Fenyang City, China, Sept. 10, 2019 (GLOBE NEWSWIRE) -- Oranco, Inc. ("Oranco" or the "Company") (OTC: ORNC), a company engaged in marketing and wholesale of self-branded liquors and wines in China, announced today its financial results for the fiscal year ended June 30, 2019.
Mr. Peng Yang, President of Oranco, Inc., commented, “We maintained our business growth for the fiscal year ended June 30, 2019 under an uncertain global business environment with significant RMB devaluation. We once again delivered on all of our financial expectations while generating RMB104.27 million in revenue with a 70.2% gross margin, demonstrating our ongoing focus on optimizing our business strategies. We believe the overall business environment has been optimistic due to the continuous economic growth evidenced by the significant growth of Chinese nominal gross domestic product. Moving forward, Oranco will be able to take advantage of the Chinese liquor market based on our business success. We look forward to supplying the growing alcoholic beverage demand in China.”
Fiscal Year 2019 Financial Highlights
| For the Year Ended June 30, | ||||||||||||
| (RMB & USD millions, except per share data) | 2019 | 2018 | % Change | |||||||||
| RMB | USD | RMB | RMB | |||||||||
| Revenues | 104.27 | 15.19 | 101.76 | 2.5 | % | |||||||
| Fenjiu liquor products | 96.61 | 14.07 | 86.36 | 11.9 | % | |||||||
| Imported wine products | 7.66 | 1.12 | 15.40 | -50.3 | % | |||||||
| Gross profit | 73.20 | 10.66 | 73.96 | -1.0 | % | |||||||
| Gross margin | 70.2 | % | 70.2 | % | 72.7 | % | -2.5 pp* | |||||
| Income from operations | 59.25 | 8.64 | 61.37 | -3.5 | % | |||||||
| Net income | 39.98 | 5.82 | 44.67 | -10.5 | % | |||||||
*Notes: pp represents percentage points
- Revenue increased by 2.5% to RMB 104.27 million (USD 15.19 million), from RMB 101.76 million for the fiscal year ended June 30, 2018.
- Gross profit decreased by 1.0% to RMB 73.20 million (USD 10.66 million), from RMB 73.96 million for the fiscal year ended June 30, 2018.
- Gross margin decreased by 2.5 percentage points to 70.2% from 72.7% for the fiscal year ended June 30, 2018.
- Net income was RMB 39.98 million (USD 5.82 million), or RMB 0.95 (USD 0.14) basic and diluted earnings per share for the fiscal year ended June 30, 2019, compared to RMB 44.67 million, or RMB 1.06 basic and diluted earnings per share for the fiscal year ended June 30, 2018.
Fiscal Year 2019 Financial Results
Revenue
Revenue for the fiscal year ended June 30, 2019 increased by RMB 2.51 million, or 2.5%, to RMB 104.27 million (USD 15.19 million) from RMB 101.76 million for the same period of last year. The increase in revenue was due to the increase in sales of Fenjiu liquor, partially offset by the decrease in sales of imported wine products.
| For the Year Ended June 30, | ||||||||||||||
| 2019 | 2018 | |||||||||||||
| (RMB millions) | Revenue | Cost of Sales | Gross Margin | Revenue | Cost of Sales | Gross Margin | ||||||||
| Fenjiu liquor products | 96.61 | 28.89 | 70.1 | % | 86.36 | 23.25 | 73.1 | % | ||||||
| Imported wine products | 7.66 | 2.18 | 71.5 | % | 15.40 | 4.55 | 70.5 | % | ||||||
| Total | 104.27 | 31.07 | 70.2 | % | 101.76 | 27.80 | 72.7 | % | ||||||
Revenue from the Fenjiu liquor business increased by RMB 10.25 million, or 11.9%, to RMB 96.61 million (USD 14.07 million) for the fiscal year ended June 30, 2019 from RMB 86.36 million for the same period of last year. The increase was mainly due to the increased sales volume of our Fenjiu liquor.
