Liuyang Fireworks Announced First Quarter 2012 Financial Results and Expanded Manufacturing Capacity and Distribution Channel
30 November 2011 - 1:00PM
PR Newswire (Canada)
TORONTO, Nov. 30, 2011 /CNW/ - Liuyang Fireworks Limited ("Liuyang"
or "the Company") today announced financial performance for the
first quarter 2012 ended September 30, 2011 and expansion
activities. Highlights for the 3 month period ending September 30,
2011 -- Improved domestic sales led to a 14.4% increase in revenues
during the 3 month period to September 30th, 2011 compared with the
same period of 2010. -- The company has had a successful marketing
program for fiscal year of 2012 with the completion of three
fireworks displays as well as organizing the 10th annual China
(Liuyang) International Fireworks Festival -- As at September 30,
2011 the Company had cash of $6.7 million and total bank debt of
$6.0 million. -- The company has expanded its efforts to increase
its manufacturing capacity and distribution channel by setting two
JVs in Hunan Province. One wholesale JV is located in Youxian city,
Hunan province; the other manufacturing JV is located in Liuyang
city, Hunan province. These steps will enable the company to obtain
a new wholesale license and provide more quality products to
customers The first quarter 2012 financial results represent
increased sales revenue, but were offset by lower domestic sales
price and higher financing costs which affected net income. The
cash and working capital have increased from last year due to
Company's emphasis on working capital management in the period. "We
are excited about the progress we have made this year. Our
new manufacturing JV will improve the Far Ocean brand awareness in
the Chinese domestic market.", said Mr.Hu, Liuyang's president and
CEO. "All of these initiatives will provide a strong base
from which further growth developments can arise. The Company
expects improvement in domestic sales both in term of volume and
price in the 2012 spring festival sales season as we continue to
expand our domestic sales network." SUMMARY FINANCIAL STATEMENTS In
thousands except Three months Three months share and % ended ended
data September 30, September 30, Change 2011 2010 (%) Revenue
$3,927 $3,433 14.4% Gross profit $1,501 $1,465 3.8% Gross margins
38.2% 42.7% (4.5%) EBITDA $246 $582 (57.7%) EBITDA before
stock-based compensation $456 $630 (27.6%) Net Income $92 $498
(81.4%) Net Income (81.8%) (loss) per Basic 0.002 0.011 (90.0%)
share Diluted 0.001 0.010 Balance Sheet Highlight Cash $6,741
$2,173 210.3% Current ratio 1.69:1 1.75:1 (3.6%) Working capital
$7,501 $3,952 89.8% Total assets $20,437 $15,037 35.9% Debt to
equity ratio 1.15:1 0.89:1 29.2% Review of First Quarter 2012
Financial Results During the three month period ended September 30,
2011, revenues were $3.93 million compared with $3.43 million for
the same period of 2010. This represented an increase of
14.4% which is mainly due to expanded production capacity at
certain facilities, and production improvements which resulted
increased China domestic sales. Gross profit was $1.50 million for
three months ended September 30, 2011, compared to $1.47 million
for the period ending September 30, 2010, representing an increase
of 3.8% gross margin as a percentage of sales for three months
ended September 30, 2011 decreased to 36.2% from 43.7% during the
period ending September 30, 2010 despite a revenue increase of $0.5
million. The increase in gross profit was attributable to higher
products volume and the higher revenue achieved as a result of the
Company's increased focus on domestic China market. The decrease of
gross margin as a percentage of sales was primarily attribute to
that the Company increased domestic sales market shares by lowering
the sales price which produced a lower gross profit margin. The
Company believes that it will gradually increase the domestic sales
price once Far Ocean brand is more recognized in China domestic
market. EBITDA for three months ended September 30, 2011 decreased
by 57.7% to $0.25 million from $0.58 million during the same period
of 2010 which is due mainly attribute to higher interest expenses,
and stock-based compensation as well as the lower net income. Net
earnings for the three months ended September 30, 2011 decreased by
81.4% to $0.01 million compared with the three months ended
September 30, 2010. The decrease in net earnings was due to
decreased gross margin and higher general & administrative
expenses as well as finance costs during the period. At September
30, 2011, the Company reported cash of $6.74 million and working
capital of $7.50 million. These figures compare to $2.17 million
and $3.95 million respectively at September 30, 2010. The Company
has sufficient cash and working capital to continue its growth and
expansion plans in 2012. Liuyang's consolidated financial
statements for the period ended September 30, 2011 and related
management's discussion and analysis (MD&A) will be filed with
securities regulatory authorities within applicable timelines and
will be available via SEDAR at www.sedar.com. About Far Ocean
Youxian Fireworks Company On July 8, 2011, Hunan Liuyang Fireworks
Ltd. incorporated Far Ocean Youxian Fireworks Company ("Far Oean
Youxian") under business laws of China. Hunan Liuyang Fireworks
Ltd. owns 70% of Far Ocean Youxian. Far Ocean Youxian is in the
process to obtain a wholesale license from local government and
will start to operate in 2012 spring festival sales season. About
Far Ocean Yongxin Fireworks Company On November 2, 2011, Hunan
Liuyang Fireworks Ltd. signed a letter of intent to set up a new
Joint Venture manufacturing company ("Far Ocean Yongxin"). Under
the terms of this joint venture, Hunan Liuyang Fireworks Ltd will
acquire 51% interest of the proposed new entity. The new company
will start to operate in December 2011 and is expected to
contribute significantly to the Company's future production
capacity. About Liuyang Fireworks Limited Liuyang Fireworks Limited
is a leading China-based manufacturer of fireworks distributed both
domestically and within more than 15 countries in North America,
South America and Europe. The Company has more than 17 years
of experience in the fireworks industry and is a supplier to the
world's top five fireworks wholesalers and retailers.
Liuyang's ISO9001-certified manufacturing facilities are located in
the Liuyang area of Hunan, China, where more than half of the
world's fireworks are produced. The forward-looking information
contained in this news release represents the expectations of the
Company as of the date of this news release and, accordingly, is
subject to change after such date. Readers should not place
undue importance on forward-looking information and should not rely
upon this information as of any other date. While the Company
may elect to, it does not undertake to update this information at
any particular time except as required in accordance with
applicable securities legislation. Neither TSX Venture Exchange nor
its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Liuyang Fireworks Limited CONTACT: Jacky Long Chief Financial
OfficerLiuyang Fireworks LimitedTel : 647 350
8818jackylong@farocean.com
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