HONG KONG, March 27, 2013 /PRNewswire/ --
Highlights
Mr. Judson Martin, Chairman, Chief Executive Officer and Executive Director of Greenheart Group Limited ("Greenheart" or the "Company"; HKEx stock code: 0094) said, "We are pleased to present Greenheart's annual financial results for 2012, where despite the challenges our Company encountered as a result of the on-going restructuring of our former largest shareholder, we saw a year of growth in all our business units. Effective January 31, 2013, substantially all of the assets of our former largest shareholder, including a 63.55% equity interest in Greenheart, have been transferred to a new ownership group. Although the long-term plans of the new ownership group are not yet entirely clear, the distinct disassociation of Greenheart from the substantial problems surrounding our former largest shareholder is a positive step forward.
In 2012, we increased our year on year revenue by over 50% from HK$327.0 million to HK$495.2 million and increased our business units' adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA") by 203% from HK$12.6 million to HK$38.2 million. Importantly, we reduced the total comprehensive loss attributable to the equity holders of the Company by 60% compared to the year before by growing our operations, expanding our range of products and increasing our market share. As we announced on December 20, 2012 we strengthened our capital structure and liquidity with the completion of a US$30 million credit facility with the Bank of New Zealand. The facility includes a US$5 million revolving facility, repayable on demand and a US$25 million revolving facility maturing on November 30, 2015. The facility remained undrawn in our year-end 2012 financial results.
In our softwood business unit, we grew our New Zealand operations and sales network into China and India taking advantage of the growing demand for radiata pine as a key construction and building material. All of our softwood sales and marketing activity are managed by our in-house staff. We have no reliance on any related party or agreements. In 2012, we harvested approximately 559,000 cubic metres, representing a 59% increase from 2011 resulting in revenue and Adjusted EBITDA increases of 50% and 65% respectively. In 2013, we have plans to harvest up to 650,000 cubic metres. In a little over two years we have taken our New Zealand plantation assets from under development with little harvest volume to a profitable income producing asset with increasing harvest volume and asset value.
China, India and New Zealand are now our three largest markets for our New Zealand radiata pine. China accounted for 76% of Greenheart's softwood sales with average A-Grade prices increasing by 11% from December 2011 to December 2012. This was primarily driven by reduced supply from Russia and a redirection of Canadian softwood supply to the improving US housing market. Additionally, we benefitted from the oversupply of dry bulk carriers that drove shipping costs from New Zealand to China down by 17% during 2012. In 2013, we will continue to grow our export market share in China and India with our planned increased harvest volumes and explore new opportunities to supplement our own supply with additional third party volume.
In our hardwood business unit in Suriname, we increased sales by 67% from the year before with revenues of HK$42.5 million in 2012. In West Suriname, we completed phase one of our world-class wood processing facility, which was commissioned in August 2012 by Suriname's Minister of Public Works. This is an important achievement and allows Greenheart to produce and sell high-value tropical hardwood products around the world which are sustainably produced in Suriname.
Phase two expansion, which is underway in West Suriname includes an additional sawmill and processing capacity, 22 dry kilns and the construction of a bioenergy plant to convert a substantial proportion of our timber waste into clean energy. When completed in 2013, we will be substantially less reliant on diesel fuel while realising approximately US$2 million in annual cost savings. As a result, our carbon footprint will be substantially smaller and we are exploring opportunities to relay our excess clean energy back to the national grid as well as the local indigenous community. Most importantly and aligned with our fundamental commitment to the environment and principles of sustainability, our West Suriname operations achieved the Forest Stewardship Council ("FSC") controlled wood certification in 2012. We also successfully completed the annual audit evaluation for full FSC certification in our Central Suriname concessions where we now control harvesting rights and the option to acquire further concession rights in the neighboring region.
Due to the problems faced by our former largest shareholder over the past two years, we have moved cautiously and deliberately slow in our Suriname expansion. Our operations in Suriname remain under development but with the restructuring of our former largest shareholder now substantially behind us, we can recommence our full growth strategy. Upon completion of phase two later in 2013, our tropical hardwood processing facility in West Suriname will be one of the largest and most energy efficient in South America. Our future plans include replication of the wood processing facility and bioenergy plant that is under construction in West Suriname, in our Central and East Suriname operations.
