China Kanghui Holdings

CIK:0001495660|SEC Filings

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2011

26.

EARNINGS PER SHARE

The Company’s contingently redeemable convertible preferred shares are participating securities because preferred shareholders are entitled to liquidation preference first and then share pro rata with the ordinary shareholders in any remaining liquidation proceeds. The conversion ratio between preferred shares and ordinary shares is 1:1.

Under the two-class method, net income is allocated between ordinary shares and other participating securities based on dividends declared (or accumulated) and participating rights in undistributed earnings on the basis of the total weighted-average shares outstanding during the period.

Basic and diluted earnings (loss) per share for each of the years presented is calculated as follows:


	For the year ended December 31,
	2009			2010			2011
	RMB			RMB			RMB		US$
	(in thousands, except for share and per share data)
*Numerator:*
Net income		74,967			99,707			120,486		19,145
Accretion of contingently redeemable convertible preferred shares:
—Series A		(10,739	)		(7,572	)		—		—
—Series B		(73,180	)		(54,988	)		—		—
—Series B-1		(2,736	)		(2,844	)		—		—
Earnings allocated to participating preferred shareholders		—			(7,582	)		—		—
Net loss attributable to non-controlling interest		—			—			591		94

Net income (loss) attributable to ordinary shareholders:		(11,688	)		26,721			121,077		19,239

*Denominator:*
Number of ordinary shares outstanding, opening		57,714,400			57,714,400			136,821,600		136,821,600
Weighted-average number of ordinary shares issued		—			30,693,657			2,264,502		2,264,502

Weighted-average number of ordinary shares outstanding—basic		57,714,400			88,408,057			139,086,102		139,086,102
Dilutive effect of share options		—			11,938,555			14,395,834		14,395,834

Weighted-average number of ordinary shares outstanding—diluted		57,714,400			100,346,612			153,481,936		153,481,936

Earnings (loss) per ordinary share:
—basic		(0.20	)		0.30			0.87		0.14

—diluted		(0.20	)		0.27			0.79		0.12

The effects of share options and Series A, Series B and Series B-1 Contingently Redeemable Convertible Preferred Shares have been excluded from the computation of diluted loss per ordinary share for the years ended December 31, 2009 and 2010 as they are anti-dilutive. Series A, Series B and Series B-1 Contingently Redeemable Convertible Preferred Shares have all been converted to ordinary shares in 2010. They have no effects in the computation of diluted earnings per ordinary share from 2010.

CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 USD ($)	Dec. 31, 2011 CNY	Dec. 31, 2010 CNY	Dec. 31, 2009 CNY
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 19,145	120,486	99,707	74,967
Adjustments to reconcile net income to net cash generated from operating activities:
Share-based compensation	1,171	7,373	7,995	10,308
Depreciation of property, plant and equipment	2,523	15,880	10,365	9,192
Amortization of intangible assets	700	4,409	3,593	3,525
Amortization of prepaid land lease payments	77	486	378	55
Foreign exchange loss	1,361	8,564	7,340	286
Loss on disposal of equipment	13	80	16	3
Provision for bad debts	990	6,234	353	534
Write-down of inventories	836	5,260	1,271	764
Realized gain on trading securities			(426)	(44)
Deferred tax (benefit) expense	209	1,318	(4,069)	(3,800)
Changes in operating assets and liabilities, net of effect of acquisition:
Bills receivable	364	2,290	(3,497)	(2,007)
Accounts receivable	(6,145)	(38,681)	(12,282)	(2,187)
Inventories	(4,752)	(29,902)	(11,863)	(22,960)
Prepayments and other current assets	(67)	(425)	(1,781)	(2,013)
Amount due from related parties	(799)	(5,028)	19,824	2,542
Deposit for prepaid land lease payments				(21,305)
Other assets, non-current	(41)	(257)
Accounts payable	653	4,109	4,422	(2,921)
Accrued expenses and other liabilities	2,622	16,514	6,679	9,241
Income tax payable	472	2,970	(196)	(1,707)
Deferred revenue	(46)	(289)	(136)	(68)
Uncertain tax positions	(605)	(3,807)	(5,141)	(2,481)
Amount due to related parties	(461)	(2,903)	(1,259)	(374)
Deferred government grants	143	898	(2,321)	7,832
Net cash generated from operating activities	18,363	115,579	118,972	57,382
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash acquired	(1,236)	(7,778)	(56,403)
Purchase of long-term investment	(4,208)	(26,486)
Acquisition of property, plant and equipment	(25,082)	(157,865)	(58,918)	(13,364)
Purchase of short-term investments	(12,259)	(77,155)	(266,247)	(29,000)
Proceeds from disposal of short-term investments	42,371	266,673	27,044	9,000
Proceeds from disposal of property, plant and equipment	50	316
Net cash used in investing activities	(364)	(2,295)	(354,524)	(33,364)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Series B-1 contingently redeemable convertible preferred shares, net of paid issuance costs				13,185
Proceeds from the initial public offering			386,002
Proceeds from exercise of share options	2,118	13,324
Capital injection from a non-controlling shareholder	159	1,000
Net cash generated from financing activities	2,277	14,324	386,002	13,185
Effect of exchange rate changes on cash and cash equivalents	(1,588)	(9,992)	(10,541)	(315)
Net increase in cash and cash equivalents	18,688	117,616	139,909	36,888
Cash and cash equivalents at beginning of year	41,703	262,476	122,567	85,679
Cash and cash equivalents at end of year	60,391	380,092	262,476	122,567
Supplemental cash flow information:
Income taxes paid	3,662	23,048	16,567	20,372
Supplemental disclosure non-cash activities:
Acquisition of property, plant and equipment through utilization of deposits	1,680	10,576		1,986
Acquisition of a subsidiary through utilization of deposit	3,527	22,200
Prepaid land lease payments through utilization of deposits			21,305

CONSOLIDATED BALANCE SHEETS In Thousands, unless otherwise specified	Dec. 31, 2011 USD ($)	Dec. 31, 2011 CNY	Dec. 31, 2010 CNY
Current assets:
Cash and cash equivalents	$ 60,391	380,092	262,476
Bills receivable	933	5,873	8,163
Short-term investments	12,234	76,998	266,673
Accounts receivable, net	13,915	87,578	55,131
Inventories, net	17,621	110,907	86,266
Prepayments and other current assets	2,135	13,428	11,693
Deferred tax assets	1,444	9,090	12,134
Amount due from related parties	901	5,672	644
Total current assets	109,574	689,638	703,180
Non-current assets:
Property, plant and equipment, net	41,282	259,825	107,237
Intangible assets, net	9,855	62,026	46,995
Prepaid land lease payments	3,624	22,812	23,298
Goodwill	24,681	155,341	131,527
Long-term Investment	4,004	25,204
Deposits for non-current assets	752	4,731	37,507
Deferred tax assets	388	2,444	2,436
Other assets, non-current	41	257
Total non-current assets	84,627	532,640	349,000
Total assets	194,201	1,222,278	1,052,180
Current liabilities:
Accounts payable	3,063	19,278	15,086
Accrued expenses and other liabilities	10,389	65,388	47,433
Income tax payable	922	5,800	2,830
Deferred revenue			289
Uncertain tax positions	667	4,197	8,004
Amount due to related parties	181	1,137	4,040
Total current liabilities	15,222	95,800	77,682
Non-current liabilities:
Deferred government grants	1,018	6,409	5,511
Deferred tax liabilities	2,361	14,857	11,700
Total non-current liabilities	3,379	21,266	17,211
Total liabilities	18,601	117,066	94,893
Commitments and contingencies
Equity:
Ordinary shares (par value of US$0.001 per share; 1,000,000,000 shares authorized as of December 31, 2010 and 2011; 136,821,600 shares and 140,401,842 shares issued outstanding as of December 31, 2010 and 2011 respectively)	162	1,022	999
Additional paid-in capital	145,057	912,972	892,298
Accumulated other comprehensive loss	(3,115)	(19,604)	(16,737)
Statutory reserves	7,216	45,417	31,247
Retained earnings	24,847	156,387	49,480
Total China Kanghui Holdings shareholders' equity	174,167	1,096,194	957,287
Non-controlling interests	1,433	9,018
Total equity	175,600	1,105,212	957,287
Total liabilities and equity	$ 194,201	1,222,278	1,052,180