Research and Trading Portal for US-listed China Stocks · March 29, 2017
China Tracker - Details for Universal Travel Group (UTRA)
Universal Travel Group
Recent Chain of Events: 2012-08-15 -- Last SEC Filing 2012-05-08 -- Delisting from NYSE 2011-11-14 -- Last Quarterly/Annual Report: Q3/FY2011 ended September 30, 2011 2011-04-12 -- Trading halted by NYSE
On April 10, 2011, Universal Travel Group received notification that its principal independent accountants, Windes & McClaughry Accountancy Corporation, had resigned its engagement with the Company effective April 9, 2011. Windes had informed the Company in its resignation letter that it was no longer able to complete the audit process. Windes stated this was due in part to Management and/or the Audit Committee being non-responsive, unwilling or reluctant to proceed in good faith and imposing scope limitations on Windes' audit procedures. Windes also stated that Windes had lost confidence in the Board of Directors' and the Audit Committee's commitment to sound corporate governance and reliable financial reporting.
Prior to its resignation, Windes raised the following issues (some of which may be considered to be disagreements) encountered during the audit, including issues related to the authenticity of confirmations, a loss of confidence in confirmation procedures carried out under circumstances which Windes believed to be suspicious; issues concerning the lack of evidence of certain tour package contracts and related cash payments. As a result, Windes had requested authority to perform additional audit procedures and the above issues to be addressed by an independent Audit Committee investigation. Windes stated in its resignation letter that, in its view, the Company was not willing to proceed in good faith with the course of action requested by Windes. Windes also stated in its resignation letter that in its opinion, Windes believed that certain statements made by Management and the Audit Committee, between March 29, 2011 and its resignation letter, impaired its independence as it related to the Company.
We disagree with Windes' reasons for resignation, in particular Management and/or the Audit Committee's purported unwillingness or reluctance and/or non-responsiveness to proceed in good faith and imposition of scope limitations on Windes' audit procedures, the Company's purported unwillingness to proceed in good faith with courses of action requested by Windes and Management and the Audit Committee's purported impairment of Windes' independence in relation to the Company a result of certain statement made by them. We believe that we have acted responsively, prudently and in good faith to address the numerous issues raised by Windes during the entire audit process. Windes disagrees. Management, the Audit Committee and Windes attempted to resolve these disagreements to no avail.
Universal Travel Group today announced that it has postponed its year 2010 earnings conference call ... to a later day in 2011 to be determined. The postponement was not due to any accounting irregularities and will allow the Company and its independent auditors to complete their work on the financial statements and audit. The Company regrets any inconvenience that the postponement may have created.
"We are fully committed to maintaining the highest standards of disclosure and maintaining the confidence of our investors and shareholders. In light of recent unfounded allegations casting doubt on the integrity of our business model and financial statements, management has decided to collect and address questions from investors in a conference call."
Universal Travel Group today responded to allegations that appeared in the online blog by Bronte Capital. Universal Travel categorically denies all the allegations contained in the blog. The Company is consulting with its legal counsel as to the legal options available to it and will be aggressively pursuing all legal remedies against Bronte Capital and John Hempton for the damages caused to the Company and its shareholders.
Universal Travel Group today announced that the Company has entered into an agreement to sell all of its 1,523 TRIPEASY Kiosks to Shenzhen Xunbao E-Commerce Co. for approximately $5.9 million in cash. The transaction is expected to be completed by the end of the fourth quarter of 2010. "We do not expect this transaction to reduce our top-line, at least for the next two years, as we have secured exclusive air ticketing, hotel reservation and package tour travel product sales rights via the kiosk network. Our travel product offerings are complementary to Shenzhen Xunbao's travel insurance products and, as a result, we expect to negotiate a mutually beneficial arrangement to continue to utilize the TRIPEASY Kiosks as one of our multiple sales channels after the initial two-year period expires. In terms of cost savings, we expect an increase in our gross margin as a result of eliminating costs associated with the kiosks."
As previously announced, for full year 2010, the Company expects to achieve between $145.0 million and $155.0 million in revenue, $27.0 million and $28.0 million in net income, and $1.35 and $1.40 in diluted EPS. "In June, a number of Chinese airlines reported that they were authorized to cut the commission paid to travel agencies. Currently there has been no major impact on our existing business since the airlines planned to cut only the commission rates for a few flights departing from Beijing and Shanghai. Based on our analysis of air ticket booking habits in China, we believe that in the coming years the airlines will continue to heavily rely on travel agencies and pay travel agency commissions when selling tickets. Furthermore, we believe that any eventual commission rate cuts will serve to accelerate the consolidation of the travel services industry in China. We expect Universal Travel Group to be a beneficiary of any such consolidation as we believe the larger and more efficient travel service providers will gain more market share and the smaller and weaker players would be hurt most from any further commission rate cuts."
With the closing of these two acquisitions, assuming no further dilutive effect from financings or acquisitions, the Company now expects to achieve between $145.0 million and $155.0 million in revenue, $27.0 million and $28.0 million in net income, and $1.35 and $1.40 in diluted EPS in the fiscal year 2010, excluding the effect of non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation.
For full year 2010, the Company reiterates its previously issued guidance of achieving a growth rate range of between 45% and 55% in both revenues and net income, excluding the effect of non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation. This guidance does not include any impact from the four companies the Company has announced it is in the process of acquiring.
Universal Travel Group today announced that the Company has entered into letters of intent to acquire four travel agency businesses in China for a total purchase consideration of $19.5 million. The combined unaudited 2009 revenue and net income for the four travel agencies were $23.0 million and $3.0 million, respectively. "After the acquisition of these four travel agencies, we will have expanded our geographic coverage to ten provinces in mainland China and the variety of services we offer our clients. We are confident these acquisitions, once complete, will have a positive impact on our top and bottom line in 2010."
The Company also announced that the financial results from these three acquisitions will be included in the Company's quarterly report for the three months ended March 31, 2010. In addition, as a result of the synergy from these three acquisitions, for full year 2010, the Company expects to achieve a growth rate range of between 45% and 55% in both revenues and net income, excluding the effect of non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation.