BEIJING, April 8, 2014 /PRNewswire/ -- Deyu Agriculture
Corp. (OTCBB: DEYU) (the "Company"), a Shanxi Province, China-based vertically integrated producer,
processor, marketer and distributor of organic and other
agricultural products made from corn and grains, today announced
its financial results for the fiscal year ended December 31, 2013.
Fiscal Year 2013 Results:
- Net revenue was $246.4 million, a
decrease of $7.7 million or 3.0%,
compared to $254.0 million in
2012;
- Gross profit was $14.6 million, a
decrease of $30.1 million or 67.3%,
compared to $44.7 million in
2012;
- Gross margin was 6.0%, as compared to 17.6% in 2012;
- Net loss available to common stockholders was $26.8 million, as compared to net income of
$16.0 million in 2012;
- Loss per diluted share was $2.52
on 10.6 million shares, as compared to income per diluted share of
$1.30 on 12.6 million shares in
2012.
The Company also announced that Mr. Greg
Chen resigned from his positions as Chief Executive Officer
and Director effective as of March 31,
2014 and April 1, 2014,
respectively, and effective as of March 31,
2014, Mr. Jan Poulsen
resigned from his position as President of the Company. Effective
as of April 1, 2014, the Board
appointed Mr. Hong Wang, Chairman of
the Board of Directors to serve as Acting Chief Executive Officer.
The Company intends to replace the vacancy created by the
resignation of Mr. Jan Poulsen, in
the near future. Effective as of March 31,
2014, the Company closed its New
York office.
"2013 was a very difficult year for the Company. Since the
beginning of 2013, the corn market has been experiencing weak
demand from downstream industries, while the output of the corn
harvest continued to increase. China's on-going economic slowdown also
impacted the grain and bulk trading businesses," said Mr.
Hong Wang, the Acting Chief
Executive Officer. "We saw a substantial decrease in gross margins,
especially in corn sales, and an increase in the cost of raw
materials for grain products, operating expenses, as well as
nonrecurring losses including impairment losses of certain assets
and corn inventory damages due to weather-related conditions."
"The Company has been undertaking measures to optimize
operations, to increase efficiency and to reduce operational costs.
In December 2013, Management
conducted a cost-savings, internal control and efficiency
assessment review of all of the Company's subsidiaries and
divisions, with a particular focus on reducing administrative
costs. After the reviews, improved policies were introduced and
implemented forthwith," added Mr. Wang.
Financial Results for the Fiscal Year Ended December 31, 2013
The Company's net revenue for Fiscal Year 2013 was $246.4 million as compared to $254.0 million for 2012, representing a decrease
of $7.7 million, or 3.0%. This
decrease was the combined result of a decrease of $8.5 million in corn sales and a decrease of
$32.2 million in grain sales, off-set
by an increase of $33.0 million in
bulk trading sales. Net revenue from our Corn Division for 2013 was
$142.6 million, a decrease of
$8.5 million, or 5.6%, as compared to
$151.0 million for 2012, which such
decrease was primarily due to the weak demand with an oversupply in
the corn market. Net revenue from our Grain Division for 2013
was $41.6 million, a decrease of
$32.2 million, or 43.6%, as compared
to $73.8 million for 2012, which such
decrease was mainly attributable to the decline in commercial sales
to institutional clients and the decline in retail sales in
supermarket and convenience stores. Net revenue from our Bulk
Trading Division for 2013 was $62.2
million, an increase of $33.0
million, or 112.9% as compared to $29.2 million for 2012. This increase was mainly
attributable to our strategic shift from grain retail sales to
wholesale or bulk trading in 2013.
