-- Second Quarter Total Revenues Increased 37.3 % to $ 43.1 Million
-- Q2 Net Income Increases 102% to $5.6 Million, with EPS of $0.27
DALIAN, China, Sept. 3 /Xinhua-PRNewswire-FirstCall/ -- Energroup
Holdings Corporation (OTC:ENHD) (BULLETIN BOARD: ENHD) , through
its direct and indirect subsidiaries known as "Chuming," a premier
processor and supplier of fresh and prepared pork products in
Dalian, China, reported the Company's financial results for the
second quarter ended June 30, 2008. -- Supermarket and franchise
stores drive sales 57.8% up for the first six months versus prior
year -- Net income increased 70% to $9.9 million with EPS of $0.47
for the 6 months ended June 30, 2008 "Before discussing our
financial results, we would like to address the reason for our
requested extension for this quarter's report and subsequent late
filing thereafter. As we continue to work through our S1
registration, it was necessary for us to adjust our internal
reporting to more consistently categorize our sales by product
category and sales channel. In doing so, we have spent considerable
time ensuring our reporting remains consistent with both GAAP and
SEC requests. We are confident this delay will not occur again in
the future," stated Huashan Shi, Chairman and CEO of Chuming. 2008
Second Quarter Financial Results Total revenues increased $11.7
million, or approximately 37.3% to $43.1 million for the three
months ended June 30, 2008. Revenue increases in all product
categories were driven by the organic growth in the company's
product lines including; fresh pork, frozen pork and processed pork
and seafood. Revenues were also buoyed by consumer consumption,
particularly for meat products, as China's middle class continues
to drive demand of high-quality, branded food products. Revenues in
the Company's supermarket and outlet stores showed the sharpest
increase in sales and accounted for 79.4% of the $11.7 million
increase in revenues. The top selling category of products in these
channels is fresh pork which accounted for 69% of the sales
increase and increased 44.4% year over year for the quarter ended
June 30th 2008. Chuming's focus on the supermarket and branded
store channel produced noteworthy gains in the number of
supermarket and branded store locations the Company services. For
the six months ended June 30th, the number of supermarkets selling
Chuming's products increased 56% while branded franchise stores
increased 36%, 140 and 682 stores respectively. "We are extremely
pleased with our second quarter and year to date results, where we
experienced solid growth in both our core product segments and
sales channels," Mr. Shi opened. "In particular, our profitability
is not solely based on pork price increases, but also on the value
attached to our brand name of high quality products. We anticipate
continued robust demand, and as pork prices stabilize, we plan to
eventually pass on all incremental increase in costs to the
marketplace," Shi concluded. Cost of goods sold was $36.6 million
yielding gross profits of $6.5 million in the second quarter 2008.
These profits represented an increase of $1.6 million or 33.3% from
$4.9 million for the same period in 2007. The increase in gross
profit was mostly due to a growth in sales volume. Gross profit
margin was 15.03% compared with 15.49% for the same period in 2007,
with the decrease resulting from an increase in the cost of raw
materials, offset, in part, by an increase in the retail pricing
for pork products. While costs of pork year over year increased
66.8% or $0.90 per kilogram during the second quarter, Chuming
increased its sales prices to its customers by 18% thus buffering
the consumer from a portion of the increase while still maintaining
strong demand for its products. Total operating expenses for the
second quarter of 2008 decreased 30% to $1.4 million from $2.0
million for the same period in 2007. Operating expenses as a
percentage of revenues were 3.28% compared with 6.22% for the same
period 2007. The decrease in expenses was mainly due to a temporary
reduction of advertising expense for the quarter. Subsequent
advertising programs consistent with those in previous quarters are
still planned for the remaining quarters in 2008. Balancing the
decrease in advertising costs, general and administrative
("G&A") expenses increased $0.41 million for the quarter to
$1.1million, which was mainly related to increased salaries to
retain qualified talent for the Company. Operating income and
operating margins for the quarter were $5.1 million and 11.8%,
versus $2.9 million and 9.3% in same period 2007. The 250-basis
