Liuyang Fireworks Limited (TSXV:FWK)
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TORONTO, May 2 /CNW/ --
TORONTO, May 2 /CNW/ - Liuyang Fireworks Limited (TSX-V: FWK), a leading
China-based manufacturer of consumer fireworks, released its three- and
twelve-month results today. The results, ending December 31, 2010, are
in Canadian dollars unless otherwise stated.
Selected 2010 Financial Highlights
_______________________________________________________________
|In thousands except share and % data|FY 2010|FY 2009|Change (%)|
|____________________________________|_______|_______|__________|
|Revenue |$14,081|$13,408|5% |
|____________________________________|_______|_______|__________|
|Gross margins |37.6% |41.3% |-9% |
|____________________________________|_______|_______|__________|
|EBITDA |$1,293 |$1,590 |-19% |
|____________________________________|_______|_______|__________|
|Net Income |$894 |$637 |40% |
|____________________________________|_______|_______|__________|
|Earnings per share (Basic) |$0.021 |$0.016 |31% |
|____________________________________|_______|_______|__________|
|Cash and Cash equivalents |$2,031 |$1,999 |2% |
|____________________________________|_______|_______|__________|
|Working capital |$3,806 |$4,507 |-16% |
|____________________________________|_______|_______|__________|
Liuyang Fireworks Limited 2010 Operating Highlights:
-- Launched fireworks display company in March 2010;
-- Established two wholesale JVs in Zhejiang Province to enter the
fireworks wholesale market;
-- Received Canadian Explosives Regulatory Division (CERD)
approval for additional three products (15 in total as of
December 2010) to distribute within Canada;
-- Received a confirmed order from one US wholesaler for US$1.4
million to deliver in 2011.
"We are very pleased with our company's achievements and our ability to
present positive earnings growth to our shareholders." said Miao Hu,
President and Chief Executive Officer, Liuyang Fireworks. "We continue
to capitalize on the domestic market through new product offerings and
acquisitions. Although we have faced the negative impact of strong
Canadian dollars, our revenues continue to increase steadily in 2010."
Highlights subsequent to the year-end:
-- Completed a non-brokered private placement of 12,033,700 shares
for gross proceeds of $2.17 million;
-- Announced record sales of $3.6 million for the 2011 Chinese New
Year selling season;
-- Hunan Liuyang Fireworks Display Art Company (100% owned
subsidiary of the company) successfully presented fireworks
displays at eight different events during first two months of
2011.
Review of Fourth Quarter and Fiscal Year 2010 Financial Results
Selected Fourth Quarter Financial Highlights
_______________________________________________________________
|In thousands except share and % data|Q4 2010|Q4 2009|Change (%)|
|____________________________________|_______|_______|__________|
|Revenue |$4,986 |$4,709 |6% |
|____________________________________|_______|_______|__________|
|Gross margins |37% |35% |6% |
|____________________________________|_______|_______|__________|
|EBITDA |$226 |($71) |--- |
|____________________________________|_______|_______|__________|
|Net Income |$83 |($338) |--- |
|____________________________________|_______|_______|__________|
|Earnings per share (Basic) |$0.002 |($0.01)|--- |
|____________________________________|_______|_______|__________|
Revenue
Revenue for the fourth quarter was $4.99 million, compared with $4.71
million for the same period last year, representing an increase of 6%.
The increase was due to a slight increase in Chinese domestic sales
over the same period in 2009.
Revenue for 2010 was $14.1 million, an increase of $0.67 million or 5%
over the $13.4 million generated in 2009. Liuyang Fireworks Limited
receives most of its international orders in U.S. dollars. Conversely,
the company incurs most of its expenses in Chinese RMB. Strong Canadian
dollar appreciation during 2010 has significantly reduced the reported
revenues. If 2010 revenue was converted at the prior year's average
exchange rate, revenue for 2010 would have been $15.6 million, a 16%
increase over 2009 results.
Gross Profit
Gross profit for the fourth quarter was $1.84 million compared with
$1.67 million for the same period last year, an increase of 11%. As a
percentage of revenue, gross profit margin for the fourth quarter was
37% compared to 35% for the fourth quarter of 2009. The increase was
due to higher margin products sold during this period.
The gross profit for 2010 was $5.29 million, compared with $5.55 million
for 2009. The decrease was due to higher raw material cost incurred
over the year. Management believes that the company will continue to
control these production costs by establishing an alliance with the
subcontractors used for raw materials purchasing. Liuyang Fireworks
Limited also plans to improve upon the historical levels of gross
margin by optimizing product mix and improving production efficiency.
EBITDA
EBITDA for the fourth quarter increased to $0.23 million from a negative
$0.07 million for the same period in 2009. The improvement in EBITDA
for the fourth quarter of 2010 was mainly attributed to low non-cash
stock-based compensation costs and higher revenue in 2010.
EBITDA for 2010 was $1.3 million, while in 2009 it was $1.59 million.
The change was due to the significant decrease of amortization expense
and interest expense, which were offset by the increase of net income
in 2010.
Net Income
Net income for the fourth quarter increased to $0.08 million from a
negative $0.34 million for the same period last year.
Luiyang Fireworks Limited's net income for 2010 was 0.9 million, a 40%
increase over the $0.64 million earned in 2009. This net income growth
was due to slightly higher revenue and cost savings from operation
expenses. After successful integration of two wholesaler joint venture
companies, Liuyang Fireworks Limited enters into the domestic Chinese
market for the second year. It is believed that the company will
continue its success and is expected to generate higher net income in
the future.
Cash and Cash Equivalents
As of December 31, 2010, the company has cash and cash equivalents
totaling $2.03 million, representing an increase of $0.03 million, or
2% compared with the balance as of December 31, 2009. The Company also
had $0.1 million of restricted cash.
Outlook
"We are very pleased with our progress and will continue the two-pronged
strategy designed to accelerate our long-term growth. Internationally,
we continue to see strong demand for our safe, high quality consumer
fireworks." said Mr.Hu. "Domestically, we have successfully integrated
our two recently acquired wholesale companies into our operation over
the past year. As a result, our revenues from international markets and
domestic markets are 70% and 30% respectively. We expect a dramatic
increase in domestic sales for Q1, 2011 as we continue to expand our
domestic sales network. We are also in the process of evaluating a
third acquisition candidate. Our display company has begun establishing
some key client relations and we are very confident that we can fulfill
our goal of 30 displays over 2011."
About Liuyang Fireworks Limited
Liuyang Fireworks Limited is a leading China-based manufacturer of
consumer fireworks distributed domestically and in more than 15
countries in North America, South America and Europe. The company has
more than 16 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.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2011/02/c8372.html
p Jacky Longbr/ Chief Financial Officerbr/ Liuyang Fireworks Limitedbr/ Tel : 416-613-0208 ext 206br/ a href="mailto:jackylong@farocean.com"jackylong@farocean.com/a /p