Energroup Holdings Corporation ('Chuming') Reports Third Quarter 2008 Financial Results

Share Name	Share Symbol	Market	Type
Energroup Holdings Corporation New (PK)	USOTC:ENHD	OTCMarkets	Common Stock

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Energroup (PK) (USOTC:ENHD)
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DALIAN, China, Nov. 20 /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, frozen and processed food products in Dalian, China, reported the Company's financial results for the third quarter ended September 30, 2008. -- Third quarter total revenues increased 52.8% to $53.7 million -- Third quarter net income increased 72.5% to $4.3 million, with EPS of $0.20 for the quarter -- For the first nine months, revenues increased 56.4% to $140.3 million -- Nine-month net income increased 70.8% to $14.2 million with EPS of $0.67 2008 Third Quarter Financial Results Total revenues increased 52.8% million, or approximately $18.6 million to $53.7 million for the three months ended September 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. The product mix of revenues derived from the Company's three product families; fresh (refrigerated) pork, frozen pork and processed food, were 79.8%, 8.6% and 11.6% respectively. Different than previous reports, the company now groups both its processed pork and processed seafood sales into one product family, "processed foods", and will continue with these product categories on a go-forward basis. Chuming's gains in revenues were driven mostly by increases in supermarket locations market that market fresh, refrigerated, Chuming(R)-branded pork products in deli cases. Year to date, the Company has increased the number of supermarket retail points 90% to 186 while sales in the channel for the third quarter alone increased $5.2 million versus the same period in 2007. Chuming's second key sales channel, Chuming(R)-branded outlet stores, also recorded double digit increases of 34% in new store openings to 702 locations for the same period. In comparison to the second quarter of 2008, Chuming sales efforts added a total of 46 more supermarket locations and 20 new Chuming(R)-branded stores to their customer network. "We have found supermarkets to be the most profitable and cost efficient channel to market our products," stated Philips Zhang, CFO of the Company. "While some additional credit terms were necessary to maintain our competitive edge, the profits on resale are the highest in our product categories. Due to the size of the orders to supermarkets, efficiencies in order processing help us maintain overhead costs and strong earnings to our bottom line." Zhang concluded. Cost of goods sold was $47.3 million yielding gross profits of $6.5 million in the second quarter 2008. These profits represented an increase of $0.8 million or 12.9% from $5.7 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 12.0% compared with 16.3% for the same period in 2007. The decrease resulted partly from higher costs of inputs, such as live pigs and packaging material, but more importantly because during the three months ended September 30, 2008, the Company significantly increased its sales of fresh pork through sales agents and distributors, who assumed certain marketing expenses in selling fresh pork products. This sales channel typically provides the Company with lower profit margins, but as a trade-off the Company is able to effectively reduce associated selling expenses. Cost increased the most for grade-1 and grade-2 pigs, the premium grades of pigs Chuming uses. The Company only uses the highest grade of meat to maintain its brand and commitment to quality. Per kilogram prices in the third quarter of 2008 for live pigs were on average 24.3% higher than the third quarter of 2007. Within each of the three quarters of 2008, the cost of inputs increased 107% for the first quarter, 67% for the second quarter and 24% for the third quarter, compared to the same period in 2007. Although the prices of live pigs have been volatile in the past years, management currently projects a 10% per year increase in the average price per kilogram for live pigs during the next several years and is implementing price increases to its customer base in an effort to return to previous profit margin levels. Selling expenses totaled $878,893 for the three months ended September 30, 2008, as compared to $1,597,626 for the same period in 2007, a decrease of $718,733 or 45.0%. This decrease was due primarily to a decrease in direct advertising expenses and the shifting of advertising cost to sales agents whose commission accounts for such promotional efforts to be funded by agents themselves. General and administrative expenses totaled $734,976 for the three months ended September 30, as compared to $459,975 for the same period in 2007, an increase of $275,000. This increase is partially attributable to the increased expenses we incurred after we became a public company, and partially attributable to an increase in salary expenses. The Company continues to hire new staff to meet the needs of their