point improvement on operating margin resulted mainly from the
increase in sales and prudent management of operating expenses. Net
income for the three months ended June 30, 2008 was $5.6 million,
representing an increase of 101.7% from $2.8 million reported in
the same period prior year and a 32.4% improvement quarter to
quarter in 2008. Corresponding net profit margins were 13.0% for
the second quarter representing a 415-basis point increase versus
the same quarter 2007. The company incurred $0.07 million in taxes
during the second quarter. Located in a favorable economic zone in
the Liaoning province, Chumming pays 0% corporate taxes on its
profits from fresh and frozen pork and 25% on profits from
processed foods. Based on 21.2 million shares outstanding, earnings
were $0.27 per diluted share for the quarter ended June 30th, which
represents a 35% increase in earnings per share compared to the
first quarter of 2008. Six Month Results Revenue increased
approximately $ 32.0 million or 58.7% to $86.6 million for the six
months ended June 30, 2008 as compared to $54.6 million for the
same period last year. Operating expenses for the six months ended
June 30, 2008 were $3.7 million compared to $2.5 million for the
same period in 2007 and represented 4.3% and 4.6% of revenues
respectively. Operating income for the six months ended June 30,
2008 was $9.8 million, an increase of 50.0% compared to $6.5
million for the six months ended June 30, 2007. Operating margins
were for the six month period was 11.3%. Net income is $9.9 million
for the six months ended June 30, 2008, an increase of
approximately $4.1 million or 70.1% compared to same period last
year. Earnings per diluted share totaled $0.47 based on 21.2
million shares for the six month period. Financial Condition Cash
and cash equivalents by the end of second quarter were $11.3
million as of June 30th, 2008. The Company had $6.4 million in long
term debt and $23.8 million in total liabilities. Net cash from
operations was $16.3 million. Accounts receivables were $19.1
million for the period ended June 30th, 2008. Shareholders' equity
totaled $60.3 million, which represents an increase of 23.1% from
the period ended December 31st, 2007. "Though several companies
have been affected by the recent changes in meat standards in China
and as we already exceeded these standards, we believe the new
regulations present an opportunity for us to benefit from industry
consolidation and capture additional market share," said Mr. Shi.
"We remain focused on building additional brand awareness across
the different market segments we serve, while further increasing
our distribution footprint and sales to our installed customer
base. We are confident in our continued earnings for the balance of
the year and meeting investors' goals this year and after," Shi
concluded. About Chuming We are a Nevada corporation quoted on the
OTC Bulletin Board, with our operations based in the Liaoning
Province in Northeastern China. Chuming is a leading regional
producer and distributor of fresh and prepared meat products in
Northeastern China which has a population of approximately 108
million. We operate through our subsidiaries, including Dalian
Chuming Slaughter and Packaging Pork Company, Ltd., Dalian Chuming
Processed Foods Company, Ltd., and Dalian Chuming Sales Company,
Ltd., whose primary focus is on the processing and preparation of
pork, the most consumed meat in China. We are a contract supplier
of premium pork products to more than 3,600 retail locations in
China, including Wal-Mart, Metro, Carrefour, New-Mart, Hymall and
its own network of 500+ Chuming-branded franchise stores. Our
processing and distribution facilities maintain ISO 9001 Quality
Management System standards and carry a Hazard Analysis and
Critical Control Point (HACCP) certification. Chuming is the first
processing company in China's meat industry to receive "Green Food"
Certification from the Ministry of Agriculture, meeting strict
environmental, food safety and quality standards from slaughter to
shelf. FORWARD LOOKING STATEMENTS This press release contains
forward-looking information and statements. Forward-looking
statements are statements that are not historical facts, including
targeted net income. These statements can be identified by the use
of forward-looking terminology such as "believe," "expect," "may,"
"will," "should," "project," "plan," "seek," "intend," or
"anticipate" or the negative thereof or comparable terminology, and
statements which may include discussions of strategy, and
statements about industry trends future performance, operations and
