China Fire Reports Record Third Quarter 2007 Results; Raises Financial Guidance For 2007

    BEIJING, Nov. 13 /Xinhua-PRNewswire-FirstCall/ -- China Fire & Security
 Group, Inc. ( CFSG), a leading industrial fire protection products
 and solutions provider in China announced its financial results for the
 third quarter ended September 30, 2007. The Company will host a conference
 call to discuss these results on Tuesday at 8:00 AM EST November 13, 2007.
     Q3 Highlights
     -- Record revenues increased 44.2 % from last year to a record $11.6
        million
     -- Gross margin improved to 59.2%
     -- Record GAAP net income increased 186.8% from last year to a record $4.4
        million
     -- Fully diluted EPS of $0.16 (year-on-year increase of 147.4%)
     -- New contract announced with Wuhan Iron & Steel Group, $4.1 million
     -- New contract announced with Handan Iron & Steel Group, $2.9 million
     -- Raised 2007 net income guidance to $16.6 million and fully diluted EPS
        to $0.60
 
     Key Financial Indicators:
     (All numbers in USD millions, except per-share amounts)
 
                                   Q3 2007         Q3 2006       Percent Change
     Revenues                       11.6             8.0              44 %
     Gross Profit                    6.9             3.8              80 %
     Operating Income                4.1             1.2             253 %
     Net Income                      4.4             1.5             187 %
     EPS Diluted                    0.16            0.06             147 %
     Revenue increased for the third consecutive quarter to a record $11.6
 million, up 44.2 percent from $8.0 million for the third quarter 2006. This
 increase was mainly attributable to the growth of product sales and the
 execution of contracts at bigger value. During this quarter, the revenues
 from total solution contracts increased by 7.8 percent to $6.1 million,
 compared to $5.7 million in the same period of last year. The revenues from
 product sales increased by 133.1 percent to $5.2 million, compared to $2.2
 million of last year. The three largest customers were Maanshan Iron and
 Steel Group, Sichuan Dongfang Electronic Equipment and PetroChina, which
 total contributed approximately $4.9 million of the revenues, representing
 43.0 percent of total revenues for this period.
     Gross profit for the quarter increased by 79.6 percent to $6.9 million
 from $3.8 million for the period last year. Gross margins improved to 59.2%
 due to the higher revenue contribution from the sales of the Company's
 proprietary products, which enjoy higher margins.
     "We are pleased to report another consecutive quarter of record
 revenues. During this quarter our top three customers are from Iron and
 Steel, Power, and petrochemical sectors, reflecting our continuous success
 in our focused industries," commented Mr. Brian Lin, Chief Executive
 Officer of China Fire & Security Group, Inc. "During this quarter we have
 signed contracts with both existing clients as well as new clients. On
 September 4, we announced that we successfully extended our current
 business relationship with our existing clients, Wuhan Iron & Steel and
 Handan Iron & Steel Group, by securing two new contracts with values of
 $4.1 million and $2.9 million respectively. With the adoption of the new
 fire codes in Iron and Steel industry, we are well positioned to benefit
 from the expansion, relocation, and modernization of large steel
 companies," Mr. Lin continued.
     Operating expense was approximately $2.8 million for this quarter, as
 compared to approximately $2.7 million of last year. Operating income was
 approximately $4.1 million, compared to $1.2 million for the same period of
 last year, representing 253.0 percent annual growth of operating income.
 The improvement in operating income was mainly attributable to the increase
 in revenue and gross margin and the benefit of improved cost controls. For
 the third quarter, reported GAAP net income was $4.4 million and fully
 diluted EPS of $0.16 as compared to $1.5 million and $0.06 last year.
     Nine Month Financial Results
     Revenue for the first nine months of 2007 was $32.6 as compared to
 $23.1 million of year 2006, which represent an increase of approximately
 $9.6 million or 41.5 percent. This increase was mainly attributable to the
 further penetration of the Company's customer base in the iron and steel,
 power, and petrochemical industries and the execution of more contracts in
 the period. Gross margin for the period was 55.7 percent, which is higher
 than the gross margin of 52.6 percent for the same period of 2006. The
 increase in gross margin was mainly due to the use of a higher percentage
 of the Company's proprietary products that tend to provide higher margins.
     Operating income was approximately $10.9 million for the nine months
 ended September 30, 2007 as compared to approximately $6.8 million for the
 nine months ended September 30, 2006, which represent an increase of $4.1
 million or 59.2 percent. The increase was mainly due to the increase in our
 revenues and higher gross margin in this period even though we had a
 significant increase in our operating expenses related to being a public
 company and related to increasing our sales activities.
     Net income was approximately $12.8 million for the nine months ended
 September 30, 2007 as compared to approximately $7.3 million net income for
 the nine months ended September 30, 2006, which represent an increase of
 5.5 million or 73.7 percent. Net profit margin for the nine months ended
 September 30, 2007 was 39.1 percent, which is higher than the net profit
 margin of 31.9 percent for the same period of 2006. The reason for the
 increase in the net income was mainly due to the increase in revenues and
 operating margin and the non-cash credit of $1.2 million related to the
 change in fair value of derivative instruments. Excluding the one-time
 credit of approximately $1.2 million from the change in fair value of
 derivatives, the pro forma net income is $11.6 million for the nine months
 ended September 30, 2007.
     "We are very pleased with our record third quarter results as they
 exceeded our expectations. We hope that as we look to maintain our leading
 position in the industry, we are very confident to meet our newly updated
 guidance for 2007," concluded Mr. Brian Lin.
     Increase of 2007 Financial Guidance
     With the stronger-than-expected gross profit in the third quarter, the
 Company is pleased to announce an upward revision of its 2007 full year
 guidance to at least $16.6 million in net income from an earlier guidance
 of $14.7 million to $15.0 million, and to at least $0.60 in fully diluted
 EPS from an earlier guidance of $0.53 to $0.54. These projections are based
 on generally accepted accounting principles (GAAP).
     Teleconference Information
     The conference call will take place at 8:00 a.m. EST on Tuesday,
 November 13, 2007. Interested participants should call 1-800-860-2442 when
 calling within the United States or 1-412-858-4600 when calling
 internationally. There will be a playback available until November 28,
 2007. To listen to the playback, please call 1-877-344-7529 when calling
 within the United States and Canada or 1-412-317-0088 when calling
 internationally. Please use pass code 413018# for the replay. This call is
 being web cast by MultiVu and can be accessed by clicking on this link
 http://www.videonewswire.com/event.asp?id=43841 .
     About China Fire & Security Group, Inc.
     China Fire & Security Group, Inc., through its wholly owned
 subsidiaries, Sureland Industrial Fire Safety Limited ("Sureland") and
 Sureland Industrial Fire Equipment (Beijing) Limited ("Sureland
 Equipment"), is engaged primarily in the design, development, manufacture
 and sale in China of a variety of fire safety products for the industrial
 fire safety market and the design and installation of industrial fire
 safety systems in which it uses its own fire safety products. It also
 provides maintenance services for customers of its industrial fire safety
 systems.
     Headquartered in Beijing with over 30 sales and project offices
 throughout China, Sureland markets its industrial fire safety products and
 systems primarily to major companies in the iron and steel, power and
 petrochemical industries in China. It is developing and expanding its
 business in other industrial sectors including transportation, wine and
 tobacco, vessels, nuclear energy, and public space markets.
     Cautionary Statement Regarding Forward Looking Information
     This presentation may contain forward-looking information about China
 Fire & Security Group, Inc. and its wholly owned subsidiary Sureland which
 are intended to be covered by the safe harbor for forward-looking
 statements provided by the Private Securities Litigation Reform Act of
 1995. Forward- looking statements are statements that are not historical
 facts. These statements can be identified by the use of forward-looking
 terminology such as "believe," "expect," "may," "will," "should,"
 "project," "plan," "seek," "intend," or "anticipate" or the negative
 thereof or comparable terminology, and include discussions of strategy, and
 statements about industry trends and China Fire & Security Groups' future
 performance, operations and products. This and other "Risk Factors"
 contained in China Fire & Security Groups' public filings with the SEC.
                CHINA FIRE & SECURITY GROUP, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS UNIPRO FINANCIAL SERVICES, INC.)
 
         CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
      FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
                                    (Unaudited)
 
                              Three months ended        Nine months ended
                                September 30,              September 30,
                             2007         2006          2007          2006
     REVENUES
       System contracting
        projects         $ 6,105,899  $ 5,664,761  $ 23,270,285 $  17,353,668
 
       Products            5,188,117    2,225,380     8,827,922     5,366,832
       Maintenance
        services             302,954      152,059       545,410       347,783
 
         Total revenues   11,596,970    8,042,200    32,643,617    23,068,283
 
     COST OF REVENUES
       System contracting
        projects           2,539,812    2,676,347    10,564,382     8,679,358
       Products            2,065,515    1,516,652     3,705,298     2,203,146
       Maintenance
        services             124,211       25,006       181,085        60,501
           Total cost of
            revenues       4,729,538    4,218,005    14,450,765    10,943,005
 
 
     GROSS PROFIT          6,867,432    3,824,195    18,192,852    12,125,278
 
     OPERATING EXPENSE
       Selling and
        marketing          1,082,176    1,184,060     2,843,685     2,033,140
       General and
        administrative     1,420,221    1,103,316     3,605,574     2,195,730
       Depreciation and
        amortization         128,394      106,581       387,933       376,359
       Research and
        development          139,205      269,389       457,126       672,909
           Total
            operating
            expense        2,769,996    2,663,346     7,294,318     5,278,138
 
