Changfeng Revenue Up 39%, Gross Profit Up 40% and Net Income Up 52%
for the Three Months Ended March 31, 2014 With Compared to the Same
Period of 2013
TORONTO, ONTARIO--(Marketwired - May 15, 2014) - Changfeng
Energy Inc. (TSX-VENTURE:CFY) ("Changfeng" or the "Company") is
pleased to announce that the Company has filed its unaudited
condensed interim consolidated financial results for the first
quarter ended March 31, 2013. The unaudited condensed interim
consolidated financial results and Management Discussion and
Analysis can be downloaded from www.SEDAR.com or from the Company's
website at www.changfengenergy.com.
Summary of the First Quarter of 2014 Consolidated Financial
Results
In thousands of Canadian dollars |
|
Three months ended March 31, |
|
except percentages and per share |
2014 |
2013 |
Change |
% |
amounts |
|
|
|
|
|
Revenue |
|
13,381 |
9,623 |
3,758 |
39% |
Gross margin |
|
7,790 |
5,572 |
2,218 |
40% |
Net income |
|
1,930 |
1,273 |
657 |
52% |
EBITDA (1) |
|
5,019 |
3,001 |
2,018 |
67% |
Note: |
(1) See Non- IFRS Financial Measures in this Press
Release. |
Sales from the gas distribution utility for the three months
ended March 31, 2014 were $11.4 million, an increase of $3.4
million, or 43%, from $8.0 million for same period of 2013. This
increase was attributable to the 11.5% appreciation of exchange
rate between the Chinese RMB and the Canadian dollar, an increase
in connection fees in the Sanya operation, increased gas volume
sold of 11.0 million m3 in the Sanya operation in the first three
months of 2014 compared to 10.9 million m3 sold in Sanya operation
in the same period of 2013; and increased gas volume sold of 0.3
million m3 in the Xiangdong operation in the first three months of
2014 compared to 0.0 million m3 sold in the same period of
2013.
Total revenue from the CNG refueling retail station for the
three months ended March 31, 2014 was $2.0 million, an increase of
$0.3 million, or 18%, from $1.7 million for same period of 2013.
The increase was attributable to the combined effect of the
increased gas volume sold and the appreciation of exchange rate
between the Chinese RMB and the Canadian dollar. (3.0 million m3 in
the three months ended March 31, 2014 compared to 2.8 million m3
sold in the same period of 2013). The Company has been upgrading
its station's refueling capacity to meet the increasing demand that
is primarily driven by both rising gasoline prices and continued
government support for clean energy vehicles. It is expected that
more existing gasoline-fueled buses in the city will be converted
into dual-fuel vehicles (gasoline/CNG).
Gross margin for the first quarter of 2014 increased $2.2
million, or 40%, to $7.8 million from $5.6 for the comparable
period in 2013. The gross margin percentage of 58% for the first
quarter of 2014 is approximately the same as for the first quarter
of 2013.
General and administrative expenses for the first quarter of
2014 were $2.7 million, an increase of $0.6 million, or 27%, from
$2.2 million in the same period of 2013. The increase was
attributable to higher employee salaries and benefits as a result
of a higher inflation rate in China, additional employees, higher
conference and professional fees and higher exchange rate between
the Chinese RMB and the Canadian dollar. General and administrative
expenses as a percentage of sales for the first quarter of 2014
decreased to 20% from 22% in the first quarter of 2013.
Travel and business development expenses for the first quarter
of 2014 were $1.1 million, an increase of $0.1 million, or 12%,
from $1.0 million in the first quarter of 2013. Travel and business
development expenses as a percentage of sales for the first quarter
of 2014 decreased to 8% from 10% in the first quarter of 2013.
These expenses normally fluctuate with travel and business
development activities in mainland China as the Company seeks to
develop new projects in close proximity to the new national
pipelines.
Net income for the first quarter of 2014 was $1.9 million, or
$0.030 per share (basic and diluted) compared to $1.3 million or
$0.020 per share (basic and diluted) for the same period in 2013,
primarily due to the reasons discussed above.
EBITDA (non-IFRS measure as identified and defined under section
"Non-IFRS Measures") for the first quarter of 2014 was $5.0
million, an increase of $2.0 million, or 67%, from $3.0 million for
the same period of 2013. The increase was driven primarily by
higher sales. EBITDA as a percentage of revenue for the first
quarter of 2014 was 38%, compared to 31% in the first quarter of
2013, representing an increase of 7% due to the sales increases but
was partially offset by higher operating expenses, as discussed
above.
