- 2007 revenues increase 77% to $124.7 million - 2007 Operating
profit increases 45% to $14.1 million - 2007 after-tax net income
increases 44% to $11.7 million - 2007 Diluted EPS of $0.67 DALIAN,
China, April 1, 2008 /Xinhua-PRNewswire-FirstCall/ -- Energroup
Holdings Corporation (OTC:ENHD) (BULLETIN BOARD: ENHD) , through
its subsidiaries known as "Chuming," processor and supplier of
fresh and prepared meat products based in Dalian, China, announced
the Company's full year financial results for the year ended
December 31, 2007. All financial numbers reported in this press
release have been rounded to one decimal place for convenience. "We
achieved strong year-over-year growth in 2007," stated Mr. Huashan
Shi, Chairman and CEO of Chuming. "We showed further improvements
in our higher- margin processed pork segment, where we produce
three product lines, including over 100 types of hams and sausages,
in addition to over 200 promotional and seasonal products. We
believe our processed pork segment will continue to be an important
contributor to growth during 2008," Mr. Shi further commented. Full
Year 2007 Results Revenues for the year ended December 31, 2007
totaled $124.7 million, a 77% increase over the $70.4 million
reported in 2006, which was driven by an increase in the average
per-kilogram price customers paid coupled by an increase in overall
sales volume. All of Chuming's revenues are realized from sales
within China, and approximately 78% of its revenues were from fresh
pork, 7% from frozen pork, and 15% from processed meats
(approximately 2% of which is from seafood products). Each of
Chuming's product categories reported significant year-over-year
growth. More specifically, fresh pork sales increased 112%, frozen
pork sales increased 22%, and processed meat and meat by-products
increased 6.3%. Within the processed meats category, sales of
Chuming's new processed seafood products that were launched toward
the end of 2005, increased 130% as compared to the prior year.
Additionally, the company began selling its products to over 170
new franchise operators. Gross profit for 2007 was $20.3 million,
representing a 61% increase from the $12.6 million reported in
2006. Overall, gross margins were 16.3% in 2007, compared to 17.9%
in 2006. "China now produces 50% of the pork consumed globally, an
approximately $32 billion market. Most of our industry's production
is focused on meeting the demand from the local market in China,"
Shi began his comments, "As consumers become more sophisticated,
traditional sales of fresh pork in open air "wet" markets are being
replaced by the retail sector, termed "dry" markets. We believe
over 80% of overall pork sales in China are still made in open air
markets and represent a significant market opportunity as consumers
become accustomed to and expect to purchase pork in dry markets
such as Western-style supermarkets. Chuming's sales strategy of
catering to the retail market through both our franchised stores
and other retail channels, including global hypermarkets, is a
strategy that we believe will successfully drive revenue growth for
processed meats, particularly pork, while helping us to gain
further market share." Total operating expenses for 2007 were $6.2
million versus $2.9 million for 2006 and the increase was directly
attributed to the addition of new sales and marketing staff, plus
advertising and promotional expenses, including television, radio
and magazine placements, as part of an overall strategy to support
Chuming's brand positioning in the over 3,600 retail locations that
its products are sold through. In 2007, Chuming significantly
increased its advertising budget from $150,000 in 2006 to $3.8
million in 2007. Total operating expenses for 2007 were 5.1% of
sales versus 4.0% for 2006. "Our brand notoriety, which is
supported by the Green Food Certification, has enabled us to
mitigate declines in gross margins by passing along price increases
more easily than many competitors, which have not been as
fortunate. We anticipate margins will at minimum stabilize and
possibly increase during 2008 as hog prices stabilize," Mr. Shi
concluded. Operating income increased 70% to $14.1 million in 2007
versus $9.7 million for 2006, while operating margins were 11.3%
compared to 13.8%. For 2007, the company incurred approximately $1
million in income taxes which yielded an effective tax rate of
8.5%. In 2008, the company expects to pay no tax for revenues
derived from fresh and frozen pork and 25% on processed pork and
seafood. After tax net income for 2007 increased 44% year-over-year
to $11.7 million from $8.1 million and earnings per diluted share
were $0.67 in 2007 as compared with $0.47 per share in the prior
year, based upon 17.3 million shares outstanding. The discrepancy
between reported net income and preliminary guidance of $12.1
million came from the GAAP ratio utilized in converting RMB to
dollars, which was determined using a blended average taken during
the entire 2007 year. Specifically, the exchange rate on December
31, 2007 was 7.31RMB = $1 US, while the average annual exchange
rate was 7.61RMB = $1 US. As such, the foreign currency translation
adjustment was approximately $2.1 million and the comprehensive
income for 2007 was $13.7 million. "We remain confident in our
growth strategy, which includes expansion through adding additional