Revenue from the imported wine business decreased by RMB 7.74 million, or 50.3%, to RMB 7.66 million (USD 1.12 million) for the fiscal year ended June 30, 2019 from RMB 15.40 million for the same period of last year. The decrease reflects the Company’s decision to adopt a strategy to focus on selling products with relatively higher profit margins and to reduce selling products with relatively lower profit margins. The proportion to the sales on these products was different for the years ended June 30, 2019 and 2018.
Gross profit and gross margin
The total cost of sales increased by RMB 3.27 million, or 11.8%, to RMB 31.07 million (USD 4.53 million) for the fiscal year ended June 30, 2019 from RMB 27.80 million for the same period of last year. Gross profit decreased by RMB 0.76 million, or 1.0%, to RMB 73.20 million (USD 10.66 million) for the fiscal year ended June 30, 2019 from RMB 73.96 million for the same period of last year. Overall gross margin decreased by 2.5 percentage points to 70.2% for the fiscal year ended June 30, 2019, compared to 72.7% for the same period of last year.
For the fiscal year ended June 30, 2019, gross margins for our Fenjiu liquor business and imported wine business were 70.1% and 71.5%, respectively. For the fiscal year ended June 30, 2019, gross margins for the Fenjiu liquor business and imported wine business were 73.1% and 70.5%, respectively.
Income from Operations
Selling and distribution expenses decreased by RMB 1.55 million, or 28.3%, to RMB 3.93 million (USD 0.57 million) for the fiscal year ended June 30, 2019 from RMB 5.48 million for the same period of last year. The decrease in selling and distribution expenses was primarily due to decreased packaging and advertising expenses during the year ended June 30, 2019, as compared to the same period of 2018.
Administrative expenses increased by RMB 2.91 million, or 40.9%, to RMB 10.02 million (USD 1.46 million) for the fiscal year ended June 30, 2019 from RMB 7.11 million for the same period of last year. The increase in administrative expenses was primarily due to salaries, foreign exchange differences, investor relationship expenses, and regulatory fees.
Income from operations decreased by RMB 2.12 million, or 3.5%, to RMB 59.25 million (USD 8.63 million) for the fiscal year ended June 30, 2019 from RMB 61.37 million for the same period of last year.
Net income
Net income decreased by RMB 4.69 million, or 10.5%, to RMB 39.98 million (USD 5.82 million) for the fiscal year ended June 30, 2019 from RMB 44.67 million for the same period of last year. After deduction of non-controlling interest, net income attributable to shareholders for the fiscal year ended June 30, 2019 was RMB 39.98 million (USD 5.82 million), or RMB 0.95 (USD 0.14) per basic and diluted earnings share. This compared to net income attributable to shareholders of RMB 43.31 million, RMB 1.06 per basic and diluted earnings share, for the same period of last year.
Financial Condition
As of June 30, 2019, the Company had cash and cash equivalents of RMB 53.16 million (USD 7.74 million), compared to RMB 26.50 million as of June 30, 2018. Cash provided by operating activities was RMB 29.78 million (USD 4.34 million) for the fiscal year ended June 30, 2019, compared to RMB 47.29 million for the same period of last year. Cash used in investing activities was RMB 5,066,081 (USD 737,958) for the fiscal year ended June 30, 2019, compared to cash provided by investing activities of RMB 5,408 for the same period of last year. Cash provided by financing activities was RMB 1.95 million (USD 0.28 million) for the fiscal year ended June 30, 2019, compared to cash used in financing activities of RMB 27.4 million for the same period of last year.
About Oranco, Inc.
