FUQING CITY, China, May 16 /Xinhua-PRNewswire/ -- 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 financial results for the first quarter ended on
March 31, 2007.
First Quarter 2007 Highlights
-- Revenue reached a record $ 4.1 million, up 45% from the first quarter
of 2006
-- Gross Profits reached a record $ 1.1 million, up 45% from the first
quarter of 2006
-- Operating income totaled $424,149, compared to $491,935 in the first
quarter of 2006
-- Net income rose to $400,706, or $0.02 per diluted share, up 45% from
the first quarter of 2006
"During the first quarter, we saw strong growth in our biodiesel business
as we more than doubled our production capacity," said Mr. Tai-ming Ou,
Chairman and CEO of the Company, "We were also very pleased with the
performance of our specialty chemical products with the increasing awareness
of the environmental benefits of our products translating into increased
demand for our products and higher prices."
First Quarter 2007 Results
Net revenue for the first quarter was $4.14 million, an increase of 45%
year-over-year. Gross profit for the first quarter was $1.1 million, up 45%
from the comparable period in 2006. Gross margin for the first quarter of 2007
was 27.8%, unchanged from the first quarter of 2006.
Operating expenses came in at $724,268 for the first quarter of 2007, a
140% increase from $301,736 recorded in the first quarter of 2006. The
increase was primarily due to higher legal, auditing and other professional
fees resulting from China Clean Energy's new status as a public company as
well as the Company's increased efforts to market its specialty chemical
products worldwide. The Company's higher operating cost structure resulted in
lower operating profits, which came in at $424,149 with operating margin
coming in at 10.3% for the first quarter of 2007 compared with approximately
$491,933 and 17.2% in 2006, respectively. Going forward, the Company expects a
recovery in its operating margins as it increases production capacity and
benefits from economies of scale.
Recently the Company gained status as a Wholly-Owned-Foreign Enterprise in
China, and its operating subsidiary, Fujian Zhongde, applied for and was
granted approval for income tax exemptions for 2007 and 2008 followed by 50%
exemption in the subsequent three year period. As a result, the Company did
not record income tax expense in the first quarter of 2007, compared to
$196,640 tax expenses recorded in the comparable period of 2006.
Net income for the first quarter of 2007 was $400,706 or $0.02 per basic
and diluted share, versus net income of $276,615, or $0.02 per share on both
basic and diluted basis for the comparable period of 2006.
Financial Condition
At March 31, 2007, China Clean Energy had $897,178 in total cash and
short-term investments, approximately $2.5 million in working capital, and
$1.5 million in debt. Cash flow from operations for the three months ended
March 31, 2007 totaled $236,301, up from negative $396,071 in the comparable
period in 2006. Capital expenditures totaled $26,815 in the three months ended
March 31, 2006. Shareholders' equity stood at $11.1 million, compared to
$10.6 million at the end of 2006.
Business Outlook
The rapid increase in demand for motor vehicles as a result of strong
economic growth and rising income levels in China, combined with the
government's commitment to reduce environmental pollution by encouraging the
development of alternative renewable energy sources, is expected to support
sustained and rapid growth in demand for biodiesel fuel over the next several
years.
"As we enter into the second quarter we remain focused on our near
objective of building our new biodiesel plant in Jiangyin to expand our
biodiesel capacity, and are very exited with the growth opportunities for this
market in China," stated Mr. Ou. "We believe we are well positioned to
participate in the expected rapid growth of the biodiesel fuel market in
China, with the right strategies and a management team with extensive industry
experience that can continue the successful execution of our business plan."
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 oils. Using this proprietary process, the 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 operate as a public company; 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.
China Clean Energy Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(US$ - Unaudited)
Three months ended March 31,
2007 2006
(Unaudited) (Unaudited)
Revenue: $ $
Net sales of products 4,138,366 2,852,910
Government subsidy - 5,965
Total revenue 4,138,366 2,858,875
Operating Costs and Expenses
Cost of goods sold 2,989,949 2,065,204
Selling and marketing 213,243 82,211
General and administrative 335,933 50,699
Depreciation of property, plant and equipment 125,844 83,469
Amortization of intangible assets 49,248 85,357
Total operating costs and expenses 3,714,217 2,366,940
Income from Operations 424,149 491,935
Other Income (Expense)
Interest income 2,502 2,193
Interest expense (25,945) (20,873)
Total Other Income (Expense) (23,443) (18,680)
Income before Income Taxes 400,706 473,255
Income Taxes - (196,640)
Net Income $400,706 $276,615
Other Comprehensive Income
Foreign currency translation gain (loss) 106,964 161,500
Comprehensive Income $507,670 $438,115
Earnings per common share:
Basic $0.02 $0.02
Diluted $0.02 $0.02
Weighted average number of common shares:
Basic 21,512,269 15,995,000
Diluted 21,512,269 15,995,000
The accompanying notes are an integral part of these financial statements.
