Huaxing Machinery Corp.

September 04, 2012 21:38 ET

Huaxing Reports Consolidated Financial Results for the Six Months Ended June 30, 2012

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 4, 2012) - Huaxing Machinery Corp. (TSX VENTURE:HUA) ("Huaxing" or the "Company") reports its consolidated financial results as at and for the six months ended June 30, 2012 in accordance with International Financial Reporting Standards ("IFRS"). All dollar amounts are expressed in Canadian dollars.

The Company's consolidated financial results for the six months and three months ended June 30, 2012 in comparison to those of 2011 are as follows:

Six Months Ended June 30 Changes from
2012 2011 2011 to 2012
$ $ $ %
Sales 15,513,721 13,733,529 1,780,192 12.96%
Cost of sales 11,137,654 11,102,605 35,049 0.32%
Gross profit 4,376,067 2,630,924 1,745,143 66.33%
Income from operations 2,444,232 925,154 1,519,078 164.20%
Net income (loss) 2,074,852 (165,095) 2,239,947 1,356.76%
Net income attributed to equity holders of the Company 1,607,769 (344,352) 1,952,121 566.90%
Earnings (loss) per share -basic and diluted 0.04 (0.01) 0.05 500%
Three Months Ended June 30 Changes from
2012 2011 2011 to 2012
$ $ $ %
Sales 8,456,772 7,889,005 567,767 7.20%
Cost of sales 5,862,953 6,349,126 (486,173) (7.66%)
Gross profit 2,593,819 1,539,879 1,053,940 68.44%
Income from operations 1,614,712 468,308 1,146,404 244.80%
Net income 1,445,170 283,302 1,161,868 410.12%
Net income attributable to:
equity holders of the Company 1,129,521 189,739 939,782 495.30%
Earnings per share - basic and diluted 0.03 0.00 0.03 300.00%

For the six months ended June 30, 2012, consolidated income from operations and net income were $2,444,232 (2011 - $925,154) and $2,074,852 (2011 - loss of $165,095), respectively.

Following the Company's successful research and development of the large scale Robotic Welding System (the "System") for fabrication of corrugated web beams, and sale of the first component of the System for $1.8million in December, 2011, the Company sold other significant components of the System for $3.275million during the six months ended June 30, 2012.

"In the face of global economic slowdown," said Mr. Xianhua Sun, Chairman of Huaxing, "Huaxing has maintained its growth momentum in the first half of 2012 by achieving a 12.96% increase in sales and 66.33% increase in gross profit. Our new product of Robotic Welding System has helped Huaxing weather the impact of economic slowdown and also helped the end users of the product substantially reduce their operating costs and enhance their competitiveness."

As a result of the sale of the high profit margin System, the Company's gross profit margin increased from 19.16% for the six months ended June 30, 2011 to 28.21% for the six months ended June 30, 2012.

During the six months ended June 30, 2011, the Company recorded one-time non-cash listing costs of $769,308, which were incurred specifically to take the Company public.

The Board of Directors did not declare dividends for the six months ended June 30, 2012.

The foregoing reflects a selected extract of the Company's financial performance only, and must be viewed with the Company's consolidated financial statements and management's discussion and analysis on SEDAR for further details at under the Company's profile.

About Huaxing Machinery Corp.

Huaxing is engaged in the business of machinery manufacturing, and became listed on TSX.V on January 21, 2011 upon completing the Qualifying Transaction with Samurai Capital Corp., a CPC. Through its wholly owned subsidiary Gold Rhino Limited, Huaxing holds an 80% controlling equity interest in Shandong Gold Rhino Huaxing Machinery Corp., the operating entity that holds the manufacturing facilities located in Boxing County, Shandong province, China. Its main products are stone cutting, polishing and processing machinery and equipment for the building and construction industry, and Robotic Welding System for the steel structure industry.

Forward-Looking Statements

Certain information regarding Huaxing Machinery Corp. contains herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. The Company assumes no obligation to update such forward-looking statements, except as required by applicable securities laws or exchange regulations. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The Company seeks safe harbour.

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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