Headquartered in Fenyang City, China, Oranco, Inc. (OTC: ORNC), is engaged in the alcohol marketing and wholesale business in China. We currently focus our business on the sale of self-branded Fenjiu liquor and imported wines. Our goal is to promote premium alcoholic beverages to China’s population. We aim to achieve this goal by catering to the ever-evolving tastes in alcohol through our creative marketing strategies and innovative product designs that target different age groups in China. Oranco, Inc. has developed various innovative products, such as its “Dagangjiu (translated as “Big Jar Liquor”), and is effective in capturing the attention of different age groups of Chinese consumers. We are constantly renovating traditional Chinese culture to attract various age and cultural groups in China.
Contact Information
For investor and media inquiries please contact:
Email: Oranco@surerich-invest.com
Forward-Looking Statements
This press release contains information about the Company’s view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. The Company encourages you to review other factors that may affect its future results in the Company’s registration statement and in its other filings with the Securities and Exchange Commission.
ORANCO, INC.
CONSOLIDATED STATEMENT OF BALANCE SHEETS
(Amounts in RMB and US$, except for number of shares and per share data)
| June 30, 2018 | June 30, 2019 | |||||||||||
| ASSETS: | RMB | RMB | US$ | |||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 26,504,962 | 53,163,966 | 7,744,205 | |||||||||
| Inventories | 7,346,549 | 6,900,988 | 1,005,242 | |||||||||
| Trade receivables | 33,933,857 | 32,053,899 | 4,669,177 | |||||||||
| Deposits, prepayments and other receivables | 33,249,590 | 45,610,523 | 6,643,922 | |||||||||
| Prepaid land lease and other lease | 109,680 | 547,180 | 79,706 | |||||||||
| 101,144,638 | 138,276,556 | 20,142,252 | ||||||||||
| Non-current assets | ||||||||||||
| Investment | - | 1,000,000 | 145,666 | |||||||||
| Property, plant and equipment | 3,296,146 | 3,124,224 | 455,095 | |||||||||
| Prepaid land lease and other lease | 4,909,420 | 9,362,240 | 1,363,764 | |||||||||
| 8,205,566 | 13,486,464 | 1,964,525 | ||||||||||
| Total assets | 109,350,204 | 151,763,020 | 22,106,777 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Trade payables | 44,636 | 247,685 | 36,079 | |||||||||
| Receipts in advance, accruals and other payables | 5,140,025 | 5,698,168 | 830,032 | |||||||||
| Amount due to Director | 96,231,368 | 13,392,777 | 1,950,878 | |||||||||
| Current tax liabilities | 2,928,207 | 3,406,187 | 496,167 | |||||||||
| Bank borrowings | - | 2,250,000 | 327,749 | |||||||||
| 104,344,236 | 24,994,817 | 3,640,905 | ||||||||||
| Non-Current liabilities | ||||||||||||
| Amount due to Director | - | 81,781,805 | 11,912,863 | |||||||||
| 104,344,236 | 106,776,622 | 15,553,768 | ||||||||||
| Shareholders’ equity | ||||||||||||
| Number of authorized shares with par value US$0.001 | 100,000,000 | 50,000,000 | 50,000,000 | |||||||||
| Number of issued and outstanding shares | 98,191,480 | 41,948,748 | 41,948,748 | |||||||||
| Number of fully paid shares to be issued | 321,296,000 | - | - | |||||||||
| Share capital | 638,708 | 2,765,228 | 402,801 | |||||||||
| Fully paid shares to be issued | 2,126,520 | - | - | |||||||||
| Retained earnings | 2,240,740 | 42,221,170 | 6,150,208 | |||||||||
| Total shareholders’ equity | 5,005,968 | 44,986,398 | 6,553,009 | |||||||||
| Total liabilities and shareholders’ equity | 109,350,204 | 151,763,020 | 22,106,777 | |||||||||
ORANCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in RMB and US$, except for number of shares and per share data)
