Universal Travel Group To Restate Previously Issued Q3 ‘07 Financial Statements

By: Lifestyle News

Universal Travel Group (OTCBB:UTVG), a fast growing travel services provider in China, announced today that it will restate its previously issued third quarter financial statements to report the revenues of the company’s subsidiary, Shanghai Lanbao, on a commission based revenue recognition method as opposed to the transaction-based method originally used in preparing the third quarter financials. The decision to restate the revenues on a commission based as opposed to a revenue based methodology was approved by the company's board of directors based on discussion with senior management, outside counsel and the company’s current public accounting firm.

Revenues for Shanghai Lanbao in the quarter ended September 30, 2007 as restated were $916,467 compared to the $8,453,949 previously reported for the period. Restated revenues of Universal Travel Group for the period were $12,813,942 compared to the $20,351,424 previously reported. Significantly, gross profit and net income are not affected by the change in reporting methodology and remain $4,505,579 and $3,066,475 for the third quarter of 2007. As a result of the change, Universal Travel’s gross margin for the third quarter of 2007 is now 35% compared to the 22% previously reported. Similarly, since net income for the third quarter remains as reported, net margin increases to 24% compared to the previously reported 15%.

As a result of the restatement, management is adjusting its fiscal 2007 guidance, which now reflects the recent closing of both the Foshan and Tianjin acquisitions in the fourth quarter. Fiscal 2007 revenue is expected to come in between $44 million and $45 million, an increase of 340% to 350% from $10.01 million reported in fiscal 2006. This guidance is up from the previously issued range of $35 million to $36 million reported in August 2007 for FY’07. Net income for fiscal 2007 is now expected to be in the range of $8.5 million to $8.8 million, or $0.23 to $0.24 earnings per share, an increase of 233% to 245% from $2.55 million reported in fiscal year 2006. This is an increase from the range of $8.2 million and $8.5 million previously announced for FY’07 in August 2007.

Universal Travel Group Chairwoman and CEO, Jiangping Jiang, stated, “We remain committed to growing our company for the long-term and I continue to be encouraged by the numerous opportunities we see in the near future as well as the performance of our subsidiaries. The restatement will not in any way impact our ability to continue serving our customers and the Chinese travel market successfully."

Universal Travel Group plans to restate its third quarter financial statements and file them with the SEC today. The nature of the accounting adjustment and the effect on the financial statements and earnings per share for the relevant period will be discussed in the Amendment.

The company also announced that as of today, the current CFO, Xin Zhang will be re-assigned to another position in the general staff of the finance department.

Until the company files the restated financial statements with the SEC, investors and other users of the company's SEC filings should not rely on the company's third quarter 2007 financial statements or any communications relating to such periods.

About Universal Travel Group

Universal Travel Group, a fast growing travel services provider in China, is engaged in providing reservation, booking and domestic and international travel and tourism services throughout China. The company's core services include tour packaging for customers, booking services for air tickets and hotels as well as air cargo transportation. Universal Travel Group has completed acquisitions of Speedy Dragon, specializing in air cargo transportation; Xi'an Golden Net, specializing in travel packaged tours; and Shanghai Lanbao, specializing in hotel reservation. In October 2007, UTVG completed the acquisition of Foshan Overseas International, a China based company that handles domestic and international travel inquiries as well as corporate travel, offering specialized packages that include national and international air ticket booking, hotel reservations, conference center reservations and rental cars. Today, UTVG completed the acquisition of Tianjin Golden Dragon, a company that specializes in domestic and international tour packaging, including planning and organizing conferences, events and tours for large groups in Tianjin, China. Tianjin Golden Dragon offers local transportation to foreign companies in China as part of their corporate tourism package. Universal Travel's goal is to become China's leading travel services provider in all fields of the tourism industry including aviation, cargo, hotel booking and tour packaging.

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