The gross profit for 2013 was $14.6
million, a decrease of $30.1
million, or 67.3%, as compared to $44.7 million for 2012. This decrease was a
combined result of an increase in loss on inventory valuation
reserves of $4.5 million, a decrease
in gross profits of $11.8 million in
the Corn Division and a decrease of $14.2
million in the Grain Division, offset by an increase of
$0.4 million in the Bulk Trading
Division. Our gross margin decreased from 17.6% for 2012 to 5.9%
for 2013, which was mainly the combined result of the increase of
loss in inventory valuation reserves, the simultaneous decline of
gross margin in each division, and the increased sales percentage
of our bulk trading business, which had a relatively lower gross
margin. Gross margin for our Corn Division was 8.1% for 2013, down
from 15.4% for 2012, which was mainly attributable to the weak
demand from corn downstream industries coupled with an oversupply
of corn from the two good harvests in 2012 and 2013. Gross margin
for the Grain Division was 13.2% for 2013, down from 26.7% for
2012, which was primarily due to the increasing cost of raw
materials in addition to the strategic shift from grain retail
sales to wholesales, which yielded relatively lower gross margins.
Gross margin for the Bulk Trading Division was 3.4% for 2013, down
from 6.0% for 2012, which was mainly attributable to market
fluctuations in 2013 during the current economy slowdown. Loss on
inventory valuation reserves increased by $4.5 million for 2013 compared to 2012, which was
mainly attributable to the quality deterioration of some of the
corn inventories caused by extreme weather conditions and obsolete
grain products.
Selling expenses for 2013 were $17.4
million, an increase of $1.3
million, or 8.0% from $16.2
million for 2012, which was mainly the combined result of
the increase in freight and handling expenses off-set by a decrease
in advertisement and payroll expenses incurred as a result of the
reduction of retail sales. General and administrative expenses for
2013 were $13.2 million, an increase
of $3.6 million or 37.2% compared to
$9.6 million for 2012, which was
primarily due to an increase in allowance for bad debts of account
receivables and other receivables, the increased expenses for
management team enhancement, as well as business development and
the increase in taxes related to inter-subsidiary fixed asset
transfers. Loss on impairment of asset valuation was $7.3 million for 2013, which represented the
impairment loss of the land use rights of farmland, the
construction of an uncompleted building and the idle ERP system for
retail sales. Extraordinary loss (after taxes) for 2013 represented
$1.2 million in inventory loss due to
the collapse of our warehouses under a heavy snow storm in
April 2013.
As a result of the above, we had net loss available to common
stockholders of $26.8 million for
2013 compared to a net income of $16.0
million for 2012. Loss per diluted share was $2.52 on 10.6 million shares for 2013, compared
to income per diluted share of $1.30
on 12.6 million shares for 2012.
Business Outlook
"Given that the decrease in demand of corn from downstream
industries, another good corn harvest in 2013 and anticipated
increases in corn imports with low prices, we anticipate the
oversupply in the corn market will continue to impact our business
in the coming months," said Mr. Wang. "The Company has been
undertaking measures to optimize operations, to increase efficiency
and to reduce operational costs. At the same time, the Company is
continuing its business development initiatives. We expect these
measures, together with new business development, will help us get
through this difficult period and restore the growth in the
future."
About Deyu Agriculture Corp.
Deyu Agriculture Corp. is a vertically integrated producer,
processor, marketer and distributor of organic and other
agricultural products made from corn and grains operating in
Shanxi Province in the People's Republic of China. We have a
nationwide sales network covering manufacturers, grain traders,
wholesalers, distributors, institutional clients and retail stores
in China. Deyu Agriculture Corp.'s
facilities include sophisticated production lines and modern
warehouses with a total production capacity of over 105,000 tons
for grain products, storage capacity of over 100,000 tons and
annual turnover of 700,000 tons for corn products. The Company's
website is located at www.deyuagri.com.
Safe Harbor Statements
This press release contains forward-looking statements made
under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based
upon the current plans, estimates and projections of Deyu
Agriculture Corp.'s management and are subject to risks and
uncertainties, which could cause actual results to differ from the
forward looking statements. Such statements include, among others,
those concerning market and industry segment growth and demand and
acceptance of new and existing products; any projections of sales,
earnings, revenue, margins or other financial items; any statements
of the plans, strategies and objectives of management for future
operations; any statements regarding future economic conditions or
performance; uncertainties related to conducting business in
China, as well as all assumptions,
expectations, predictions, intentions or beliefs about future
events. Therefore, you should not place undue reliance on these
forward-looking statements. The following factors, among others,
could cause actual results to differ from those set forth in the
forward-looking statements: business conditions in China, general economic conditions;
geopolitical events and regulatory changes, availability of
capital, changes in the agricultural industry, the Company's
ability to maintain its competitive position. Additional
Information regarding risks can be found in the Company's quarterly
and annual reports filed with the U.S. Securities and Exchange
Commission at www.sec.gov.
Company Contact:
Ms. Amy He, Chief Financial
Officer
Deyu Agriculture Corp.
Tel: +86-10-8273-2870 x8522
Email: amy@china-deyu.com
Financial Tables
DEYU AGRICULTURE
CORP. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
December 31,
2013
|
|
|
|
December 31,
2012
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
979,282
|
|
|
$
|
4,937,279
|
Restricted
cash
|
|
|
16,519
|
|
|
|
815,348
|
Accounts
receivable, net
|
|
|
32,326,897
|
|
|
|
33,991,288
|
Due from
related parties
|
|
|
44,441
|
|
|
|
397,214
|
Inventory
|
|
|
15,318,224
|
|
|
|
30,322,191
|
Advance to
supplier
|
|
|
4,363,298
|
|
|
|
6,145,840
|
Prepaid
expenses
|
|
|
1,161,302
|
|
|
|
1,453,184
|
Other current
assets
|
|
|
115,507
|
|
|
|
340,456
|
Total Current
Assets
|
|
|
54,325,470
|
|
|
|
78,402,800
|
|
|
|
|
|
|
|
|
Property, plant, and
equipment, net
|
|
|
19,251,051
|
|
|
|
19,442,599
|
Construction-in-progress
|
|
|
-
|
|
|
|
2,614,491
|
Long-term
Investment
|
|
|
60,129
|
|
|
|
58,426
|
Intangible assets,
net
|
|
|
7,827,809
|
|
|
|
13,389,075
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
81,464,459
|
|
|
$
|
113,907,391
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Short-term loan
|
|
$
|
7,464,856
|
|
|
$
|
8,323,623
|
Accounts
payable
|
|
|
8,538,544
|
|
|
|
5,179,729
|
Advance from
customers
|
|
|
1,990,479
|
|
|
|
2,249,282
|
Accrued
expenses
|
|
|
1,002,885
|
|
|
|
1,506,776
|
Tax
payable
|
|
|
73,790
|
|
|
|
305,712
|
Preferred
stock dividends payable
|
|
|
247,614
|
|
|
|
229,171
|
Due to related
parties
|
|
|
14,306
|
|
|
|
8,668,552
|
Other current
liabilities
|
|
|
282,179
|
|
|
|
986,153
|
Total Current
Liabilities
|
|
|
19,614,653
|
|
|
|
27,448,998
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Series A convertible
preferred stock, $.001 par value, 10,000,000 shares
authorized, 2,182,628 and 2,039,970 shares outstanding, respectively
|
|
|
2,183
|
|
|
|
2,040
|
Common stock, $.001