| Year ended June 30, 2018 | Year ended June 30, 2019 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Revenue | 101,759,660 | 104,270,083 | 15,188,650 | |||||||||
| 101,759,660 | 104,270,083 | 15,188,650 | ||||||||||
| Cost of sales | 27,800,667 | 31,073,778 | 4,526,406 | |||||||||
| Selling and distribution expenses | 5,477,457 | 3,928,466 | 572,246 | |||||||||
| Administrative expenses | 7,109,937 | 10,018,732 | 1,459,393 | |||||||||
| 40,388,061 | 45,020,976 | 6,558,045 | ||||||||||
| Other income | 155,700 | 133,321 | 19,420 | |||||||||
| Interest and other financial charges | 1,759,325 | 73,925 | 10,768 | |||||||||
| Income before income taxes | 59,767,974 | 59,308,503 | 8,639,257 | |||||||||
| Income taxes | 15,095,681 | 19,328,073 | 2,815,451 | |||||||||
| Net Income | 44,672,293 | 39,980,430 | 5,823,806 | |||||||||
| Attributable to: | ||||||||||||
| Equity holders of the Company | 43,313,447 | 39,980,430 | 5,823,806 | |||||||||
| Former non-controlling interests | 1,358,846 | - | - | |||||||||
| 44,672,293 | 39,980,430 | 5,823,806 | ||||||||||
| Earnings per share: | ||||||||||||
| Basic and diluted earnings per share | 1.06 | 0.95 | 0.14 | |||||||||
ORANCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in RMB and US$, except for number of shares and per share data)
| Year ended | Year ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2018 | 2019 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Operating activities | ||||||||||||
| Net income | 44,672,293 | 39,980,430 | 5,823,806 | |||||||||
| Adjustments to reconcile net income to cash generated from operating activities: | ||||||||||||
| Depreciation and amortization | 335,005 | 347,684 | 50,646 | |||||||||
| Changes in working capital: | ||||||||||||
| Inventories | 1,251,161 | 445,561 | 64,903 | |||||||||
| Trade receivables | 13,583,343 | 1,879,958 | 273,847 | |||||||||
| Deposits, prepayments and other receivables | (13,659,564 | ) | (12,360,934 | ) | (1,800,573 | ) | ||||||
| Trade payables | (73,479 | ) | 203,049 | 29,577 | ||||||||
| Receipts in advance, accruals and other payables | 305,431 | (141,857 | ) | (20,664 | ) | |||||||
| Current tax liabilities | 300,928 | 477,980 | 69,626 | |||||||||
| Amount due to Director | 577,029 | (1,056,786 | ) | 153,938 | ||||||||
| Cash generated from operating activities | 47,292,147 | 29,775,085 | 4,337,230 | |||||||||
| Investing activities | ||||||||||||
| Cash acquired on merger | 406,713 | - | - | |||||||||
| Payments for acquisition of property, plant, equipment and other lease | (401,305 | ) | (5,066,081 | ) | (737,958 | ) | ||||||
| Cash generated from / (used in) investing activities | 5,408 | (5,066,081 | ) | (737,958 | ) | |||||||
| Financing activities | ||||||||||||
| Acquisition of additional interest in subsidiary | (400,000 | ) | (300,000 | ) | (43,700 | ) | ||||||
| Repayment of bank borrowings | (27,400,000 | ) | - | - | ||||||||
| Proceeds of bank borrowings | - | 2,250,000 | 327,749 | |||||||||
| Cash (used in) / generated from financing activities | (27,400,000 | ) | 1,950,000 | 284,050 | ||||||||
| Increase in cash and cash equivalents | 19,897,555 | 26,659,004 | 3,883,322 | |||||||||
| Cash and cash equivalents, beginning of the year | 6,607,407 | 26,504,962 | 3,860,883 | |||||||||
| Cash and cash equivalents, end of the year | 26,504,962 | 53,163,966 | 7,744,205 | |||||||||
| Supplemental disclosure of cash flows information | ||||||||||||
| Cash paid during the year for interest | (1,759,325 | ) | (73,925 | ) | (10,768 | ) | ||||||
| Cash paid during the year for income taxes | (14,509,505 | ) | (18,903,260 | ) | (2,753,570 | ) | ||||||