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Liuyang Fireworks Reports Second Quarter Financial Results

source: Liuyang Fireworks     author: Liuyang Fireworks      Published time: 2014-03-04 16:43:39    
Toronto, Ontario, March 3, 2014 – Liuyang Fireworks Limited (TSX-V: FWK) (“Liuyang” or “the Company”) today announced financial results for its second quarter and first six months ended December 31, 2013. All amounts are in Canadian dollars unle

Toronto, Ontario, March 3, 2014 – Liuyang Fireworks Limited (TSX-V: FWK) (“Liuyang” or “the Company”) today announced financial results for its second quarter and first six months ended December 31, 2013. All amounts are in Canadian dollars unless otherwise indicated.

 

Highlights for the second quarter:

 

  • Sales of the Company’s firework products were lower as a result of a weaker Chinese economy, and from concerns over poor air quality in major cities in China;
  • During the second quarter ended December 31, 2013 revenues was $4.6 million of which 85% was international sales.  For the quarter revenues decreased 18% compared with the same period of 2012;
  • EBITDA was negative $231,968 compared to $404,006 the previous year; Net loss was $410,423 compared to net income of $215,987 a year earlier.

 

“Our financial results for the quarter were negatively affected by the ongoing poor economic conditions as well as poor smog conditions in China,” said Mr. Hu, Liuyang’s president and CEO.  “The Chinese government issued a circular in November 2013, urging officials not to buy fireworks with public funds during the holidays. As a result of this decree and heightened concerns over smog, many local governments and enterprises cancelled their planned fireworks shows for the Lunar New Year holiday. The good news is that our lower domestic sales were partially offset by a 32.8% increase in sales to international markets. To address environmental concerns and satisfy regulatory bodies in China, we have completed development of our new environmentally-friendly fireworks products, which have started selling as of the second quarter.”

Summary Financial Statements

 

 

In thousands except per share and % data

3 months ended Dec. 31

6 months ended Dec. 31

2013

2012

2013

2012

Revenue

$4,565

$5,565

$7,687

$9,634

Gross profit

$1,624

$2,413

$2,633

$3,801

Gross margins

35.6%

43.4%

34.3%

39.5%

EBITDA

$(232)

$404

$(443)

$8707

Net income

$(410)

$216

$(787)

$308

Net income per share

Basic

$(0.007)

$0.004

$(0.014)

$0.007

 

Diluted

$(0.007)

$0.004

$(0.014)

$0.006

 

 

In thousands except ratio data

3 months ended Dec. 31

2013

2012

Cash

$1,750

$2,848

Current ratio

1.82:1

1.65:1

Working capital

$7,194

$7,630

Total assets

$19,900

$22,931

Debt to equity ratio

0.78:1

1.05:1

 

Review of Second Quarter Results

 

Revenue for the second quarter was $4.57 million, representing a decline of $1 million or 18% compared to the second quarter of the previous year. A $1.98 million decrease in China domestic market fireworks revenue was partially offset by a $0.98 million improvement in international revenues during the quarter. Weaker domestic fireworks revenue for the quarter was a result of the weak Chinese economy and heightened concerns over air quality issues in China.

 

Gross profit for the quarter was $1.6 million, or 35.6% of revenue, compared with $2.4 million, or 43.4% of revenue, for the same quarter last year. The decrease in gross margin was attributable to higher international sales of lower margin products as well as a more competitive domestic business environment.

 

EBITDA for the quarter was negative $231,968, representing a decrease of $635,974, or 157%, compared with the second quarter of fiscal 2013. The decrease in EBITDA was mostly attributable to the lower revenue and gross margins experienced during the quarter.

 

The Company had a net loss of $410,423, or $0.007 per share, compared to net income of $215,987, or $0.004 per share, for the second quarter of last year.

 

At December 31, 2013, the Company had cash of $1.75 million and working capital of $7.19 million. These figures compare to cash of $2.85 million and working capital of $7.63 million at December 31, 2012.

 

Liuyang’s consolidated financial statements for the three and six months ended December 31, 2013 and related management’s discussion and analysis (MD&A) will be filed with securities regulatory authorities within applicable timelines and will be available via SEDAR at www.sedar.com.

 

 

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 17 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.

 

For further information, contact:

 

 

Jacky Long

Chief Financial Officer

Liuyang Fireworks Limited

Tel : 647 350 8818

jackylong@farocean.com

 

 

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.