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Liuyang Fireworks Limited is a leading China-based manufacturer of fireworks that are distributed domestically and in more than 15 countries in North America, South America and Europe. The Company trades on the TSX Venture Exchange under the symbol "FWK".
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Liuyang Fireworks
Liuyang FireworksAnnual General MeetingJune 22, 2010
Liuyang Fireworks
Cautionary Note on Forward-Looking Information
In addition to historical information, the statements set forth throughout this presentation include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. This forward-looking information includes, among other things, information with respect to expected growth in the domestic Chinese market, the recovery of the Chinese economy, the shift to more profitable products, decreased selling expenses related to transportation costs, as well as information with respect to the Company’s beliefs, plans expectations, anticipations, estimates and intentions. The words, “may”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “continue”, “plan”, “predict”, “probable”, “potential”, “target” and similar words and expressions are used to identify forward-looking information. Risks and uncertainties affecting forward-looking information include, but are not limited to, fluctuations and seasonality in demand for fireworks, fluctuations in the costs of production and transportation, fluctuation and uncertainty in foreign currency exchange rates, fluctuation in costs of materials, changes in the laws of the PRC that affect the Company’s operations, regulatory approval, competition, product spoilage and liability, and the risk that revenues do not grow as expected. These and other such factors are discussed in greater detail in the Company’s Filing Statement dated may 27, 2009 and in its other public filings available on SEDAR at www.sedar.com. Potential investors and other readers are urged to consider these factors carefully in evaluating these forward-looking statements and information and are cautioned not to place undue reliance on them. The forward-looking information contained in this presentation reflects the expectations of the Company as of the date of this presentation and, accordingly, is subject to change after such date. While the Company may elect to, the Company does not undertake to update this information at any particular time excepts as required in accordance with applicable securities legislation.
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Liuyang Fireworks
2009 in Review2009 in Review
3
Liuyang Fireworks
1.5
1.6
1.6
1.7
1.7
1.8
1.8
1.9
2007 2008 2009
$M CDNRevenue EBITDA Adjusted Net Income
$M CDN$M CDN
2009 - First as a public company
$8.4 $8.8 $1.7
$1.8
2009 Financial Results
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2007 2008 2009
$1.6
$13.4$1.6
$1.3 $1.3
0
2
4
6
8
10
12
14
16
2007 2008 2009
Liuyang Fireworks
2009 Operational Highlights
• Completed qualifying transaction for TSX-Venture Exchange
• Closed non-brokered private placement for $3.1 million
• Set-up Toronto operations and named CFO
Liuyang Fireworks
2009 Operational Highlights
• Signed agreement with Quebec-based fireworks distributor
• $1.5 million purchase order with U.S. fireworks distributor
Liuyang Fireworks
Recent Highlights
Recent Highlights
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Liuyang Fireworks
2.4
2.5
2.5
2.5
2.5
2.5
2.6
2.6
2.6
2.6
Q1 2009 Q1 2010
Revenue Adjusted Net Income$K CDN$M CDN
Results impacted by 20% appreciation of $CDN and Stock Compensation Charges of $135,000.
$2.5
Q1 2010 Financial Results
0
50
100
150
200
250
300
350
400
450
Q1 2009 Q1 2010
$2.6$399
$267
Liuyang Fireworks
Recent Operational Highlights
• Launched display company
• Record $2.0 million for Chinese New Year Sales Season
• Acquired wholesale license in Zhejiang province
Liuyang Fireworks
Growth StrategyGrowth Strategy
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Liuyang Fireworks
Liuyang Fireworks
Current
Liuyang Fireworks
Target
International sales Domestic sales
50%50%
5%5%
Growth Strategy
95%95%
50%50%
Liuyang Fireworks
Chinese fireworks industry supply chain
How Liuyang Operates - Today
Manufacturer
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Display company
consumer
Wholesaler Retailer Display company
Liuyang’s Origins
Operations launched in March 2010
Liuyang Fireworks
Chinese fireworks industry supply chain
How Liuyang Operates - Tomorrow
Manufacturer
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Display company
consumer
Wholesaler Retailer Display company
Liuyang’s Origins
Operations launched in March 2010
Acquisition Focus
Liuyang Fireworks
Municipal license required to wholesale fireworks
Limit of 2-3 licenses per municipality
> 3,000 municipalities
Fragmented Wholesaler Market
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Liuyang Fireworks
Expand into Wholesale Market
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Guangdong Region
ShanghaiRegion
NortheastRegion
Strategically target key regions with highest growth opportunities
Acquire controlling position of dominant wholesaler
Each acquisition should generate $1M to $10M in incremental sales
Liuyang Fireworks
Proposed Acquisition Timeline
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Jan. 2010
3wholesalers
Dec. 2010
Sept. 2011
Dec. 2012
7 wholesalers
TBD(targets already identified)
Liuyang Fireworks
Uniquely Positioned
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Only Chinese fireworks company publicly-listed in North America—provides access to capital
Ability to expand capacity with minimal capital expenditure
Critical mass and size to execute consolidation strategy
Extensive experience as a distributor through historical export business
Liuyang Fireworks
QuestionsQuestions
18
Liuyang Fireworks
Jacky LongChief Financial Officer
Liuyang Fireworks LimitedTel : 416-613-0208 ext [email protected]
www.liuyangfwk.com
Contact
For more information, please contact:
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