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 $18.41 million due partially to environmental concerns in the Chinese domestic market;
- Gross margin improved to 37.5% of sales from 37.2% of sales in fiscal 2012 as a result of selling more higher margin products;
- Completed construction of a new warehouse for Far Ocean Youxian Company (a wholesale distribution company 70% owned by Liuyang).
- New product development was initiated in response to environmental concerns and fireworks regulatory changes in China;
"Despite the higher gross margin achieved during the year, our fiscal 2013 financial results were disappointing," said Mr. Hu, Liuyang's president and CEO. "Our results were impacted by the cancellation of several of our firework display shows during the Spring Festival following media reports suggesting that widespread use of fireworks was contributing to heightened levels of smog in Beijing. We have since developed, and begun selling, new environmentally-friendly products to address environmental concerns and satisfy regulatory bodies in China. With this issue now behind us, and construction of Far Ocean Youxian Company's new warehouse now complete, we look forward to the continued, successful execution of our growth strategy."
Income Statement Highlights
| In thousands except per share and
| 3 months ended
| 12 months ended
| EBITDA before stock-based
|Net income per share||Basic||$(0.013)||$(0.0005)||$(0.002)||$0.015|
Balance Sheet Highlights
|In thousands except ratio data||As at June 30|
|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.
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
For further information:
Chief Financial Officer
Liuyang Fireworks Limited
Tel : 647 350 8818