FUQING CITY, China, March 12 /Xinhua-PRNewswire-FirstCall/ -- China Clean Energy Inc. (OTC Bulletin Board: CCGY) ("China Clean Energy", the "Company"), a leading producer of biodiesel fuel and environmentally-friendly specialty chemical products made from renewable resources in The People’s Republic of China ("PRC"), today reported record financial results for the fourth quarter and fiscal year ended December 31, 2007.
Fourth Quarter 2007 Highlights
-- Total revenues increased to $6.9 million, up 87.1% from the fourth
quarter of 2006
-- Gross Profits reached $1.9 million, up 73.9% from the fourth quarter
of 2006
-- Operating Income totaled $1.4 million, up 895% from the fourth quarter
of 2006
-- Net Income was $1.3 million, or $0.06 per share
-- Completed private placement financing and raised $15 million to build
new biodiesel plant
-- Initiated construction for new a 100,000 metric ton facility on
December 19, 2007
Full Year 2007 Highlights
-- Total revenues increased 61.3% in 2007 to $21.8 million
-- Operating Income increased 60.8% in 2007 to $3.5 million
-- Net income increased 164.6% in 2007 to $3.4 million
"This was a very successful quarter for China Clean Energy, both in terms of financial performance and the execution of our expansion strategy. We achieved double-digit sequential growth in net revenues, driven by strong demand of our biodiesel and specialty chemical products. The rise of international oil price has also increased the company’s margin and net income from operations," said Mr. Tai-ming Ou, China Clean Energy’s Chairman and CEO. "In addition, the successful completion of our private placement was an important milestone for our company, and provided us with the capital necessary to complete our expansion strategy to build a 100,000 metric ton annual capacity biodiesel plant."
Fourth Quarter 2007 Results
China Clean Energy’s net revenues in the fourth quarter were $6.9 million, an increase of 26.4% from the third quarter of 2007 and an increase of 87% year-over-year. The increase from the third quarter of 2007 was due to increased demand for the company’s biodiesel and specialty chemical product lines, increased sales volume, higher sales prices, as well as greater sales volume due to our increased sales force.
Gross profit in the fourth quarter of 2007 was $1.9 million, an increase of 31% since the third quarter of 2007 and an increase of 73.9% year-over-year. Gross margins were 27.1% in the fourth quarter of 2007, down from 29.1% during the same period in 2006. The increase in gross profit was the result of higher sales prices and sales volume. The decrease in gross margin, however, was the result of a decrease in Chinese government export tax rebates from 13% to 5%, effective on July 1, 2007, for our exported specialty chemical products.
Operating expense in the fourth quarter of 2007 was $507,346 for the fourth quarter of 2007, a 45.9% decrease from $937,559 in the fourth quarter of 2006 which included a one time "reverse merger" charge. The Company’s operating income was up 58% from the third quarter of 2007 and up 895% year-over-year. The Company recorded a 20% increase in operating margin in the fourth quarter of 2007, representing a 400 basis point improvement compared to the third quarter of 2007 as well as the fourth quarter of 2006. This was due to the increase in production capacity and benefits from economies of scale.
Net income for the fourth quarter of 2007 was $1.3 million or $0.06 per basic and diluted share, compared to a loss of $3,606 in the fourth quarter of 2006. The increase in net income was driven by the increase of sales and the improvement in operating margins.
Full Year 2007 Results
For the full year 2007, net revenues were $21.8 million, up 61.5% from $13.5 million in 2006. 26.54% of revenue came from biodiesel sales and 73.46% came from specialty chemical sales. Gross profit for the full year 2007 was $5.9 million, an increase of 55.3% from $3.8 million in 2006. The increase was attributed to a significant increase in selling price and sales volume of the Company’s biodiesel and specialty chemical export business. Gross margin decreased slightly from 28.2% in 2006 to 27.0% in 2007 due to the decrease in Chinese government export tax rebates from 13% to 5% effective on July 1, 2007 for the Company’s exported specialty chemical products. Operating income for the full year 2007 was $3.5 million, up 59% from $2.2 million in 2006. Operating margin remained the same at 16% in 2006 and 2007. Net Income for 2007 increased 164.6% to $3.4 million from $1.3 million in 2006. Earnings per share also increased 128.5% to $0.16 per basic and diluted share in 2007 from $0.07 in 2006. Cash flow from operations for 2007 totaled $2.1 million, compared to $1.4 million in 2006. Capital expenditures for 2007 totaled $3.8 million, including a partial payment for initial construction and land-usage rights related to the Company’s new 100,000 ton-per-annum biodiesel plant.