Financial Position
Cash increased by $0.05 million to $15.20 million at March 31,
2014 from $15.15 million at December 31, 2013, primarily resulting
from cash provided during the quarter by operating activities of
$2.1 million and effects of foreign exchange on cash balances of
$0.2 million, offset by $0.1 million repayment of long-term debt,
$0.3 million for share buyback and cash used for capital
expenditures of $1.9 million during the quarter.
Net cash provided by operations was $2.1 million for the first
quarter of 2014 compared to $1.7 million for the same period of
2013.
Cash used in financing activities in the first quarter of 2014
included a $0.1 million principle payment of long-term debt and
$0.3 million paid for the share buyback.
Capital expenditures in property and equipment totaled $1.9
million in the first quarter of 2014 compared to $2.2 million in
the same period of 2013. The expenditures were mainly related to
the purchase of equipment for the Xiangdong project and the
on-going construction of pipeline networks to connect new customers
in the Sanya Region.
Changfeng will finance the majority of the upcoming construction
of projects under development in mainland China through its
long-term bank loans with BOC Sanya and BOC Pingxiang, as well as
operating cash flow from its existing operations.
Non-IFRS Financial Measures
The Company uses the following non-IFRS financial measure:
EBITDA. The Company believes this non-IFRS financial measure
provides useful information to both management and investors in
measuring the financial performance and financial condition of the
Company for the reasons outlined below.
Management uses this non-IFRS financial measure to exclude the
impact of certain expenses and income that must be recognized under
IFRS when analyzing consolidated operating performance, as the
excluded items are not necessarily reflective of the Company's
underlying operating performance and make comparisons of underlying
financial performance between periods difficult. From time to time,
the Company may exclude additional items if it believes doing so
would result in a more effective analysis of underlying operating
performance. The exclusion of certain items does not imply that
they are non-recurring.
This measure do not have a standardized meaning prescribed by
IFRS and therefore they may not be comparable to similarly titled
measures presented by other publicly traded companies and should
not be construed as an alternative to other financial measures
determined in accordance with IFRS. This measure is listed and
defined below:
EBITDA
EBITDA is defined herein as income before income tax expense,
interest expense, depreciation and amortization, share of loss of
investment in associate, as well as non-cash stock-based
compensation expense. EBITDA does not have any standardized meaning
prescribed by IFRS and therefore may not conform to the definition
used by other companies. A reconciliation of net income to EBITDA
for each of the periods presented as follows:
In thousands |
Three months ended March 31, |
|
(except for % figures) |
2014 |
2013 |
Change |
% |
Net Income |
1,930 |
1,273 |
657 |
52% |
Add (less): |
|
|
|
|
|
Income tax |
1,469 |
744 |
725 |
97% |
|
Interest income |
(9) |
(9) |
0 |
0% |
|
Share of loss of investment in associate |
7.6 |
0.3 |
7 |
2333% |
|
Stock-based compensation |
87 |
- |
87 |
100% |
|
Amortization |
1,044 |
551 |
493 |
89% |
|
Interest expense |
490 |
442 |
48 |
11% |
EBITDA |
5,019 |
3,001 |
2,018 |
67% |
About Changfeng Energy Inc.
Changfeng Energy Inc. is a natural gas service provider with
operations located throughout the People's Republic of China. The
Company services industrial, commercial and residential customers,
providing them with natural gas for heating purposes and fuel for
transportation. The Company has developed a significant natural gas
pipeline network as well as urban gas delivery networks, stations,
substations and gas pressure regulating stations in Sanya City
& Haitang Bay. Through its network of pipelines, the Company
provides safe and reliable delivery of natural gas to both homes
and businesses. The Company is headquartered in Toronto, Ontario
and its shares trade on the Toronto Venture Exchange under the
trading symbol "CFY". For more information, please visit the
Company website at www.changfengenergy.com.
Forward-Looking Statements
Information set forth in this news release may involve
forward-looking statements under applicable securities laws. The
forward-looking statements contained herein are expressly qualified
in their entirety by this cautionary statement. The forward-looking
statements included in this document are made as of the date of
this document and the Company disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable securities legislation. Although
Management believes that the expectations represented in such
forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. This
news release does not constitute an offer to sell or solicitation
of an offer to buy any of the securities described herein and
accordingly undue reliance should not be put on such.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSXV)
accepts responsibility for the adequacy or accuracy of this
release.
Changfeng Energy Inc.Mr. Yan Zhao CPA. CAChief Financial
Officer416.362.5032/647.528.0115yan.zhao@changfengenergy.comChangfeng
Energy Inc.Ms. Ann S.Y.LinVP, Corporate Development and Corporate
Secretary416.362.5032ann@changfengenergy.comwww.changfengenergy.com
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