Migao Corporation
TSX : MGO

Migao Corporation

June 03, 2009 16:00 ET

Migao Reports Year-End Financial Results

- 6-month stub period with change of year-end date -

TORONTO, ONTARIO--(Marketwire - June 3, 2009) - Migao Corporation (TSX:MGO), a China-based leading specialty potash fertilizer producer, today reported financial performance for the six-months ended March 31, 2009. Migao reported net income of $24.6 million or $0.56 per basic share from revenues of $161 million for the six-months ended March 31, 2009 as compared to net income of $27 million or $0.67 per basic share from revenues of $187 million for the twelve-month period ended September 30, 2008. On a comparative six-month performance basis, the Company reported net income of $7.7 million or $0.20 per basic share from revenues of $59 million for the six-month period ended March 31, 2008.



SUMMARY FINANCIAL STATEMENTS

Year ended
6 months ended 6 months ended September
March 31, 2009 March 31, 2008 30, 2008

($'000)
Sales 161,484 59,186 187,028
Gross Profit 36,290 14,096 45,520
Net Income 24,662 7,665 27,303
EBITDA 29,279 9,821 33,010
Basic EPS 0.56 0.20 0.67
Diluted EPS 0.55 0.20 0.63

Weighted average number of
shares (in millions of shares)
Basic 44.4 37.7 40.7
Diluted 44.7 40.4 43.1


Balance Sheet Highlights
($'000)
March 31, 2008 March 31, 2008 September 30, 2008

Current ratio 5.40:1 2.84:1 3.32:1
Cash 42,241 32,875 16,850
Working Capital 146,210 74,513 95,343
Total assets 275,192 170,382 209,394
Debt to Equity Ratio 0.14:1 0.31:1 0.24:1


Migao changed its fiscal year end to March 31 to better align the Company's financial reporting, tax planning, and business cycles with customers and suppliers. As such, Migao is reporting its transitional fiscal 2009 financial results for the six-month period ending March 31, 2009. The first full fiscal period will be for the twelve months ended March 31, 2010.

Migao maintained gross profit margin at a desired and historically consistent 22.5%. EBITDA for the six-month period of fiscal 2009 was $29 million versus $33 million for the twelve months ended September 30, 2008.

"Our financial achievements in a challenging economic environment where many companies have experienced shrinking profit margins is evidence of Migao's dominant market position, strong customer base, and high quality products and service," said Mr. Liu Guocai, President and CEO of Migao.

The Company continues to reflect the costs of raw materials in its product pricing. Potash is the single largest raw material input cost for the Company and as such, the pricing of finished goods is influenced by the price of potash. Migao has successfully passed through historical raw material price increases to its customers, maintaining gross profit margin between 22-24% of revenue over the last five years. China is currently negotiating potash pricing with the world's dominant potash suppliers in Canada and Russia. Once the pricing has been set, which influences the price Migao pays for potash, the Company expects to adjust its product pricing accordingly.

For the three-month period ended March 31, 2009, Migao reported sales of $85 million compared to $35 million for the comparable period last year. EBITDA for the March 31st quarter of fiscal 2009 was $15 million or 18% of revenue as compared to $6 million or 17% of revenue for the same period last year. Net income was $13 million or $0.29 per basic share for the final quarter of fiscal 2009 compared to $5 million or $0.12 per basic share for the same period in 2008.

At March 31, 2009, Migao reported cash of $42 million and working capital of $146 million, including $66 million of potash in inventory and in transit. At September 30, 2008, long-term debt was nil and current bank debt was $21 million.

Conference Call

Migao will be hosting a conference call to discuss the year-end results at 10:00am Thursday June 4, 2009. The details are as follows:

Dial in number: 416-695-6320 or 1-866-852-2121

Taped replay (until June 11, 2009): 416-695-5800 or 1-800-408-3053

Taped replay access code: 1007374#

About Migao

Migao Corporation, through its wholly owned subsidiaries, owns and operates fertilizer production plants in various strategic locations across China for the production and sale of specialty potash fertilizer (potassium nitrate and potassium sulphate) to China's agricultural market. Migao Corporation is subject to, and complies with strict government regulations that govern safety, quality and environmental protection. Migao's Sichuan facility is ISO 14001 certified, an international environmental management standard. Please visit www.migaocorp.com for further information.

Caution Regarding Forward-Looking Statements

This news release may include forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and other provincial securities laws in Canada. These forward-looking statements include, among others, statements with respect to our objectives and goals, and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "continue" (or the negative or grammatical variations thereof), and words and expressions of similar meaning, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on these statements as a number of important factors, many of which are beyond our control, could cause actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: risks related to raw materials; execution of the business plan; dependence on key personnel; key relationships; dependence on key customers; dependence on key suppliers; competition; market factors and volatility of commodity prices; environmental risks and hazards; operating risks; proprietary rights; infrastructure; future capital requirements; technical substitution; exchange rate fluctuation; insurance; foreign operations; weather conditions and natural disasters; control by management; seasonality; dividends; conflicts of interest; state ownership; government sector intervention; foreign investment; repatriation of profit and currency conversion; tax; shareholders' rights and enforcement of judgements; developing legal system; protection of intellectual property rights; permits and business licenses; appropriation; and availability of land. Should one or more of these factors materialize, or should our estimates or underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described in forward-looking statements.

We caution that the foregoing list of important factors that may affect our future results is not exhaustive. When reviewing our forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found under the "Risk Factors" sections in our Annual Information Form and annual MD&A and elsewhere in our filings with Canadian securities regulatory authorities. Except as required by Canadian securities laws, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. We cannot assure readers that actual results will be consistent with these forward-looking statements, and the differences may be material. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.

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