Company provides update on Cease Trade Order
TORONTO,
Nov. 19, 2013 /CNW/ - Liuyang
Fireworks Limited (TSX-V: FWK) ("Liuyang" or "the Company")
today reported its financial results for the three- and 12-month
periods ended June 30, 2013. All
amounts are in Canadian dollars unless otherwise indicated.
Fiscal 2013 Highlights:
- The Company had a net loss of less than $0.05 million, compared with net income of
$0.86 million in the prior year;
- Revenue decreased 7.1% to $18.41
million due partially to environmental concerns in the
Chinese domestic market;
- Gross margin improved to 37.5% of sales from 37.2% of sales in
fiscal 2012 as a result of selling more higher margin
products;
- Completed construction of a new warehouse for Far Ocean Youxian
Company (a wholesale distribution company 70% owned by
Liuyang).
- New product development was initiated in response to
environmental concerns and fireworks regulatory changes in
China;
"Despite the higher gross margin achieved during
the year, our fiscal 2013 financial results were disappointing,"
said Mr. Hu, Liuyang's president and CEO. "Our results were
impacted by the cancellation of several of our firework display
shows during the Spring Festival following media reports suggesting
that widespread use of fireworks was contributing to heightened
levels of smog in Beijing. We have
since developed, and begun selling, new environmentally-friendly
products to address environmental concerns and satisfy regulatory
bodies in China. With this issue
now behind us, and construction of Far Ocean Youxian Company's new
warehouse now complete, we look forward to the continued,
successful execution of our growth strategy."
Income Statement Highlights
|
|
|
In thousands except per
share and
% data |
3 months ended
June 30 |
12 months ended
June 30 |
2013 |
2012 |
2013 |
2012 |
Revenue |
$2,636 |
$2,844 |
$18,408 |
$19,805 |
Gross profit |
$956 |
$930 |
$6,898 |
$7,374 |
Gross margins |
36.3% |
32.7% |
37.5% |
37.2% |
EBITDA |
$(678) |
$40 |
$667 |
$1,537 |
EBITDA before stock-based
compensation |
$(678) |
$58 |
$688 |
$1,891 |
Net income |
$(718) |
$(10) |
$(47) |
$864 |
Net income per share |
Basic |
$(0.013) |
$(0.0005) |
$(0.002) |
$0.015 |
|
Diluted |
$(0.013) |
$(0.0005) |
$(0.002) |
$0.015 |
Balance Sheet Highlights
|
|
In thousands except ratio data |
As at June 30 |
2013 |
2012 |
Cash |
$1,505 |
$1,910 |
Current ratio |
1.85:1 |
2.08:1 |
Working capital |
$7,691 |
$7,727 |
Total assets |
$20,786 |
$17,852 |
Debt to equity ratio |
0.78:1 |
0.67:1 |
Review of Fiscal 2013 Results
Revenue for fiscal 2013 was $18.41 million, compared with $19.81 million in fiscal 2012. The decrease of
$1.4 million or 7.1%, was largely
attributable to the cancellation of a number of the Company's
firework display shows in the Chinese domestic market during the
Spring Festival (February 8 to February 22,
2013) following media reports suggesting that widespread use
of fireworks was a contributor to heightened levels of smog in
Beijing.
The Company earned 61% and 39% of its revenue
during fiscal 2013 from the international market and domestic
market respectively. The Company receives most of its international
orders in U.S. dollars; and it incurs most of its expenses in
Chinese RMB and reports in Canadian dollars.
Gross profit for fiscal 2013 was $6.90 million, compared with $7.37 million the year before. Gross margin as a
percentage of sales was 37.5% for fiscal 2013, representing an
increase of 0.3 percentage points from the prior year. The increase
in gross profit margin was due to differences in the product mix,
with higher margin products sold during fiscal 2013.
EBITDA for fiscal 2013 was $0.67 million, compared with $1.79 million a year earlier, representing a
decrease of 59.4%. EBITDA before share-based compensation expense
was $0.69 million in fiscal 2013,
compared with $1.97 million in fiscal
2012, representing a decrease of 65.1%. These decreases were
attributable to the lower sales revenue achieved in fiscal 2013
combined with increased expenses.
The Company had a net loss of less than
$0.05 million in fiscal 2013,
compared with net income of $0.86
million in the prior year.
While the Company's balance sheet remains
relatively strong, in fiscal 2013 the Company funded its higher
levels of receivables, supplier advances, inventory, and capital
expenditures primarily using bank loans. The Company has sufficient
working capital to continue its growth and expansion plans for
fiscal 2014.
Liuyang's consolidated financial statements for
the year ended June 30, 2013 and
related management's discussion and analysis (MD&A) have been
filed with securities regulatory authorities and are available via
SEDAR at www.sedar.com.
Update on Cease Trade Order
On November 8,
2013, the Company announced that the TSX Venture Exchange
(the "Exchange") had suspended trading in the Company's securities
as a result of a Cease Trade Order ("CTO") issued by the
British Columbia Securities
Commission due to the Company's failure to file its audited annual
financial statements for the year ended June 30,
2013 (the "Annual Financial Statements") and its related
Management's Discussion and Analysis and Chief Executive Officer
and Chief Financial Officer certifications (the "2013 Annual
Filings") by the prescribed filing deadline under applicable
Canadian securities laws. Now that the required filings have been
made, the Company will request for the CTO to be revoked.
Reinstatement of trading can occur only when the CTO is revoked and
the Exchange has concluded its reinstatement review to ensure the
Company has satisfactorily complied with Exchange requirements.
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 18
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.
Forward-Looking Statements
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.
SOURCE Liuyang Fireworks Limited