Financial Condition
As of December 31, 2007, China Clean Energy had $1.1 million in total cash, approximately $4.3 million in working capital, and $1.5 million in debt. Stockholders’ equity at December 31, 2007 stood at $14.8 million, a 13.8% increase over the $13.0 million recorded at September 30, 2007.
Additional Information
In connection with the private placement financing, certain stockholders and officers of the Company deposited an aggregate of 1.5 million shares of common stock into an escrow account, which shares shall be disbursed, pro rata, among the investors should (i) the Company fail to begin the production of biodiesel at its currently proposed production facility in Jiang Yin, People’s Republic of China on or before January 1, 2009 or (ii) the Company fail to achieve at least $14,000,000 of adjusted net income during 2009. The Company plans to provide investors with regular updates as it makes progress on its Jiang Yin production facility construction. At this time the Company reaffirms its belief that it will commence biodiesel production from the new facility by January 1, 2009 and achieve at least $14,000,000 of adjusted net income during 2009.
In addition, over the next several quarters the Company plans to recruit independent directors to join its Board and take all additional actions necessary to fulfill the requirements to support an application to list on a national stock exchange.
Conference Call
To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888-552-2116. International callers should dial 706-645-9795 or 706-758-9965. When prompted by the operator, mention Conference Passcode 38344624. If you are unable to participate in the call at this time, a replay will be available for seven days starting on Wednesday, March 12 at 12:30 p.m. Eastern Time. To access the replay, dial 800-462-1687, international callers dial 706-645-9291, and enter the passcode 38344624.
This conference call will also be broadcast live over the Internet and can be accessed by all interested parties on China Clean Energy’s website at http://www.chinacleanenergyinc.com . To listen to the live webcast, please go to China Clean Energy’s website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on China Clean Energy’s website for 90 days.
About China Clean Energy:
China Clean Energy, through its wholly-owned subsidiary, Fujian Zhongde Technology Co., Ltd., is engaged in the development, manufacturing, and distribution of biodiesel fuel and specialty chemical products made from renewable resources. Since its inception, the Company has been engaged in the manufacture of high-quality specialty chemical products from renewable resources. Through its research and development efforts, the Company developed a proprietary process for refining biodiesel fuel from waste grease and certain vegetable oil-based waste. Using this proprietary process, China Clean Energy began producing biodiesel in 2005 and commenced selling biodiesel commercially starting in December 2005.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company’s ability to raise additional capital to finance the Company’s activities; the effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the future trading of the common stock of the Company; the ability of the Company to expand its production capacity; the period of time for which its current liquidity will enable the Company to fund its operations; the Company’s ability to protect its proprietary information; general economic and business conditions; the volatility of the Company’s operating results and financial condition; the Company’s ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company’s filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
--FINANCIAL TABLES FOLLOW--
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
(Expressed in US Dollars)
Three months ended Twelve months ended
December 31, December 31,
2007 2006 2007 2006
(Unaudited) (Unaudited) (Audited) (Audited)
Revenue:
Net sales of products $6,902,916 $3,689,548 $21,756,010 $13,489,710
Government subsidy -- 1,828 -- 9,640
Total revenue 6,902,916 3,691,376 21,756,010 13,499,350
Gross Profit 1,868,190 1,074,324 5,873,211 3,800,186
Gross Margin 27.1% 29.1% 27.0% 28.2%
Operating Costs and
Expenses
Cost of goods sold 5,034,726 2,617,052 15,882,799 9,699,164
Selling and marketing 93,074 143,838 695,007 411,850
General and
administrative 346,172 278,332 1,456,985 529,377
Expenses relating to
the reverse merger of
CCER -- 464,550 -- 464,550
Depreciation of
property, plant and
equipment 23,875 9,415 77,818 34,771
Amortization of
intangible assets 44,225 41,424 178,635 204,948
Total operating costs
