Asia Packaging Group Inc. Announces Third Quarter Fiscal 2012 Financial Results and a Pending Acquisition
01 Marzo 2012 - 1:00PM
Marketwired Canada
Asia Packaging Group Inc. (TSX VENTURE:APX) ("Asia Packaging" or the "Company")
announces its interim financial statements for the three-month period ending
December 31, 2011. The Company is also pleased to announce that it has signed a
purchase agreement to acquire JinJiang City Anhai Hongrizhong Plastic Color
Printing Co., Ltd.
Interim Financial Results
Highlights
-- Company achieved revenues of $11 million for the quarter ended December
31, 2011 representing 8.7% growth over the corresponding period last
year. This improvement was largely due to a change in product mix
towards higher price, higher margin products.
-- Higher value product sales contributed to an increase in gross profit
margin during the third quarter to 27.3% from 24.9% in the same period
of last year.
-- The Company achieved EBITDA before stock based compensation of $2.8
million during the third quarter representing a 13.7% improvement over
the same period of last year.
-- Net income increased 10.3% for the third quarter to $2.3 million
compared with $2.1 million during the same period of last year.
-- As at December 31, 2011, the Company had $13.8 million in cash and no
debt.
-- On February 27, 2011 the Company signed an asset purchase agreement with
JinJiang City Anhai Hongrizhong Plastic Color Printing Co., Ltd. ("Anhai
Hongrizhong") and its majority shareholder. Upon closing, the Company
will take over the business of Anhai Hongrizhong.
"We are pleased to report that we have improved our performance as we continue
to shift our product focus towards higher margin Medical products," stated Mr.
Wenge Hong, President and CEO of Asia Packaging. "Further, the acquisition of
Anhai Hongrizhong will increase our mix of higher margin products while bringing
us closer to larger customers. The Anhai Hongrizhong business generated over $6
million in revenue last year and is profitable. Given the minimum share
dilution, the acquisition is expected to be immediately accretive to the
earnings per share of Asia Packaging."
During the third quarter, sales at Asia Packaging increased to over $11 million
representing an 8.7% increase compared with the corresponding period of last
year. This increase was achieved thru a change in product mix away from lower
margin CPP film in favor of higher margin medical packaging products. As a
result of this change in mix, the average sale price experienced during the
quarter increased by 29.7% compared with the same period last year.
With the change in product mix towards medical packaging and away from the
commodity CPP film products, gross margin improved during the third quarter to
27.3% from 24.9% during the same quarter of last year.
SUMMARY FINANCIAL STATEMENTS
:
---------------------------------------------
Three Months Period Ended
December 31 (Unaudited) Change
------------------------------
2011 2010
---------------------------------------------
Sales 11,010,446 10,129,781 8.7%
Gross profit 3,010,374 2,525,843 19.2%
Gross margin (% of Sales) 27.3% 24.9% 9.7%
Operating expenses 364,195 136,935 166.0%
Income from operations 2,646,179 2,388,908 10.8%
Other income 14,326 3,183 350.1%
Income taxes 349,375 297,299 17.5%
Net income 2,311,130 2,094,792 10.3%
EBITDA 2,826,672 2,486,611 13.7%
EBITDA before stock-based
compensation 2,826,672 2,486,611 13.7%
Earnings per share
Basic 0.018 0.020
Diluted 0.018 0.020
Weighted average number of
shares
Basic 127,878,450 106,300,000
Diluted 128,050,500 106,300,000
---------------------------------------------
For the three months ended December 31, 2011, EBITDA increased by $340,061 or
13.7%. The increase in EBITDA was primarily the result of the aforementioned
increase in income before tax.
Net income for the three months ended December 31, 2011 was $2,311,130,
representing a 10.3% increase compared to the same period last year. Net income
in the current three months ended December 31, 2011 represents 21% of gross
revenue, compared to 20.7% of gross revenue for the comparable period last year.
Acquisition of Anhai Hongrizhong
Mei Tak (HK) Group Limited ("Mei Tak"), The Company's wholly-owned subsidiary,
has signed an asset purchase agreement (the "Agreement") dated February 27, 2012
with JinJiang City Anhai Hongrizhong Plastic Color Printing Co., Ltd. ("Anhai
Hongrizhong"), a company incorporated in the People's Republic of China, and
Jinyang Yang, a Chinese businessman.
Under the terms of the Agreement, Mei Tak has agreed to buy from Anhai
Hongrizhong and from Mr. Yang (together, the "Vendors") certain assets involved
in plastic color printing located in the People's Republic of China (the
"Business Assets").
In consideration for the Business Assets, Mei Tak has agreed to pay to the
Vendors RMB 50,000,000 as follows: RMB 40,000,000 in cash and RMB 10,000,000
worth of common shares (the "Consideration Shares") in the capital of the
Company at a price of CDN$0.30 per share (approximately 5,343,336 common shares
in the capital of the Company). The Consideration Shares are issuable to Mr.
Yang or his personal holding company only after all of the following milestones
has been achieved:
-- total revenues generated from purchase orders, contracts, engagements or
commitments with the customers of the Vendors for the period from April
1, 2012 to March 31, 2013 exceed RMB 60,000,000; and
-- total revenues generated from purchase orders, contracts, engagements or
commitments with the customers of the Vendors for the period from April
1, 2013 to March 31, 2014 exceed RMB 75,000,000
The Company expects to close the acquisition within the next week.
About Asia Packaging Group Inc.
Asia Packaging Group, through its wholly-owned subsidiaries in the People's
Republic of China ("PRC"), is in the business of manufacturing packaging
products and services to the food and pharmaceutical industries in China. The
Company operates a 38,000 square meter plant located in Yichun City, Jiangxi
Province in PRC.
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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