omniture

Home System Group Reports 2006 Financial Results

Home System Group
2007-04-02 21:41 884

- Company reports 2006 revenue of $26.4 million and net income of $1.4

million

- On January 31, 2007 Company completed acquisition of Oceanic Well

Profit, Inc.

LOS ANGELES, April 2 /Xinhua-PRNewswire-FirstCall/ -- Home System Group

(OTC Bulletin Board: HSYT) based in Guangdong Province, PRC, an International

manufacturer and distributor of home appliance products to major global

retailers, today announced 2006 financial results.

Reported results exclude contribution from the January 2007 acquisition of

Holy (H.K.) Limited, a Hong Kong holding company which owns 100 percent of

Oceanic Well Profit, Inc., one of China's largest professional BBQ gas grill

manufacturers with annual production capacity of $75 million.

For the year ended December 31, 2006, revenues were $26.4 million and were

generated from the distribution of home appliance products, including BBQ gas

grills, home water pumps, blenders, electric fans, heaters, and other

electronic and environmentally friendly products made in China and sold

through major distributors such as Nexgrill, Pro Steel, Rich Empire and Whalen

directly to retailers based in the US, Europe and Australia. Cost of sales for

the year were $23.7 million yielding gross profits of $2.7 million and gross

margins of 10.1 percent. General and administrative expenses were $1 million,

of which $0.7 million was a non-cash charge related to equity compensation for

consultants.

Operating income for the year totaled $1.7 million with a related

operating margin of 6.4 percent. Net income was $1.4 million with earnings per

share of $0.08 based on 16.1 million fully diluted shares outstanding. The

Company did not incur taxes as revenues were generated outside of Hong Kong.

Net cash provided by operating activities for 2006 totaled $2.0 million,

which was a result of positive net income, decreased accounts receivable and

strong working capital management. Current assets were $7.2 million and the

Company maintained a healthy current ratio of 2.1 to 1. Shareholders' equity

improved 133.8 percent to $3.8 million.

"We made further progress in growing our International business by

establishing incremental distribution capabilities in Europe and North

America, adding new product lines to broaden our portfolio, while formalizing

several new customer relationships. In order to develop a vertically

integrated Company and capitalize on the management teams' manufacturing

expertise, we have been actively pursuing acquisition opportunities, including

companies developing and manufacturing key products complementary to our

distribution platform," stated Mr. Li Wei Qiu, CEO and Chairman of Home System

Group.

"On January 30 2007, the Company completed a crucial first step in this

initiative with the acquisition of Oceanic Well Profit, Inc., which is located

in Zhongshan City, Guangdong Province, adjacent to Shenzhen. The Company is a

leading OEM manufacturer of BBQ gas grills for end customers such as Home

Depot which sells the product under its Charm Glow(R) private label. In 2006

Home System generated 15 percent of its revenues from distributing Oceanic

Well Profit's product and thus we anticipate this acquisition will

significantly enhance overall margins and provide incremental opportunities

for pricing power. As a point of reference, over $4 billion in grill sales

occur in the United States each year, with approximately 85 percent of

households owning a grill."

Consideration for the purchase of Oceanic Well Profit included 42.5

million common shares and $3 million in cash. After the acquisition of Oceanic

Well Profit, the Company had approximately 62.5 million shares outstanding.

The Company commenced operations in April, 2006 and utilizes a state of the

art, newly constructed 864,000 square-foot manufacturing facility on 82.5

acres of property. This new facility is equipped with over 500 pieces of

advanced production equipment and utilizes a staff of 1,200 employees.

Currently, the facility operates five production lines which are

interchangeable and can produce 450,000 grills, 3 million water pumps, and 2

million tool and hardware cabinets annually, collectively representing $75

million in total revenue capacity.

Additionally, Oceanic Well Profit, Inc. has an extensive research and

development team consisting of 278 employees dedicated to product enhancement

and development, As part of the Company's new product efforts, Oceanic Well

Profit expects to introduce a new line of energy efficient oven range hoods,

BBQ grills, water pumps and dishwashers, in addition to new tool and hardware

cabinets. Management expects that these new product introductions will

complement and enhance its current product offering while further penetrating

both international and domestic markets through existing and new customers.

