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Wollemi Mining Corp. Announces Completion of Reverse Merger With Owner of Leading Chinese Footwear Companies; Plans to Change Name to Pacific Bepure Industry Inc.
Marketwire
Fast Growing Pacific Bepure Footwear Brand "Baopaio" Is Among the Most Recognized in China
November 12, 2009: 08:30 AM ET
Wollemi Mining Corp. (OTCBB: WOLI)
-- 49% Growth in Revenues and 59% Advance in Net Income Achieved in 2008
As Footwear Companies Repositioned For Future Growth
-- Double Digit Revenue Growth Reported in 2009 First Half on Strength of
Foreign Footwear Sales Despite Sluggish Domestic Environment; Net Income
Was Down 7% as Selling Prices Were Maintained
-- Mr. Haiting Li, Newly Elected Chairman and CEO, Sees Start of U.S.
Trading as Significant Step in Executing Growth Strategy
-- Five New Directors Appointed
Wollemi Mining Corp. (OTCBB: WOLI) announced today the completion of a reverse merger with the sole shareholder of Peakway Worldwide Limited, whose operating subsidiaries design, manufacture and sell their own branded and moderately priced casual sports, athletic, outdoor, business and travelling series footwear -- primarily for women -- throughout China and South America. Domestic sales are largely under the widely known brand name "Baopaio" (or "Bepure"). These operating subsidiaries -- with nearly 600 employees and three production lines -- produced more than 2.2 million pairs of shoes and approximately $20 million in sales in 2008, and now constitute the primary operations of Wollemi Mining Corp. ("Wollemi Mining," "Wollemi," or the "Company") which, pending required approvals, plans to change its name to Pacific Bepure Industry Inc. The Company is now headquartered in Jinjiang City, often referred to as the "footwear capital" of China, which has emerged as the world's largest consumer and exporter of shoes.
Mr. Haiting Li, who was named Chairman and CEO of the Company upon the closing of the transaction, stated, "We have taken a number of critical steps since 2008 to strengthen the rapidly growing footwear business we began nearly 16 years ago, and to prepare it for continuing strong growth in the new decade ahead. Of note, we have reorganized our sales and distribution in China to be closer to the market and more competitive, increased marketing expenditures to broaden awareness of the Baopaio brand, begun to build a new factory to further reduce costs and greatly expand our capacity and broaden our product line, added new technology throughout the organization and developed a substantial export business. We believe having our shares trade in the U.S. is another key step that will help in gaining access to potential financing if needed to speed our growth and also help raise awareness internationally of our Bepure brand."
The Transaction
In connection with the transaction, Wollemi Mining issued 10.5 million shares of common stock or about 70% of its issued and outstanding shares to the owner of Peakway, in exchange for 1,000 shares of Peakway. Immediately after giving effect to the exchange, Wollemi had 15 million shares outstanding. Wollemi has filed a Current Report on Form 8-K with the U.S. Securities and Exchange Commission on November 12, 2009 describing in more detail the terms of the reverse merger.
Five New Directors
Upon closing of the reverse transaction, Mr. Haiting Li, 45, who had previously served as Chairman and CEO of the Company's footwear subsidiaries, was appointed Chairman of the Board and CEO of the Company. Also named to the Board were Mr. Rongyan Ding and three independent directors -- Mr. Erik Vonk, Mr. Fuhsin Chen and Ms. Minghua Liu.
2008 Financial Results for Operating Subsidiaries
Prior to the reverse acquisition, Wollemi was primarily engaged in the acquisition and exploration of mining properties and had not realized any revenues. Therefore, the financial results below rely on the pre-merger statistics of the Chinese footwear subsidiaries to provide year-over-year comparisons.
For the year ended December 31. 2008, revenues grew 49.25% to $20,131,118 compared to $13,488,136 in 2007. Net income in 2008 increased 59.06% to $4,436,018 compared to net income of $2,788,881 a year earlier.