franchise stores and increasing sales through our large retail
distribution footprint. We plan to accommodate this growth by more
than doubling the Company's annual processing capacity during 2008
from 13,000 metric tons to 30,000 metric tons," Shi opened, "While
we believe that market prices of pork should stabilize, Chuming is
unique in that it enjoys a favorable advantage by maintaining a
production facility close to its main supply of hogs, while our
primary market, the Liaoning Province and Northeastern China, which
is home to approximately 108 million people, is largely untapped by
a sophisticated processor like Chuming." Balance Sheet and
Financial Position As of December 31st, 2007 the Company reported
cash and cash equivalents of $14 million and restricted cash of
$4.3 million, versus $3.1 million at December 31, 2006. Cash
balances reflect the proceeds from the Company's initial $17
million capital raise which was completed in December, 2007. Cash
flow from operations was $23.0 million. Accounts receivables on
December 31st, 2007 were $0.6 million compared to $1.8 million as
the Company instituted a new policy which required agents to pay
promptly for products ordered. The company's current ration was 1.7
to 1 and the Company had $7.4 million of bank loans and notes
payable. Shareholder's equity on December 31, 2007 was $51.3
million. 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. Cautionary Statement Regarding Forward Looking Information
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 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 our 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. FINANCIAL TABLES The following financial
information for the twelve-month periods ending December 31, 2007,
2006 and 2005 were derived from audited financial statements of
Energroup Holdings Corporation. Historical results are not
necessarily indicative of the results to be expected for any future
period. The following information should be reviewed in conjunction
with the audited financial statements and accompanying footnotes as
presented in the Company's Annual Report of Form 10-K for 2007. (US
dollars in thousands) Twelve Months Ended December 31, 2007 2006
2005 (audited) (audited) (audited) Consolidated Statements of
Operations Data: Sales 124,696 70,396 54,119 Cost of Sales 104,379
57,794 45,284 Gross Profit 20,317 12,601 8,835 Operating Expenses
6,246 2,891 1,647 Income from Operations 14,071 9,709 7,188 Other
Income (Expense), net (1,476) (1,583) (1,008) Income Before Taxes
12,620 8,126 6,180 Income Taxes 968 1.6 191 Net Income 11,652 8,128
5,988 Foreign Currency Translation 2,064 285 0.7 Comprehensive
Income 13,716 8,739 5,989 Basic Net Income Per Share (in US$) 0.67
0.47 0.35 Diluted Net Income Per Share (in US$) 0.67 0.47 0.35
Basic Weighted Average Number of Shares Outstanding 17,272,756
17,272,756 17,272,756 Diluted Weighted Average Number of Shares
Outstanding 17,272,756 17,272,756 17,272,756 Energroup Holdings
Corporation Consolidated Balance Sheets At December 31, 2007, 2006,
and 2005 (Stated in US Dollars) 2007 2006 2005 ASSETS Current
Assets Cash $ 14,031,851 $ 3,075,787 $ 10,179,414 Restricted Cash
4,250,000 -- -- Accounts Receivable 622,433 1,798,397 3,247,304
Other Receivable 1,068,939 679,019 1,006,541 Related Party
Receivable 3,964,357 13,148,788 - Inventory 2,916,016 2,385,447
2,850,213 Advance to Suppliers 267,807 1,110,449 704,706 Prepaid
Expenses 46,401 90,913 48,191 Prepaid Taxes 185,319 -- -- Deferred
Tax Asset 613,844 574,316 158,992 Total Current Assets 27,966,967
22,863,116 18,195,361 Non-Current Assets Property, Plant &
Equipment, net 24,836,496 20,875,462 21,093,489 Land Use Rights,
net 12,855,980 8,911,119 8,525,125 Construction in Progress 927,866
4,165,407 3,149,690 Other Assets 32,619 30,519 29,553 Total Assets
$ 66,619,928 $ 56,845,623 $ 50,993,218 LIABILITIES &
STOCKHOLDERS' EQUITY Current Liabilities Bank Loans $ 7,383,095 $
6,971,538 $ 3,777,838 Accounts Payable 3,779,274 4,207,992
7,645,595 Taxes Payable 1,677,194 2,259,465 831,699 Other Payable
1,471,381 1,362,607 842,806 Accrued Liabilities 3,347,013 912,707
988,851 Customer Deposits 24,161 1,049,212 437,472 Related Party
Payable -- -- 4,454,927 Total Current Liabilities 17,682,118
16,763,521 18,979,188 Long Term Liabilities Bank Loans --
17,908,539 18,579,533 Total Liabilities $ 17,682,118 $ 34,672,060
$37,558,721 Stockholders' Equity Preferred Stock - $0.001 Par Value
10,000,000 Shares Authorized; 0 Shares Issued & Outstanding at
December 31, 2007, 2006, and 2005, respectively. $ -- $ -- $ --
Common Stock - $0.001 Par Value 21,739,130 and 17,273,756 Shares
Authorized; 21,136,392 Shares Issued & Outstanding at December
31, 2007, 2006, and 2005, respectively. 21,137 17,273 17,273
Additional Paid in Capital 15,440,043 2,396,079 2,396,079 Statutory
Reserve 751,444 751,444 72,508 Retained Earnings 29,764,236
18,112,089 10,662,654 Accumulated Other Comprehensive Income
2,960,951 896,679 285,983 Total Stockholders' Equity 48,937,811
22,173,564 13,434,497 Total Liabilities & Stockholders' Equity
$ 66,619,928 $ 56,845,623 $50,993,218 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 (U.S.) Email: Email: Web site:
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 (U.S.), or , or , or
http://www.hcinternational.net/
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