Liuyang Fireworks Reports Second Quarter Results



    - Revenue Up 53% for Year-to-Date -

    TORONTO, Aug. 28 /CNW/ - Liuyang Fireworks Limited (TSX-V: FWK) today
reported its financial results for the second quarter ended June 30, 2009. All
amounts are in Canadian dollars unless otherwise stated.

    
    Second quarter 2009 highlights:
    -   Revenue was $2.2 million compared with $2.2 million for the second
        quarter 2008;
    -   EBITDA(1) was $347,000 compared with $570,000 for the second quarter
        2008;
    -   Net income before non-controlling interest was $243,000 compared with
        $642,000 for the second quarter of 2008;
    -   The Company completed its qualifying transaction, concurrently with
        which the Company's shares were listed on the TSX Venture exchange;
    -   The Company completed a non-brokered private placement of 5,178,364
        common shares generating proceeds of $3.1 million.

    Six-month period 2009 highlights:
    -   Revenue increased 53% to $4.7 million from $3.1 million for the first
        six months of 2008;
    -   EBITDA increased to $958,000 from $707,000 for the first six months
        of 2008;
    -   Net income before non-controlling interest increased to $642,000 from
        $592,000 for the first six months of 2008.

    Highlights Subsequent to Quarter End

    -   Jacky Long was appointed to the position of Chief Financial Officer.
    

    "Our financial results for the first half of 2009, highlighted by
year-over-year revenue growth of 53% and strong year-over-year growth in
EBITDA, reflect the continued strength of our international export business,
as well as the initial success we are having in growing our domestic
business," said Miao Hu, President and Chief Executive Officer, Liuyang
Fireworks Limited. "The second quarter was marked by the completion of a $3.1
million equity financing and our listing on the TSX-Venture Exchange. These
events represent an important step in our strategy to capitalize on the
significant opportunity in the high-growth domestic fireworks market in China.
With just five percent of our 2008 revenue derived from sales to the Chinese
market, we are embarking on a growth strategy focused on leveraging our
success in the international export markets to become a leading distributor of
fireworks in the domestic Chinese market. As one of the five largest fireworks
manufacturers in China and backed by our public listing in Canada, we believe
we are uniquely positioned to capitalize on this opportunity."

    Second Quarter Financial Results

    Revenue for the second quarter of 2009 was $2.2 million compared with
$2.2 million for the second quarter of 2008. Revenue for the second quarter of
fiscal 2009 was dampened by management's decision to move some shipments to
first quarter of 2009 to take advantage of favourable shipping costs during
the first three months of the year.
    Gross profit for the second quarter of 2009 was $927,000 compared with
$1.1 million for the corresponding quarter of 2008. The decrease in gross
margin was primarily the result of lower average selling prices for high
volume orders.
    Total expenses for the second quarter of 2009 were $629,000 compared with
$543,000 for the second quarter of 2008. The increase is primarily the result
of higher salary expenses in the second quarter of 2009 related to additions
to the senior management team associated with the Company's public listing in
Canada, which were partially offset by lower selling expenses in the second
quarter of 2009 due to lower shipping costs.
    EBITDA for the second quarter of 2009 was $347,000 compared with $570,000
for the corresponding period of 2008.
    Net income before non-controlling interest for the second quarter of 2009
was $243,000 compared with $642,000 for the same quarter of 2008. Net income
for the second quarter of 2009 was $174,000 compared with net income of
$476,000.

    Six-Month Period 2009 Financial Results

    Revenue for the first half of 2009 increased 53% to $4.7 million from
$3.1 million for the corresponding period of 2008. The increase is the result
of higher sales volumes to both the international export markets and within
China.
    Gross profit for the first half of 2009 increased to $2.0 million
compared with $1.4 million for the corresponding period of 2008.
    Total expenses for the first half of 2009 were $1.1 million compared with
$791,000 for the first six months of 2008.
    EBITDA for the first half of 2009 increased to $958,000 from $707,000 for
the first half of 2008.
    Net income before non-controlling interest for the first half of 2009
increased to $641,000 from $592,000 for the corresponding period of 2008. Net
income for the first half of 2009 was $573,000 compared with $592,000 for the
corresponding period of 2008.