The Company attributed the sharp gain in revenues despite the onset of recession to a number of factors. In particular, the Company expanded its sales network of distributors to broaden its reach across 24 provinces in China. Additionally, through market oriented research and development, the Company made a specific effort to develop innovative localized products suitable to each market. At the same time, it continued efforts to enrich the Baopaio brand -- known for such innovations as height enhancement and anti-odor technology -- and promote recognition of it, with a particular focus on ensuring its trend-setter position in sports and leisure shoes for women.
While the strongest growth during the year occurred in the domestic northern and southern markets (+73% and +64% respectively) the Company was pleased with the growth in its eastern markets (+17%) which was a particular focus of its efforts. Of special significance, $3,231,000 in 2008 sales were from foreign export markets, mainly Chile and Peru in South America.
In addition to increased sales, the Company said that careful cost management, more rapid inventory turnover and a reasonable pricing strategy resulted in slightly higher gross profit margins (35.30%) compared to 2007. Net profit margins for the year also increased from 20.68% in 2007 to 22.04%.
Financial Results in the First Six Months of 2009
While the Company was combating the effects of the world financial crisis, revenues in the first half of 2009 continued to grow, but at a lower pace. Revenues in the first half ended June 30, 2009 were $7,061,013, or approximately 13% higher than the $6,250,588 reported in the same period last year.
Domestic sales were impacted in particular in the northern region due to the cancellation in this period of a distribution contract by one of the distributors. The Company has since made efforts to replace this distributor. In other areas growth was sluggish. The bright spot in the period, however, was the growth in sales from goods handled through an export agent, shipped mainly to South America, which saw a 61.76% gain over the same period last year and contributed approximately 35% of total revenues.
To fight the slower market domestically, the Company incurred higher costs to introduce new styles and increase promotional efforts. Nevertheless, gross profits margins were about the same (34.07%) as in 2008, and gross profits in the period rose 12.91% compared with same period last year. However, while expenses in the period increased, the Company made the decision to maintain prices, and this was a key factor in the decrease in net profit margins in the period to 18.37% compared with 22.36% a year earlier. The effect on net profit was a decline of $100,370, or approximately 7.18% to $1,297,326, compared with $1,397,696 in the first half of 2008.
Of significance in the period, the Company continued to move forward with changes in the mode of its distributorships that it began in 2008 with the establishment of its own retail outlets in major cities across China and, going forward, believes this will have a favorable effect on sales.
In addition, the Company continued with efforts to build a new factory which it expects will permit at least a 50% increase in production and lower costs, in particular, by enabling it to reduce the amount of production that currently must be contracted out to other manufacturers.
Outlook
Commenting on the future outlook for the Company, Mr. Li stated, "While we operate in a highly competitive market, the opportunity for continuing strong future growth is quite substantial. Domestically, while China is now the world's largest shoe market, shoe purchases represent approximately only .02% of GDP, whereas in the U.S., it is about 2%, leaving lots of room for continuing growth as the middle class in China continues to expand. Further, we have the good fortune of a brand that not only is well known, but also is recognized as being one of the favorite products purchased by consumers. With our continuing flow of market sensitive new products, expanded production capacity and the improved control we are developing in distribution with our own stores, I'm confident of continuing success in an improving economy."
He added, "We also see a very bright future in the foreign markets we have entered. In South America, in particular, we are reaching a growing middle class female population eager to expand their wardrobes and to own shoes that permit them to enjoy leisure activities just as is the case in China. We see similar opportunities ahead in Eastern Europe, in particular, but also are continuing to explore opportunities in North America, where we believe our reputation for fashionable, comfortable, moderately priced footwear should prove attractive to consumers there as well."
Information Regarding Forward-Looking Statements
Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.
Contacts:
Haiting Li
Chairman and Chief Executive Officer
Tel: (86 595) 8677 0999
Fax: (86 595) 8677 5388
Ken Donenfeld
DGI Investor Relations
donfgroup@aol.com
Tel: 212-425-5700
Fax: 646-381-9727
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