FOR INCOME TAXES
AND MINORITY
INTEREST 4,916,341 5,011,805 8,530,626 7,789,853
PROVISION FOR INCOME
TAXES 2,123,843 848,852 2,864,325 1,298,962
NET INCOME BEFORE
MINORITY INTEREST 2,792,498 4,162,953 5,666,301 6,490,891
LESS MINORITY INTEREST 758,344 719,453 1,364,347 1,148,548
NET INCOME 2,034,154 3,443,500 4,301,954 5,342,343
FOREIGN CURRENCY
TRANSLATION GAIN 747,767 370,319 1,871,125 463,092
OTHER COMPREHENSIVE
INCOME $2,781,921 $3,813,819 $6,173,079 $5,805,435
BASIC EARNINGS PER
SHARE
Weighted average number
of shares 21,434,942 21,434,942 21,434,942 21,434,942
Earnings per share $0.09 $0.16 $0.20 $0.25
DILUTED EARNINGS PER
SHARE
Weighted average number
of shares 21,664,429 21,434,942 21,808,852 21,434,942
Earnings per share $0.09 $0.16 $0.20 $0.25
CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2008 AND DECEMBER 31, 2007
A S S E T S
June 30, December 31,
2008 2007
(Unaudited)
CURRENT ASSETS:
Cash $8,775,242 $5,010,033
Accounts receivable, net of
allowance for doubtful accounts of
$1,202,838 and $1,238,772 as of June 30,
2008 and December 31, 2007,
respectively 939,406 316,869
Notes receivable 68,142 41,130
Other receivables 659,799 425,163
Other receivable- related party 307,481 290,307
Inventories 12,759,906 9,505,074
Prepayments and deferred expense 395,949 138,756
Total current assets 23,905,925 15,727,332
PLANT AND EQUIPMENT, net 18,132,745 15,434,124
OTHER ASSETS:
Advances on equipment purchases 791,014 711,459
Long term prepayment - related
party 549,605 516,456
Intangible assets, net 929,738 915,874
Total other assets 2,270,357 2,143,789
Total assets $44,309,027 $33,305,245
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable $2,546,739 $2,677,587
Short term loans - bank -- 685,500
Short term loan - minority
shareholder 769,060 722,674
Other payables and accrued
liabilities 1,980,188 1,200,068
Other payable - land use right 324,411 305,571
Dividend payable 643,842 506,626
Customer deposits 696,966 398,794
Taxes payable 2,604,880 384,788
Total current liabilities 9,566,086 6,881,608
COMMITMENT AND CONTINGENCIES 40,899 142,120
MINORITY INTEREST 4,870,150 3,885,892
SHAREHOLDERS' EQUITY:
Common stock, $0.0001 par value,
100,000,000 shares authorized,
21,434,942 shares issued
and outstanding
at June 30, 2008 and
December 31, 2007, respectively 2,143 2,143
Paid-in-capital 10,651,493 9,388,305
Statutory reserves 5,334,520 4,513,077
Retained earnings 9,363,817 5,883,306
Accumulated other comprehensive
income 4,479,919 2,608,794
Total shareholders' equity 29,831,892 22,395,625
Total liabilities and
shareholders' equity $44,309,027 $33,305,245
CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(UNAUDITED)
2008 2007
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $4,301,954 $5,342,343
Adjustments to reconcile net
income to cash
provided by operating
activities:
Recovery of bad debt
previously reserved (107,583) --
Minority Interest 1,364,347 1,148,548
Depreciation 579,754 417,406
Amortization 53,192 23,686
Loss on disposal of
equipment 1,900 4,064
Stock-based compensation 1,263,188 --
Change in operating assets
and liabilities:
Accounts receivable (477,858) 458,758
Notes receivable (23,694) 57,721
Other receivables (201,576) (1,317,291)
Other receivables -
shareholders 1,419 (146,149)
Inventories (2,571,137) (989,274)
Prepayments and deferred
expenses (241,377) 187,928
Accounts payable (294,290) 36,733
Other payables and
accrued liabilities 683,527 298,787
Other payable - land use
right (752) --
Customer deposits 264,990 1,239,099
Taxes payable 2,134,302 547,273
Contingent liability (107,273) --
Net cash provided
by operating activities 6,623,033 7,309,632
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to plant and equipment (2,245,627) (3,830,236)
Additions to construction in progress -- 9,393
Additions to intangible assets (9,517) (46,213)
Proceeds from sale of equipment 3,546 --
Advances on building, equipment
and intangible assets purchases (32,945) (5,672)
Net cash used in investing activities (2,284,543) (3,872,728)
CASH FLOWS FINANCING ACTIVITIES:
Restricted cash -- (65,750)
Proceeds from short term loans - bank -- 1,297,100
Payments on short term loans - bank (709,200) (2,511,400)
Proceeds from employee loans -- 752,750
Payments on long term debt -- (194,565)
Dividends paid to minority shareholders (283,680) (476,597)
Net cash (used in) provided
by financing activities (992,880) (1,198,462)
EFFECTS OF EXCHANGE RATE CHANGE IN CASH 419,599 41,654
INCREASE IN CASH 3,765,209 2,280,096
CASH, beginning of period 5,010,033 4,268,220
CASH, end of period $8,775,242 $6,548,316
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Income taxes paid $850,605 $743,113
Interest paid (net of capitalized
interest) $29,901 $55,714
SOURCE China Biologic Products, Inc.
