HOHHOT CITY, China, March 1, 2011 /PRNewswire-Asia-FirstCall/ -- China Energy Corporation (OTC Bulletin Board: CHGY), ("China Energy" or the "Company"), a producer and trader of coal for domestic heating, electrical generation, and coking purposes and a supplier of heating and electric energy services in Inner Mongolia, today announced financial results for the fourth quarter and fiscal year ended November 30, 2010.
FY 2010 Year End Results
EPS (fully diluted)
Fourth Quarter Results (3 months ended November 30)
EPS (fully diluted)
Revenues for fiscal 2010 fourth quarter ended November 30 totaled $25.6 million, an increase of approximately 7.1% over $23.9 million reported in the same year ago period. China Energy produced and sold approximately 221,841 metric tons of coal at an average price of $49.4, compared to 295,168 metric tons at an average price of $39.1 in the fourth quarter of fiscal year 2009. Currently, China Energy has the capacity to produce up to 800,000 metric tons annually.
Gross profit decreased 12.4% to $9.9 million, with gross margin of 38.7% compared to 47.3% in the fourth quarter of 2009.
During the first three quarters of 2009, the Company did not have normal coal production while the long wall extraction machinery was being installed. When full production resumed in the fourth fiscal quarter, the Company ramped output above normal thresholds to make up for the shortfall which created an exceptionally strong quarter from an earnings perspective and higher margins.
Net income for the fourth quarter of fiscal year 2010 was $4.9 million, or $0.11 per diluted share, compared to $7.1 million, or $0.16 per diluted share, in the fourth quarter of fiscal year 2009. The effective tax rate was 26.0% compared to 19.7% for each respective period.
Fiscal Year 2010 Financial Results
For the year ended November 30, 2010, the Company reported revenue of $88.0 million, an increase of 103.2% over revenue of $43.3 million generated in 2009. For fiscal 2010, revenue from the coal group increased 121.2% to $71.0 million, and represented 80.7% of total sales, compared to $32.1 million, or 74.1% of total sales in fiscal year 2009. As a component of this, 39.4% of total company sales came from coal trading, and 41.3% came from coal production during fiscal year 2010. China Energy produced and sold 820.3 thousand tons of coal in 2010, a 80.9% increase from the 453.4 thousand tons in 2009, which mostly occurred during the fourth quarter. Average sales price of coal during fiscal year 2010 was $44.2 per ton, compared to $37.4 per ton in fiscal year 2009.
Revenue from the heat power group totaled $17.0 million, or 19.3% of total sales, in fiscal 2010, compared to $11.2 million, or 25.9% of total sales in fiscal year 2009. Higher revenues in this segment were due to an increase in the coverage area of Heat Power's operations of over 19%.
"We were able to report significant growth across each of our businesses," stated WenXiang Ding, chief executive officer and president. "We successfully ramped production at our Laiyegou mine, as well as capitalized on our expanded quota from the railway bureau to accelerate our coal trading volumes. Continued strong demand for energy and electricity provide both diversification and another conduit for incremental growth in 2011. As consolidation across our industry accelerates we continue to evaluate opportunities to expand our mining assets."
Cost of goods sold for fiscal year 2010 was approximately $54.1 million, compared to approximately $29.3 million for fiscal year 2009. Gross profit was $33.9 million and gross margins were 38.5% in 2010, compared to $14.0 million in gross profit and gross margins of 32.3% during 2009. The increase in overall gross profit margin was primarily attributable to the improvement of the gross profit margin of the Company's coal trading business which experienced a 1400 basis points margin improvement year-over-year. The Company benefited from the ability to sell coal at higher open market prices at the port. Heat Power benefited from a 275.2% increase in government subsidies to compensate for lower government regulated heat price and higher cost of coal.
Operating expenses for fiscal year 2010 were approximately $9.3 million, compared to $5.5 million in 2009. Selling and marketing expenses in fiscal year 2010 were $5.5 million compared to $2.2 million in 2009, which was driven by the increase of transportation and storage costs necessary to support the coal trading business. General and administration expenses totaled $3.8 million and $3.3 million in the respective periods.
Net income for fiscal year 2010 totaled approximately $17.6 million, or $0.39 per diluted, share, compared to approximately $5.1 million, or $0.11 per diluted share, in fiscal year 2009. A total of 45 million shares were utilized in the calculations for both years. Net income margins were 20.0% and 11.8% for fiscal years 2010 and 2009, respectively. The effective tax rate was 26.2% and 29.9% in fiscal 2010 and 2009, respectively.
Balance Sheet and Cash Flow
Cash and equivalents and restricted cash totaled $4.6 million on November 30, 2010 compared to $5.1 million on November 30, 2009. The Company had total stockholders' equity of $52.0 million, with total assets of $103.3 million versus total liabilities of $51.3 million on November 30, 2010. For fiscal year 2010, the Company generated $17.9 million in cash from operations versus $13.2 million in fiscal year 2009.
About China Energy Corporation
China Energy Corporation is a producer and trader of coal for domestic heating, electrical generation and coking purposes for steel production primarily in the People's Republic of China. The Company produces coal through its subsidiary Inner Mongolia Tehong Coal Group Co, Ltd. ("Coal Group") and supplies heating and electricity requirements throughout the XueJiaWan district through its subsidiary Inner Mongolia Zhunger Heat Power Co., Ltd. ("Heat Power"). Through Heat Power, China Energy operates a thermoelectric plant and 32 heat transfer stations located in XueJiaWan, Ordos City in which the Company has a monopoly for heating supply granted to the Company by the local government. For additional information on China Energy Corporation see http://www.ceccec.com .
Cautionary Statement Regarding Forward-Looking Information
This press release may contain certain "forward-looking statements" relating to the business of China Energy Corporation, and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov)
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CHINA ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Income And comprehensive income FOR THE YEARS ENDED NOVEMBER 30, 2010 AND 2009
Cost of revenues
Selling and marketing
General and administrative
Total operating expenses
Income from operations
Other income and expenses:
Finance expenses, net
Income before income taxes
Provision for income taxes
Other comprehensive income:
Foreign currency translation adjustment
Total comprehensive income
Net income per common share
basic and diluted
Weighted average common shares outstanding
basic and diluted
CHINA ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Accounts receivables, net of allowance for doubtful accounts of $54,747
and $120,853, respectively
Advance to suppliers
Total current assets
Fixed assets, net
Investment property, net of accumulated depreciation of $288,735 and $166,172, respectively
Mining right, net of amortization of $1,133,133 and $787,417, respectively
Other long term assets
Total other assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term bank loans
Advance from customers
Current portion of deferred income
Total current liabilities
Common stock: authorized 200,000,000 shares of $0.001 par value;
45,000,000 shares issued and outstanding
Additional paid-in capital
Accumulated other comprehensive income
Total stockholders' equity
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
SOURCE China Energy Corporation