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Oranco, Inc. Reports Fiscal Year 2019 Financial Results

Fenyang City, China, Sept. 10, 2019 (GLOBE NEWSWIRE) -- Oranco, Inc. ("Oranco" or the "Company") (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. (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 )