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China Security & Surveillance Technology, Inc. Reports R

Revenues Increased 246.6% to $43.4 腾讯新闻million; Net Income Up 205.0% to

$10.3 million; EPS of $.37 excluding comprehensive income

Recent Operating and Financial Highlights include:

* During the third quarter the Company signed 51 new contracts, with a

total value of approximately $32 million.

* On July 6th the Company entered into an agreement to acquire Shanghai

Cheng Feng Digital Technology Co., Ltd. ("Cheng Feng") whose

proprietary technology is expected to significantly improve the

Company's positioning in the security market

* On July 31st the Company completed a private placement yielding net

proceeds of $14.9 million

* On October 3rd the Company formalized a receivables bank financing

agreement with China Construction Bank to facilitate new business

signings and contract work for approved Safe City "Plan 3111"

projects.

SHENZHEN, China, Nov. 16 /Xinhua-PRNewswire/ -- China Security &

Surveillance Technology, Inc. ("China Security") (OTC Bulletin Board: CSSTF),

a leading provider of digital surveillance technology in China, today reported

financial results for the third quarter and first nine months ended September

30, 2006.

For the third quarter of 2006, the Company reported revenues of $43.4

million, an increase of 246.6 percent compared to $12.5 million for the third

quarter of last year. Revenues were comprised of the following: $24.4 million

in deferred contracts signed during the second quarter, $14.3 million from new

contracts signed during the quarter, $2.1 million from accessories and

products, and a $2.6 million contribution from the Cheng Feng acquisition. As

a percentage of revenue, the sale of security systems and installations

comprised approximately 95 percent of revenue during the third quarter 2006

with the remaining balance related to the sale of parts. The majority of the

increase in revenue resulted from new government regulations and initiatives

designed to improve macro economic trends in China. Additionally, the Company

was also effective in further capitalizing on its strong brand name, broad

distribution channels and extensive sales network to win business from new and

installed customers.

Gross profit for the third quarter was $12.9 million, resulting in gross

margins of 29.6 percent as compared to gross profit of $4.3 million and gross

margins of 34.3 percent for the third quarter last year. The decrease in gross

margins was primarily a result of increasing competition and a conscious

decision by management to lower prices on its key products to win new

business. Total operating expenses for the third quarter of 2006 were $2.1

million, a significant increase from the $0.3 million reported in the third

quarter of last year, resulting from an expansion of the organization

accommodate current and future growth in addition to the incremental costs

associated with being a public entity. Income from operations was $10.8

million, up 167.6 percent from the $4.0 million for the same period last year.

Operating margins for the third quarter 2006 were 24.8 percent compared to

32.1 percent last year with the decline as compared to last year a result of

the lower gross margins and higher operating expenses previously discussed.

The Company recorded an income tax expense of $0.8 million for the third

quarter of 2006, nearly equal to that incurred during the third quarter of

last year. This represented an effective tax rate of 7.0 percent and 18.9

percent for the third quarter of each respective year and decrease related to

the effective of change in deferred tax assets and liability components. Net

income for the third quarter increased 205.0 percent to $10.3 million, or

$0.37 per diluted share, from $3.4 million, or $0.16 per diluted share for the

third quarter of 2005. Fully diluted weighted average shares used in this

calculation were 28.0 and 21.6 million for the third quarters of 2006 and

2005, respectively. These figures exclude the impact of comprehensive income.

Fully diluted shares outstanding at the end of the third quarter, including

warrants, was approximately 31.0 million.

"Sales momentum continued in the third quarter and our pipeline of

potential future business remains robust. Solid execution on behalf of our

team, supported by key government initiatives and mandates along with macro

economic drivers, enabled us to report significant year over year and

sequential growth," stated Mr. Guo Shen Tu, Chief Executive Officer of China

Security. "During the third quarter, the Company signed 51 new contracts with

a total value of more than $32 million for the sale of equipment and

installation services, including several city-wide surveillance projects and

several directly related to State Ordinance 458, several of these we believe

can lead to much larger projects. As of October 1st, 24 projects totaling

$16.3 million in contract value had yet to commence, which when coupled with

$1.5 million in deferred project revenue, created a backlog of $17.8 million

that the Company expects to convert to revenues during the fourth quarter. In

addition, China Security announced $10.7 million in new fourth quarter

signings and a significant portion are expected to be realized as revenue

before the end of this year."

For the first nine months of 2006, the Company reported revenues of $66.1

million, an increase of 161.5 percent compared to $25.3 million for the first

nine months of 2005. Gross profit for the first nine months in 2006 was $20.3

million, resulting in gross margins of 30.7 percent as compared to gross

profit of $7.2 million and gross margins of 28.4 percent for the prior nine

month period. Total operating expenses for the first nine months of 2006 were

$3.2 million, an increase of 357.9 percent compared to the $0.7 million for

the same period last year. Income from operations for the first nine months in

2006 was $17.1 million, up 163.6 percent from the $6.5 million reported for

the same period last year with operating margins of 25.8 percent and 25.6

percent respectively. The Company recorded an income tax expense for the first

nine months of 2006 of $1.7 million as compared to $0.8 million for the same

period last year, representing an effective tax rate of 9.5 percent and 12.4

percent respectively. Net income for the period increased 172.4 percent to

$16.3 million, or $0.66 per diluted share, from $6.0 million, or $0.28 per

diluted share for the first nine months last year, which excludes the impact

of comprehensive income.

