Net income increases to $4.9 million in fiscal 2008 compared to $3.9 million in fiscal 2007
Affirms adjusted net income guidance of $9 million for fiscal 2009
NEW YORK and BEIJING, Oct. 3 /PRNewswire-FirstCall/ -- China Advanced Construction Materials Group, Inc. ("China ACM") (OTC Bulletin Board: CADC) today announced financial results for the twelve months ended June 30, 2008.
Mr. Xianfu Han, Chairman and Chief Executive Officer, stated, "We are pleased with our strong financial performance for fiscal 2008, as illustrated by a 31% increase in revenue and 44% increase in gross profit. We attribute this performance to the growing interest in our technically advanced concrete products, which translated into new contract awards and acceleration of existing projects. New contract awards in fiscal 2008 included the JinYuChi Office & Hotel project, the HeXie Garden residential project and the XiaoHongMen New Village. China ACM's market share currently represents less than 7% of the open tendered ready-mix concrete market in Beijing, and we seek to capture additional market share through the innovation of new materials, expanding our geographic footprint and building long-term relationships with top construction companies, general contractors, engineers and the Chinese government."
Mr. Han continued, "During fiscal 2008, we increased our concrete production to nearly 700,000 cubic meters of ready-mix concrete to support our growing portfolio of landmark projects. In June 2008, we completed a $7 million private placement to help facilitate our further growth through the construction of new plants. We recently completed our portable plant to support our involvement in the Beijing to Shanghai High Speed Railway project, which will add an additional 400,000 cubic meters of annual production capacity. We have also entered into technical consulting and joint venture agreements with several independently-owned mixture stations. We expect to expand upon this higher margin business in the months ahead and to continue the vertical integration of our operations."
Mr. Han concluded, "Overall, our proven ability to provide a superior product accounts for our increasing number of repeat customers and high recurring revenue. We have recently been awarded contracts that are expected to account for nearly one million cubic meters of ready-mix concrete through December 2009. In addition to our involvement with the Beijing to Shanghai high-speed railroad, other projects recently undertaken include the East Datong to Gudian railway project and the Beijing to Shi Jiazhuang high-speed railroad. As a result of these and other opportunities underway, we are confident in our ability to achieve net income of at least $9 million for the fiscal year ending June 30, 2009, after adjusting for certain transaction-related charges and expenses."
Revenue for the twelve months ended June 30, 2008 increased 30.7% to $27.6 million, compared to $21.1 million for fiscal 2007. Net income for the twelve months ended June 30, 2008 increased 26.9% to $4.9 million compared to net income of $3.9 million for the same period in fiscal 2007. Net income for fiscal 2008 included cash and non-cash expenses associated with the reverse merger of BVI-ACM and the preferred stock offering, totaling $420,159. Excluding these transaction related expenses, the company achieved net income of $5.4 million for the fiscal year ended June 30, 2008. Additionally, the company became subject to a 25% income tax starting January 1, 2008, which the company did not incur in fiscal 2007.
As of September 29, 2008, China ACM had 10,525,000 shares of common stock issued and outstanding.
About China ACM
China ACM, founded in 2002 and based in Beijing, China, is a leading producer of advanced construction materials for large scale commercial, residential, and infrastructure developments. The company is primarily focused on producing and supplying a wide range of advanced ready-mix concrete materials for highly technical, large scale, and environmental construction projects. The company also aims to develop and produce new and innovative environmentally conscious construction materials.
China ACM provides materials and services through its seven ready-mix concrete plant network covering Beijing metropolitan area. China ACM owns one plant, leases two plants and has technical services and preferred procurement agreements with four other independently-owned plants. China ACM is ISO 9001 (product quality), ISO 14001 (environmental safety), and ISO 18001 (employment environment safety) certified. Additional information about the company is available at www.china-acm.com.
This press release contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including changes from anticipated levels of sales, future national or regional economic and competitive and regulatory conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, and other factors. Additional Information regarding risks can be found in the Company's Annual Report on Form 10K and in the Company's recent report on Form 8K filed with the SEC. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.
