Based on the strong results recorded in the first nine months of fiscal 2011, Management reaffirms guidance of sales of $40 million and net income of $19.5 million with EPS of $1.45 for the fiscal year ending March 31, 2011. Guidance assumes 7,000 plots sold at an average sales price of $5,000 to $6,250.
China Redstone began developing approximately 7,000 cemetery plots on approximately 11 acres of land located in the leased area of its property in the second quarter of fiscal 2011. By starting construction on all 7,000 cemetery plots in advance instead of in batches of 500 plots, the Company was able to reduce the construction costs by approximately 5%. The total estimated capital expenditures for the 7,000 plots are approximately $19.6 million, of which $18.2 million has already been paid through December 31, 2010. Management expects to complete this project, including construction of the walls, roads and other infrastructure, by calendar second quarter of 2011.
The Company started construction of the Guanying Temple, located in the leased land in November 2010. This temple will serve as a spiritual center where current and prospective clients can visit. In addition, it will house over 10,000 urns, which will be sold to customers at an average price of approximately $750 each. Management anticipates the completing construction by the end of fiscal 2011, with a grand opening scheduled for September 2011. The total construction cost will be approximately $3.6 million, $1.5 million of which has been paid as of December 31, 2010.
Similar to licenses issued to other private cemetery operators in Chongqing, this license permits the Company to develop and operate cemeteries for as long as it has available land and is in compliance with all applicable rules and regulations issued by the Chongqing Civil Administration Bureau. The Company pays approximately $26,500 per year for the rights to develop and operate cemeteries on 164 acres of land.
Through a series of approvals from May 2003 to August 2005, the Company acquired land use rights covering approximately 667,391 square meters, or the equivalent of approximately 164 acres of land. In addition, the Chongqing municipal government has committed to enable Foguang to secure the land use rights to approximately 1,194,804 square meters, or the equivalent of 295 acres of land and includes the Longqiao Lake (357,220 sq meters or 88 acres), which portions of Guiyuan II overlook. However, as of the date of this press release, Foguang has yet to officially receive such land use rights. Foguang has the option but is not obligated to apply for such rights in the future.
China Redstone has paid $3.0 million to date out of $13.5 million in projected FY 2012 cap ex (for the development of 9,000 plots on Guiyuan II cemetery)