In 2012, we focused on strengthening our in-house sales & marketing resources to expand to new hardwood markets with more species and more product choice. All of our hardwood sales and marketing activity are managed by our in-house staff. We have no reliance on any related party or agreements. As we started producing top quality lumber, we commenced sales to the Netherlands, which has become our largest hardwood lumber market. We are also developing a growing customer base in Denmark, Belgium and the United Kingdom. In 2012, our average selling price for hardwood lumber, excluding recovery products was US$811 per cubic metre, an increase of 8% from 2011. We also increased our third-party hardwood trading revenue by nearly 200% compared to 2011 as we focused on selective sourcing and trading of timber that leverages our growing marketing and distribution network. Although currently a small contributor, we will continue to develop our trading business in the coming years as it generates substantial operating synergies, utilises and develops our existing resources and strengths without significant additional long term capital commitments.
On January 31, 2013, Emerald Plantation Group Limited ("EPGL"), Greenheart's largest shareholder with approximately 63.55% of the issued share capital in Greenheart (at the time of the making of the MGO (as defined below) made an unconditional mandatory general cash offer (the "MGO") to acquire all the issued ordinary share capital, including the convertible notes and outstanding options of Greenheart that were not already held by EPGL. On March 21, 2013, the MGO closed and EPGL announced they owned a total of 496,189,028 shares in Greenheart representing approximately 62.82% of the issued share capital of the Company. This level of acceptance did not meet the requirements for compulsory acquisition under the relevant rules and Greenheart continued to maintain its listing of shares on the Main Board of the Stock Exchange. Our net asset value per share of HK$1.61 attributable to shareholders at the end of 2012 is a premium of 178% to the EPGL offer price of HK$0.58 per share.
In the last two years, we faced significant challenges and acted with deliberate care as a direct result of the restructuring of our former largest shareholder. At the same time, we have turned a small business with annual sales of only HK$17 million into a business generating annual revenue of almost HK$500 million with positive adjusted EBITDA from business units. Our keen focus in 2013 and beyond is to continue the reduction of operating losses and move to profitability and positive operating cash flow on a consolidated basis. We plan to accomplish this by growing our top line with increased softwood harvesting and sales from New Zealand and to ramp up hardwood sales in Suriname which we are now well positioned to do, with the completion of our wood processing facility in West Suriname. We also intend to improve efficiency in all our operations thereby controlling costs.
With the challenges of our former largest shareholder now substantially behind us, we are excited about our future. We believe we have the strategy and the people to turn our existing assets into a world-class sustainable forestry business creating a solid platform on which to grow. "
Greenheart's full year financial results can be found on its website (www.greenheartgroup.com) and on the Hong Kong Stock Exchange website.
Note: Adjusted EBITDA refers to EBITDA from operations only and excludes Hong Kong. Please see Greenheart Announcement for full details.
About Greenheart Group Limited
Greenheart Group Limited is a Hong Kong based investment holding company. The Company has various interests in and operates and manages approximately 450,000 hectares of hardwood forest concessions in Suriname, South America, comprised of approximately 230,000 hectares of direct concession licenses and 220,000 hectares of harvesting and related rights. The Company also owns a softwood plantation in New Zealand of approximately 13,000 hectares of freehold land with a net harvestable area of approximately 11,000 hectares. The principal activities of the Company's subsidiaries consist of responsible and sustainable log harvesting, lumber processing and sales and marketing of logs and lumber products to China and other countries around the world. Learn more at www.greenheartgroup.com.
Please note: This press release contains projections and forward-looking statements regarding future events. Such forward-looking statements are not guarantees of future performance of the Company and are subject to risks and uncertainties that could cause actual results and company plans and objectives to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but not limited to, changes in China and international economies; changes in currency exchange rates; changes in worldwide demand for the Company's products; changes in worldwide production and production capacity in the forest products industry; competitive pricing pressures for the Company's products and changes in wood and timber costs.
FOR FURTHER INFORMATION, PLEASE CONTACT:
David Wu
Vice President of Corporate Development & Investor Relations
Tel: +852 2593 3122
Email: davidwu@greenheartgroup.com