The Company's balance sheet strengthened significantly, with a current

ratio of 2.91 to 1 and working capital of approximately $46.8 million. The

Company completed the quarter with $23.5 million in cash and equivalents, up

from $2.3 million as of December 31, 2005, with the primary increase in cash

as a result of two prior private placements in 2006 that collectively

generated $22.5 million in net proceeds. The Company plans on using $7.5

million in cash for the previously announced acquisition of Chang Feng, in

addition to issuing 1.33 million restricted common shares. Inventory increased

261.7 percent from the end of 2005 to $19.2 million with the increase used to

support future revenue growth. Accounts receivable increased 52.0 percent from

the end of 2005 to $17.7 million, which was well below the growth in revenues

for the nine month period. Management believes current accounts receivable are

of high quality and has had very minimal occurrences of collection issues to

date. Shareholder's equity increased 98.8 percent to $48.9 million compared to

$24.6 million as of December 31, 2005.

"On October 3rd the Company announced a bank financing agreement with

China Construction Bank to help support the its efforts to secure new

contracts and improving cash conversion for the Safe City Projects initiative

(termed "Plan 3111"). This agreement will provide financing of up to 80

percent of the total contract amount for projects which qualify and affords

the Company with a significant competitive advantage versus the under

capitalized manufacturers which comprise most of our domestic marketplace.

Based on this agreement and our approved vendor designation, we feel confident

in our ability to win new contracts associated with what we believe is one of

the largest growth opportunities in China," concluded Mr. Guo Shen Tu.

Conference Call Information

Management held a conference call at 8:30 a.m. EST on Wednesday, November

15th. There will be a playback available until November 22, 2006. To listen to

the playback, please call 877-519-4471 when calling within the United States

or 973-341-3080 when calling internationally. Please use pass code 8120438 for

the replay.

The webcast may also be accessed at ViaVid's website at www.viavid.net.

The webcast can be accessed until December 15, 2006 on either site.

About China Security & Surveillance Technology, Inc.

Based in Shenzhen, China, China Security manufactures, distributes,

installs and maintains security and surveillance systems through its wholly

owned subsidiary, Golden Group Corporation (Shenzhen) Limited. China Security

has a manufacturing facility located in Shenzhen and a R&D facility which

leverages an exclusive collaboration agreement with Beijing University. In

addition, China Security has built a diversified customer base through its

extensive sales and service network that includes 37 points of presence

throughout the PRC. To learn more about China Security, visit their website

at: http://www.csstf.com .

Safe Harbor Statement

This press release includes certain statements that are not descriptions

of historical facts, but are forward-looking statements within the meaning of

Section 27A of the Securities Act of 1933 and Section 21E of the Securities

Exchange Act of 1934. These forward-looking statements may include statements

about our proposed discussions related to our business or growth strategy,

which is subject to change. Such information is based upon expectations of our

management that were reasonable when made but may prove to be incorrect. All

of such assumptions are inherently subject to uncertainties and contingencies

beyond our control and upon assumptions with respect to future business

decisions, which are subject to change. For a further description of other

risks and uncertainties, see our most recent Annual Report filed with the

Securities and Exchange Commission (SEC) on Form 20-F, and our subsequent SEC

filings. Copies of filings made with the SEC are available through the SEC's

electronic data gathering analysis retrieval system (EDGAR) at www.sec.gov.

Contact:

Company: Investors:

Terence Yap Matt Hayden or Brett Maas

(646) 713-4888 Hayden Communications

(852) 98387413 (858) 704-5065

terence@goldengroup.cn matt@haydenir.com

- TABLES FOLLOW -

CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED BALANCE SHEETS AS OF SEPTEMBER 30, 2006 AND DECEMBER 31, 2005

ASSETS

September 30, December 31,

2006 2005

(Unaudited)

USD USD

CURRENT ASSETS

Cash and cash equivalents 23,477,149 2,276,915

Accounts receivable, net 17,701,594 11,642,823

Related party receivables 1,457,300 3,783,198

Inventories, net 19,212,303 5,311,293

Prepayment & deposits 288,420 --

Advance to suppliers 4,471,388 1,492,512

Other receivables 3,412,842 415,455

Assets held for sale 3,796 --

Deferred tax assets - current portion 1,284,113 129,712

Total current assets 71,308,906 25,051,908

Plant and equipment, net 7,865,149 1,951,566

Land use rights, net 1,143,884 1,142,182

Equity in affiliated companies 12,652 --

Goodwill 8,426,502 --

Intangible assets 3,359,046 511,127

Deferred tax assets - non-current portion 401,646 459,889

TOTAL ASSETS 92,517,786 29,116,672

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable and accruals 5,677,230 1,839,609