par value; 75,000,000 shares authorized, 10,618,266 and
10,658,266 shares outstanding,
respectively
|
|
|
10,618
|
|
|
|
10,658
|
Additional paid-in capital
|
|
|
21,225,146
|
|
|
|
20,781,439
|
Other comprehensive income
|
|
|
7,897,730
|
|
|
|
5,737,793
|
Retained
earnings
|
|
|
32,681,588
|
|
|
|
59,500,134
|
Total Stockholders'
Equity
|
|
|
61,817,265
|
|
|
|
86,032,064
|
Noncontrolling
Interests
|
|
|
32,541
|
|
|
|
426,329
|
Total
Equity
|
|
|
61,849,806
|
|
|
|
86,458,393
|
|
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
|
$
|
81,464,459
|
|
|
$
|
113,907,391
|
DEYU AGRICULTURE
CORP. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
|
For The Years
Ended
|
|
|
December
31,
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
Net
revenue
|
|
$
|
246,350,104
|
|
|
$
|
254,046,098
|
Cost of goods
sold
|
|
|
(227,250,013)
|
|
|
|
(209,325,445)
|
Loss on inventory
valuation reserve
|
|
|
(4,478,174)
|
|
|
|
-
|
Gross
Profit
|
|
|
14,621,917
|
|
|
|
44,720,653
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(17,447,531)
|
|
|
|
(16,153,096)
|
General and
administrative expenses
|
|
|
(13,195,537)
|
|
|
|
(9,619,036)
|
Loss on impairment of
asset valuation
|
|
|
(7,346,776)
|
|
|
|
-
|
Total
Operating Expenses
|
|
|
(37,989,844)
|
|
|
|
(25,772,132)
|
Operating income
(loss)
|
|
|
(23,367,927)
|
|
|
|
18,948,521
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
35,193
|
|
|
|
37,846
|
Interest
expense
|
|
|
(790,438)
|
|
|
|
(1,477,304)
|
Non-operating income
(loss)
|
|
|
(403,885)
|
|
|
|
665,270
|
Total
Other Expenses
|
|
|
(1,159,130)
|
|
|
|
(774,188)
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
|
(24,527,057)
|
|
|
|
18,174,333
|
Income
taxes
|
|
|
(604,450)
|
|
|
|
(1,765,514)
|
Income before
extraordinary items
|
|
|
(25,131,507)
|
|
|
|
16,408,819
|
Extraordinary loss
(after taxes)
|
|
|
(1,212,430)
|
|
|
|
-
|
Net income
|
|
|
(26,343,937)
|
|
|
|
16,408,819
|
Net loss attributable
to noncontrolling interests
|
|
|
4,160
|
|
|
|
46,599
|
Net income (loss)
attributable to Deyu Agriculture Corp.
|
|
|
(26,339,777)
|
|
|
|
16,455,418
|
Preferred stock
dividends
|
|
|
(478,769)
|
|
|
|
(446,748)
|
Net income (loss)
available to common stockholders
|
|
|
(26,818,546)
|
|
|
|
16,008,670
|
Foreign currency
translation gain
|
|
|
2,150,517
|
|
|
|
910,907
|
Comprehensive income
(loss)
|
|
|
(24,668,029)
|
|
|
|
16,919,577
|
Other comprehensive
income (loss) attributable to noncontrolling interests
|
|
|
9,420
|
|
|
|
(4,467)
|
Comprehensive income (loss) attributable to Deyu Agriculture Corp.
|
|
$
|
(24,658,609)
|
|
|
$
|
16,915,110
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stockholders per share - basic
|
|
$
|
(2.52)
|
|
|
$
|
1.51
|
Net income (loss)
attributable to common stockholders per share - diluted
|
|
$
|
(2.52)
|
|
|
$
|
1.30
|
Weighted average
number of common shares outstanding - basic
|
|
|
10,625,170
|
|
|
|
10,598,603
|
Weighted average
number of common shares outstanding - diluted
|
|
|
10,625,170
|
|
|
|
12,614,108
|
DEYU AGRICULTURE
CORP. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
For The Year
Ended
|
|
|
December
31,
|
|
|
|
2013
|
|
|
|
2012
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income (loss)
available to common stockholders
|
|
$
|
(26,818,546)
|
|
|
$
|
16,008,670
|
Adjustments to
reconcile net income (loss) to net cash
provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
2,366,220
|
|
|
|
2,297,082
|
