|By Marketwired .||
|November 22, 2012 09:03 AM EST||
TORONTO, ONTARIO -- (Marketwire) -- 11/22/12 -- Changfeng Energy Inc. ("Changfeng" or the "Company") (TSX VENTURE:CFY), a natural gas utility in China, today reported its unaudited interim consolidated financial results for the third quarter ended September 30, 2012. All figures are in Canadian dollars unless otherwise stated. The unaudited interim consolidated financial statements and Management Discussion and Analysis can be downloaded from www.SEDAR.com or from the Company's website at www.changfengenergy.com.
Summary of Q3 2012 Consolidated Financial Results ---------------------------------------------------------------------------- (in thousands in $Cdn) except Q3 Q3 YTD YTD percentages and Change % Change % per share data 2012 2011 2012 2011 ---------------------------------------------------------------------------- Revenue 7,929 5,936 1,993 34% 22,416 19,247 3,169 16% Gross profit 3,164 2,059 1,105 54% 10,488 7,424 3,064 41% EBITDA (note a) 1,349 612 737 120% 5,603 3,389 2,214 65% Net income (loss) 55 -326 381 117% 1,707 484 1,223 253% Adjusted net income (loss) (note b) 55 -326 381 117% 1,074 484 590 122% Basic and diluted EPS 0.001 -0.005 0.006 120% 0.026 0.008 0.018 225% ----------------------------------------------------------------------------
(a) This is a non-GAAP financial measure. The definition and reconciliation of GAAP to this non-GAAP financial measure are included in the Management Discussion and Analysis, under the heading "Non-GAAP Financial Measures".
(b) The adjusted net income excludes a one-time government grant of $722,535 and associated income tax provision of $90,000.
Revenue for the third quarter of 2012 was $7.9 million, an increase of $2.0 million, or 34%, from $5.9 million for the same quarter in 2011. Revenue for the nine months ended September 30, 2012 was $22.4 million, an increase of $3.2 million, or 16%, from $19.2 million for the same period in 2011. The increases in revenue during the quarter and YTD of 2012 versus the same periods last year are mainly attributable to continued gas volume growth (109% in Q3'12 and 115% YTD) and a 15% price increase from the CNG refueling retail station. Piped gas sales from its operation in the Sanya Region for the quarter and YTD of 2012 were relatively flat compared to the same periods of 2011 due to limited sources of gas supply. Pipeline connection fees from its operation in the Sanya Region for the quarter and YTD of 2012 increased by 40% and 17%, respectively, compared to the same periods of 2011 due to an increase in the number of residential customers and an increase in certain higher-value commercial customers despite fewer commercial connections.
Gross profit for the third quarter of 2012 increased by $1.1 million (or 54%) and for the nine months ended September 30, 2012 increased by $3.1 million (or 41%), compared to the same periods of 2011. Gross profit as a percentage of sales for the third quarter and nine months of 2012 increased by 5% to 40% and by 8% to 47%, respectively, compared to the same periods of 2011. CNG refueling retail station gross margins year- over-year improved 9% due primarily to sale price increases and lower operating costs as a result of gas volume increase. Piped gas gross margins year-over-year improved 6% reflecting the reduced volume of gas purchased at market rate prices. Pipeline connection fee margins year-over-year improved 19% due to higher-value commercial customers.
General and administrative expenses for the third quarter of 2012 increased by $0.3 million (or 22%) to $1.7 million and for the nine months ended September 30, 2012 increased by $0.9 million (or 24%) to $4.4 million, compared to the same periods of 2011. The increases were attributable to general expenses increases including employee salary and benefits as a result of a high inflation rate in China, and sales increases. General and administrative expense as a percentage of sales for the quarter of 2012 decreased by 2% to 21%, and for the nine months ended September 30, 2012 increased by 1% to 20%, compared to the same periods of 2011.
Travel and business development expenses for the third quarter of 2012 increased by $0.2 million (or 28%) to $0.8 million and for the nine months ended September 30, 2012 increased by $1.0 million (or 50%) to $2.9 million, compared to the same periods of 2011. The increases were attributable to the travel and business development activities in mainland China as the Company seeks to develop new projects in close proximity to the new national pipelines. Included in this amount was a $0.2 million one-time sponsorship fee for a provincial-level table tennis tournament. The majority of the travel and business development expenses did not relate to the Company's business in the Sanya Region or the CNG retail station but instead related to projects under consideration or development in mainland China.
