2014

China Natural Gas Announces Second Quarter 2012 Financial Results -- Second Quarter 2012 revenues increased by 38.8% year-over-year to $37.90 million, up from $27.31 million in second quarter 2011

-- Second Quarter 2012 net income increased by 15.5% year-over-year to $5.07 million, up from $4.39 million in second quarter 2011

XI'AN, China, Aug. 14, 2012 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (PINK: CHNG), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced its financial results for the second fiscal quarter ended June 30, 2012.

Shuwen Kang, CEO of China Natural Gas, Inc. commented: "We are pleased to share the results of our second quarter, as we believe that they demonstrate continued progress toward our sector and geographic growth and forward integration objectives. The company has successfully commenced commercial production of its Jingbian liquefied natural gas ("LNG") plant on July 16, 2011, which represents a key milestone in its corporate history.

Our network of compressed natural gas, or CNG, fueling stations currently contains 35 stations, a significant presence in the markets we operate in. Our outlook for the second half of the year is promising as we continue to grow our business, and we look forward to sharing any future developments as they materialize."

Second Quarter 2012 Financial and Operating Results

Revenues in the second quarter of 2012 increased by 38.8% to $37.90 million from $27.31 million in the second quarter of 2011, driven by our LNG production facility in Jingbian County, Shaanxi Province started operations. Natural gas sales grew by 56.7% year-over-year to $34.93 million, up from $22.29 million in the second quarter of 2011. Gasoline revenues in the second quarter of 2012 decreased to $0.70 million, down by 64.5% from $1.97 million in the same period of the prior year, which was mainly attributable to the closure of three gasoline fueling stations during the first and fourth quarter of 2011. Installation and services revenue decreased by 25.6% year-over-year to $2.27 million from $3.05 million in the comparable period of 2011. In the second quarter of 2012, sales of natural gas, gasoline, and installation and other services contributed 92.2%, 1.8%, and 6.0% of the total revenues, respectively.

Gross profit in the second quarter of 2012 increased by 23.1% to $13.83 million, from $11.23 million in the same period of the prior year. Gross margin in the second quarter of 2012 was 36.5%, compared to 41.1% a year ago. Gross margin decreased primarily due to the current lower gross margin level of our LNG business, as compared to the gross margins of those business lines making greatest contribution to revenue.

Operating income in the second quarter of 2012 was $6.57 million, an increase of 23.1% year-over-year from $5.34 million in the second quarter of 2011, primarily attributable to the realization of revenue and gross profit of LNG, which started in July 2011.

Income tax expense was $1,25 million for an effective tax rate of 19.8%, as compared to an effective tax rate of 19.5% in the second quarter of 2011.

Net income in the second quarter of 2012 increased by 15.5% to $5.07million, or $0.24 per diluted share, from $4.39 million, or $0.21 per diluted share, in the second quarter of 2011. Net margin decreased to 13.4% during the three months ended June 30, 2012 from 16.1% during the three months ended June 30, 2011, primarily due to the decrease in gross margin.

As of June 30, 2012, the Company had $6.30 million in cash and cash equivalents, compared to $9.62 million in cash and cash equivalents at December 31, 2011. The decrease was primarily attributable to the construction of the LNG plant and other projects, and the repayment of the loans from Shanghai Pudong Development Bank and of the principal of the Abax Senior Notes.

Net cash provided by operating activities was $18.85 million for the six months ended June 30, 2012, compared to net cash provided by operations of $12.72 million for the six months ended June 30, 2011. The increase was primarily due to the decrease in prepaid expense and other current assets, increase in accounts payable and accrued liabilities and decrease in accounts receivable.

Conference Call

Management will hold a conference call on Thursday, August 16, 2012 at 8:30 a.m. EDT (5:30 a.m. Pacific) to discuss its second quarter results.

To participate in the call please dial 1-800-860-2442, or 1 412-858-4600 for international calls, approximately 10 minutes prior to the scheduled start time. Teleconference replay will be available 1 hour after the end of the conference with end date at 9 AM ET. Aug 24, 2012. The number for the replay is 1-877-344-7529 or 1-412-317-0088 for international calls with conference Number: 10017499.

About China Natural Gas, Inc.

China Natural Gas ( http://www.naturalgaschina.com ) transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 24 CNG fueling stations in Shaanxi Province 10 CNG fuelling stations in Henan Province and 1 CNG fueling station in Hubei Province. China Natural Gas' five primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fueling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) production and sales of LNG through our LNG production facility in Jingbian County, Shaanxi Province; (4) the distribution and sale of gasoline through Company-owned CNG fueling stations for hybrid (natural gas/gasoline) powered vehicles; and (5) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

 

CHINA NATURAL GAS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 



June 30,


December 31,




2012


2011














ASSETS

CURRENT ASSETS:






Cash and cash equivalents


$

6,304,066


$

9,622,883


Restricted cash



1,888,258



-


Accounts receivable, net



2,099,579



2,997,845


Other receivables,net



410,279



540,646


Employee advances



424,264



285,270


Inventories



2,915,301



1,938,754


Advances to suppliers



4,353,460



4,540,139


Prepaid expense and other current assets



4,094,987



4,470,687


Total current assets



22,490,194



24,396,224










Investment in unconsolidated joint ventures



1,585,000



1,574,000


Property and equipment, net



188,281,179



174,097,754


Construction in progress



44,514,824



45,882,320


Deferred financing cost, net



312,418



517,334


Goodwill



1,754,512



629,729


Other intangible assets



21,299,973



18,910,244


Prepaid expenses and other assets



6,130,315



10,976,203


TOTAL ASSETS


$

286,368,415


$

276,983,808










LIABILITIES AND STOCKHOLDERS' EQUITY









CURRENT LIABILITIES:








Senior notes- current maturities


$

13,595,775


$

9,671,682


Current portion of bank loan payable



5,547,500



4,722,000


Accounts payable and accrued liabilities



9,714,776



7,694,423


Other payable - related party



1,614,392



787,000


Short-term borrowing - related party



2,679,945



1,359,945


Unearned revenue



3,999,560



4,280,594


Accrued interest



1,003,954



1,029,431


Taxes payable



2,182,274



2,626,271


Total current liabilities



40,338,176



32,171,346










LONG-TERM LIABILITIES:








Senior notes, net of current portion



20,393,663



25,791,151


Bank loan payable, net of current portion



7,925,000



9,444,000


Borrowings - related party



-



1,320,000


Warrants liability



17,500,000



17,500,000


Total long-term liabilities



45,818,663



54,055,151


Total liabilities



86,156,839



86,226,497


























STOCKHOLDERS' EQUITY:








Preferred stock, par value $0.0001 per share, 5,000,000 authorized, none issued and outstanding



-



-


Common stock, par value $0.0001 per share, 45,000,000 authorized, 21,458,654 issued and outstanding at June 30, 2012 and December 31, 2011



2,145



2,145


Additional paid-in capital



83,205,561



82,909,485


Accumulated other comprehensive income



21,558,709



19,817,493


Statutory reserves



11,133,287



10,124,710


Retained earnings



84,116,412



77,903,478


Noncontrolling interests



195,462



-


Total stockholders' equity



200,211,576



190,757,311


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

286,368,415


$

276,983,808










CHINA NATURAL GAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(Unaudited)

 


Three Months Ended


Six Months Ended


June 30,

June 30,


2012



2011



2012


2011

Revenues












Natural gas

$

34,927,804


$

22,285,730



$

64,327,491


$

42,633,560

Gasoline


701,168



1,974,377




1,527,063



3,281,550

Installation and others


2,272,723



3,053,062




4,324,459



5,506,167



37,901,695



27,313,169




70,179,013



51,421,277














Cost of revenues













Natural gas


22,462,516



12,870,450




41,737,375



24,969,900

Gasoline


655,614



1,902,709




1,443,758



3,127,433

Installation and others


955,283



1,308,916




1,807,528



2,372,548



24,073,413



16,082,075




44,988,661



30,469,881














Gross profit


13,828,282



11,231,094




25,190,352



20,951,396














Operating expenses













Selling


5,619,864



4,041,412




10,570,664



7,621,333

General and administrative


1,636,029



1,851,785




4,347,675



4,762,756



7,255,893



5,893,197




14,918,339



12,384,089














Income from operations


6,572,389



5,337,897




10,272,013



8,567,307














Non-operating income (expense):













Interest income


9,853



9,273




20,599



15,920

Interest expense


(275,643)



-




(707,680)



(4,666)

Other income (expense), net


18,763



(9,091)




(14,330)



87,865

Change in fair value of warrants


(1,146)



123,630




(1,229)



239,810

Foreign currency exchange loss


1,494



(4,006)




(504,446)



(7,048)



(246,679)



119,806




(1,207,086)



331,881














Income before income tax


6,325,710



5,457,703




9,064,927



8,899,188














Provision for income tax


1,251,128



1,064,018




2,042,599



2,019,671














Net income


5,074,582



4,393,685




7,022,328



6,879,517

Less: Income (loss) attributable to noncontrolling interests


28,876



-




(199,183)



-

Net income attributable to China Natural Gas, Inc.


5,045,706



4,393,685




7,221,511



6,879,517














Other comprehensive income













      Foreign currency translation gain 


(17,584)



2,993,637




1,741,216



4,442,292

Comprehensive income

$

5,028,122


$

7,387,322



$

8,962,727


$

11,321,809














Weighted average shares outstanding













Basic


21,458,654



21,428,265




21,458,654



21,375,085

Diluted


21,458,654



21,428,265




21,458,654



21,377,407

Earnings per share













Basic

$

0.24


$

0.21



$

0.34


$

0.32

Diluted

$

0.24


$

0.21



$

0.34


$

0.32














CHINA NATURAL GAS, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

(Unaudited)

 


Common Stock

 

Additional

Paid-in

Capital

Accumulative

Other

Comprehensive

Income

 

