SHOUGUANG, China, April 17, 2015 (GLOBE NEWSWIRE) -- Gulf Resources, Inc. (Nasdaq:GURE) a leading manufacturer of bromine, crude salt and specialty chemical products in China, today announced the company has filed its Pro Forma 8-K for the acquisition of Shouguang City Rongyuan Chemical Co., Ltd. (SCRC).
Gulf Resources signed the Equity Interest Transfer Agreement with SCRC on Jan. 12, 2015. The transaction was closed on Feb. 4, 2015. Gulf is required to file the Pro Forma 8-K with the SEC by April 20, 2015. Based on the agreement, the former shareholders of SCRC guaranteed SCRC's audited 2014 net income would not be less than RMB70 million (approximately $11.4 million).
The audited financial statements show that in 2014 SCRC reported:
- Sales of $52,382,605, and increase of 23.1% from $42,562,392 in 2013
- Income from operations of $15,987,202, an increase of 28.3% from $12,459,050 in 2013.
- Net Income of $12,047,478, an increase of 28.6% from $9,371,590 in 2013, exceeding the guarantee of $11.4 million.
- Cash of $24,484,964, working capital of $34,873,709 and shareholders' equity of $54,169,792.
On a pro-forma basis, Gulf Resources would have ended 2014 with
- Revenues of $160,625,493, 41% higher than the $113,660,331 reported in the 10-K.
- Net Income of $29,675,079, 66% higher than the $17,871,795 reported in the 10-K.
- Basic Pro-Forma Earnings Per Share of $0.65, 41% higher than the $0.46 reported in the 10-K.
- Cash of $104,764,959
- Stockholders' equity of $325,446,553.
Gulf Resources CEO Xiaobin Liu Stated, "We are very pleased with SCRC's strong performance. We believe this transaction will lead Gulf Resources into a downstream business that should help GURE increase its profit margins, improve its return on investment, and produce more consistent and reliable earnings."
"With this major downstream acquisition," Liu continued, "major international price increases in bromine, and the discovery of natural gas in Sichuan; we are optimistic about our future and believe we are on the right path to significantly increasing shareholder value."
* The sellers of SCRC agreed as part of the purchase price to accept 7,268,011 shares of Gulf Resources stock, based on a valuation of $2.00, which was a 73% premium to the price on the day the agreement was reached. For accounting purposes, these shares are now being valued at $1.84, which was the closing price of Gulf Resources' stock on the day of the closing of the agreement. The price difference between the original $2.00 and the current $1.84 is solely for accounting purposes. There has been no change in the number of shares issued. In addition, the sellers of SCRC have agreed to a 5 year lock-up.
About Gulf Resources, Inc.
Gulf Resources, Inc. operates through two wholly-owned subsidiaries, Shouguang City HaoyuanChemical Company Limited ("SCHC") and Shouguang Yuxin Chemical Industry Co., Limited ("SYCI"). The company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the company manufactures chemical products utilized in a variety of applications, including oil and gas field explorations and papermaking chemical agents. For more information, visit www.gulfresourcesinc.com.
Certain statements in this news release contain forward-looking information about Gulf Resources and its subsidiaries 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 general economic and business conditions in the PRC, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competitors for bromine and other oilfield and power production chemicals, changes in technology, the ability to make future bromine asset purchases, 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. Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
Source:Gulf Resources, Inc.