|
¡¡
Jade Art Group Announces Strong
First Quarter 2008 Results
May 14, 2008
¡¡
-- New Jade Distribution Initiative Provides
Impressive Operating Results
-- Transfer of Woodcarving Business Generates $55 Million Gain from
Discontinued Operations
Jade Art Group Inc. (OTCBB: JADG) (the ¡°Company¡±), a seller and
distributor of raw jade sourced from the SheTai Jade mine in
China,announced its operating results for the quarter ending March
31, 2008. Jade Art began to distribute raw jade in this quarter;
previously its operations consisted of the manufacturing and
distribution of hand-carved and machine-carved wood products in
China, which are now treated as discontinued operations.
Revenue from continuing operations for the quarter ending March 31,
2008 was $10.7 million. The first jade sales were made at the end of
January 2008 and there were no comparable sales during 2007.
Shipments of raw jade during the quarter reached approximately 3,385
metric tons, with an average sales price equivalent to approximately
$3,150 per metric ton. Net income from continuing operations for the
first quarter was $6.0 million, or $0.03 per diluted share. There
were no comparable operations in the prior year quarter. Net income
from discontinued operations in the first quarter of 2008 was $55.4
million, or $0.23 per diluted share, compared to net income of $1.9
million, or $0.01 per diluted share in the same period for 2007. The
large increase in net income from discontinued operations is
attributable to the gain recognized from the transfer of Jade Art
Group¡¯s woodcarving business, which as previously announced was
transferred on February 20, 2008 to Wulatequianqi XiKai Mining Co.,
Ltd. (¡°XiKai Mining¡±) as part of the consideration for XiKai
Mining¡¯s entering into a 50 year Exclusive Distribution Rights
Agreement that provides Jade Art with 90% of the raw jade produced
by XiKai Mining¡¯s SheTai jade mine.
Mr. Hua-Cai Song, CEO of Jade Art Group, stated, ¡°We are pleased
with the results of our first quarter operating as a seller and
distributor of raw jade. The revenue from continuing operations of
$10.7 million exceeded our expectations. Year to date, Jade Art
Group has entered into six sales agreements for SheTai Jade,
representing a total contractual sales value equivalent to
approximately $42 million. We believe that this is a good indication
of the market¡¯s positive response to SheTai jade and supports our
expectation of continuing solid revenue performance.¡±
Recent Events
On January 11, 2008, Jade Art Group announced the formation of a new
wholly owned subsidiary, Jiangxi SheTai Jade Industrial Co., Ltd.
(¡°JST¡±). JST now manages the sale and distribution of jade sourced
from the SheTai Jade mine. This subsidiary is located in Yujiang
Jiangxi, China, an area known as a major center for the processing
and distribution of jade products.
On January 17, 2008, Jade Art Group signed an Exclusive Distribution
Right Agreement with XiKai Mining enabling the Jade Art Group to
acquire 90% of the raw jade produced from XiKai Mining¡¯s SheTai Jade
mine for a period of 50 years. The price has been set for the first
five years at the equivalent of $285 per metric ton, and is
subsequently subject to renegotiation every five years with
adjustments not to exceed 10%. The SheTai raw jade has uses ranging
from decorative commercial and residential construction material to
high-end jewelry. In exchange for this exclusive right, Jade Art
Group transferred its wholly-owned woodcarving business to XiKai
Mining and agreed to pay XiKai Mining RMB 60 million (approximately
$8.4 million) by March 2009. Jade Art Group has already paid
approximately $6.7 million of this obligation.
On April 16, Richard E. Khaleel was appointed an independent member
of the Board of Directors of the Jade Art Group. Mr. Khaleel is an
experienced senior marketing executive, having served as the Chief
Marketing Officer for the Bank of New York, the Chief Creative
Marketing Officer at Alliance Bernstein, and the Vice President of
Marketing at CNBC.
On April 28, Company announced that its Board of Directors had
authorized a one-for-three reverse stock split of its outstanding
common stock. The reverse split will reduce the number of
outstanding shares from 239,940,000 shares to 79,980,000 shares. The
Board set May 15, 2008 as the effective date for the reverse stock
split. The marketplace effective date, on which the reverse stock
split will be reflected in trading on the OTC Bulletin Board, will
be determined by NASDAQ and is expected to be in late May or early
June of 2008. The earnings per share results cited above are based
on common shares outstanding before the reverse split.
Fiscal 2008 Outlook
Jade Art Group Inc. reaffirms guidance for its 2008 full-year
financial results. This guidance reflects the results presently
anticipated from continuing operations and does not include unusual
or non-operating events. The following projections exclude results
from discontinued operations, which were discussed in more detail
above.
- Revenues are expected to be between $61 million and $65 million.
- Net income is expected to be between $37 million and $41 million.
- Diluted earnings per share are expected to be between $0.15 and
$0.17.
(Note: The diluted earnings per share are based on the common shares
outstanding before the pending reverse split. This is equivalent to
between $0.46 and $0.51 per diluted share after the effective date
of the reverse stock split.)
Mr. Song concluded, ¡°We are quite excited about our results to date
and the opportunity to be a leading seller and distributer of raw
jade in China. The increasing popularity of SheTai Jade and our
favorable long term agreement enabling us to obtain high quality
SheTai jade in significant quantities suggests further opportunities
to generate increasing value to our shareholders.¡±
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, which is located in Wulateqianqi,
China. The uses of this jade range from decorative construction
material to high-end jewelry. The SheTai mine¡¯s annual operating
capacity is expected to reach 40,000 tons and has been operating for
a number of years. It has one of the largest jade reserves in China
and 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.
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, 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.
¡¡ |
