Asia Bio-Chem Group Corp. Announces Third Quarter 2014 Financial Results

TORONTO, Nov. 21, 2014 /CNW/ - Asia Bio-Chem Group Corp. (CSE: ABC) ("Asia Bio-Chem" or the "Company") announces its financial results for the three-month period ending September 30, 2014.

Highlights

• The Company continues to manage its capacity utilization in reaction to market conditions.  During the third quarter, the Company's plants had no operations and only minimal sales where realized from inventory. 
  
  
• Net loss for the third quarter was $7.9 million (-$0.09 per share) compared with a net loss of $13.8 million (-$0.16 per share) during the third quarter of 2013.
  
  
• The company's EBITDA improved to negative $2.6 million during the third quarter compared with negative $5.2 million during the third quarter of 2013.
  
  
• The Company continues to fund its losses with loans from various sources. As at September 30, 2014 total loans outstanding were $213.2 million.
  
  
• The company obtained new loans in the amount of $17.4 million from a subsidiary of Beidahuang State Farm Group General Corp ("Beidhuang").  The Company is currently in negotiations with Beidahuang with regard to the sale of a minority interest in its operating subsidiaries.
  
  
• The Company maintains unrestricted cash balance of $1.0 million at September 30, 2014.

"Our Company has been working to minimize our losses while maintaining our borrowing capacity", stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem.  "We continue to work through securing the necessary approvals for our transaction with Beidahuang.  In the meantime, we are pleased that Beidahuang has began to provide support through extending a loan to the Company."

During the third quarter, in reaction to weak product prices, the Company discontinued production and had negligible sales from inventory.   This is compared with the corresponding third period of 2013, when the Company achieved $26.3 million in sales.  A weak Chinese economy caused starch, germ and gluten prices to deteriorate during 2014 compared with the same period in 2013.   

Negligible sales during the third quarter reduced variable expenses, which resulted in reduced losses as gross profit improved to negative $2.2 million compared with negative $3.6 million during the third quarter of 2013.

Operating expenses also fell during the third quarter due to the elimination of transportation expenses.  Consequently, operating losses fell to $6.2 million from $9 million during the same period in 2013.

As a result of the above factors, net losses and EBITDA also improved during the third quarter compared with the same period of 2013 by 43% and 50% respectively.

SUMMARY FINANCIAL STATEMENTS

in thousands of Canadian dollars except per share and percentage data		Three Months Ended September 30,
		2014		2013		% Change
Sales		0		26,260		-100.0%
Gross profit		(2,242)		(3,594)		37.6%
Gross margin (% of Sales)		n/a		-13.7%
Operating expenses		3,914		5,400		-27.5%
Income(loss) from operations		(6,156)		(8,993)		13.5%
Other income (expense)		(2,742)		(3,689)		25.7%
Income taxes (recoveries)		(1,048)		1,160		n/a
Net (loss)		(7,850)		(13,843)		43.3%
EBITDA		(2,614)		(5,213)		49.9%
Earnings per share:
	Basic	(0.09)		(0.16)
	Diluted	(0.09)		(0.16)
Weighted average number of shares:
	Basic	85,306,258		85,306,258
	Diluted	85,306,258		85,306,258
Balance Sheet Highlights		As at 9/30/14		As at 12/31/13
Cash		1,038		1,649
Restricted Cash		10,155		32,736
Working Capital		(195,038)		(169,290)
Total assets		222,082		255,557
Current Ratio		0.23:1		0.33:1

During the third quarter, the Company's refinanced or renewed its short-term borrowings and maintained its total borrowings, which totaled $213.2 million as at September 30, 2014.   Further, during the quarter the company reduced its BA lines of credit, which resulted in the reduction in restricted cash of $16 million during the quarter.  Unrestricted cash position at September 30, 2014 was $1.0 million compared with $1.6 million at December 31, 2013.

Strategic Transaction Update
Further to the press release dated March 7, 2014, and subsequent update on May 22, 2014, Beidahuang State Farm Group General Corp.(" Beidahuang") has completed its due diligence and operational audit for purposes of acquiring an interest in Asia Bio Chem.

Beidahuang has recently advised the Company that it intends to amend the previous letter of intent ("LOI") which would result in the purchase of a 49% interest in the operating subsidiaries of Asia Bio Chem rather than the purchase of Asia Bio-Chem shares from the major shareholders as previously contemplated.  The operating subsidiaries namely; Chang Tu Bio-Chem Technology Co. Ltd., Daqing Biochemical Company Ltd. and Tieling Wanshunda Starch Company Ltd. will become party to joint venture agreement with a subsidiary of BDH Commerce and Trade Co. Ltd, (a subsidiary of Beidahuang) which will bring together 10 facilities in the corn processing industry.

Management is currently working through the details of the transaction and the various levels of approval.

About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the People's Republic of China, is in the business of processing corn into cornstarch, germ and gluten for sale into the domestic Chinese market.  From its plants in Liaoning and Heilongjiang Province, the Company has a total processing capacity of 1.5 million tonnes of corn per year.

This news release contains certain statements that may be deemed "forward looking statements". Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects,", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward looking statements, except as required by law, in the event that management's beliefs, estimates or opinions, or other factors, should change.

SOURCE: Asia Bio-Chem Group Corp.

For Corporate Information: Robert Wilson, Executive Vice President, Asia Bio-Chem Group Corp., Tel: [phone], Email: [email protected]

Related Links

www.asiabiochem.com