Related party payables 118,074 --

Taxes payable 1,718,711 1,115,356

Payable for acquisition of business 13,917,004 592,846

Deferred income 1,498,333 887,469

Short-term debts 1,472,219 --

Due to a director 82,635 69,646

Total current liabilities 24,484,206 4,504,926

LONG-TERM LIABILITIES

Long-term debt 2,772,468 --

Total liabilities 27,256,674 4,504,926

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 106,944 --

REDEEMABLE EQUITY 16,221,072 --

SHAREHOLDERS' EQUITY

Common stock, $0.01 par value;

100,000,000 shares authorized

29,159,259 including 4,634,592 shares

classified as redeemable equity

(September 30, 2006) and 21,558,000

(December 31, 2005) shares issued and

outstanding 245,247 215,580

Additional paid-in capital 11,563,672 4,494,565

Retained earnings 34,830,628 18,552,610

Statutory reserves 823,748 803,758

Accumulated other comprehensive income 1,469,799 545,233

Total shareholders' equity 48,933,094 24,611,746

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 92,517,784 29,116,672

CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

September 30 June 30

2006 2005 2006 2005

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

USD USD USD USD

Revenues 43,448,232 12,535,699 66,057,404 25,265,140

Cost of goods sold 30,587,917 8,237,909 45,762,899 18,087,424

Gross profit 12,860,315 4,297,790 20,294,505 7,177,716

Selling and marketing 393,831 67,577 686,941 188,017

General and

administrative 1,301,813 72,039 1,974,875 151,075

Depreciation and

amortization 382,809 128,605 571,602 367,118

Income from operations 10,781,861 4,029,569 17,061,087 6,471,506

Other income, net 250,114 118,001 949,894 358,722

Equity in net loss of

affiliated companies 7,055 -- 7,055 --

Income before income

taxes 11,024,921 4,147,570 18,003,926 6,830,228

Minority interest in

income of consolidated

subsidiaries 5,599 -- 5,599 --

Income taxes 773,675 782,711 1,716,199 846,589

Income from continuing

operations 10,245,647 3,364,859 16,282,128 5,983,639

Loss from discontinued

operations, net of

taxes 17,988 -- 17,988 --

Gain on disposal of

discontinued

operations, net of

taxes 33,868 -- 33,868 --

Net income 10,261,527 3,364,859 16,298,008 5,983,639

Foreign currency

translation gain

(loss) 707,825 (17,852) 924,566 (17,852)

COMPREHENSIVE INCOME 10,969,352 3,347,007 17,222,574 5,965,787

NET INCOME PER SHARE

BASIC 0.37 0.16 0.66 0.28

DILUTED 0.37 0.16 0.66 0.28

WEIGHT AVERAGE NUMBER

OF SHARES OUTSTANDING

BASIC AND DILUTED 27,647,979 21,558,000 24,597,358 21,558,000

DILUTED 27,948,386 21,558,000 24,689,147 21,558,000

CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

2006 2005

(Unaudited) (Unaudited)

USD USD

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income 16,298,008 5,983,639

Adjustments to reconcile net income

to net cash provided by operating

activities:

Depreciation and amortization 571,602 128,605

Amortization of loan origination fees 10,438 --

Issue of warrants for investor relation

services 185,000 --

Equity in net loss of affiliated

companies 7,055 --

Non-cash adjustments related to

discontinued operations (15,880) --

Deferred taxes (1,170,422) (412,174)

Minority interest 5,599 --

Changes in operating assets and

liabilities:

(Increase) decrease in:

Inventories (12,687,002) 4,014,904

Accounts receivable (5,061,441) (4,094,494)

Advances to suppliers (2,936,222) (35,346)

Prepayment & deposits 61,580 --

Other receivables (2,189,669) (360,272)

Related party receivables 2,673,753 (811,504)

(Decrease) increase in:

Accounts payable and accruals 1,690,287 (3,380,793)

Deferred income 599,367 545,747

Related party payables 109,218 --

Deferred tax liabilities 81,902 --

Tax payable 631,172 608,919

Net cash (used in)provided by operating

activities (1,135,655) 2,187,231

CASH FLOWS FROM INVESTING ACTIVITIES:

Additions to fixed assets (4,427,448) --

Proceeds from disposal of fixed assets -- 74,873

Additions to intangible assets (31,314) --

Acquisitions, net of cash acquired (107,012) --

Proceeds from dispositions of

discontinued operations 570,597 --

Net cash (used in) provided by investing

activities (3,995,177) 74,873

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of common stock, net of issuing

expenses 22,284,845 --

New borrowings 3,508,351 --

Advances from directors 12,087 1,087,689

Net cash provided by financing activities 25,805,283 1,087,689

NET INCREASE IN CASH AND CASH EQUIVALENTS 20,674,451 3,349,793

Effect of exchange rate changes on cash 525,783 (407,402)

Cash and cash equivalents, at beginning

of period 2,276,915 33,298

CASH AND CASH EQUIVALENTS, END OF PERIOD 23,477,149 2,975,689

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