In c8987 transmitted at 09:03e today, an error occurred in the "SUMMARY FINANCIAL STATEMENTS." The "Earnings per share" and "Weighted average number of shares" figures were incorrect. Corrected copy follows: Asia Bio-Chem Group Corp. Announces 2008 Annual Financial Results /THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM./ TSX Venture: ABC
TORONTO, March 16 /CNW/ - Asia Bio-Chem Group Corp. (TSXV: ABC) ("Asia Bio-Chem" or the "Company") today announced its annual financial statements for the period ending December 31, 2008.
2008 Financial Results Highlights - In June 2008, the Company completed a reverse takeover transaction as well as closed a private placement for gross proceeds of $30 million. This financing was one of the largest financing for a Chinese company in Canada and was one of the last achieved in the marketplace before the financial crisis took hold. - On September 25, 2008, the Company announced the closing of its acquisition of 100% interest in Daqing Biochemical Company Ltd. ("Daqing Bio") which owns a partially completed corn processing facility in Heilongjiang Province. Upon completion of this facility in 2009, the Company is expected to approximately triple its production capacity. - While faced with challenging market conditions in its industry during 2008, the Company has remained profitable and achieved growth in revenues during fiscal 2008 compared with the previous year. - The Daqing plant construction is well underway with approximately $63 million of construction in progress incurred as of December 31, 2008. The Company expects the Daqing Plant to be complete and in operation by the fourth quarter of 2009. - The Company's wholly owned subsidiary, Chang Tu Bio-Chem Technology Co. Ltd. ("Changtu Bio") has received a working capital loan from China Construction Bank for 35 million RMB ($6.6 million). In addition, the Company has entered into an agreement with Zhaoyuan County Government relating to a long term loan of up to 100 million RMB ($18.9 million) to assist with financing its expansion.
Mr. Zhiping Wang, President and CEO of Asia Bio-Chem stated; "Our Company has achieved some considerable milestones during 2008. Against the backdrop of the most challenging capital markets, we achieved a successful financing and public listing. While much of our industry was forced to retrench, we executed on our growth strategy through the purchase and construction of the Daqing plant which will triple our production capacity. And lastly, while faced with challenging commodity price environment, we maintained over 20% gross margins while maintaining profitability and growing revenues."
Growth in both production volumes and product pricing contributed to an increase in revenues during fiscal 2008 compared with the previous year. During fiscal 2008, revenues grew 11.3% to $84.5 million.
Gross profit increased to $18.5 million during the fiscal year representing a 0.6% increase over fiscal 2007 primarily due to the depreciation of Canadian dollar against Chinese RMB. Gross margin as a percentage of sales was 21.9% during 2008 compared with 24.2% in fiscal 2007. The reduction in gross margin as a percentage of sales was primarily due to higher corn costs in 2008.
SUMMARY FINANCIAL STATEMENTS in thousands of Canadian dollars except per share and percentage data Twelve Months Ended December 31, --------------------------------- 2008 2007 ----------------- --------------- Sales $ 84,449 $ 75,898 Gross profit 18,486 18,381 Gross margin (% of Sales) 21.9% 24.2% Operating expenses (x)7,473 2,375 Income from operations 11,013 16,007 Other income (expense) (xxx)(393) (xx)2,847 Income taxes 1,896 627 Net income 8,723 18,227 EBITDA 11,691 19,498 EBITDA before stock-based compensation 14,361 19,498 Earnings per share Basic and diluted 0.14 0.49 Weighted average number of shares Basic and diluted 61,177,213 37,540,000 Balance Sheet Highlights As at 12/31/08 As at 12/31/07 Cash 10,489 6,655 Working Capital 5,154 4,234 Total assets 113,144 33,811 Current Ratio 1.28:1 1.24:1 (x) Includes a $2.67 million non-cash charge for stock-based compensation expense in 2008. (xx) Includes $1.2 million gain on disposal of equipment and $1.6 million gain on foreign exchange arising largely due to conversion of a Hong Kong dollar denominated shareholder loan which was converted to equity in the second quarter of 2007. (xxx) Includes a foreign exchange loss of $0.5 million.
