Jade Art Group Announces Third Quarter 2008 Financial Results
Company Reports Revenue of $7.6 Million, Net Income of $4.0 Million, and EPS of
$.05 Per Diluted Share Despite Supply Disruptions Due to June 10 Earthquake
NEW YORK and JIANGXI, CHINA, - Jade Art Group Inc. (OTCBB: JADA) (the
"Company"), a seller and distributor of raw jade sourced from the SheTai Jade
mine in China, today announced its operating results for the third quarter ended
September 30, 2008.
Revenue from the sale of raw jade was $7.6 million during the third quarter
ending September 30, 2008. Since Jade Art Group transitioned its business from
decorative woodcarving to the sale of raw jade in January 2008 there are no
comparable sales during 2007. Net income for the quarter ending September 30,
2008 was approximately $4.0 million, or $0.05 per diluted share.
"I am very pleased with our third-quarter revenue of $7.6 million considering
the major disruption caused by the June 10th earthquake," said Hua-Cai Song, CEO
of Jade Art Group. "Despite loss of access to the main supply road to the mine
by heavy trucking until late September, our customers were able to pick up a
total of 2,300 metric tons of raw jade within the last seven days of the
quarter. Our dedicated team of professionals, the XiKai mine and our loyal
customers worked together to overcome challenging obstacles and I'm extremely
proud of our accomplishments."
Third Quarter and First Nine Months Highlights
Revenue from the sale of raw jade was $7.6 million during the third quarter
ending September 30, 2008, compared to $6.7 million for the three months ended
June 30, 2008. Raw jade shipments from the SheTai Jade Mine were halted as a
result of the June 10 earthquake in Inner Mongolia, China, which damaged the
main supply road. However, even with almost no access to the mine aside from a
small service road, XiKai Mining was still able to prepare raw jade at their
on-site warehouse. As a result, customers were able to immediately collect
orders when the main supply road was reopened on September 23, 2008.
The increase in reported cost of sales to $1.4 million during the three months
ended September 30, 2008, from $1.2 million during the three months ended June
30, 2008 resulted from the increase in the amount of raw jade which the Company
purchased from SheTai mine and the amortization of the intangible assets
pertaining to the exclusive distribution rights of the SheTai mine's jade. Under
the Exclusive Distribution Agreement signed with XiKai Mining, the purchase
price for raw jade is RMB 2,000 per metric ton, which is presently equivalent to
approximately $285.
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The resulting gross profit for the three months ended September 30, 2008 was
$6.2 million, which represented approximately 82 percent of the revenue,
compared to $5.5 million for the three months ended June 30, 2008, which
corresponds to the same ratio.
Selling, general and administrative expenses (SG&A) were $0.6 million for the
three months ended September 30, 2008, compared to $0.8 million for the three
months ended June 30, 2008. The decrease in SG&A was mainly due to the decrease
in the Company's normal operational activities during the period when shipments
of raw jade were interrupted by the road damage caused by the earthquake.
The income tax expense pertaining to continuing operations for the three months
ended September 30, 2008 was $1.7 million, compared to $1.5 million for the
three months ended June 30, 2008.
Net income for the three months ended September 30, 2008 was $4.0 million or 52
percent of revenue, compared to $3.0 million or 44 percent of revenue for the
three months ended June 30, 2008. This increase in the ratio of net income to
revenue is primarily due to a decrease in interest expense, as well as a
decrease in SG&A.
Fiscal 2008 Outlook
As a result of the interruption in the transport of raw jade, the Company's
revenues were lower than anticipated in its second quarter ended June 30, 2008
and its third quarter ended September 30, 2008. Jade Art Group Inc. has
subsequently adjusted 2008 full-year financial guidance. The following
projections exclude results from discontinued operations.
- - Revenues are expected to be between $32 million and $35 million.
- - Net income is expected to be between $21 million and $23 million.
- - Diluted earnings per share are expected to be between $0.26 and $0.29.
"Obviously the earthquake affected our sales, however the road to the mine has
been re-opened and our customers were able to collect a substantial amount of
raw jade before the end of the quarter," said Mr. Song. "No contracts were
cancelled and all of our customers were extremely supportive and understanding,
considering the extreme circumstances surrounding the event. We expect to attain
higher sales levels in future quarters now that full access to the mine has been
restored."
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About Jade Art Group Inc.
