TSX Venture: ABC
TORONTO, Aug. 13 /CNW/ Asia Bio-Chem Group Corp. (TSXV: ABC) ("Asia Bio-Chem" or the "Company") today announced its interim financial statements for the three month period ending June 30, 2010.
Interim Financial Results
- During the Second quarter of 2010 the Company achieved 144%
increase in revenues to $56.9 million and a 170% increase in gross
profit to $9.6 million compared with the corresponding period of
- The average production capacity at the Daqing plant during the
second quarter was 79% bringing the Company's combined capacity
utilization to 84% during the quarter.
- The addition of the Daqing plant coupled with continued improvement
in product pricing contributed to a 279% increase in EBITDA before
stock based compensation during the second quarter of 2010 compared
with the same period in 2009. Net income increased $4.0 million in
the second quarter of 2010 to $4.5 million compared with the same
period in 2009.
- As at June 30, 2010, the Company had $7.3 million in cash and $52.4
million in government and bank debt.
- The Company also announces that commencing in August it will begin
the first phase of work on the Changtu Bio Chemical Industrial Park
project in cooperation with the Changtu county government. The
initial phase of this project will involve the upgrade and
relocation of the Changtu facility to improve efficiencies and
accommodate new customer requirements.
"We are pleased to report that our new Daqing facility is running smoothly and contributing to earnings" stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem. "With Daqing up and running, we will use this opportunity to upgrade the Changtu facility to improve cost efficiency through a reduction in energy comsumption and discharge. These improvements will position our company to win business with the largest players in the global market."
With the improved capacity from the Daqing plant, second quarter revenues increased over the first quarter of fiscal 2010 by $16.8 million or 43%. Second quarter gross profit also increased by $2.8 million or 42% compared with the first quarter.
As a percentage of sales, gross margin was 17% during the quarter which was consistent with the first quarter even with a 17% increase in average corn costs experienced during the second quarter.
SUMMARY FINANCIAL STATEMENTS
in thousands of Canadian dollars
except per share and percentage data Three Months Ended
June 30, June 30,
2010 2009 % Change
Sales 56,883 23,299 144.1%
Gross profit 9,595 3,558 169.6%
Gross margin (% of Sales) 16.9% 15.3%
Operating expenses 4,272 2,957 44.5%
Income from operations 5,323 601 785.7%
Other income (expense) (749) (107)
Income taxes 115 65
Net income 4,459 430 937.0%
EBITDA 7,003 1,088 543.7%
EBITDA before stock-based compensation 7,608 2,007 279.1%
Earnings per share
Basic 0.06 0.01
Diluted 0.06 0.01
Weighted average number of shares
Basic 76,840,529 76,777,025
Diluted 78,606,454 76,777,025
Balance Sheet Highlights As at As at
Cash 7,299 14,119
Working Capital 7,686 1,685
Total assets 154,930 142,282
Current Ratio 1.15:1 1.04:1
With the contribution from Daqing together with strong product prices, the Company achieved EBITDA before stock based compensation of $7.6 million during the second quarter, the highest in the Company's history and 40% improvement over the first quarter.
During the first six months of 2010, the Company's cash position declined to $7.3 million as at June 30, 2010 primarily due to increased working capital requirements including higher deposits on corn purchases.
Production at Daqing has improved during the second quarter with the average corn processing capacity utilization reaching 79% during the quarter.
As stated, in previous announcements, the Company is expanding its loading system at the Daqing plant to accommodate bi-modal container cars. This expansion is expected to increase throughput at the dock and therefore allow the plant to run at a higher capacity. In addition, this expansion will improve the rail-to-ship transfer and therefore allow quicker delivery to our customers. The Company expects to complete this project before the end of October.
Based on the above initiatives, management expects to achieve continued improvements in capacity utilization at its Daqing plant over the coming months.
Changtu Corn Bio Chemical Project
Beginning in the third quarter of this year the Company will begin work on the Changtu Corn Bio Chemical Industrial Park which has been established in cooperation with the Changtu county government. Upon completion, the project will include a total of 900,000 tonnes of corn processing representing 600,000 tonnes of net new corn processing capacity .
The first phase ("Phase 1") of this project will include an upgrade of our Changtu plant in the area of evaporation, dewatering and packaging. These upgrades will improve efficiencies by reducing steam, electricity and water usage. Also by undertaking these upgrades the Company will satisfy the latest standards of the international food and beverage industry and allow the Company to qualify for larger contracts. Phase 1 of the project will also include the relocation of the Changtu facility to a new 190,000 square meter parcel of land which will be granted to the Company by the government. The county has made significant investments into the new location which is 7.5 km from the existing Changtu plant. The existing Changtu facility will remain the property of the company and serve as a storage facility to allow the Company to manage more of its own grain supply for the new project.
The Phase 1 (upgrade and relocation) will cost the company approximately RMB 80 million ($12 million) which will be funded by cash flow and bank debt. Phase 1 of the project will begin on August 15, 2010 and is expected to be completed by mid November 2010, after which, the company will resume production from the new location. The relocation process is expected to result in a 90 day reduction in capacity during the third and fourth quarter. To supplement the Daqing capacity, the Company is building inventory ahead of the relocation period.
Asia Bio-Chem will be hosting a conference call to discuss the third quarter results at 10 am Monday, August 16, 2009. The details are as follows:
Dial in number: 1-888-231-8191 or 647-427-7450
Conference ID and
Replay passes code: 92366763
Taped Replay: 1-800.642.1687 or 416.849.0833
(available until August 30th, 2010)
About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the Peoples Republic of China ("PRC") is in the business of manufacturing cornstarch and related byproducts. From its plants in Liaoning and Heilongjiang Province, the Company has a total processing capacity of 900,000 tonnes of corn. The Company products include cornstarch, corn germ, gluten and fiber which are sold into the domestic Chinese market.
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.
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SOURCE Asia Bio-Chem Group Corp.
For further information: For further information: For Corporate Information: Asia Bio-Chem Group Corp., Suite 2105 - 130, Adelaide Street West, Toronto, Ontario, M5H 3P5, Attention: Robert Wilson, Tel: 416-603-7500