Contact:
Crescendo Communications, LLC
David Waldman or Klea Theoharis
Tel: (212) 671-1020
Email: ir@china-acm.com
Web: http://www.china-acm.com
(tables follow)
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2008 AND 2007
2008 2007
ASSETS
CURRENT ASSETS:
Cash $ 1,910,495 $ 1,424,883
Restricted cash 913,092 -
Investments 61,767 69,209
Accounts receivable, net of
allowance for doubtful accounts
of $224,924 and $53,038,
respectively 9,365,486 12,388,484
Inventories 237,836 416,420
Other receivables 505,968 1,227,622
Prepayment 3,240,394 512,874
Total current assets 16,235,038 16,039,492
PLANT AND EQUIPMENT, net 16730220 7894876
OTHER ASSETS:
Financing cost 586,818 -
Accounts receivable (non-current),
net of allowance for doubtful
accounts of $411,061 and $96,929,
respectively 4,753,006 2,243,566
Total other assets 5,339,824 2,243,566
Total assets $ 38,305,082 $ 26,177,934
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,293,553 $ 8,453,884
Customer deposits 165,434 -
Short term loans 4,271,222 5,876,735
Other payables 254,259 142,330
Other payables - shareholder 880,302 -
Accrued liabilities 145,207 208,093
Taxes payable 1,073,237 661
Current portion of contribution
payable - 750,000
Total current liabilities 13,083,214 15,431,703
Contribution payable - 4,250,000
Redeemable preferred stock ($0.001
par value, 875,000 and 0 shares
issued) 5,831,452 -
net of discount of $1,168,548 and
$0 at June 30, 2008 and 2007,
respectively
Total liabilities 18,914,666 19,681,703
COMMITMENTS AND CONTINGENCIES - -
SHAREHOLDERS' EQUITY:
Preferred stock $0.001 par value,
1,000,000 shares authorized,
875,000 redeemable preferred
shares issued and outstanding in
2008, and reported in liabilities
Above - -
Common Stock, $0.001 par value,
74,000,000 shares authorized,
10,525,000 and 8,809,583 shares
issued and outstanding, respectively 10,525 8,810
Paid-in-capital 13,494,105 12,091,290
Contribution receivable (1,210,000) (13,470,100)
Deferred Compensation (27,708) -
Retained earnings 3,072,249 6,309,675
Statutory reserves 1,452,779 896,634
Accumulated other comprehensive
income 2,598,466 659,922
Total shareholders' equity 19,390,416 6,496,231
Total liabilities and
shareholders' equity $ 38,305,082 $ 26,177,934
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED JUNE 30, 2008 AND 2007
2008 2007
REVENUE $ 27,565,044 $ 21,082,534
COST OF SALES 20,799,398 16,393,134
GROSS PROFIT 6,765,646 4,689,400
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,946,541 1,273,415
INCOME FROM OPERATIONS 4,819,105 3,415,985
OTHER INCOME, NET
Other subsidy income 1,586,192 1,264,952
Non-operating (expense) income, net (79,312) 14,494
Interest expense, net (367,833) (797,378)
TOTAL OTHER INCOME, NET 1,139,047 482,068
INCOME BEFORE PROVISION FOR INCOME
TAXES 5,958,152 3,898,053
PROVISION FOR INCOME TAXES 1,012,382 -
NET INCOME 4,945,770 3,898,053
OTHER COMPREHENSIVE INCOME:
Unrealized (loss) gain from
marketable securities (12,482) 8,523
Foreign currency translation
adjustment 1,951,026 461,570
COMPREHENSIVE INCOME $ 6,884,314 $ 4,368,146
EARNING PER SHARE
Basic
Weighted average number of shares 9,064,359 8,809,583
Earning per share $ 0.55 $ 0.44
Diluted
Weighted average number of shares 9,255,616 8,809,583
Earning per share $ 0.35 $ 0.44
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2008 AND 2007
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,945,770 $ 3,898,053
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 1,178,745 1,091,740
Amortization of discount on capital
lease - 121,834
Amortization of financing cost 15,682 -
Amortization of discount on convertible
preferred stock 33,387
Loss on disposal of equipment - 7,638
Bad debt expense, net of recovery 443,171 -
Warrants issued for services 169,345 -
Amortization of deferred compensation
expense 5,542 -
Changes in operating assets and
liabilities
Accounts receivable (4,831,494) (11,539,141)
Inventories 211,569 (141,789)
Other receivables 1,109,454 345,625
Other receivables - shareholders - 96,068
Prepayment (2,523,568) (498,652)
Accounts payable 3,157,464 10,056,683
Customer deposits 156,125 -
Other payables 108,430 (474,761)
Accrued liabilities (80,851) (130,365)
Taxes payable 1,012,153 643
Net cash provided by operating
activities 5,110,924 2,833,576
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant, and
equipment (8,701,026) (241,004)
Net cash used in investing activities (8,701,026) (241,004)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under short term loans 3,925,075 481,763
Principal payments under short term
loans (5,906,096) -
Restricted cash (913,092) -
Proceeds from issuance of redeemable
preferred stock 6,397,500 -
Proceeds from capital contribution 100 -
Proceeds from advances by shareholder 873,020 -
Payments on capital lease obligations - (2,090,368)
Net cash provided by (used in) financing
activities 4,376,507 (1,608,605)
EFFECTS OF EXCHANGE RATE CHANGE IN CASH (300,793) 37,094
INCREASE IN CASH 485,612 1,021,061
CASH, beginning of year 1,424,883 403,822
CASH, end of year $ 1,910,495 $ 1,424,883
SOURCE China Advanced Construction Materials Group, Inc.
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