 
     INCOME FROM
      OPERATIONS           4,097,436    1,160,849    10,898,534     6,847,140
 
     OTHER INCOME
      (EXPENSE)
        Other income         249,537      371,747       577,535       597,231
        Other expense         (1,400)          --        (7,817)           --
        Interest income       46,462       13,566        90,632        19,646
        Interest expense          --      (32,456)           --       (75,475)
        Change in fair
         value of
         derivative
         instruments              --           --     1,205,791            --
           Total other
            income
            (expense)        294,599      352,857     1,866,141       541,402
 
     INCOME BEFORE
      PROVISION FOR
      INCOME TAXES         4,392,035    1,513,706    12,764,675     7,388,542
 
     PROVISION FOR
      INCOME TAXES                --      (17,619)           --        39,181
 
 
     NET INCOME            4,392,035    1,531,325    12,764,675     7,349,361
 
     OTHER
      COMPREHENSIVE
      INCOME
        Foreign currency
         translation
         adjustment          540,152      210,268     1,350,486       330,945
 
     COMPREHENSIVE
      INCOME             $ 4,932,187  $ 1,741,593  $ 14,115,161 $   7,680,306
 
     BASIC
      Weighted average
       number of shares   27,026,221   24,000,000    26,649,859    24,000,000
 
        Earning per
         Share           $      0.16  $      0.06  $       0.48 $        0.31
 
     DILUTED
      Weighted average
       number of shares   27,825,442   24,000,000    27,436,695    24,000,000
 
        Earning per
         Share           $      0.16  $      0.06  $       0.47 $        0.31
 
 
 
 
                CHINA FIRE & SECURITY GROUP, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS UNIPRO FINANCIAL SERVICES, INC.)
 
                            CONSOLIDATED BALANCE SHEETS
                  AS OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006
 
                                    A S S E T S
 
                                                   September 30,   December 31,
                                                       2007           2006
                                                     Unaudited
     CURRENT ASSETS:
 
      Cash                                     $    12,978,897 $    9,426,091
 
      Restricted cash                                  829,534      1,622,833
      Accounts receivable, net of allowance
       for doubtful accounts of $1,779,084 and
       $1,252,947 as of September 30, 2007
       and December 31, 2006, respectively          17,129,943     13,211,721
 
      Notes receivable                               1,284,242        903,425
 
      Other receivables                              1,381,321        875,119
 
      Inventories                                    4,334,244      4,190,830
      Costs and estimated earnings in excess
       of billings                                  11,576,823      9,020,122
 
      Employee advances                              2,539,279      1,641,138
      Employee advances - officers and
       directors                                        18,067          7,422
 
      Prepayments and deferred expenses              3,066,828      2,396,571
 
        Total current assets                        55,139,178     43,295,272
 
 
     PLANT AND EQUIPMENT, net                        4,057,117      3,529,808
 
     OTHER ASSETS:
 
      Accounts receivable - retentions                 564,834        383,375
 
      Deferred expenses - non current                   19,257         40,830
      Advances on building purchases                 2,395,369             --
 
      Investment in joint ventures                   1,152,077        501,288
      Intangible assets, net of accumulated
       amortization                                  1,153,888        558,255
 
        Total other assets                           5,285,425      1,483,748
 
 
          Total assets                         $    64,481,720 $   48,308,828
 
     L I A B I L I T I E S    A N D    S H A R E H O L D E R S'   E Q U I T Y
 
     CURRENT LIABILITIES:
 
      Accounts payable                         $     6,893,026 $    6,117,733
 
      Customer deposits                              4,937,818      2,713,451
      Billings in excess of costs and
       estimated earnings                            4,443,456      8,867,624
 
      Other payables                                   615,571        438,957
 
      Accrued liabilities                            2,502,714      1,891,628
 
      Taxes payable                                    627,072        619,949
 
        Total current liabilities                   20,019,657     20,649,342
 
 
     FAIR VALUE OF DERIVATIVE INSTRUMENTS                   --      2,680,811
 
     COMMITMENTS AND CONTINGENCIES                          --             --
 
     SHAREHOLDERS' EQUITY:
      Common stock, $0.001 par value,
       65,000,000 shares authorized,
       27,428,810 shares and 26,461,678
       issued and outstanding                           27,429         26,462
 
      Additional paid-in-capital                    18,760,431     13,393,171
 
      Statutory reserves                             3,123,127      3,728,127
 
      Retained earnings                             20,135,068      6,765,393
 
      Accumulated other comprehensive income         2,416,008      1,065,522
 
        Total shareholders' equity                  44,462,063     24,978,675
 
          Total liabilities and shareholders'
          equity                               $    64,481,720 $   48,308,828
 
 
 
 
     For more information, please contact:
 
      Robert Yuan
      China Fire & Security Group, Inc.
      Tel:     +86-10-8441-7848
      Email:   ir@chinafiresecurity.com
      Web: http://www.chinafiresecurity.com
 
 

SOURCE China Fire & Security Group, Inc.