China Clean Energy, Inc. and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEET
(US$)
March 31, December 31,
2007 2006
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $897,178 $2,241,712
Accounts receivable, net of
allowance for doubtful accounts of
$249,482 and $228,604, respectively 2,245,336 1,962,403
Other receivable - refundable taxes 139,331 24,904
Inventories 1,015,498 941,933
Prepaid expenses 34,908 37,696
Total Current Assets 4,332,251 5,208,648
Property, plant and equipment, net 4,639,303 4,692,200
Intangible assets, net 2,405,159 2,430,504
Deposits paid in connection with
contract for purchase of land use rights 1,921,973 95,033
Total Assets $13,298,686 $12,426,385
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $633,323 $386,719
Current portion of bank indebtedness 1,153,174 1,282,462
Income taxes payable - 117,964
Due to related parties - 6,419
Total current liabilities 1,786,497 1,793,564
Noncurrent portion of bank indebtedness 371,698 -
Total Liabilities 2,158,195 1,793,564
Commitments and Contingencies - -
Stockholders' Equity
Common stock par value $0.001 per share,
authorized 100,000,000 shares;
issued and outstanding 21,512,269 and
21,512,269 shares, respectively 21,512 21,512
Additional paid-in capital 7,034,473 7,034,473
Retained earnings 3,562,453 3,161,747
Accumulated other
comprehensive income (loss) 522,053 415,089
Total stockholders' equity 11,140,491 10,632,821
Total Liabilities and Stockholders' Equity $13,298,686 $12,426,385
The accompanying notes are an integral part of these financial statements
China Clean Energy Inc. and Subsidiaries
CASH FLOW STATEMENT
(US$ - Unaudited)
Three months ended March 31,
2007 2006
(Unaudited) (Unaudited)
Cash Flows from Operating Activities
Net income $400,706 $276,615
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation of property, plant
and equipment 125,844 83,469
Amortization of intangible assets 49,248 85,357
Changes in operating assets and liabilities
Accounts receivable, net (282,933) (678,156)
Other receivables (114,427) -
Inventory (73,565) 45,837
Prepaid expenses 2,788 -
Accounts payable and accrued liabilities 246,604 79,777
Income taxes payable (117,964) (288,970)
Net cash provided by (used in)
operating activities 236,301 (396,071)
Cash Flows from Investing Activities
Property, plant and equipment additions (26,815) (106,788)
Deposits paid in connection with contract
for purchase of land use rights (1,826,940) -
Net cash provided by (used in)
investing activities (1,853,755) (106,788)
Cash Flows from Financing Activities
Increase (decrease) in bank indebtedness 242,410 8,010
Increase (decrease) in due to related parties (6,419) 174,238
Dividends paid - (753,420)
Net cash provided by (used in)
financing activities 235,991 (571,172)
Effect of exchange rate changes on
cash and cash equivalents 36,929 76,609
Increase (decrease) in cash and cash
equivalents (1,344,534) (997,422)
Cash and cash equivalents, beginning
of period 2,241,712 3,175,128
Cash and cash equivalents, end of period $897,178 $2,177,706
Supplemental disclosures of cash flow information:
Interest paid $25,945 $20,873
Income taxes paid $- $196,640
The accompanying notes are an integral part of these financial statements.
Contact:
China Clean Energy Inc.
Mr. Gary Zhao, CFO
Phone: +1-86-138-0133-9172 (China)
Email: gary.zhao@chinacleanenergyinc.com
CCG Elite Investor Relations Inc.
Mr. Crocker Coulson, President
Phone: +1-646-213-1915 (New York)
Mr. Ed Job, CFA
Phone: +1-646-213-1914