Excluding the (non-cash) stock-based compensation expense, income from operations during 2008 was $13.7 million. This compares with income from operations of $16 million during fiscal 2007. This decline is primarily due to additional expenses associated with achieving and maintaining its status as a public company.
The Company's operating subsidiary, Changtu Bio began paying tax at 12.5% which represents 50% of the Chinese corporate tax rate starting at January 1, 2008. Consequently, the Company's tax expense during the year was $1.9 million compared with approximately $0.6 million during the same period in 2007.
Net income during the year was $8.7 million compared with $18.2 million in 2007. This decline in net income was due to the above mentioned increase in operating expenses, higher taxes and the lack of one-time gains experienced in 2007.
Year 2008 EBITDA excluding stock-based compensation was $14.4 million compared with $19.5 million in 2007. The decline of $5.1 million was the result of the aforementioned public company expenses incurred in 2008 as well as the lack of gain on disposal of equipment and foreign exchange gain experienced in 2007.
Cash and cash equivalents totaled $10.5 million as of December 31, 2008, representing an increase of $3.8 million compared with the balance as of December 31, 2007. This increase was a result of $15.7 million cash flows generated by operating activities, $27.2 million by financing activities of private placement, offset by $17.3 million used in the acquisition of Daqing and $23.9 million used for plant construction, equipment purchases and deposits. A further increase of $2.1 million represents the changes in exchange rates on cash.
As at December 31, 2008 working capital was $5.2 million and the Company had no bank debt and a shareholders equity base of $83 million.
On September 25th, 2008, the Company announced that it had closed the acquisition of Daqing Biochemical Company Ltd. ("Daqing"). Daqing owns a partially completed, 600,000 tonne corn processing plant in Zhaoyuan County of Heilongjiang Province in China. The purchase price of Daqing was approximately RMB 160 million (approximately $24.7 million) of which 70% has been paid in cash at closing and 30% is in the form of an unsecured note ("Note"). The Note is non-interest bearing and due, in full, 6 months after completion of construction of the plant.
The Daqing plant construction is well underway with approximately $63 million of construction in progress incurred as of December 31, 2008. The remaining capital required to complete the project and current obligations associated with the project are expected to be financed with a combination of cash, cash flow from operations, bank and government financing.
Changtu Bio has entered into a loan agreement with China Construction Bank for a RMB 35 million ($6.6 million) short term, working capital loan. The interest rate on this loan will be 110% of the Peoples Central Bank Rate. The loan agreement provides that the company is restricted from pledging certain of its current assets.
In addition, the Company has entered into an agreement with Zhaoyuan County Government whereby a long term loan will be made available to the Company's wholly owned subsidiary, Daqing Bio in the amount of up to a maximum of RMB 100 million ($18.9 million). This loan is intended to assist the Company with financing its expansion activities in Daqing and will be made available in separate drawdowns. The loan will have a term of 5 years from the date of drawdown and bear interest at 1% per annum payable in advance. Daqing Bio has provided a corporate guarantee to Daqing Industrial and Commercial Investment Company Limited ("DICICL") in connection with the loan from Zhaoyuan County Government to the Company.
Conference Call Asia Bio-Chem will be hosting a conference call to discuss the annual results at 9 am Tuesday, March 17, 2009. The details are as follows: Dial in number: 1-800-731 5319 or 416-644-3420 Taped replay: 416-640-1917 Pass Code: 21300249 followed by the number sign (available until March 31th, 2009)
About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiary in the Peoples Republic of China ("PRC") is in the business of manufacturing cornstarch and related products. From its plant in Liaoning Province, the Company produces approximately 270,000 tonnes of cornstarch, corn germ, gluten and fiber per year for sale into the domestic market in the PRC. The Company is currently constructing a second facility in Heilongjiang Province which, upon completion, is expected to triple production capacity.
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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