    About Liuyang Fireworks Limited

    Liuyang Fireworks Limited is a leading China-based manufacturer of
fireworks that are distributed domestically and in more than 20 countries in
the Americas, Europe, Australia, and Southeast Asia. The Company has more than
15 years 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 LTD.
    (Formerly New Legend Group Limited)
    CONSOLIDATED INTERIM BALANCE SHEET
    As at June 30, 2009
    (Unaudited)

    -------------------------------------------------------------------------
                                                      2009          2008
                                                    June 30     December 31
                                                   Canadian $    Canadian $
    -------------------------------------------------------------------------

    ASSETS
    CURRENT
      Cash and cash equivalents                  $  5,020,519   $  1,935,403
      Short term investment                                 -          3,590
      Accounts receivable                           5,090,791      3,482,817
      Inventory                                       677,033      1,180,036
      Taxes recoverable                               297,103        266,208
      Prepaid expenses                                163,651        120,754
      Due from related parties                        441,932        419,454
      Due from shareholders                                 -        326,098
                                                -----------------------------
                                                   11,691,029      7,734,360
    PROPERTY AND EQUIPMENT                          9,380,870      9,829,493
    DEFERRED CHARGES                                        -        498,405
                                                -----------------------------

                                                 $ 21,071,899   $ 18,062,258
                                                -----------------------------
                                                -----------------------------

    LIABILITIES
    CURRENT
      Bank indebtedness                          $  5,106,000   $  2,924,055
      Accounts payable and accrued liabilities      2,510,096      2,909,431
      Due to related parties                          225,190              -
      Unearned revenue                                 18,108         19,098
                                                -----------------------------
                                                    7,859,394      5,852,584
                                                -----------------------------

    NON-CONTROLLING INTEREST                       10,577,397              -
                                                -----------------------------

    SHAREHOLDER'S EQUITY
      Share capital                                 2,069,057      6,703,500
      Reserve                                           4,088        588,051
      Accumulated other comprehensive income              108      2,453,546
      Retained earnings                               561,855      2,464,577
                                                -----------------------------
                                                    2,635,108     12,209,674
                                                -----------------------------

                                                 $ 21,071,899   $ 18,062,258
                                                -----------------------------
                                                -----------------------------



    LIUYANG FIREWORKS LTD.
    (Formerly New Legend Group Limited)
    CONSOLIDATED INTERIM STATEMENT OF INCOME AND COMPREHENSIVE INCOME
    For the period ended June 30, 2009
    (Unaudited)

    -------------------------------------------------------------------------
                             Three-month Three-month   Six-month   Six-month
                               June 30,    June 30,     June 30,    June 30,
                                 2009        2008         2009        2008
                              Canadian $  Canadian $  Canadian $  Canadian $
    -------------------------------------------------------------------------

    REVENUE                  $ 2,197,591 $ 2,241,354 $ 4,731,187 $ 3,088,426

    COST OF SALES              1,270,917   1,188,837   2,780,829   1,658,613
                            -------------------------------------------------
    GROSS PROFIT                 926,674   1,052,517   1,950,358   1,429,813
                            -------------------------------------------------

    EXPENSES
      General and
       administrative            504,221     233,287     828,750     402,807
      Selling                     53,753     271,682     154,698     339,224
      Amortization                70,826      37,580     164,747      48,593
                            -------------------------------------------------
                                 628,801     542,548   1,148,195     790,623
                            -------------------------------------------------

    INCOME (LOSS) FROM
     OPERATIONS                  297,873     509,969     802,163     639,190

    OTHER INCOME (EXPENSES)
      Interest income                (15)        945         226       2,084
      Realized foreign
       exchange loss                (884)    (18,877)    (29,082)    (28,342)
                            -------------------------------------------------

                                    (899)    (17,932)    (28,856)    (26,258)
                            -------------------------------------------------

    INCOME BEFORE INCOME
     TAXES                       296,974     492,037     773,307     612,932

    INCOME TAXES                  53,920      16,126     131,585      20,592
                            -------------------------------------------------