Earnings before interest, tax, depreciation and amortization ("EBITDA") as defined in the Management Discussion and Analysis for the third quarter of 2012 increased by $0.7 million, or 120%, to $1.4 million and for the nine months ended September 30,2012 increased by $2.2 million, or 65%, to $5.6 million, compared to the same periods of 2011. The increases were primarily attributable to the reasons noted above relating to the sales increases, higher gross margins and a $0.7 million one-time government grant, partially offset by higher operating expenses.
Net income (loss)
The net income for the third quarter of 2012 was $0.06 million or $0.001 per basic and diluted share compared to a net loss of $0.3 million or -$0.005 per basic and diluted share for the same period in 2011, primarily due to the reasons stated above. The net income for the nine months ended September 30, 2012 was $1.7 million, or $0.026 per basic and diluted share compared to $0.5 million or $0.008 per basic and diluted share for the same period of 2011.
Cash increased by $0.1 million to $5.2 million at September 30, 2012 from $5.1 million at December 31, 2011, primarily from cash provided by operating activities of $4.8 million and a government grant of $0.8 million, offset by cash used for capital expenditures of $1.4 million and $0.6 million of principal repayments of the bank term loans.
Working capital deficit as at September 30, 2012 was $10.4 million, relatively constant when compared to $10.7 million as at December 31, 2011.
The adjusted working capital as defined in the Management Discussion and Analysis under the heading "Non-GAAP Financial Measures" was $4.5 million as at September 30, 2012, compared to $2.4 million as at December 31, 2011.
Xiangdong project, Xiangdong District, Pingxiang City, Jiangxi Province
The Company continues to accelerate the first phase of construction at Xiangdong. Currently, the Company has completed construction of the 7km main pipelines and site preparation for construction of the citygate in the Park, and it is expected that the Company will be able to supply gas for the ceramic manufacturers in the Park by late 2012 upon completion of the first phase of construction. In addition, the Company is negotiating with a local bank for financing related to upcoming second phase of construction.
On October 30, 2012, the Company entered into its first pipeline installation contract with a local real estate developer. It is expected that the Company will supply gas for a condominium located in the downtown district with a total of 400 units by May 2013, depending upon the progress of construction of the condominium which is currently under construction.
A 24 kilometer pipeline connecting the Company's citygate to the existing intra-provincial pipeline network will be built by a state-owned company. Construction of this pipeline is postponed to mid-2013 subject to the approval of the development by the state-owned company. Once the pipeline is built, it will ship the gas from the PetroChina's Second West-East Pipeline to the Xiangdong district. Before that, the Company will purchase CNG to supply to its customers in this area. The gas quota as previously announced on November 23, 2011 will be saved and accumulated until the Company can access to the gas from the PetroChina's Second West-Ease Pipeline.
On November 13, 2012, the Company received the land use right for an 18-mu (approximately 1.20 hectare) parcel of land which is being used for the Company to construct a citygate for this project.
Sanya Operation, Sanya City, Hainan Province
In connection with the Gas & Electricity Exchange Program (the "Program") as previously announced on February 22, 2012 and April 30, 2012, a total of $0.4 million (RMB 2.4 million) has been paid as of September 30, 2012 for the first phase of construction of the Program. The completion of the first phase of construction is delayed to early 2013 due to certain engineering design modifications.
In addition, the Company's application to raise the sales prices for its commercial customers is waiting for the final approval by the Hainan Provincial Pricing Bureau. The price increase application was made based on the long term Budget Process previously announced on June 27, 2012 that was approved by Sanya Municipal government as part of the solution to address the gas shortage issue in the Sanya Region.
Proposed Joint Venture for the Pipeline Project, Guangdong Province
During the quarter, the Company continued to work on the proposed joint venture with the subsidiary of PetroChina as previously announced on March 29, 2012. An arm's- length pipeline project research firm has finalized a project feasibility study for supplying gas for one of the targeted industrial customers in these regions. The establishment of the proposed joint venture is subject to the approval by PetroChina after review of the feasibility study.
The proposed joint venture will build, own and operate natural gas pipelines to connect the potential industrial customers to an existing and/or planned intra-provincial pipeline network within four (4) cities in west Guangdong area. Those four (4) cities include Zhaoqing City, Foshan City, Zhuhai City and Jiangmen City.
CNG Refuelling Station, Changsha City, Hunan Province
On October 24, 2012, the Company reached an agreement with the existing shareholder of Hunan CNPC Guangda Gas Co., Ltd. ("Guangda Gas") for return of the good faith deposit in amount of RMB1.0 million (approx.$0.2 million) that was advanced in early 2010 in connection with the proposed acquisition of Guangda Gas. The good faith deposit will be repaid to the Company by way of partially offsetting gas purchase to be made from Guangda Gas over a ten-month period starting in November 2012.
