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Press release from Marketwire

Migao Reports Fiscal 2012 First Quarter Financial Results

Thursday, September 08, 2011

Migao Reports Fiscal 2012 First Quarter Financial Results07:00 EDT Thursday, September 08, 2011TORONTO, ONTARIO--(Marketwire - Sept. 8, 2011) -Migao Corporation (TSX:MGO), a China-based leading specialty potash fertilizer producer, today reported financial results for the first quarter ended June 30, 2011. Migao reported revenues of $100.5 million (RMB 675.1 million) for the first quarter ended June 30, 2011 as compared to revenues of $66.3 million (RMB 440.0 million) for the three-month period ended June 30, 2010. For the quarter, the Company reported net income of $7.8 million or $0.15 per basic share as compared to net income of $8.8 million or $0.17 per basic share. The revenue improvement is attributed to increased sales of potassium chloride. The decrease in net income was primarily a result of decreased gross profit margin related to the increased volume of potassium chloride sales and further impacted by maintenance shutdown programs of the Company's higher margin core fertilizers.SUMMARY FINANCIAL STATEMENTS3 months ended June 30, 20113 months ended June 30, 2010($'000)Sales100,52166,256Gross Profit17,16217,499Gross Profit (% of revenue)17.1%26.4%Net Income7,7678,776EBITDA12,15513,276Basic EPS0.150.17Diluted EPS0.150.17Weighted average number of shares (in millions of shares)Basic52.952.1Diluted52.952.6Balance Sheet Highlights($'000)June 30, 2011March 31, 2011Current ratio3.24:12.44:1Cash20,48626,007Working Capital212,677116,734Total Assets410,936386,762Total Debt98,78183,326Total Equity312,155303,436Long Term Bank Debt to Equity Ratio0:10:1"The seasonal maintenance and repair work conducted during the quarter was successfully completed and we are ramping up to full production capacity," said Mr. Liu Guocai, CEO of Migao. "We have negotiated increased selling prices of our core fertilizers and are still enjoying strong pricing and demand for our specialty compound products. We expect gross profit margin to return to the strong historical range of 22-24% for the remainder of the year."Migao's gross profit margin was 17.1% of revenue, below the annual targeted 22-24% range due to increased sales of the lower-margin potassium chloride, increased raw material prices and seasonally timed shut down of certain facilities for maintenance work. The Company anticipates meeting its annualized gross margin target of 22-24%. Currently Migao produces 480,000 tonnes annually of combined core products and specialty compound fertilizers. Announced projects under construction will bring online an additional 40,000 tonnes of core product capacity by the end of calendar 2011 as well as 100,000 tonnes of per year of specialty compound fertilizers to be built in two phases ending in the fourth quarter of calendar 2012. At the end of the period, the Company had $35.7 million (81,436 tonnes) of potassium chloride inventory with an average delivered price of $438 per tonne, of which 33,852 tonnes were on hand with the reminder being in transit. In addition, during the quarter, the Company sold 24,191 tonnes of potassium nitrate, 69,262 tonnes of potassium sulphate, 22,817 tonnes of compound fertilizer, 57,317 tonnes of potassium chloride, and at the end of the period, the Company had $8.9 million (43,459 tonnes) of finished goods inventory on hand, including co-products. At June 30, 2011, Migao reported cash of $20.5 million and working capital of $212.7 million. Conference CallMigao will be hosting a conference call to discuss the year-end results at 10:00am, Eastern Time, Thursday September 8, 2011. The details are as follows:Dial in number: 416-695-6616 or 1-800-952-6845Taped replay (until September 22, 2011): 905-694-9451 or 1-800-408-3053 Taped replay access code: 1021880#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", 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: Jay HusseyMigao CorporationVice President Corporate Finance416-869-1108 ext. 104jay.hussey@migaocorp.comORRandall SmallboneMigao CorporationChief Financial Officer416-869-1108 ext. 103randall.smallbone@migaocorp.com