"We have identified several additional acquisition opportunities which are

attractive from a production and geographic standpoint. The goal is to

increase the size and scope of our Company while capitalizing on our ability

to significantly increase overall production capacity and monetizing a broader

base of significant customers. The new facility we purchased with Ocean Well

Profit offers us the flexibility to meaningfully improve our economies of

scale and optimize leverage in our business model. The secular trend towards

outsourcing manufacturing to China remains strong and we are well positioned

to capture a meaningful portion of this large and growing market," Mr. Li Wei

Qiu concluded.

About Home System Group

Headquartered in Hong Kong, China, Home System Group, through its wholly

owned distributor Oceanic International (Hong Kong), Ltd. (OCIL) and Oceanic

Well Profit produces and distributes home appliances, including stainless

steel gas grills, residential water pumps, electronic fans, fruit processors,

and other electrical appliances to retailers in the U.S., Europe and Australia.

The Company became public through a reverse merger and received its stock

trading symbol on October 4, 2006. Please visit the company website at:

www.homesystemgroup.com.

Safe Harbor Statement:

Certain statements in this news release may contain forward-looking

information about Home System Group, Inc.'s business and products within the

meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the

Securities Exchange Act of 1934, and are subject to the safe harbor created by

those rules. The actual results may differ materially depending on a number of

risk factors including, but not limited to, the following: general economic

and business conditions, product development, shipments to end customers,

market acceptance of new and existing products, additional competition from

existing and new competitors, changes in technology, and various other factors

beyond its control. All forward-looking statements are expressly qualified in

their entirety by this Cautionary Statement and the risks factors detailed in

the Company's reports filed with the Securities and Exchange Commission. Home

System Group undertakes no duty to revise or update any forward-looking

statements to reflect events or circumstances after the date of this release.

The financial information stated above and in the tables below has been

abstracted from the Company's Form 10-K for the year ended December 31, 2006

filed with the Securities and Exchange Commission and should be read in

conjunction with the information provided therein.

HOME SYSTEM GROUP (formerly SUPREME REALTY INVESTMENTS, INC.)

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2006 AND 2005

2006 2005

ASSETS

CURRENT ASSETS

Cash $65,615 $103,701

Accounts receivable - Net of

allowance for doubtful

accounts of $58,012 and $-0- 1,886,349 3,962,986

Trade deposits 2,903,959 2,208,079

Due from directors 7,629 -

Due from related party 2,344,415 -

7,207,967 6,274,766

PROPERTY AND EQUIPMENT 996 -

TOTAL ASSETS $7,208,963 $6,274,766

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank loans $962,020 $3,030,836

Accounts payable and accrued expenses 2,474,180 1,578,677

Due to directors 8,624 54,917

TOTAL LIABILITIES 3,444,824 4,664,430

STOCKHOLDERS' EQUITY

COMMON STOCK - $0.001 par value;

200,000,000 shares authorized,

19,797,949 and 8,000,000 shares issued

and outstanding 19,798 8,000

ADDITIONAL PAID-IN CAPITAL 1,680,204 (7,998)

NOTE RECEIVABLE FOR STOCK ISSUANCE (900,000) -

RETAINED EARNINGS 2,964,137 1,610,334

TOTAL STOCKHOLDERS' EQUITY 3,764,139 1,610,336

TOTAL LIABILITIES AND STOCKHOLDERS'

EQUITY $7,208,963 $6,274,766

HOME SYSTEM GROUP (formerly SUPREME REALTY INVESTMENTS, INC.)

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2006

2006

NET SALES $26,391,044

OPERATING EXPENSES

Cost of net sales 23,736,261

General and administrative expenses 992,379

24,728,640

INCOME FROM OPERATIONS 1,662,404

OTHER INCOME (EXPENSE)

Finance costs (313,784)

Interest income 5,183

(308,601)

NET INCOME $1,353,803

BASIC AND DILUTED EARNINGS PER SHARE $0.08

BASIC AND DILUTED WEIGHTED AVERAGE

NUMBER OF SHARES 16,047,950

Source: Home System Group
Keywords: Machinery
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