Guangda Gas owns and runs a CNG wholesales station in the Changsha City and has been one of gas suppliers for the Company's CNG refueling retail station in the city.
Due to favorable market conditions after the PetroChina's Second West-East Pipeline commenced supplying gas for this region, the gas shortage situation has been significantly alleviated. As a result, the Company has no intention of proceeding with this proposed acquisition of Guangda Gas.
"We are pleased with our financial performance achieved for this quarter. We are also very pleased to see the progress we made to address the gas shortage issue in the Sanya Region, and the progress on our other projects under development in Mainland China, especially on the Xiangdong Project and Guangdong Project," stated Mr. Huajun Lin, Chairman and CEO of the Company. "We have nearly completed the first phase of construction of the Xiangdong Project, and remain on target to commence supply of gas for the Park in 2012. In addition, we are optimistic about the proposed joint venture with a subsidiary of PetroChina and see a tremendous opportunity ahead from the Guangdong Project."
About Changfeng Energy Inc.
Changfeng Energy Inc., is a local natural gas distribution company ("LDC" or natural gas utility) with operations located throughout the southern part of People's Republic of China. The Company serves industrial, commercial and residential customers, providing them with natural gas for heating purposes and fuel for transportation. The Company has developed a significant natural gas pipeline network as well as urban gas delivery networks, stations, substations and gas pressure regulating stations in Sanya City & Haitang Bay. Through its network of pipelines, the Company provides safe and reliable delivery of natural gas to both homes and businesses. The Company is headquartered in Toronto, Ontario and its shares trade on the Toronto Venture Exchange under the trading symbol "CFY". For more information, please visit the Company website at www.changfengenergy.com.
Information set forth in this news release may involve forward-looking statements under applicable securities laws. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this document are made as of the date of this document and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. Although Management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. This news release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein and accordingly undue reliance should not be put on such.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
Feb. 23, 2017 04:15 AM EST Reads: 1,145
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
Feb. 23, 2017 03:45 AM EST Reads: 6,572
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at 20th Cloud Expo, Ed Featherston, director/senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Feb. 23, 2017 03:45 AM EST Reads: 3,751
910Telecom exhibited at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and exchanges.
Feb. 23, 2017 03:00 AM EST Reads: 1,594
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Feb. 23, 2017 03:00 AM EST Reads: 1,849
China Unicom exhibit at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. China United Network Communications Group Co. Ltd ("China Unicom") was officially established in 2009 on the basis of the merger of former China Netcom and former China Unicom. China Unicom mainly operates a full range of telecommunications services including mobile broadband (GSM, WCDMA, LTE FDD, TD-LTE), fixed-line broadband, ICT, data communica...
Feb. 23, 2017 01:15 AM EST Reads: 1,095
Zerto exhibited at SYS-CON's 18th International Cloud Expo®, which took place at the Javits Center in New York City, NY, in June 2016. Zerto is committed to keeping enterprise and cloud IT running 24/7 by providing innovative, simple, reliable and scalable business continuity software solutions. Through the Zerto Cloud Continuity Platform™, organizations can seamlessly move and protect virtualized workloads between public, private and hybrid clouds. The company’s flagship product, Zerto Virtual...
Feb. 23, 2017 12:45 AM EST Reads: 1,328
As businesses adopt functionalities in cloud computing, it’s imperative that IT operations consistently ensure cloud systems work correctly – all of the time, and to their best capabilities. In his session at @BigDataExpo, Bernd Harzog, CEO and founder of OpsDataStore, will present an industry answer to the common question, “Are you running IT operations as efficiently and as cost effectively as you need to?” He will expound on the industry issues he frequently came up against as an analyst, and...
Feb. 23, 2017 12:00 AM EST Reads: 1,695
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of Soli...
Feb. 22, 2017 10:45 PM EST Reads: 667
"We're bringing out a new application monitoring system to the DevOps space. It manages large enterprise applications that are distributed throughout a node in many enterprises and we manage them as one collective," explained Kevin Barnes, President of eCube Systems, in this SYS-CON.tv interview at DevOps at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Feb. 22, 2017 09:45 PM EST Reads: 6,710
SYS-CON Events announced today that CA Technologies has been named "Platinum Sponsor" of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, New York, and 21st International Cloud Expo, which will take place in November in Silicon Valley, California.
Feb. 22, 2017 08:45 PM EST Reads: 1,863
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @CloudExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.
Feb. 22, 2017 08:45 PM EST Reads: 1,406
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
Feb. 22, 2017 08:45 PM EST Reads: 1,338
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
Feb. 22, 2017 07:45 PM EST Reads: 7,826
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
Feb. 22, 2017 07:30 PM EST Reads: 1,212