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Press release from Marketwire

Migao Reports Fiscal 2010 Year-End Financial Results

Thursday, June 03, 2010

Migao Reports Fiscal 2010 Year-End Financial Results06:30 EDT Thursday, June 03, 2010 TORONTO, ONTARIO--(Marketwire - June 3, 2010) - Migao Corporation (TSX:MGO), a China-based leading specialty potash fertilizer producer, today reported financial results for the year ended March 31, 2010. Migao reported net income of $38.3 million or $0.80 per basic share from revenues of $269.1 million for the 12-months ended March 31, 2010 as compared to net income of $24.7 million or $0.56 per basic share from revenues of $161.5 million for the six-month period ended March 31, 2009 and as compared to net income of $27.3 million or $0.67 per basic share from revenues of $187.0 million for the twelve-month period ended September 30, 2008. SUMMARY FINANCIAL STATEMENTS Year ended 12 months ended 6 months ended September 30, March 31, 2010 March 31, 2009 2008 ($'000) Sales 269,107 161,484 187,028 Gross Profit 62,654 36,290 45,520 Net Income 38,288 24,662 27,303 EBITDA 49.984 29,279 33,010 Basic EPS 0.80 0.56 0.67 Diluted EPS 0.79 0.55 0.63 Weighted average number of shares (in millions of shares) Basic 48.1 44.4 40.7 Diluted 48.6 44.7 43.1 Balance Sheet Highlights ($'000) September 30, March 31, 2010 March 31, 2009 2008 Current ratio 3.51:1 5.40:1 3.32:1 Cash 60,221 41,688 16,850 Working Capital 189,451 146,210 95,343 Total assets 343,976 275,192 209,394 Debt to Equity Ratio 0.28:1 0.14:1 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 a result, Migao's fiscal 2009 financial results are for the six-month period ending March 31, 2009. Migao maintained gross profit margin at a desired and historically consistent 23.3%, an increase of 0.8% as compared to fiscal 2009. EBITDA for fiscal 2010 was $50.0 million versus $29.3 million for the six months ended March 31, 2009 and as compared to $33.0 for the twelve months ended September 30, 2008. "We are very proud of our performance during the continued challenging times during fiscal 2010. It wasn't until late in calendar 2009 that we saw the signs of a recovering marketplace. Despite the economic pressures, Migao achieved record financial results in terms of revenue and earnings," said Mr. Liu Guocai, President and CEO of Migao. "Since the end of 2009, our selling prices have firmed up and we were able to secure potash at favorable prices to ensure our profit margins remain strong. We have reactivated our construction activities in China to add approximately 20% more production capacity of our core products. These construction products will be completed by the end of calendar 2010 and begin producing revenue in early calendar 2011. The 20 percent of additional capacity comes from a 40,000 tonne per year potassium sulphate facility near Shanghai and a 40,000 tonne per year potassium nitrate facility, which we are building through a 50/50 joint venture with Chile's SQM at our Sichuan Migao property. In addition, we added a 100,000 tonne per year specialty compounding facility which contributed revenue in our recent fourth quarter."For the three-month period ended March 31, 2010, Migao reported sales of $75.5 million compared to $67.0 million in the previous quarter ended December 31, 2009. EBITDA for the March 31st quarter of fiscal 2010 was $13.5 million or 17.9% of revenue as compared to $11.6 million or 17.3% of revenue for the previous quarter ended December 31, 2009. Net income was $10.4 million or $0.20 per basic share for the final quarter of fiscal 2010 compared to $8.7 million or $0.18 per basic share for the third quarter of fiscal 2010. "Migao was fortunate to not be negatively impacted by the drought during the early spring season in Southern China. Most of the fertilizers we supply in that region is for tobacco crops, which have adequate irrigation and resources to dig wells," said Mr. Liu Guocai, President and CEO of Migao. "Tobacco, which represented approximately 30% of our sales in fiscal 2010 is planted in late April to mid May and the rains arrived soon enough in May to establish the young plants. The other 70% of our sales was to the fruit and vegetable markets in China. Our revenue growth favours fruits and vegetables as this follows consumer consumption trends in China."At the end of the period, the Company had $108.5 million (338,222 tonnes) of potassium chloride inventory with an average delivered price of $321 per tonne, of which 30,306 tonnes were on hand and the reminder in transit. In addition, during the quarter, the Company sold 23,730 tonnes of potassium nitrate, 66,356 tonnes of potassium sulphate, 20,594 tonnes of compound fertilizer, and at the end of the period, the Company had $5.8 million (42,929 tonnes) of finished goods inventory on hand, including co-products. Of the compound fertilizer sold during the period, the Company used 870 tonnes of potassium nitrate produced at its own facilities.At March 31, 2009, Migao reported cash of $60.2 million and working capital of $189.5 million. At March 31, 2010, current bank debt was $40.8 million.Conference CallMigao will be hosting a conference call to discuss the year-end results at 10:00am, Eastern Time, Thursday June 3, 2010. The details are as follows: Dial in number: 416-340-2216 or 1-866-226-1792 Taped replay (until June 17, 2010): 416-695-5800 or 1-800-408-3053 Taped replay access code: 6170726# About MigaoMigao 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 STATEMENTSThis 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", and "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, performance or achievements may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on forward-looking statements as a number of important factors, many of which are beyond our control, could cause actual results, performance or achievements to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors that relate to our company include, but are not limited to: risks related to raw materials; execution of the business plan; expansion plans; 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 fluctuations; insurance; foreign operations; tobacco industry considerations; weather conditions and natural disasters; control by management; seasonality; dividends; conflicts of interest; global financial conditions; and the implementation of the Labour Contract Law in the People's Republic of China in 2008. In addition to the foregoing risk factors, there are also risks related to doing business in China which include, but are not limited to: 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, performance or achievements 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, performance and achievements 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.To be added to Migao's email distribution list for news releases or to be removed from the list, please send a request to info@migaocorp.com.FOR FURTHER INFORMATION PLEASE CONTACT: Migao Corporation Jay Hussey Vice President Corporate Finance 416-869-1108 ext. 104 jay.hussey@migaocorp.com or Migao Corporation Randall Smallbone Chief Financial Officer 416-869-1108 ext. 103 randall.smallbone@migaocorp.com www.migaocorp.com