products of the entities referred to above. Our actual results may
differ materially depending on a number of risk factors including,
but not limited to, our ability to timely and accurately complete
orders for our products, our dependence on a limited number of
major customers, political and economic conditions within the PRC,
our ability to expand and grow our distribution channels, general
economic conditions which affect consumer demand for our products,
the effect of terrorist acts, or the threat thereof, on consumer
confidence and spending, acceptance in the marketplace of our new
products and changes in consumer preferences, foreign currency
exchange rate fluctuations, our ability to identify and
successfully execute cost control initiatives, and other risks
outlined above and in the "risk factors" described in our other
public filings. All forward-looking statements are expressly
qualified in their entirety by this Cautionary Statement and the
risks factors detailed in our reports filed with the Securities and
Exchange Commission. We undertake no duty to revise or update any
forward-looking statements to reflect events or circumstances after
the date of this release. Energroup Holdings Corporation
Consolidated Balance Sheets As of June 30, 2008 and December 31,
2007 (Stated in US Dollars) June 30, 2008 December 31, 2007 ASSETS
Cash $ 11,270,730 $ 14,031,851 Restricted Cash 2,230,667 4,250,000
Accounts Receivable 19,120,753 622,433 Other Receivable 3,953,573
1,068,939 Related Party Receivable -- 3,964,357 Inventory 5,110,172
2,916,016 Purchase Deposit 795,418 267,807 Prepaid Expenses 141,767
46,401 Prepaid Taxes 199,893 -- Deferred Tax Asset 653,354 613,844
Total current assets 43,476,326 27,781,648 Property, Plant &
Equipment, net 25,934,159 24,836,496 Land Use Rights, net
13,539,743 12,855,980 Construction in Progress 1,016,693 927,866
Other Assets 92,928 32,619 TOTAL ASSETS $ 84,059,848 $ 66,434,609
LIABILITIES Bank Loans & Notes 6,402,980 7,383,095 Accounts
Payable 5,142,723 3,779,274 Related Party Payable 1,835,881 --
Accrued Liabilities 3,500,487 3,347,013 Taxes Payable 2,018,967
1,491,876 Other Payable 3,208,336 1,471,381 Customer Deposits
1,694,300 24,161 Total current liabilities 23,803,675 17,496,800
TOTAL LIABILITIES $ 23,803,675 $ 17,496,800 STOCKHOLDERS' EQUITY
Preferred Stock - $0.001 par value 10,000,000 shares authorized; 0
shares issued & outstanding at June 30, 2008 and December 31,
2007, respectively -- -- Common Stock $0.001 par value 21,739,130
shares authorized; 21,136,392 shares issued & outstanding at
June 30, 2008 and December 31, 2007, respectively $ 21,136 $ 21,136
Additional Paid in Capital 15,440,043 15,440,043 Statutory Reserve
1,729,863 751,444 Retained Earnings 38,642,002 29,764,236
Accumulated Other Comprehensive Income 4,423,129 2,960,951
60,256,173 48,937,810 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
84,059,848 $ 66,434,610 Energroup Holdings Corporation Consolidated
Statements of Income for the three and six months ended June 30,
2008 and 2007 (Stated in US Dollars) 3 months 3 months 6 months 6
months ended ended ended ended June 30, June 30, June 30, June 30,
2008 2007 2008 2007 Sales $43,076,524 $31,370,321 $86,583,622
$54,558,315 Cost of Sales 36,600,428 26,510,666 73,074,852
45,536,298 Gross Profit 6,476,097 4,859,655 13,508,771 9,022,017
Selling Expenses 759,778 1,570,001 2,585,055 1,799,420 General
& Administrative Expenses 653,187 382,377 1,146,161 687,513
Operating Income 5,063,132 2,907,277 9,777,555 6,535,084 Other
Income 358,850 4,276 383,119 7,004 Interest Income 631,707 --
635,692 -- Other Expenses (72,085) (9,657) (100,735) (37,830)
Interest Expense (300,613) (117,663) (607,078) (710,641) Earnings
before Tax 5,680,991 2,784,233 10,088,553 5,793,617 Income Tax
66,023 -- 232,368 -- Net Income $5,614,968 $2,784,233 $9,856,185
$5,793,617 Earnings Per Share Basic $0.33 $0.21 $0.57 $0.43 Diluted
$0.27 $0.16 $0.47 $0.34 Weighted Average Shares Outstanding Basic
17,272,756 13,409,120 17,272,756 13,409,120 Diluted 21,182,756
17,272,756 21,182,756 17,272,756 For more information, please
contact: Investor Relations Contact(s) John Mattio & Feng Peng
HC International, Inc. 56 June Road North Salem, NY 10560 Tel:
+1-914-669-0222 Email: / Web: http://www.hcinternational.net/
DATASOURCE: Energroup Holdings Corporation CONTACT: Investor
Relations Contact(s) - John Mattio & Feng Peng, HC
International, Inc., 56 June Road, North Salem, NY 10560; or
+1-914-669-0222; or / Web site: http://www.hcinternational.net/
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