omniture

China Clean Energy Announces Solid First Quarter 2007 Results

2007-05-16 09:34 843

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

Source: China Clean Energy Inc.
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