Grand Power Logistics Group Inc.
TSX VENTURE : GPW

Grand Power Logistics Group Inc.

May 01, 2012 19:59 ET

Grand Power Logistics Reports Financial Results for FY 2011

CALGARY, ALBERTA and HONG KONG, CHINA--(Marketwire - May 1, 2012) - Grand Power Logistics Group Inc. ("Grand Power" or the "Corporation") (TSX VENTURE:GPW), a leading international logistics provider based in Hong Kong, today announced its consolidated financial results for the year ended December 31, 2011. All amounts are expressed in the US dollar (US$) except where noted.

Selected 2011 Financial Highlights

(in thousands except per share or % data) FY 2011 FY 2010 Change
Revenue $ 50,980 $ 68,297 -25.4 %
Gross profits $ 3,670 $ 5,154 -28.8 %
Gross margins 7.20 % 7.5 % -4.0 %
Net (loss) income (owners of Corporation) $ (1,589 ) $ (1,322 ) -20.2 %
Earnings (loss) per share $ (0.021 ) $ (0.023 ) -$0.002
Dec. 31, 2011 Dec. 31, 2010 Change
Total assets $ 23,652 $ 27,823 -14.99 %
Working capital $ 3,696 $ 5,807 -36.35 %
Total liabilities $ 13,473 $ 15,988 -15.73 %
Shareholders' Equity (owners of Corporation) $ 10,179 $ 11,835 -13.99 %

"During the year, the company continued to experience lower sales revenue compared to previous years as a result of the company's restructuring and consolidation effort initiated after the financial crisis in 2009. During this period, the company has reduced significantly its operations and overhead in China. We are in a solid position to grow again once the health of the logistics sector returns." said Mr. Ricky Chiu, President and CEO of Grand Power. "During the year, the company did accomplish a milestone by having its 70% owned subsidiary, Grand Power Logistics Development Ltd. ("GPLD"), engage J.P. Morgan Securities (Asia Pacific) Limited to act exclusively as its financial advisor in its pursuit in the development of Yangshan International Container Transit Logistics Park located at a deep sea port near Shanghai."

2011 Financial Operational Highlights

  • On July 9, 2011, the Corporation has redeemed $2,001,000 convertible debentures.

  • On September 6, 2011, the Corporation announced that J.P. Morgan Securities (Asia Pacific) Limited ("J.P. Morgan") has been exclusively engaged by the Company's 70% owned subsidiary, Grand Power Logistics Development Ltd ("GPLD"), to act as its financial advisor. GPLD has established a WOFE (Wholly Owned Foreign Enterprise) in Zhejiang, China to facilitate the development of Yangshan International Container Transit Logistics Park ("Yangshan Logistics Park"). J.P. Morgan will provide financial advisory services in connection to the investment in Yangshan Logistics Park with a total investment estimated to be in the range of US$360 million.

  • During the third quarter, the share capital of GPLD has been increased to HK$36 million. Grand Power has further injected HK$4.8 million to hold 36.67% ownership in GPLD after the full share capital of HK$36 million has been contributed. The remaining ownership of GPLD is controlled by a group of private investors, including Ricky Chiu, Grand Power's President and CEO.

2011 Financial Results

Sales revenue for the year ended December 31, 2011 decreased by $17,317,566 (25.4%) to $50,979,974 from $68,297,540 in 2010. The decrease in sales revenue for the year reflected the transformation of the subsidiary, Beijing Jinfeng International Logistics Ltd., in becoming a minority owned subsidiary during the fourth quarter of 2010 as a result of the dilution due to the increase of the share capital of this Beijing subsidiary, and the continual weakness in the world economy. In addition, the restructuring of the Corporation's operations in China since 2009 to focus more on higher margin business had also led to the decrease in the Corporation's revenue.

For the year ended December 31, 2011, the Corporation generated $45,323,915 (88.9%) of its revenue from its traditional co-loading air freight business, $2,228,892 (4.4%) of revenue from its direct sales air freight business and $3,427,169 (6.7%) of revenue from its ocean freight business. During the corresponding period of 2010, the Corporation generated $48,729,224 (71.4%) of its revenue from its traditional co-loading air freight business, $13,759,489 (20.2%) of revenue from its direct sales air freight business and $5,808,828 (8.5%) of revenue from its ocean freight business.

For the year ended December 31, 2011, Hong Kong is still the Corporation's largest operating centre, generating $41,647,356 (81.7%) of the Corporation's total revenue and other regions accounted for $3,170,226 (6.2%) of revenue for the year ended December 31, 2011. Last year, Hong Kong, China and other regions accounted for $47,219,633 (69.1%), $13,177,610 (19.3%), and $7,900,296 (11.6%), respectively, of the Corporation's total revenue.

Gross profit for the year ended December 31, 2011 decreased by 28.8% to $3,670,127 compared to $5,154,048 in 2010, and gross profit margin decreased to 7.20% compared to 7.55% for 2010. The decrease in gross profit in 2011 compared to that in 2010 is primarily due to a decrease in revenue.

The net loss attributable to the owners of the Corporation for the year ended December 31, 2011 was $1,589,298 compared to a net loss of $1,322,096 in 2010. Operating expenses for the year ended December 31, 2011 increased by 9.0% to $6,610,312 compared to $6,062,707 in 2010. The increase in loss was primarily due to the decrease in sales revenue and in gross profit margin and the increase in general and administration expenses. The increase in general and administration expenses were primarily due to the increase of sales staff in Hong Kong and China and the expansion of the oversea agent network.

The Corporation generated negative cash flow from its operations for the year ended December 31, 2011 of $317,483 compared to a negative cash flow of $174,272 in 2010.

Tonnage shipped decreased by 3,676 tonnes (13.04%) to 24,524 tonnes for the year ended December 31, 2011 compared to 28,200 tonnes in 2010. The decrease was primarily due to the continual weakness in the logistics sector.

Outlook

"During 2011, the Corporation had increased the size of its sales team in Hong Kong and China and its oversea agent network, and is expecting to see positive results generated from these efforts in the future. In 2012, we will continue to pursue the development of the Yangshan International Container Transit Logistics Park Project and is looking forward to have this project coming to fruition in 2012," said Ricky Chiu, President and CEO of Grand Power.

About Grand Power Logistics Group Inc.

Grand Power operates principally through its wholly owned Hong Kong based subsidiary, Grand Power Express International Limited (GP Express), and provides air-freight forwarding and sea-freight services, customs brokerage, logistics, warehousing and distribution, as well as other value added services. GP Express has established operations in various regions, particularly in the Greater Pearl River Delta (GPRD), China's largest economic region. GP Express' Subsidiaries or Branch Offices in this region are located in Macau, Shenzhen and Guangzhou. GP Express also operates in other regions through Subsidiaries and Branch Offices or Supporting Offices in Shanghai, Beijing, Tianjin and Xiamen. For more information, please visit http://www.grandpowerlogistics.com

Forward-looking Information

Statements included in this press release that are not historical facts may be considered "forward looking statements". All estimates and statements that describe the Company's objectives, goals or future plans are forward looking statements. Forward-looking statements involve inherent risks and uncertainties where actual results could differ materially from those currently anticipated.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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