Loss on
impairment of asset valuation
|
|
|
7,346,776
|
|
|
|
-
|
Loss on
disposal of fixed assets
|
|
|
-
|
|
|
|
577
|
Extraordinary loss
|
|
|
1,212,430
|
|
|
|
-
|
Provision for Inventory valuation
|
|
|
4,478,174
|
|
|
|
-
|
Allowance for doubtful accounts
|
|
|
1,925,357
|
|
|
|
-
|
Share-based compensation
|
|
|
44,504
|
|
|
|
120,853
|
Preferred stock dividends accrued
|
|
|
478,769
|
|
|
|
446,748
|
Common
stocks issued for services
|
|
|
(57,200)
|
|
|
|
114,400
|
Gain on
bargain purchase
|
|
|
-
|
|
|
|
(499,079)
|
Deferred
income tax expense
|
|
|
-
|
|
|
|
878,746
|
Noncontrolling interests
|
|
|
(4,160)
|
|
|
|
(46,599)
|
Decrease
(increase) in current assets:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
1,649,532
|
|
|
|
2,649,036
|
Related-parties trade
receivable
|
|
|
358,771
|
|
|
|
226,755
|
Inventories
|
|
|
11,182,382
|
|
|
|
(8,383,187)
|
Advance to
suppliers
|
|
|
1,931,601
|
|
|
|
1,987,857
|
Prepaid expense and
other current assets
|
|
|
(244,860)
|
|
|
|
(40,331)
|
Increase
(decrease) in liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
1,946,353
|
|
|
|
2,967,217
|
Advance from
customers
|
|
|
(319,381)
|
|
|
|
(6,471,286)
|
Accrued expense and
other liabilities
|
|
|
(1,631,079)
|
|
|
|
297,336
|
Net cash provided by
operating activities
|
|
|
5,845,643
|
|
|
|
12,554,795
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Purchase of machinery
and equipment
|
|
|
(518,165)
|
|
|
|
(128,383)
|
Construction and
remodeling of factory and warehouses
|
|
|
-
|
|
|
|
(900,487)
|
Consideration paid
for acquisition
|
|
|
-
|
|
|
|
(5,501,046)
|
Advances to related
parties
|
|
|
-
|
|
|
|
(33,294)
|
Cash held by the
Taizihu Group at acquisition date
|
|
|
-
|
|
|
|
20,272
|
Net cash
used in investing activities
|
|
|
(518,165)
|
|
|
|
(6,542,938)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net proceeds
(repayment) of short-term loans from
related
parties
|
|
|
(9,053,440)
|
|
|
|
3,312,931
|
Net repayment from
short-term loans from bank and others
|
|
|
(1,024,757)
|
|
|
|
(12,658,509)
|
Cash released from
restriction for credit line of bank loans
|
|
|
809,997
|
|
|
|
1,281,894
|
Net repayments of
short-term bank acceptance notes
|
|
|
-
|
|
|
|
(1,585,087)
|
Payment of preferred
dividends
|
|
|
-
|
|
|
|
(267,721)
|
Proceeds from capital
contributions
|
|
|
-
|
|
|
|
31,702
|
Net cash
used in financing activities
|
|
|
(9,268,200)
|
|
|
|
(9,884,790)
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH
EQUIVALENTS
|
|
|
87,275
|
|
|
|
68,509
|
|
|
|
|
|
|
|
|
NET DECREASE IN
CASH & CASH EQUIVALENTS
|
|
|
(3,957,997)
|
|
|
|
(3,804,424)
|
CASH &CASH
EQUIVALENTS, BEGINNING BALANCE
|
|
|
4,937,279
|
|
|
|
8,741,703
|
CASH & CASH
EQUIVALENTS, ENDING BALANCE
|
|
$
|
979,282
|
|
|
$
|
4,937,279
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES:
|
|
|
|
|
|
|
|
Income tax paid
|
|
$
|
841,593
|
|
|
$
|
678,420
|
Interest paid
|
|
$
|
743,653
|
|
|
$
|
1,815,269
|
NONCASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Construction completed and transferred to property, plant,
and
equipment
|
|
$
|
767,494
|
|
|
$
|
-
|
Construction transferred to land use rights
|
|
$
|
1,045,640
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Note: Please refer to
the Company's annual report on Form 10-K for fiscal year 2013 for
additional notes, which are an integral part of these consolidated
financial statements.
|
SOURCE Deyu Agriculture Corp.