    NET INCOME BEFORE THE
     FOLLOWING                   243,054     475,911     641,722     592,340

    NON-CONTROLLING INTEREST     (68,966)          -     (68,966)          -
                            -------------------------------------------------

    NET INCOME                   174,088     475,911     572,756     592,340
    OTHER COMPREHENSIVE
     INCOME (LOSS)
    Foreign currency
     translation adjustment     (863,130)   (638,728)   (565,852)    126,661
                            -------------------------------------------------
    COMPREHENSIVE INCOME     $  (689,042) $ (162,817) $    6,904 $   719,001
                            -------------------------------------------------
                            -------------------------------------------------

    BASIC EARNINGS PER SHARE           -           -           -           -

    DILUTED EARNINGS PER SHARE         -           -           -           -

    WEIGHTED AVERAGE NUMBERS
     OF SHARES OUTSTANDING    43,197,917         N/A  43,197,917         N/A



    LIUYANG FIREWORKS LTD.
    (Formerly New Legend Group Limited)
    CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
    For the period ended June 30, 2009
    (Unaudited)

    -------------------------------------------------------------------------
                             Three-month Three-month   Six-month   Six-month
                               June 30,    June 30,     June 30,    June 30,
                                 2009        2008         2009        2008
                              Canadian $  Canadian $  Canadian $  Canadian $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
      Net income             $   174,088 $   475,911 $   572,756 $   592,340
      Items not affecting
       cash:
        Non-controlling
         interest                 68,966           -      68,966           -
        Amortization of
         equipment                70,827      37,580     164,747      48,593
                            -------------------------------------------------

                                 313,881     513,490     806,469     640,932

    Changes in non-cash
     working capital            (910,709)    848,912  (1,579,088)    801,552
                            -------------------------------------------------

                                (596,828)  1,362,402    (772,619)  1,442,484
                            -------------------------------------------------

    INVESTING ACTIVITIES
      Additions to property
       and equipment                (845)          -     (22,379) (2,196,325)
      Short term investment            -           -       3,590           -
      Deferred charges           796,009           -     498,405           -
                            -------------------------------------------------

                                 795,164           -     479,616  (2,196,325)
                            -------------------------------------------------

    FINANCING ACTIVITIES
      Bank indebtedness        2,102,124     279,087   2,181,945     279,087
      Dividends paid                   -           -    (453,090)          -
      Insurance of share
       capital                 3,107,019       4,000   3,107,019   2,198,543
      Share issuance costs    (1,088,722)          -  (1,088,722)          -
      Due from related parties  (189,641) (1,093,021)   (148,897) (1,074,465)
      Due from shareholders      597,354           -     677,707           -
                            -------------------------------------------------

                               4,528,134  (1,089,021)  4,275,963   1,124,078
                            -------------------------------------------------

    FOREIGN CURRENCY
    TRANSLATION ADJUSTMENT      (950,573)   (496,298)   (897,844)   (403,165)
                            -------------------------------------------------

    INCREASE (DECREASE) IN
     CASH FLOW                 3,775,898    (222,917)  3,085,116     (32,928)
    Cash - beginning of year   1,244,621     651,548   1,935,403     461,559
                            -------------------------------------------------

    CASH - END OF YEAR       $ 5,020,519 $   428,631 $ 5,020,519 $   428,631
                            -------------------------------------------------
                            -------------------------------------------------

    Supplementary information

      Interest paid          $    47,931 $    40,875 $    89,169 $    47,689
                            -------------------------------------------------
                            -------------------------------------------------

      Income taxes paid      $    53,920 $    16,126 $   131,585 $    20,592
                            -------------------------------------------------
                            -------------------------------------------------
    





For further information:

For further information: Jacky Long, Chief Financial Officer, Liuyang
Fireworks Limited, Tel: (416) 613-0208 ext 206, jackylong@farocean.com;
Lawrence Chamberlain, Investor Relations, The Equicom Group, Tel: (416)
815-0700 ext 257, Email: lchamberlain@equicomgroup.com

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