Jade Art Group Inc., through its wholly owned subsidiary, Jiangxi SheTai Jade
Industrial Co., Ltd., sells and distributes raw jade sourced from the SheTai
Jade mine throughout China, with uses ranging from decorative construction
material to high-end jewelry. This mine's operating capacity is estimated to
reach 40,000 metric tons per year in 2009 and it contains one of the largest
jade reserves in China. The mine is owned by XiKai Mining, with which Jade Art
Group signed an agreement to acquire exclusive distribution rights to sell 90%
of the SheTai Jade produced from the mine for the next 50 years. According to a
survey report issued by the Inner Mongolia Geological Institution, the mine has
proven and probable reserves of approximately 6 million tons. Several national
jade experts have noted the high quality of SheTai Jade as compared to the other
existing varieties of Chinese jade.
For more information, please visit: www.jadeartgroupinc.com
FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements.
Forward-looking statements include, but are not limited to, statements
concerning estimates of, and increases in, production, projected volume of
customer orders, performance by customers, including timely payment, under
existing and future agreements, cash flows and values, statements relating to
the continued advancement of Jade Art Group's projects and other statements
which are not historical facts. When used in this document, the words such as
"could," "plan," "estimate," "expect," "intend," "may," and similar expressions
are forward-looking statements. Although Jade Art Group believes that its
expectations reflected in these forward-looking statements are reasonable, such
statements involve risks and uncertainties and no assurance can be given that
actual results will be consistent with these forward-looking statements.
Important factors that could cause actual results to differ from these
forward-looking statements include, but are not limited to, those set forth in
our reports filed with the Securities and Exchange Commission, together with the
risks discussed in our press releases and other communications to shareholders
issued by us from time to time, such as our ability to raise capital as and when
required, our ability to pay notes and obligations when due, the possibility
that our customers and other third parties will be unable to make timely
payments, the availability of raw products and other supplies, competition, the
costs of goods, government regulations, and political and economic factors in
the People's Republic of China in which our subsidiaries operate.
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Contact:
Wanru Zhao
Jade Art Group Inc.
646-200-6328
wzhao@jadeartgroupinc.com
Darren Minton
China America Financial Communications Group
212-823-0523
jadeartgroup@cafcg.com
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Jade Art Group Inc.
and Subsidiaries
Selected Consolidated Statements of Operations
----------------------------------------------
(in millions, except per share amounts)
(unaudited) (unaudited)
Three months ended Nine months ended
September 30 September 30
--------------------------------- ---------------------------------
2008 2007 2008 2007
Sales $ 7.6 $ -- $ 25.0 $ --
Cost of sales (1.4) -- (4.2) --
Selling, general and admin expenses (0.6) -- (2.2) --
-------------- -------------- -------------- --------------
Income from operations 5.6 -- 18.6 --
Interest expense -- -- (0.2) --
Income tax expense (1.7) -- (5.5) --
-------------- -------------- -------------- --------------
Net income from continued operations 4.0 -- 13.0 --
Net income from discontinued operations -- 2.7 55.4 6.7
Net income $ 4.0 $ 2.7 $ 68.4 $ 6.7
============== ============== ============== ==============
Basic earnings per share
Income from continuing operations $ 0.05 $ -- $ 0.16 $ --
Income from discontinued operations -- 0.04 0.69 0.09
-------------- -------------- -------------- --------------
Total basic earnings per share 0.05 0.04 0.85 0.09
============== ============== ============== ==============
Diluted earnings per share
Income from continuing operations $ 0.05 $ -- $ 0.16 $ --
Income from discontinued operations -- 0.04 0.68 0.09
-------------- -------------- -------------- --------------
Total diluted earnings per share 0.05 0.04 0.84 0.09
============== ============== ============== ==============
Weighted average number of shares
Basic 79,980,000 74,980,000 79,980,000 74,980,000
Diluted 80,980,000 74,980,000 80,917,956 74,980,000
============== ============== ============== ==============
NOTE: The above numbers may not total correctly due to rounding.
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Selected Consolidated Balance Sheet Items
-----------------------------------------
(in millions)
(unaudited)
September 30, 2008
------------------
Cash $ 0.5
Accounts receivable 8.1
Notes receivable 13.2
Dividends payable 14.3
Accounts payable and accrued expenses 1.1
Taxes payable 2.7
Total stockholders' equity $ 60.5
NOTE: The above numbers may not total correctly due to rounding.
Selected Consolidated Cash Flow Items
-------------------------------------
(in millions)
(unaudited)
Nine months ended
September 30
-----------------
2008 2007
Net cash provided by operating activities $13.0 $ --
Purchases of property and equipment -- --
Notes receivable (14.7) --
Proceeds from loans (including loan from related party) 10.0 --
Net increase in cash $ 0.2 $(0.1)
NOTE: The above numbers may not total correctly due to rounding.
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