Minority

Interest

 

Retained Earnings

Total

Stockholders'

Equity


Shares

Amount




Statutory Reserve

Unrestricted


Balance at 1/1/2011

21,321,904

$2,132

$81,611,763

$   15,667,145

$           -

$7,918,634

$64,847,622

$170,047,296

Exercise of stock options

136,750

13

670,062

-

-

-

-

670,075

Stock based compensation

-

-

627,660

-

-

-

-

627,660

Cumulative translation adjustment

-

-

-

4,150,348

-

-

-

4,150,348

Net income

-

-

-

-

-

-

15,261,932

15,261,932

Appropriation of retain earnings

-

-

-

-

-

2,206,076

(2,206,076)

-

Balance at 12/31/2011

21,458,654

$2,145

$82,909,485

$   19,817,493

$           -

$10,124,710

$77,903,478

$190,757,311










Balance at 1/1/2012

21,458,654

$2,145

$82,909,485

$   19,817,493

$           -

$10,124,710

$77,903,478

$190,757,311

Stock based compensation

-

-

296,076

-

-

-

-

296,076

Purchases of a Noncontrolling interest equity

-

-

-

-

394,645

-

-

394,645

Cumulative translation adjustment

-

-

-

1,741,216

-

-

-

1,741,216

Net income

-

-

-

-

(199,183)

-

7,221,511

7,022,328

Appropriation of retain earnings

-

-

-

-

-

1,008,577

(1,008,577)

-

Balance at 6/30/2012

21,458,654

$2,145

$83,205,561

$   21,558,709

$195,462

$11,133,287

$84,116,412

$200,211,576

 

CHINA NATURAL GAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 



For the Six Months Ended June 30,




2012



2011

CASH FLOWS FROM OPERATING ACTIVITIES:







Net income attributable to China Natural Gas, Inc.


$

7,221,511


$

6,879,517

Add: Loss attributable to noncontrolling interests



(199,183)



-

Net income



7,022,328



6,879,517








Adjustments to reconcile net income to net cash







provided by operating activities:







Depreciation and amortization



6,945,862



3,744,657

Provision for doubtful accounts



202,100



20,810

Stock-based compensation



296,076



228,711

Change in fair value of warrants



1,229



(239,810)

Change in assets and liabilities:







Accounts receivable



1,035,676



(866,852)

Other receivables



(146,652)



(118,999)

Employee advances



(137,270)



2,796

Inventories



(591,244)



(712,617)

Advances to suppliers



(336,767)



(381,947)

Prepaid expense and other current assets



3,527,412



(548,647)

Accounts payable and accrued liabilities



1,830,593



992,566

Unearned revenue



(311,342)



3,367,774

Accrued interest



(25,477)



363,701

Taxes payable



(462,934)



(7,632)

Net cash provided by operating activities



18,849,590



12,724,028








CASH FLOWS FROM INVESTING ACTIVITIES:







Payment for acquisition of property and equipment



(3,592,657)



(5,723,603)

Additions to construction in progress



(10,459,937)



(5,232,444)

Prepayment on long-term assets



52,892



(3,499,321)

Payment for acquisition of business



(657,007)



-

Payment for intangible assets



(1,511,611)



(141,129)

Net cash used in investing activities



(16,168,320)



(14,596,497)








CASH FLOWS FROM FINANCING ACTIVITIES:







Proceeds from exercise of stock options



-



670,075

Proceeds from short-term debt and other payable, related parties



-



3,085,445

Repayment of long-term debt



(793,500)



-

Repayment of senior notes



(3,333,334)




Increase in restricted cash



(1,890,641)




Net cash provided by financing activities



(6,017,475)



3,755,520








Effect of exchange rate changes on cash and cash equivalents



17,388



292,245








NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS



(3,318,817)



2,175,296








CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD



9,622,883



10,046,249








CASH AND CASH EQUIVALENTS, END OF PERIOD


$

6,304,066


$

12,221,545








SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:







Interest paid, including capitalized interest


$

481,583


$

-

Income taxes paid


$

1,967,965


$

2,062,496








Non-cash transactions for investing and financing activities:







Construction material transferred to construction in progress


$

67,142


$

5,346,835

Construction in progress transferred to property and equipment


$

18,507,550


$

12,781,821

Advances to suppliers transferred to construction in process


$

-


$

7,480,412

Other assets transferred to construction in progress


$

2,395,267


$

640,767

Capitalized interest - amortization of discount of notes payable and issuance cost


$

2,040,389


$

2,091,230

For more information, please contact:

 

China Natural Gas, Inc.

Zhaoyang Qiao, CFO

Phone: +86-29-8832-7391

Cell: +86-158 2969-1287

Email: qiaochaoyang@naturalgaschina.com  


Jackie Shi

Investor Relations Director

Phone: +86-29-8832-3325 x922

Cell:  +86-139-9287-9998

Email: yjshi@naturalgaschina.com   


SOURCE China Natural Gas, Inc.



RELATED LINKS
http://www.naturalgaschina.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.