TORONTO, May 22, 2014
TORONTO, May 22, 2014 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") announces its financial results for the three-month period ending March 31, 2014.
- During the first quarter, lower starch prices caused a negative gross margin of 21.0% compared with a positive gross margin of 0.8% during the same period in 2013.
- The Company continues to manage its capacity utilization in reaction to market conditions. During the first quarter, the Company's Changtu and Daqing plants operated at approximately 26.2% capacity while the Tieling facility remained closed pending a decision regarding its relocation.
- As a result of a $4.7 million gain from debt forgiveness, net loss for the first quarter was $8.2 million (-$0.10 per share) compared with a net loss of $9.2 million (-$0.11 per share) during the first quarter of 2013.
- The company achieved a 42.8% improvement in EBITDA during the first quarter to negative $1.4 million compared with negative $2.4 million during the first quarter of 2013.
- The Company continues to enjoy the strong support of its banking group and successfully renewed $32.3 million in loans in the quarter.
- The Company maintains unrestricted cash balance of $11.1 million at March 31, 2014.
- On February 25, 2014 the Company was advised by the Toronto Stock Exchange that it no longer meets the minimum market capitalization and market float tests and would be delisted on March 28, 2014. On March 27, 2014, the Company was approved to be listed on the Canadian Securities Exchange under the same symbol ABC.
"Lower product prices together with higher corn prices have had a negative effect on gross margin", stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem. "This environment further emphasizes the need for consolidation and the benefits of our pending transaction with Beidahuang."
For the quarter ended March 31, 2014, sales decreased by $9.4 million or 28.3%, compared with the corresponding period of 2013. A weak Chinese economy caused Starch and Germ prices to deteriorate compared with the same period in 2013. These lower prices together with higher corn prices contributed to a deteriorated gross margin to negative 21% during the first quarter.
During the first quarter, the Company reduced capacity utilization in response to lower margins. Capacity at the Daqing and Changtu plants was 26.2% during the first quarter compared with 46% during the same period of 2013.
Lower gross margins and lower volumes production were offset by lower selling and distribution expenses together with a $4.7 million gain from the forgiveness of debt associated with the amended Tieling acquisition. As a result of the above, net losses for the first quarter declined to $8.2 million from $9.2 million during the first quarter of 2013.
SUMMARY FINANCIAL STATEMENTS
|in thousands of Canadian dollars except per share and percentage data||Three Months Ended March 31,|
|Gross profit (loss)||(4,994)||279||n/a|
|Gross margin (% of Sales)||-21.0%||0.8%|
|Income (loss) from operations||(9,695)||(6,417)||-51.1%|
|Other income (expense)||1,439||(2,791)||n/a|
|Income taxes (recovery)||(40)||4||n/a|
|Net income (loss)||(8,216)||(9,212)||10.8%|
|EBITDA before stock-based compensation||(1,363)||(2,389)||42.9%|
|Earnings per share:|
|Weighted average number of shares:|
During the first quarter the Company refinanced $32.3 million in loans, which resulted in the release $1.8 million in restricted cash. This release together with $4.6 million funds from operations and $3.3 million increase in borrowings resulted in an increase in unrestricted cash position to $11.1 million at March 31, 2014 from $1.7 million at December 31, 2013. As at March 31, 2014, total debt was $218.2 million.
Update on acquisition of Tieling Wanshunda Starch Company Ltd
On January 27, 2014, the Company entered into an amending agreement to the Tieling Sale and Purchase Agreement dated December 22, 2012 (the "Amending Agreement"). Under the terms of this Amending Agreement, the Company acquired the holding company of Tieling (Cheerful Dragon Asia Limited) from its sole owner, Kon Hon Wong (the "Seller"). Further, under the Amending Agreement, the Seller agreed to forgive the RMB 30 million Note in respect of the purchase price. The debt forgiveness is recorded as gain in the three months ended March 31, 2014.
Update on Change in Majority Shareholders of Asia Bio-Chem
Further to the press release dated March 7, 2014, Asia Bio Chem has been advised by it's controlling shareholders that a letter of intent ("LOI") has been completed which contemplates the sale of their shares of Asia Bio-Chem to a subsidiary of the Chinese state-owned Beidahuang State Farm Group General Corp.(" Beidahuang"). Beidahuang is currently completing its due diligence and operations audit of Company. With the successful completion of this work, the major shareholders of Asia Bio Chem will finalize the terms of the transaction with Beidahuang.
Asia Bio-Chem will be hosting a conference call to discuss the first quarter results at 9:00 a.m. EST on Friday, May 23, 2014. The details are as follows:
|Dial in number:||1-888-231-8191 or 647-427-7450|
|Conference ID and|
|Replay pass code:||42629599|
|Taped Replay:||1-855-859-2056 or 416-849-0833|
|(Available until May 30, 2014)|
About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the People's Republic of China, is in the business of processing corn into cornstarch, germ and gluten for sale into the domestic Chinese market. From its plants in Liaoning and Heilongjiang Province, the Company has a total processing capacity of 1.5 million tonnes of corn per year.
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.
SOURCE Asia Bio-Chem Group Corp.