expanding operations. Also, consistent with the recent escalation in the rate of inflation in China, especially in the earlier part of 2008, the salaries and the cost of benefits for staff increased for the third quarter of 2008 as compared to the same period in 2007. These increases in salaries were made in order to maintain compensation levels that were sufficient to attract and retain qualified employees. Operating income and operating margins for the quarter were $4.9 million and increase of 32.2%, versus $3.6 million in same period 2007. Operating margin was 9.0% for the quarter. Other expense for the quarter was approximately $320,000 for the quarter versus $418,000 for the same period in 2007. The slight decrease in other expenses in the third quarter of 2008 is due to a combination of factors. First, the Dalian City government awarded the Company a one-time subsidy of more than $1 million. This subsidy is due to efforts by the local government to keep the price of pork stable in local markets. The company also accrued a liability of $399,500 in connection with the appointment of the Company's Chief Financial Officer, Philips Zhang, on September 18, 2008. The appointment occurred later than the target date agreed under the terms of our December 2007 financing. Net income for the three months ended September 30, 2008 was $4.3 million as compared to $2.5 million for the same period in 2007, an increase of $1.8 million or 72.5%. Corresponding net income margins were 8.0% for the quarter. Based on 21.2 million shares outstanding, earnings were $0.20 per diluted share for the quarter. Nine-Month Results During the nine months ended September 30, 2008, Chuming sold $140 million of products compared to sales of $89 million for the same period of 2007, an increase of 56.4%. Sales of fresh pork accounted for 77.3% of revenues for the nine-month period, or $108 million, an increase of 54.3% versus the same period prior year. Frozen pork and processed foods accounted for $11.0 million and $20.8 million, respectively, for the same period. Gross profits for the nine-month period were $20.0 million at 14.5% gross margins on sales. Operating expenses for the nine months ended September 30, 2008 were $5.3 million compared to $4.5 million for the same period in 2007 and represented 3.8% and 5.1% of revenues respectively. Operating income for the nine months ended September 30, 2008 was $14.6 million, an increase of 43.4% compared to $10.2 million for the previous nine months period. Operating margins were for the nine-month period was 10.4%. Net income for the nine months ended September 30, 2008 was $14.2 million as compared to $8.3 million for the same period in 2007, an increase of $5.9 million or 70.8%. Earnings per diluted share totaled $0.67 based on 21.2 million shares for the nine-month period. "The pork market in China continues to demonstrate a resiliency to both inflationary concerns and changes in China's GDP forecast." Chairman Huashan Shi opened, "Pork is the mainstay of protein in the Chinese diet and the development of both local and international food retail locations in China are boosting sales of China's top selling meat. We believe pork pricing has stabilized after strong increases through the year. We have carefully passed through price increases every month however still need a quarter or two to fully recuperate slight reductions in gross margins we experienced in the second and third quarter. Our capacity expansion this year has proven critical to meet increased demand and we expect similar results in the fourth quarter and year end." Shi concluded. Financial Condition Cash and cash equivalents by the end of the third quarter were $11.7 million as of September 30th, 2008. The Company had $6.4 million in long-term debt and $33.7 million in total liabilities. Net cash from operations was $1.4 million. Accounts receivables were $25.4 million for the period ended September 30th, 2008. Shareholders' equity totaled $62.7 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. 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 September 30, 2008 and December 31, 2007 (Stated in US Dollars) At At September 30, December 31, ASSETS 2008 2007 Cash $11,672,377 $14,031,851 Restricted Cash 2,234,387 4,250,000 Accounts Receivable 25,429,400 622,433 Other Receivable 1,888,165 1,068,939 Related Party Receivable 6,244,256 3,964,357 Inventory 6,483,137 2,916,016 Purchase Deposit 1,410,121 267,807 Prepaid Expenses 50,328 46,401 Prepaid Taxes 1,224,020 185,419 Deferred Tax Asset 654,946 613,844 Total current assets 57,291,137 27,966,967 Property, Plant & Equipment, net 25,450,634 24,836,496 Land Use Rights, net 13,500,699 12,855,980 Construction in Progress 1,019,169 927,866 Other Assets 93,154 32,619 TOTAL ASSETS $97,354,793 $66,619,928 LIABILITIES Bank Loans & Notes $6,418,579 $7,383,095 Accounts Payable 14,276,813 3,779,274 Taxes Payable 2,749,160 1,677,194 Other Payable 3,477,954 1,471,381 Accrued Liabilities 3,894,780 3,347,013 Customer Deposits 2,872,226 24,161 Total current liabilities 33,689,511 17,682,118 