Providential Holdings FilesYear-End Report and Issues Corporate Update
Business Editors
HUNTINGTON BEACH, Calif.--(BUSINESS WIRE)--Nov. 26,2004--Providential Holdings, Inc. (OTC BB:PRVHE.OB) (Berlin StockExchange and Frankfurt Stock Exchange:PR7 - WKN 935160)(www.phiglobal.com) today commented on financial results for theFiscal Year ended June 30, 2004 and issued an update on the Company´soperating plan.
Total revenues for the year ended June 30, 2004 increased 540% to$9.27 million, compared to $1.44 million for the previous year. Grossprofits for the year ended June 30, 2004 increased 298% to $5.55million, compared to $1.39 million for the year ended June 30, 2003.Gross margin was 59.84% for the latest year, down from 96.09% from thesame period in 2003, primarily because over 95% of the revenues fromthe previous year were derived from M&A advisory services which didnot entail any cost of goods sold.
For the year ended June 30, 2004, net loss was $3.85 million, or$0.05 per basic and diluted share. This compares to net loss of $1.05million, or $0.03 per basic and diluted share, for the same period in2003. The loss this year was primarily due to one-time non-cashwrite-offs of $3.02 million resulting from impairments of goodwill inconnection with the acquisitions of two new subsidiaries. Without thenon-cash write-offs, net loss would have been $0.83 million, or $0.01per basic and diluted share.
In spite of the substantial increase in revenues for the latestfiscal year, this was far below the Company´s estimated revenue andprofitability targets, mainly due to the shortfalls from our consumerelectronics divisions, the belated launching of our telecommunicationsservices, and the inadequate contributions from a few other businessunits. The Company was also hoping to reach a timely resolution inorder to include Tangshan Yutian Saw Corporation´s operating resultsin our year-end consolidated financial statements. However, we weredisappointed at the recent termination of the purchase agreement withTangshan, which could have added tremendous value to our Company. Thetermination was necessitated by the delays both in Tangshan´s abilityto provide financial audits according to the US GAAP to comply withSEC requirements and the Company´s ability to remit earnest monies inconnection with this purchase and a separate joint venture agreement.
The complex circumstances relating to the Tangshan transaction andother acquisitions have caused egregious delays in the filings of ouryear-end and September 30, 2004 quarter reports. Our Chairman and CEOwishes to convey his sincere apologies to all our shareholders andinvestors for these delays and wants to make sure future reports willbe filed in a timely manner. For the quarter ended September 30, 2004,the Company has until December 16, 2004 to file Form 10QSB and willsubmit the filing before this deadline.
Looking forward, we have many promising things to report.
We have taken steps to increase our M&A advisory services in theUS, China, Korea, and Vietnam and expect to see more results fromthese efforts in the coming quarters. We have also worked closely withthe International Center for Training and Consulting under theMinistry of Trade, Vietnam, to provide consulting and M&A advisoryservices to potential Vietnamese companies.
We will continue to work with Tulon Pacific, LLC. to conclude ouracquisition plan and grow the cutting tool business as an importantcomponent of our portfolio. We have been in negotiations with BayviewFinancial and GE Capital to acquire certain assets to set upmanufacturing facilities in China or Vietnam.
We will continue to spin off a number of our portfolio companies,including ClearPass Systems, American University, and Providential Oil& Gas, to create value for our shareholders by using these spun-offunits to acquire profitable operating companies that may beimmediately accretive to the Company´s overall valuation. We willannounce the effective dates of these spin-offs in the near future. Weare also sorry for the delays in the distribution of share dividendsfrom Irvine College, Provimex, and Touchlink Communications and willmake sure our shareholders of record receive these dividend sharesbefore the end of December.
We have worked closely with a US-based steel operation partner andcontinued our negotiations with Hefei Iron & Steel Group Company,Ltd., (" HISG" ) Hefei, Anhui Province, China. Because this is a complexproject that requires resources and skills, we believe the rewardswill also be commensurate if and when it is completed.
We have recently set up a new joint venture, namely Provimex-HTVJoint Venture Company, with a Vietnam-based company to provide heatingand cooking gas and related gas supply equipment to high risebuildings and premium housings in Vietnam. Providential owns 80% ofthis joint venture and expects to greatly benefit from the on-goingconstruction boom in Vietnam. Operations are scheduled to start inearly 2005.
We have entered into a Memorandum of Intent Agreement with SmartTechnologies & Investments, Ltd., a Hong Kong-based company withsubsidiary factories located in mainland China, to acquire asubstantial interest in Smart Battery International, Ltd. (" SBI" ). SBIhas received 27x 40-foot container loads of advanced lead acid batterymanufacturing equipment, which has a replacement value of overUS$4,000,000 from the US, as part of the technology transfer processbrought about by its US-based partner. The highly automated equipmentenables complete control of the battery making process from start tofinish. This gives SBI an advantage over many of its local Chinesecompetitors who apply manual techniques, which can not guaranteequality specification consistently on some key battery makingprocesses. We plan to start investing into SBI in early 2005 and takeSBI public at an appropriate time in the future. We also plan todistribute a portion of SBI as dividends to our shareholders prior tothe spin-off.
We have increased our cooperation efforts with CDI, Co., aVietnam-based company with offices in Tam Ky, Quang Nam Province, toprovide consulting and M&A advisory services to emerging Vietnamesecompanies in this area and to co-develop some key sectors of the ChuLai Open Economic Zone. We believe this is a long-term initiative thatwill create significant value for both parties.
On the financial front, we have reached mutually agreeable termswith several major funding partners. We believe these relationshipswill provide the financial backup to execute our plan for the rest ofFY 2005 and beyond. Details regarding these financing arrangementswill be announced in the near future.
It is also noteworthy that our Chairman and CEO, fully confidentin the future of the Company, has indicated interest in convertingabout $300,000 of his loan balance to the Company into PRVH restrictedshares which will be held for a minimum of two years.
About Providential:
Providential Holdings (www.phiglobal.com) and its subsidiariesengage in a number of diverse business activities, the most importantof which are M&A advisory services and cutting tools. The Companyacquires and consolidates special opportunities in selectivehigh-growth industries to create additional value, acts as anincubator for emerging companies and technologies, and providesfinancial consultancy and M&A advisory services to U.S. and foreigncompanies.
Safe Harbor
Except for historical information contained herein, the statementsin this news release are forward-looking statements that are madepursuant to the safe harbor provisions of the Private SecuritiesReform Act of 1995. Forward-looking statements involve known andunknown risks and uncertainties, which may cause a company´s actualresults in the future to differ materially from forecasted results.These risks and uncertainties include, among other things, thecompany´s ability to attract qualified management, raise sufficientcapital, and effectively compete against similar companies.
These and other risks are identified in the company´s SEC filingsand should be considered in evaluating the forward-looking statementsmade herein.
--30--RM/ph* CONTACT: Providential Holdings Timothy Pham, 714-843-5456 www.phiglobal.com KEYWORD: CALIFORNIA INTERNATIONAL ASIA PACIFIC INDUSTRY KEYWORD: BANKING MARKETING AGREEMENTS EARNINGS SOURCE: Providential Holdings, Inc.Copyright Business Wire 2004
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