-- First Quarter Revenue Increases 78.1% to $4.3 million -- New
Customers in Recently Acquired Exclusive-Right-Cities Contributes
to Growth BEIJING, May 19 /Xinhua-PRNewswire-FirstCall/ -- Sino Gas
International Holdings, Inc. (OTC Bulletin Board: SGAS; "Sino Gas"
or the "Company"), a leading developer of natural gas distribution
systems and distributor of natural gas to residential, commercial,
and industrial customers in niche markets in People's Republic of
China, today announced its results for the first quarter of 2008
ended March 31, 2008. Sales for the first quarter 2008 increased
78.1% to $4.3 million compared to $2.4 million for the same quarter
in 2007. The improvement in revenue emanated from connection fees
from new customers and per household gas sales for new and existing
customers. During the first quarter, the Company connected 4,590
new households to its gas distribution network which resulted in
total connection fees of $1.3 million for the quarter. Gas sales
were 9.45 million cubic meters, or $3.0 million with 49% resulting
from existing customers and 51% from new connections. By
comparison, the Company connected 2,260 new residential households
to its gas distribution network for the 3 months ended March 31st,
2007, which totaled $0.62 million respectively. As a reference
point, 39,306 new residential households were connected during
2007. Cost of goods for the three months ended March 31, 2008,
which includes labor connection costs and costs per m3 of gas, from
the main pipelines for resale was $3.0 million for the period.
Gross profit for the three months ended March 31, 2008 was $1.4
million, an increase of approximately 127.5% from the first quarter
of 2007. Gross margins were 31.5% compared to 24.6% for the first
quarter of 2008 and 2007 respectively. The increase in gross profit
was attributed to an increased number of high margin connection
fees from new customer sales. Operating expenses for the three
months ended March 31, 2008 increased 104% to $1.0 million from
$0.5 million in the same period in 2007 and general and
administration expenses for the period increased to approximately
$0.8 million from $0.4 million in the first quarter of 2007. The
increases were due to the Company's six new subsidiaries
incorporated in the second half of 2007 which resulted in increased
payroll, benefits and travel expense in the first quarter.
Operating income for the first quarter of 2008 totaled $351,490
compared to $103,025 for the same period in 2007, a 241.2%
increase. Operating margins were 8.1% and 4.2% for the first
quarter of 2008 and 2007, respectively. Taxes during the quarter
were $174,017 compared to $16,865 for the same period 2007. The
reason behind the increased income tax expense is due to the
adjustment of the Company's Enterprise Income Tax (EIT) rate
prepayment rate from 7.5% in 2007 to 25% currently. In 2008, the
Company's EIT is 25%. Net income for the 2008 first quarter
increased 29.4% to $0.15 million, representing earnings of $.007
per diluted share, from $0.12 million in net income, or $.004 per
diluted share during the first quarter of 2007. Calculations were
based utilizing 22 million and 28.7 million diluted shares
outstanding respectively. The reason for the year over year
decrease in shares utilized was diluted earnings per share was
computed on the basis of the weighted average number of shares of
common stock plus the effect of dilutive potential common shares
outstanding during the period using the treasury stock method for
warrants and the as-if method for convertible securities. "Our
strategic strength and value addresses the natural gas needs of
typically un-served and newly developed provinces and cities which
possess many of the same basic needs, including adequate natural
gas supply," commented Yuchuan Liu, Chairman and Chief Executive
Officer. "In combination with Beijing's policy to support
residential development in second and third tier cities, Sino Gas
equally benefits from the policy as developers of land and REITS
incorporate the necessary infrastructure for natural gas into the
buildings. Our contractual and exclusive rights to the markets we
serve provides a significant captive market, long term recurring
revenue and the opportunity for significant future growth within
the areas we service," concluded Mr. Liu. Balance Sheet and Cash
Flow Discussion The Company had $8.0 million and $10.9 million in
cash and equivalents as of March 31, 2008 and December 31, 2007
respectively. Accounts receivable decreased slightly to $6.2
million as of March 31, 2008, from $7.3 million as of December 31,
2008 due to improved collection efforts and a tighter credit
policy. About Sino Gas International Holdings, Inc. The Company,
through its indirectly wholly-owned subsidiary, Beijing Zhong Ran
Wei Ye Gas Co., Ltd. ("Beijing Gas"), and the subsidiaries of
Beijing Gas, is a leading developer of natural gas distribution
systems in small and medium size cities in China, as well as a
distributor of natural gas to residential, commercial and
industrial customers in China. The Company owns and operates 24
natural gas distribution systems serving approximately 93,700
residential and eight commercial and industrial customers.
