Imperial Ginseng Products Ltd.
TSX VENTURE : IGP

Imperial Ginseng Products Ltd.

October 24, 2005 15:02 ET

Imperial Ginseng Products Ltd. Reports 2005 Fiscal Year Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 24, 2005) - For the year ended June 30, 2005, Imperial Ginseng Products Ltd. (the "Company") (TSX VENTURE:IGP) reports revenues of $6.6 million and a net loss of $1.2 million, or $0.07 per share basic and diluted, compared to revenues of $1.5 million and a net income of $4.0 million, or $0.25 per share basic and $0.08 per share diluted, in the prior year. Comparative figures for revenues, net income and loss per share as well as the financial position of the Company are as follows:



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2005 2004
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Revenue $ 6,621,422 $ 1,501,422
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Cost of sales 6,317,408 967,920
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Gross profit 304,014 533,502
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General and administrative expenses 1,572,501 1,396,039
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Interest and other income 66,349 8,469
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Gain on sale of term debt - 429,828
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Net loss from continuing operations (1,243,068) (417,640)
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Discontinued operations - 4,391,443
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Net income $ (1,243,068) $ 3,974,803
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Earnings (loss) per share - basic $ (0.07) $ 0.25
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Earnings (loss) per share - diluted $ (0.07) $ 0.08
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2005 2004
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Property and equipment $ 942,210 $ 1,167,496
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Total assets $ 9,203,550 $ 10,718,702
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Shareholders' Equity $ 8,645,872 $ 9,888,940
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Overview of Fiscal 2005 Financial and Operating Results

In fiscal 2005, the Company harvested 176 acres of ginseng from its farms in Ontario and produced a total of approximately 337,500 pounds of ginseng. In fiscal 2004, the Company harvested the remaining 128 acres of ginseng from its farms in British Columbia and 29 acres from its farms in Ontario and produced a total of approximately 399,000 pounds of ginseng. Similar to many ginseng growers in Ontario, the Company harvested all gardens previously affected by the frost and consequently overall yield realized by the Company in fiscal 2005 of approximately 2,000 pounds per acre was 25% lower than the average yield achieved by the Company in fiscal 2004.

The Company seeded approximately 179 acres of ginseng in Ontario in fiscal 2005. In fiscal 2004, the Company seeded 151 acres. The seeding in fiscal 2005 brought our total ginseng acres under cultivation to approximately 549 acres.

The Company realized an average selling price of approximately $15.25 per pound, compared to an average of $21.40 per pound a year ago. Although the Company produced only the premium Ontario root in 2005, the average price realized by the Company still represented an approximate 29% decrease from the average price realized in the prior year. Despite a slow market at the beginning of the selling season and an increasing number of Ontario growers consigning their ginseng in fiscal 2005, the Company continued to maintain its "full payment prior to shipment" practice. The Company granted no payment terms to ginseng buyers nor did the Company ship any root on consignment.

The Company's gross margin decreased 43% in fiscal 2005 to $0.3 million from $0.5 million in fiscal 2004. The decline in the gross profit margin was due to lower prices realized by the Company as well as higher unit cost associated with abnormally low yield realized by the Company for the fall 2004 harvest.

The Company continues to strive for cost savings despite more acres seeded and harvested and higher overall costs on fuel, supplies and labour. Nevertheless, due to the significantly higher acres harvested and seeded in 2005, the Company's cash crop expenditures increased to $3.2 million for the year ended June 30, 2005 from $2.7 million in the prior year.

Subsequent Event

Due to the unusually hot and dry weather throughout the summer of 2005, the green seed crop production in Ontario is expected to be significantly below its normal level. A poor green seed crop in the fall of 2005 is expected to affect the total number of acres Ontario growers can seed in the fall of 2006. The Company has taken steps to increase its seeds production as well as to attempt to secure additional seed supply. However, management does not believe it is prudent to spend a significant amount of cash to secure seeds in order to maintain the budget seeding plan. In the event that the Company cannot secure additional seeds in the summer of 2006, the Company will cut back its 2006 planting. The Company intends to address any subsequent acreage shortfall by planting more acres in 2007. Management does not expect its overall acres under cultivation for the year ending June 30, 2008 to significantly deviate from its long range operating plan, nor does it expect that the cash flow from operations will be adversely affected in fiscal 2006.

Summary and Looking Forward

The Company encountered difficulties at the beginning of the selling season in fiscal 2005 with respect to marketing its root due to a lack of confidence in the market by many traditional ginseng buyers. The Company overcame the challenge and completely sold out its 2003 inventory and the fall 2004 production. Although it had been expected, management was disappointed with the unusually low yield realized from the Ontario operation in fiscal 2005. Had the Company been able to maintain its 2004 average yield in Ontario of approximately 2,570 pound per acre in fiscal 2005, the Company would have reported a net income of approximately $500,000 in fiscal 2005. In spite of this, the Company has sufficient cash flow to meet its fiscal 2006 operating requirements. Management does not expect the low fiscal 2005 yield to be recurring and consequently, we are optimistic about the profitability in the coming years.

This press release may contain forward-looking statements that reflect the Company's current expectation regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including, but not limited to the success of the Company's horticultural operations and the strength of the economies and currencies of Asian countries. Investors should consult the Company's ongoing quarterly filings, and annual reports for additional information on risks and uncertainties relating to the forward-looking statements. The corporation disclaims any obligations to update these forward-looking statements.

On behalf of the Board of Directors of

IMPERIAL GINSENG PRODUCTS LTD.

James S. Chang, MA, MBA, CPA, President


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Imperial Ginseng Products Ltd.
    James S. Chang, MA, MBA, CPA
    President and Chief Executive Officer
    (604) 689-8863
    (604) 689-8892 (FAX)
    www.imperialginseng.com