TOTAL LIABILITIES $33,689,511 $17,682,118 STOCKHOLDERS' EQUITY Preferred Stock - $0.001 par value 10,000,000 shares authorized; 0 shares issued & outstanding at September 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 September 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 42,962,290 29,764,236 Accumulated Other Comprehensive Income 3,511,950 2,960,951 TOTAL STOCKHOLDERS' EQUITY 62,665,282 48,937,810 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $97,354,793 $66,619,928 Energroup Holdings Corporation Consolidated Statements of Income for the three and nine months ended September 30, 2008 and 2007 (Stated in US Dollars) 3 months 3 months 9 months 9 months ended ended ended ended September 30, September 30, September 30, September 30, 2008 2007 2008 2007 Sales $53,725,596 $35,160,526 $140,309,218 $89,718,841 Cost of Sales 47,254,631 29,430,153 120,329,483 74,966,451 Gross Profit 6,470,965 5,730,373 19,979,735 14,752,390 Selling Expenses 878,893 1,597,626 3,463,947 3,397,046 General & Administrative Expenses 734,976 459,975 1,881,138 1,147,488 Operating Income 4,857,096 3,672,772 14,634,650 10,207,856 Other Income 1,036,941 806 1,420,060 7,810 Interest Income (356,596) -- 279,097 -- Other Expenses (413,264) (40,524) (514,000) (78,354) Interest Expense (587,118) (378,580) (1,194,197) (1,089,221) Earnings before Tax 4,537,058 3,254,474 14,625,611 9,048,091 Income Tax 216,770 749,504 449,138 749,504 Net Income $4,320,288 $2,504,970 $14,176,473 $8,298,587 Earnings Per Share Basic $0.25 $0.19 $0.82 $0.62 Diluted $0.20 $0.15 $0.67 $0.48 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 Comprehensive Income Net Income $4,320,288 $2,504,970 $14,176,473 $8,298,587 Other Comprehensive Income (911,156) 927,231 550,999 1,174,740 Total Comprehensive Income $3,409,132 $3,432,201 $14,727,472 $9,473,327 Energroup Holdings Corporation Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2008 and 2007 (Stated in US Dollars) 3 months 3 months ended ended September 30, September 30, 2008 2007 Cash Flow from Operating Activities Net Income $4,320,288 $2,504,970 Amortization 74,052 32,949 Depreciation 576,203 450,002 (Increase)/Decrease in Accounts & Other Receivables (10,487,495) 1,636,735 (Increase)/Decrease in Inventory & Purchase Deposits (1,987,668) 195,202 (Increase) in Prepaid Taxes & Expenses (934,281) 28,544 Increase/(Decrease) in Accounts, Taxes & Other Payables 8,298,021 (8,424,131) Increase/(Decrease) in Accrued Liabilities 394,292 232,734 Increase in Customer Deposits 1,177,925 2,216,740 Cash Sourced/(Used) in Operating Activities 1,431,337 (1,126,255) Cash Flows from Investing Activities Funds released from/(interest earned in) Escrow Account (3,720) -- Purchases of Plant & Equipment (2,042,604) (148,353) Purchase of Land Use Rights (904,031) 2,705 Payments for Deposits (227) -- Cash Sourced/(Used) in Investing Activities (2,950,582) (145,648) Cash Flows from Financing Activities Proceeds from Bank Borrowings 15,004,489 1,219,923 Repayment of Bank Loans (14,988,890) (9,140) Cash Sourced/(Used) in Financing Activities 15,599 1,210,783 Net Increase/(Decrease) in Cash & Cash Equivalents for the Year (1,503,647) (61,120) Effect of Currency Translation 1,905,294 38,869 Cash & Cash Equivalents at Beginning of Year 11,270,730 2,479,685 Cash & Cash Equivalents at End of Year $11,672,377 $2,457,434 9 months 9 months ended ended September 30, September 30, 2008 2007 Cash Flow from Operating Activities Net Income $14,176,473 $8,298,587 Amortization 259,312 97,479 Depreciation 1,983,977 1,370,225 (Increase)/Decrease in Accounts & Other Receivables (27,906,092) (11,484,507) (Increase)/Decrease in Inventory & Purchase Deposits (4,709,434) 1,136,515 (Increase) in Prepaid Taxes & Expenses (1,083,731) (50,535) Increase/(Decrease) in Accounts, Taxes & Other Payables 13,576,079 1,424,545 Increase/(Decrease) in Accrued Liabilities 547,767 546,095 Increase in Customer Deposits 2,848,064 2,196,553 Cash Sourced/(Used) in Operating Activities (307,586) 3,534,957 Cash Flows from Investing Activities Funds released from/(interest earned in) Escrow Account 2,015,613 -- Purchases of Plant & Equipment (2,689,418) (847,063) Purchase of Land Use Rights (904,031) (3,330,801) Payments for Deposits (60,535) -- Cash Sourced/(Used) in Investing Activities (1,638,371) (4,177,864) Cash Flows from Financing Activities Proceeds from Bank Borrowings 6,418,579 1,219,923 Repayment of Bank Loans (7,383,095) (1,302,803) Cash Sourced/(Used) in Financing Activities (964,516) (82,880) Net Increase/(Decrease) in Cash & Cash Equivalents for the Year (2,910,473) (725,787) Effect of Currency Translation 550,999 107,434 Cash & Cash Equivalents at Beginning of Year 14,031,851 3,075,787 Cash & Cash Equivalents at End of Year $11,672,377 $2,457,434 DATASOURCE: Energroup Holdings Corporation CONTACT: Investor Relations Contacts: John Mattio of HC International, Inc., 56 June Road, North Salem, NY 10560, +1-914-669-5340 or and for Energroup Holdings Corporation

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ENHD Energroup Holdings Corporation New (PK)