Asia Packaging Group Inc.
TSX VENTURE : APX

Asia Packaging Group Inc.

September 06, 2013 18:19 ET

Asia Packaging Group Inc. Announces First Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 6, 2013) - Asia Packaging Group Inc. (TSX VENTURE:APX) ("Asia Packaging" or the "Company") announces its interim financial statements for the three-month period ending June 30, 2013.

Interim Financial Results

Highlights

  • Through the successful closing of the Yuanxing packaging acquisition during the first quarter, the Company has effectively doubled the size of its business.
  • With just over one month contribution from the Yuanxing acquisition, revenues increased by 48.3% during the first quarter compared with the same period of last year.
  • Improved product mix together with the higher margin from Yuanxing products sales, gross margin improved to a record 30.1% during the quarter.
  • The Company achieved EBITDA before share-based compensation of $5.2 million during the first quarter, representing a 64.2% improvement over the first quarter of last year.
  • Net income increased 35.8% for the three months ended June 30, 2013 to $3.5 million ($0.024 per share) compared with $2.6 million ($0.020 per share) during the three months ended June 30, 2012.
  • As at June 30, 2013, the Company had $8.8 million in cash and no bank debt.

"We are pleased to report the successful closing of our acquisition of Yuanxing Packaging during the first quarter and we are excited about the contribution Yuanxing will make to the performance and market presence of our Company," stated Mr. Wenge Hong, President and CEO of Asia Packaging. "Even with only 33 days of the Yuanxing results included in our numbers, we have seen a significant impact on revenues and earnings."

During the first quarter, sales at Asia Packaging increased to $19.0 million representing a 48.3% increase compared with the corresponding period of last year. This increase was achieved as a result of a $6.4 million contribution from Yuanxing products representing just over one month's sales. Compared with the first quarter of the prior year, historical products for the company experienced 20.5% lower volumes in CPP film while there was softer pricing in medical packaging and fruit jelly cups.

Reduced volume of lower margin CPP coupled with high margin bag products from the Yuanxing acquisition resulted in improved gross margin during the first quarter to 30.1% from 26.6% during the same quarter of last year. The addition of the Yuanxing bag products have contributed to the Company' overall margin because these products have a higher gross margin than the average for the Company historical products.

SUMMARY FINANCIAL STATEMENTS

Three Months Period Ended
June 30
(Unaudited)
Change
2013 2012
Sales 18,983,983 12,802,761 48.3%
Gross profit 5,721,261 3,407,668 67.9%
Gross margin (% of Sales) 30.1% 26.6% 13.2%
Operating expenses 850,610 425,102 100.1%
Income from operations 4,870,651 2,982,566 63.3%
Other income (expenses) (45,246) 14,893 N/A
Income taxes 1,310,482 408,315 220.9%
Net income 3,514,923 2,589,144 35.8%
EBITDA 5,191,179 3,160,547 64.2%
EBITDA before share-based compensation 5,214,587 3,223,776 61.8%
Earnings per share
Basic 0.024 0.020
Diluted 0.024 0.020
Weighted average number of shares
Basic 146,934,219 127,895,998
Diluted 146,934,219 128,466,965

Income from operations increased by 63.3% during the quarter while EBITDA increased 64.2% compared with the same quarter last year.

As a result of the above, net income for the three months ended June 30, 2013 improved by 35.8% to $3.5 million from $2.6 million during the corresponding period of last year.

Update Regarding the Yuanxing Acquisition

Pursuant to the terms of the acquisition agreement with shareholders of Jiayuan Investment Limited (the holding company of Yuanxing Packaging) the first cash instalment payment was made in the amount of $8.8 million. This amount was adjusted down from $9 million in accordance with the acquisition agreement.

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 pharmaceutical and retail industries in China. The Company operates a manufacturing plant in Yichun City, Jiangxi China where it produces a variety of film and plastic packaging products. With the completion of the acquisition of Yuanxing Packaging earlier this year, the Company has added a bag manufacturing facility located in Fujian Province and sales offices in Guangzhou and Shanghai.

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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