and expenses 5,542,072 3,554,611 18,291,244 11,344,660
Income from Operations 1,360,844 136,765 3,464,766 2,154,690
Other Income (Expenses) -- --
Interest incomes 3,441 210 9,355 7,001
Interest expenses (32,793) (21,850) (114,227) (89,137)
Total Other Income
(Expenses) (29,352) (21,640) (104,872) (82,136)
Income before Income
Taxes 1,331,492 115,125 3,359,894 2,072,554
Income Taxes -- (118,731) -- (802,694)
Net Income $1,331,492 $(3,606) $3,359,894 $1,269,860
Other Comprehensive
Income
Foreign currency
translation
adjustment 411,554 129,597 796,353 421,948
Comprehensive Income $1,743,046 $125,991 $4,156,247 $1,691,808
Earnings per common
share:
Basic $0.06 $-0.00 $0.16 $0.07
Diluted $0.06 $-0.00 $0.16 $0.07
Weighted average number
of common shares:
Basic 21,512,269 15,995,000 21,512,269 17,017,580
Diluted 21,512,269 15,995,000 21,512,269 17,017,580
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Expressed in US Dollars)
December 31, December 31,
2007 2006
(Audited) (Audited)
Current Assets
Cash and cash equivalents $1,133,555 $2,241,712
Accounts receivable, net of
allowance for doubtful accounts of
$407,593 and $228,604, respectively 2,795,363 1,768,262
Other receivable - refundable value
added taxes -- 24,904
Other receivable - recoverable
corporate income taxes 147,485 --
Inventories 1,361,478 941,933
Advance payments to suppliers 872,974 194,141
Prepaid expenses 32,330 37,696
Total Current Assets 6,343,185 5,208,648
Property, plant and equipment, net 5,820,045 4,692,200
Intangible assets, net 4,879,635 2,430,504
Deposits paid in connection with
contract for purchase of land use
rights and related costs -- 95,033
Total Assets $17,042,865 $12,426,385
Current Liabilities
Accounts payable and accrued
liabilities $781,680 $386,719
Current portion of bank indebtedness 1,231,020 1,282,462
Income taxes payable -- 117,964
Due to related parties -- 6,419
Total current liabilities 2,012,700 1,793,564
Noncurrent portion of bank
indebtedness 241,097 --
Total Liabilities 2,253,797 1,793,564
Commitments and Contingencies -- --
Stockholders’ Equity
Preferred stock, per value $0.0001
per share, authorized
10,000,000 shares; issued and
outstanding 0 shares
Common stock, par value $0.0001 per
share, authorized -- --
90,000,000 shares; issued and
outstanding 21,512,269
and 21,512,269 shares,
respectively 2,151 2,151
Additional paid-in capital 7,053,834 7,053,834
Retained earnings 6,521,641 3,161,747
Accumulated other comprehensive
income (loss) 1,211,442 415,089
Total stockholders’ equity 14,789,068 10,632,821
Total Liabilities and Stockholders’
Equity $17,042,865 $12,426,385
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Expressed in US Dollars)
Year ended December 31,
2007 2006
(Audited) (Audited)
Cash Flows from Operating Activities
Net income $3,359,894 $1,269,860
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities
Stock-based compensation -- 178,500
Depreciation of property, plant and
equipment 542,875 402,138
Amortization of intangible assets 178,635 204,948
Changes in operating assets and
liabilities
Accounts receivable, net (1,705,934) (433,820)
Other receivables (122,581) (24,904)
Due from related parties -- 14,875
Inventory (419,545) 358,201
Prepaid expenses 5,366 (37,696)
Accounts payable and accrued
liabilities 394,961 (286,134)
Income taxes payable (117,964) (248,389)
Net cash provided by (used for)
operating activities 2,115,707 1,397,579
Cash Flows from Investing Activities
Property, plant and equipment
additions (1,342,153) (2,063,652)
Intangible assets additions (2,467,388) (545,225)
Deposits paid in connection with
contract for purchase of land use
rights -- (95,033)
Net cash provided by (used for)
investing activities (3,809,541) (2,703,910)
Cash Flows from Financing Activities
Capital stock issued for cash -- 1,265,000
Increase (decrease) in bank
indebtedness 189,655 42,850
Due to related parties (6,419) (296,525)
Dividends paid -- (753,420)
Net cash provided by (used for)
financing activities 183,236 257,905
Effect of exchange rate changes on
cash and cash equivalents 402,441 115,010
Increase (decrease) in cash and cash
equivalents (1,108,157) (933,416)
Cash and cash equivalents, beginning
of period 2,241,712 3,175,128
Cash and cash equivalents, end of
period $1,133,555 $2,241,712
Supplemental disclosures of cash flow
information:
Interest paid $114,227 $89,137
Income taxes paid $- $1,051,083
For more information, please contact:
China Clean Energy Inc.
Gary Zhao, CFO
Tel: +86-138-0133-9172 (China)
Email: gary.zhao@chinacleanenergyinc.com
CCG Elite Investor Relations Inc.
Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Ed Job, CFA
Tel: +1-646-213-1914
Email: ed.job@ccgir.com