Facilities include approximately 700 kilometers of pipeline and
delivery networks with a designed daily capacity of approximately
70,000 cubic meters of natural gas. Beijing Gas owns and operates
natural gas distribution systems in Hebei, Jilin, Jiangsu and
Shandong Provinces. The Company's website is:
http://www.sino-gas.com/ . 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; the ability of the Company
to identify attractive acquisition candidates and close on
acquisitions; 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 companies 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 - SINO GAS
INTERNATIONAL HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS AS OF
MARCH 31, 2008 AND DECEMBER 31, 2007 (Stated in US Dollars)
3/31/2008 12/31/2007 ASSETS Current Assets Cash & cash
equivalents $ 8,021,212 $ 10,915,590 Restricted cash 664,061
478,920 Notes receivable 586,710 825,119 Accounts receivable
6,162,418 7,315,253 Inventory 246,891 207,976 Advances to suppliers
1,041,556 27,372 Prepayments and others 465,669 320,380 Other
receivables 9,849,587 3,100,695 Total Current Assets 27,038,104
23,191,305 Non-Current Assets Investment 2,703,156 4,007,310
Property, plant & equipment, net 26,852,967 24,572,565
Construction in progress 12,830,941 11,556,820 Intangible assets,
net 2,112,337 2,028,250 Total non-current assets 44,499,401
42,164,945 TOTAL ASSETS $ 71,537,505 $ 65,356,250 LIABILITIES &
STOCKHOLDERS' EQUITY Current Liabilities Bank Loans $ 7,120,276 $
2,734,444 Accounts payable 1,417,807 716,707 Other payables
9,715,659 10,383,657 Unearned revenue 640,615 312,573 Accrued
liabilities 41,428 362,263 Total current liabilities 18,935,785
14,509,644 TOTAL LIABILITIES STOCKHOLDERS' EQUITY $ 18,935,785 $
14,509,644 Preferred Stock A US $0.001 par value; 20,000,000 shares
authorized; 275,111 shares issued and outstanding as of March 31,
2008 and December 31, 2007 $ 275 $ 275 Preferred Stock B US $0.001
par value; 5,000,000 shares authorized; 4,971,859 shares issued and
outstanding as of March 31, 2008 and December 31, 2007 4,972 4,972
Common Stock US $0.001 par value; 250,000,000 shares authorized;
25,282,380 shares issued and outstanding as of March 31, 2008 and
December 31, 2007 25,283 25,283 Additional Paid in Capital
35,247,303 35,247,303 Statutory Reserve 3,481,730 3,258,201
Retained Earnings 10,358,228 10,432,430 Accumulated Other
Comprehensive Income 3,483,929 1,878,142 TOTAL STOCKHOLDERS' EQUITY
52,601,720 50,846,606 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
71,537,505 $ 65,356,250 SINO GAS INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH
31, 2008 AND 2007 (Stated in US Dollars) 3/31/2008 3/31/2007 Net
Sales Revenues $ 4,342,117 $ 2,438,227 Cost of revenues (2,975,472)
(1,837,630) Gross Profit 1,366,645 600,597 Operating Expenses
Selling and marketing expenses (181,704) (56,198) General &
administrative expenses (833,451) (441,374) Total operating
expenses (1,015,155) (497,572) Operating Income/(Loss) 351,490
103,025 Other Income (Expenses) Other income -- 36,088 Other
expenses (845) (1,495) Interest income 33,166 -- Interest expense
(60,467) (5,370) Total other income (expense) (28,146) 29,223
Earnings before tax 323,344 132,248 Income tax (174,017) (16,865)
Net income $ 149,327 $ 115,383 Earnings per share Basic 0.009 0.008
Diluted 0.007 0.004 Weighted Average Shares Outstanding Basic
17,165,894 14,730,597 Diluted 22,017,096 28,724,652 SINO GAS
INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Stated in US
Dollars) 3/31/2008 3/31/2007 Cash flow from operating activities
Net Income $ 149,327 $ 115,383 Depreciation expense 640,248 38,844
Amortization expense 29,532 -- Invested in restricted time deposits
(185,141) 3,124,541 Decrease/(increase) in accounts receivable
(5,357,649) 310,419 Increase in inventory (38,915) -- Increase in
prepaid expenses (831,430) -- Increase in accounts payable
(287,733) 3,023,295 Cash sourced/(used) in operating activities
(5,881,761) 6,612,482 Cash flows from investing activities Cash
received for investment sales proceeds 1,304,154 -- Cash paid for
investment and acquisition -- (930,801) Purchase of property, plant
& equipment (2,920,649) (3,320,688) Purchase of intangible
assets (113,620) (172,210) Increase in construction in progress
(1,274,121) (1,345,436) Cash sourced/(used) in investing activities
(3,004,236) (5,769,135) Cash flows from financing activities
Proceeds from bank borrowings 4,385,832 (2,430,445) Cash
sourced/(used) in financing activities 4,385,832 (2,430,445) Net
Increase/(Decrease) in Cash & Cash Equivalents for the Year
(4,500,165) (1,587,098) Effect of Currency Translation on cash and
cash equivalents 1,605,787 293,589 Cash & Cash Equivalents -
Beginning of Year $ 10,915,590 $ 3,638,673 Cash & Cash
Equivalents - End of Year $ 8,021,212 $ 2,345,164 Supplementary
cash flow information Interest received $ 33,166 $ 94,653 Interest
paid 60,467 43,617 Income tax paid -- 16,865 For more information,
please contact: Yong Zhang, CFO Zhou Jiang, IR Director Sino Gas
International Holdings, Inc. Tel: +86-10-8260-0527 Email: Investor
Relations Matthew Hayden HC International, Inc. Tel:
+1-858-704-5065 Email: DATASOURCE: Sino Gas International Holdings,
Inc. CONTACT: Yong Zhang, CFO or Zhou Jiang, IR Director, both of
Sino Gas International Holdings, Inc., +86-10-8260-0527, or ;
Matthew Hayden of HC International, Inc., +1-858-704-5065, or , all
for Sino Gas International Holdings, Inc. Web site:
http://www.sino-gas.com/
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