Asia Bio-Chem Group Corp. Announces 2012 Fourth Quarter and Fiscal Year End Financial Results

TORONTO, March 28, 2013 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") announces its financial results for the three-month and fiscal year ending December 31, 2012.

Highlights

  • Lower products' prices coupled with high corn costs caused gross margin to decline to negative 13.0% during the fourth quarter compared with 3.3% during the same period in 2011.
  • In response to negative gross margins, the Company adjusted production volume to 63,300 tonnes during the quarter representing 30% of capacity.
  • Negative gross margin resulted in a net loss of $14.4 million (-$0.17 per share) compared with $5.8 million net loss (-$0.07 per share) during the fourth quarter of 2011.
  • During the fourth quarter, the company increased its total borrowings by $15.1 million to $123.2 million at December 31, 2012.
  • The Company continues to enjoy the strong support of its banking group.  Since the end of the fourth quarter, the Company has successfully renewed two of its short term credit facilities and secured a new short term credit facility in the amount of $6.3 million (RMB 40 million).
  • The Company maintains unrestricted cash balance of $5.0 million at December 31, 2012.
  • On December 22, 2012, the Company entered into a binding agreement to acquire 100% of interest in Tieling Wanshunda Starch Company Ltd. ("Tieling"), a wholly foreign owned enterprise under the laws of the PRC.  On January 1, 2013, the Company closed the acquisition for an aggregate purchase price of RMB 280 million, RMB 250 million in the form of overdue accounts receivable of Asia Bio-Chem, and RMB 30 million of note payable due 12 months after the completion of all title changes and filing approval with the local government in the PRC. Tieling is a corn processing plant located in the city of Tieling in Liaoning Province of PRC, it has the capacity to process approximately 600,000 tonnes of corn per year.  The Company's main reasons for completing this acquisition are to acquire additional corn processing plant capacity, to ultimately control a larger share of the corn processing market in Northern China, to obtain the corn processing and sweetener processing licenses held by Tieling, to eliminate a competitor from the market, and to take advantage of an opportunity to acquire additional plant at a cost significantly below what the cost would be to construct it.  In addition, it offered the Company a solution to realize on its overdue trade receivables.

"2012 was another challenging year for our industry.  Margins have suffered from persistently high corn prices and lower product demand due to the weak Chinese economy," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem.  "We believe that market conditions will improve and have undertaken the acquisition of Teiling to position our company for this improvement.  The acquisition also goes a long way to solving our ongoing receivables collection issues."

During the fourth quarter, overall production was 63,290 tonnes representing 30% capacity utilization.

During the fourth quarter, corn costs increased by 5.2% compared with the same period of 2011 as the seasonal price decline was experienced later in the quarter. As a result, gross margin for the quarter was -13.3% compared with 3.3% during the same period in 2011.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") during the fourth quarter declined by $5.5 million to negative $8.1 million, as the Company experienced lower margins and higher costs including a $3.5 million provision against its accounts receivables.

SUMMARY FINANCIAL STATEMENTS

in thousands of Canadian
dollars except per share and
percentage data
Three Months Ended   Twelve Months Ended December 31
  31/12/12 31/12/11 % Change   2012   2011 % Change
Sales 20,565 63,576 -67.7%   130,440   252,498 -48.3%
Gross profit (2,680) 2,130 -225.8%   (8,203)   20,254 -140.5%
Gross margin (% of Sales) -13.0% 3.3%     -6.2%   8.0%  
Operating expenses 7,908 6,436 22.9%   24,247   22,434 8.1%
Income (loss) from
operations
(10,588) (4,306) -145.9%   (32,450)   (2,180) -1388.5%
Other income (expense) (1,331) (1,758) 24.3%   (6,306)   (4,476) -40.9%
Income tax recovery
(expenses)
(2,466) 308 -894.2%   (523)   400 -230.7%
Net income (14,385) (5,755) -150.0%   (39,279)   (6,256) -527.9%
EBITDA (8,119) (2,587) -213.9%   (23,854)   5,305 -549.7%
EBITDA before stock-
based compensation
(8,091) (2,441) -231.5%   (23,497)   6,267 -474.9%
Earnings per share                
Basic (0.17) (0.07)     (0.46)    (0.07)   
Diluted (0.17) (0.07)     (0.46)    (0.07)   
Weighted average number
of shares
               
Basic         85,306,258    84,576,395   
Diluted         85,306,258    84,576,395   
                 
in thousands of Canadian
dollars except per share and
percentage data
Three Months Ended   Twelve Months Ended December 31
  31/12/12 31/12/11 % Change   2012   2011 % Change
Balance Sheet
Highlights
        As at
12/31/12
  As at
12/31/11
 
Cash         36,185   35,620  
Working capital          (48,553)   (9,963)  
Total assets         221,494   251,686  
Current ratio         0.68:1x   0.93:1x  

During 2012, the Company's unrestricted cash position declined to $5.0 million and total debt increased to $123.2 million as at December 31, 2012.

Conference Call
Asia Bio-Chem will be hosting a conference call to discuss the year end results at 9:00 a.m. EST on Monday, April 1, 2013. The details are as follows:

Dial in number: 1-888-231-8191  or  647-427-7450
   
Conference ID and
Replay pass code: 
22341136
   
Taped Replay: 1-855-859-2056 or 416-849-0833
(Available until April 13, 2013)

About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the People's Republic of China, is in the business of processing corn into cornstarch, germ and gluten for sale into the domestic Chinese market.  From its plants in Liaoning and Heilongjiang Province, the Company has a total processing capacity of 1.5 million tonnes of corn per year.

This news release contains certain statements that may be deemed "forward looking statements". Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects,", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward looking statements, except as required by law, in the event that management's beliefs, estimates or opinions, or other factors, should change.

 

SOURCE: Asia Bio-Chem Group Corp.

For further information:

For Corporate Information: 
Robert Wilson
Executive Vice President
Asia Bio-Chem Group Corp.
Tel: 416-603-7500
Email: robert.wilson@asiabiochem.com

Profil de l'entreprise

Asia Bio-Chem Group Corp.

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